Are patients receiving the best care in hospitals? The German competition authority – Bundeskartellamt – has now decided to apply a health check to the German hospitals market.
On May 31, 2016, the German competition authority announced that it was launching a so-called “sector inquiry” into the hospital services market to examine the degree of competition in that sector of the economy.
Businesses often wonder how competition authorities pick and choose the cases they decide to bring. Companies with operations in Europe now have some guidance as a result of a recent speech by European Competition Commissioner Margrethe Vestager, in which she outlined how the Commission prioritizes its enforcement efforts.
Commissioner Vestager explained that the Commission uses three main criteria in prioritizing which cases to pursue. Not every case needs to satisfy all three criteria, but the Commission tries to keep these three objectives in mind in determining whether to pursue an enforcement action.
Rightly considered to be a “once in a generation decision,” the UK electorate will on 23 June 2016 have a chance to vote on whether the UK should remain a member of the European Union (“EU”).
This upcoming referendum has resulted in emotional rhetoric and heated discussions in the media (and no doubt around dining tables throughout the UK and elsewhere) on which way to vote, and why. However, what is striking to us is the relative lack of focus on the legal implications of so-called “Brexit,” including on EU and UK competition law.
The Consumer Rights Act 2015 (“CRA”) comes into force today, 1 October 2015.1 It introduces major reforms to the antitrust damages actions regime in the UK.2 In particular, the CRA broadens the type of cases that can be heard by the UK’s specialist antitrust court, the Competition Appeal Tribunal (the “CAT”), to include opt-out class actions, and makes other procedural amendments aimed at facilitating and streamlining private damages actions in the UK.
On July 16, 2015, the EU’s highest court, the Court of Justice, rendered its long-awaited ruling on whether seeking an injunction for a standard-essential patent (“SEP“) against an alleged patent infringer constitutes an abuse of a dominant position pursuant to Article 102 TFEU. The judgment was in response to a request for a preliminary ruling from the Landgericht Düsseldorf (Regional Court of Düsseldorf, Germany) in the course of a dispute between Huawei Technologies Co. Ltd (“Huawei“) and ZTE Corp. together with its German subsidiary ZTE Deutschland GmbH (together, “ZTE“).
On Feb. 25, 2015, the European Commission set out its strategy to achieve a European Energy Union with a forward looking climate change policy (“Framework Strategy”). Reforming and reorganizing Europe’s energy policy into a single energy market was outlined as a top priority by Jean-Claude Juncker, President of the Commission, in his political guidelines. The project is based on the three objectives of EU energy policy: (i) competitiveness; (ii) security of supply; and (iii) sustainability of infrastructure. The EU is the largest energy importer in the world, importing 53% of its energy, at an annual cost of around €400 billion.
On Feb. 12, 2015, the Court of Appeal to England and Wales dismissed Ryanair’s appeal against a judgment of the UK’s Competition Appeal Tribunal (“CAT”). The CAT had, on May 7, 2014, rejected Ryanair’s application for review of the findings of the Competition Commission (“CC”) in connection with Ryanair’s acquisition of a minority shareholding in Aer Lingus. In its final report, dated Aug. 28, 2013, the CC found that Ryanair and Aer Lingus had ceased to be distinct as a result of Ryanair’s minority shareholding (29.82%) that gave it the ability to exercise material influence over the policy of Aer Lingus. The CC reached its view by having regard to Ryanair’s ability to block special resolutions and the sale of slots at London Heathrow Airport. The CC then concluded that the minority stake resulted in a substantial lessening of competition because, in particular, Ryanair’s incentives as a competitor were likely to outweigh its incentives as a shareholder. The CC decided that a reduction of Ryanair’s holding to 5% would be an effective remedy.
