French Competition Authority Fines Wallpaper Producers for Anticompetitive Information Exchange

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

Advocate General: Removal of the Only German Participant in a Cartel Damages Case From Litigation Does Not Prevent the Claim From Being Pursued in Germany

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

Court of Justice Scrutinizes Right of the European Commission to Conduct Raids on Companies Suspected of Breaking Antitrust Rules

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

European Commission Clears Holcim/Lafarge Merger at Phase I

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

French Supreme Court Dismisses Appeal by Orange Against €60 Million Fine for Subsidiary’s Abuse of Dominant Position in Overseas French Territories

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

European Commission Publishes Competition Policy Brief on New Damages Directive

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.

EU Council Adopts Directive on Antitrust Damages Actions

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.

Court of Justice Emphasizes in Guardian Case That There Must Be No Discrimination When Fines Are Calculated

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

UK Competition Appeal Tribunal Extends Scope of BSkyB’s Wholesale Must-Offer Obligation in the Pay TV Sector

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

General Court Confirms EC Decisions Ordering Inspections at Premises of Orange

In its judgment of Nov. 25, 2014, the General Court of the European Union rejected arguments put forward by Orange disputing the proportionality and necessity of decisions by the European Commission requiring Orange to undergo inspections. Orange, the subject of a Commission inspection in July 2013, had argued that the Commission did not have the right to order the inspection since the French Competition Authority had already investigated identical allegations and found Orange’s conduct to be in compliance with EU competition rules. The Court pointed out that the Commission is not bound by decisions taken by a national court or national authority pursuant to Articles 101 and 102 TFEU. The Commission may at any time make decisions relating to competition, even where such decisions conflict with national decisions. The Court also noted that Member State national authorities are not empowered to take negative decisions declaring that violations of the EU competition rules have not occurred. Moreover, it cannot be concluded from an absence of intervention that the Commission has accepted the validity of a decision by a national authority (national competition authorities are obliged to inform the Commission no later than 30 days before adopting certain types of decisions). Read More

China and EU Reach Amicable Settlement on Trade Defense Investigation Into Chinese Telecoms

On Oct. 18 2014, at the 28th session of the China-EU Trade and Economic Joint Committee, intensive discussions led by Chinese Minister of Commerce Gao Hucheng and EU Trade Commissioner Karel De Gucht were concluded with an amicable settlement of the Commission’s trade defence investigation into Chinese telecoms. The Commission’s investigation threatened to impose significant EU anti-subsidy countervailing duties on Chinese exporters of mobile telecommunications networks equipment. The value of Chinese exports of the equipment to the EU is over €1 billion (US$1.2 billion) per year. The main points of the settlement include tasking an independent body with the monitoring of the Chinese and EU telecoms networks markets; guaranteeing access to the relevant Chinese standard-setting body for European companies without discrimination; and equal treatment of companies bidding for publically funded research and development projects. Read More

EC Imposes Fines of €138 Million on Smart Card Chips Cartel

On Sept. 3, 2014, the European Commission (Commission) announced fines totaling €138 (US$ 174 million) on Infineon, Samsung, Renesas and Philips for breaching Article 101 of the Treaty on the Functioning of the European Union (TFEU) by coordinating their market behavior in the smart card chips sector. The Commission found that, between September 2003 and September 2005, the cartel had exchanged commercially sensitive information on pricing, customers, contract negotiations, production capacity and future market conduct. The cartel was found to have operated across the European Economic Area (EEA).

The Commission had previously entered into settlement negotiations with the cartel participants pursuant to the Commission’s 2008 Settlement Notice. However, this process was discontinued in 2012 following a lack of progress in settlement discussions.

As “whistleblower,” Renesas received full immunity under the Commission’s 2006 Leniency Notice, having notified the Commission of the cartel. Samsung’s fine was reduced by 30 percent for cooperating with the investigation. Since the infringement, Philips has divested its smart card chips business but remains liable for its conduct during the period of the infringement.

The Commission’s press release announcing the fine is available here.

Zipper Maker YKK Wins Fine Reduction at EU’s Highest Court

On Sept. 4, 2014, the Court of Justice of the European Union (CJEU) rejected an appeal by the YKK Group (YKK) against the judgment of the General Court that the European Commission (Commission) had been correct in its decision relating to the fasteners cartel, in which YKK was found to have participated. In September 2007, the Commission announced fines totaling €329 million (US$412 million) on the members of the cartel, which was found to have committed serious breaches of EU competition law, including fixing prices, coordinating price increases, sharing markets, allocating customers, and exchanging commercially sensitive market information in the zipper and other fasteners markets.

YKK appealed on four grounds: 1) that the Commission and General Court had incorrectly applied the 1996 Leniency Notice rather than the 2002 Leniency Notice; 2) that the General Court had given inadequate reasons for supporting the Commission’s decision to set the starting amount of the fine at €50 million (US$62 million); 3) that the Commission and General Court had imposed fines that exceeded the upper limit of 10 percent of worldwide group turnover; and 4) that the