The European Union’s Commissioner for Competition, Margrethe Vestager, who began her five-year mandate on Nov. 1, 2014, has indicated that there is more work to be done on the Commission’s initiative to close an enforcement gap related to minority shareholdings. The proposal—which would reform the EU Merger Regulation in order to give the Commission the power to scrutinise the acquisition of non-controlling minority interests—was one of the issues put out for consultation in the Commission’s White Paper, published July 2014. In a speech delivered Mar. 12, 2015, Vestager stated that the replies to the consultation had indicated that the proposal had not struck the right balance between the issues raised and the proposal’s procedural burden. The modalities of the system would now be discussed again within the Commission as well as Member States and other stakeholders. The White Paper had proposed a targeted transparency system that would enable parties to self-assess whether a transaction creates a competitively significant link and, if so, submit an information notice to the Commission. In the event that an information notice is submitted, the Commission would then decide whether to investigate the transaction.
On Feb. 17, 2015, the Court of Justice of the European Union (“CJEU”) brought an appeal before the Court of Justice against an order of the General Court that had found that the CJEU was the correct representative of the EU in an action for damages. The action for damages—that seeks to engage the non-contractual liability of the EU—arises as a result of a General Court failure to deliver a judgment within a reasonable time. As the latest development in a tussle that began in February 2006, the CJEU is contesting its liability for a breach committed by one of its own courts. The General Court’s responsibility for the excessively long proceedings (approximately five years and nine months) has already been confirmed.
On Mar. 9, 2015, the General Court confirmed the European Commission’s decision prohibiting the proposed merger between Deutsche Börse and NYSE Euronext. The merger—which would have brought together the two largest exchanges in the world for European financial derivatives— was blocked by the Commission in February 2012. The Commission’s investigation had found that the merger would lead to a significant impediment to effective competition by creating a near-monopoly position. In particular, the transaction would have led to a single vertical structure, trading and clearing more than 90% of the global market of European exchange-traded derivatives.
On Mar. 26, 2015, the Consumer Rights Act received Royal Assent. Schedule 8 of the Act, which amends the UK’s Competition Act, gives the UK Competition Appeal Tribunal (“CAT”) the power to hear stand-alone private damages actions as well as actions arising from an infringement decision with respect to a finding of a cartel or an abuse of dominance. Infringement decisions by both the UK Competition and Markets Authority (“CMA”) and the European Commission will be relevant for the purposes of a private damages action before the CAT. The Act permits collective proceedings to be brought before the CAT, either as opt-in or opt-out proceedings, and the CAT will also have the power to approve the settlement of claims in collective proceedings. Furthermore, the Act makes it possible for redress schemes to be approved by the CMA.
The measures are expected to come into force on Oct. 1, 2015.
Following a request for leniency from seven wallpaper producers for engaging in anticompetitive conduct, the French Competition Authority (FCA) recently sanctioned them in the amount of 5.27 million euros (US$6.6 million).
The anticompetitive information exchange took place between wallpaper suppliers when they were asked by a wholesaler to create a common wallpaper catalog, according to the FCA. The competing suppliers met several times, either formally or via telephone conferences, to discuss commercially sensitive information. The type of information disclosed not only concerned commercial terms of the catalog, but also future market behavior such as foreseeable tariff trends and prospective data to fix prices. The FCA regarded these practices as restrictions of competition by object, but noted that it was occasional and unsophisticated, which had a mitigating effect on the outcome. Read More
On Dec. 11, 2014, Advocate General Niilo Jääkinsen advised that a German court could retain jurisdiction over a cartel damages claim even after the only German defendant company has reached a settlement.
In May 2006, the European Commission fined the members of a hydrogen peroxide cartel. Several companies that claimed to have suffered damages as a result of this cartel assigned their rights to any damages from actions against the cartel members to a Belgian company called Cartel Damages Claims Hydrogen Peroxide SA (CDC). CDC brought a claim before a German regional court against six of the cartel members, one of which was a German company. Read More
On Dec. 4, 2014, the Court of Justice of the European Union heard Deutsche Bahn’s appeal against a September 2013 judgment by the General Court that 2011 inspections of its premises were legal.
Deutsche Bahn argued that EU inspection procedures were subject to insufficient oversight by the courts. The company stated that raids should be authorised by a judge prior to taking place, and argued that because opposition to an inspection could lead to substantial fines, there was no real right to oppose. Deutsche Bahn stated that any challenges to the legality and process of the raids would not repair the damage that they had suffered as a result of an unlawful raid, as officials would already have viewed any potentially incriminating evidence. Read More
The European Commission cleared the merger of cement companies Holcim and Lafarge by a Phase I decision on Dec. 15, 2015, despite their positions as the first and second-largest such companies in the European Union. The merger will create the largest cement manufacturer in the world, and the new company, LafargeHolcim, will be active in over 90 countries.
The EC decision on the Lafarge-Holcim merger followed a lengthy period of pre-notification discussions between the companies and the Commission, during which the Commission expressed its concerns that the merger would have a detrimental effect on competition. Read More
On Jan. 6, 2015, the French Supreme Court dismissed an appeal by Orange against the decision of the Paris Court of Appeal of July 2013, which confirmed the decision of the French Competition Authority (FCA) to fine telecoms operator Orange 60 million euros (US$68.8 million). The fine resulted from Orange’s abuse of a dominant position in French overseas territories French Guiana, Martinique and Guadeloupe. The original decision by the FCA had found that between 2000 and 2005, Orange’s wholly owned subsidiary, Orange Caraïbe, had attempted to prevent competitors from entering the market and to limit the growth of other operators. Orange Caraïbe’s anticompetitive behaviour was found to include signing exclusivity agreements with suppliers and using loyalty programs to encourage customers to sign longer-term contracts. Orange Caraïbe’s market share in these overseas territories is estimated to have been around 75 percent. Read More
On Jan. 13, 2015, the European Commission published a competition policy brief on Commission Directive 2014/14. Competition policy briefs are occasionally issued by the Competition Directorate-General of the European Commission to explain and discuss key cases and policy issues. This brief is designed to explain the background of the Directive and to explain the reasons for the changes that it has made.
The policy brief can be viewed here. For further newsletter reporting on the Directive, see here and here.
On Nov. 10, 2014, the Council of the European Union formally adopted a Directive on antitrust damages actions. The Directive, proposed by the European Commission, sets out rules designed to ensure that citizens and businesses, in the EU, who have suffered harm caused by an infringement of Article 101 or 102 TFEU, or equivalent provisions of national competition law, can effectively claim damages against the infringing party. The Directive, which was formally signed on Nov. 26, 2014, will enter into force late December 2014. Member States will then have two years to implement it at national level. For further reporting on the Directive, see here and here.
On Nov. 12, 2014, the Court of Justice of the European Union (CJEU) issued its judgment in Guardian v. European Commission. Guardian, fined €148 million (US$184 million) by the Commission in 2007 for its participation in the “Flat glass” cartel, asked the CJEU to set aside the General Court’s judgment dismissing the company’s original appeal to have its fine reduced. Upholding Guardian’s arguments that the Commission had infringed the principle of equal treatment, the CJEU reduced the fine imposed on Guardian by 30 percent to €103.6 million (US$128.8 million). The CJEU clarified that, for the purpose of fine calculation, the proportion of the overall turnover derived from the sale of products in respect of which the infringement was committed best reflects the economic importance of the infringement. Thus, when determining value of sales, the Commission must not draw a distinction between internal sales and sales to independent third parties. The exclusion of internal sales had, in the present case, led to the relative weight of one vertically integrated company (Saint Gobain) being reduced and that of Guardian being increased commensurately. Read More
On Nov. 5, 2014, the Competition Appeal Tribunal (CAT), the UK’s specialist competition judicial body, varied the scope of an interim relief order to include an additional platform to which BSkyB (Sky)―the holder of exclusive broadcasting rights to several premier sporting events in the UK―must offer to wholesale its core premium sports channels (CPSCs). The interim relief order stems from a 2010 decision of Ofcom, the UK’s communications regulator, which amongst other things regulates the pay TV sector. In its 2010 “Pay TV Statement,” Ofcom concluded that Sky had market power in the supply of CPSCs and was restricting supply to other pay TV providers in a manner that was prejudicial to fair and effective competition. To remedy the competition concerns, Ofcom decided to impose a term in the broadcasting licences of Sky such that it must offer to wholesale its CPSCs to retailers at a fixed price set by Ofcom. On the basis that Sky would appeal, the interim relief order was made, in 2010, to limit Sky’s wholesale must-offer obligation to only certain specified platform operators. Read More
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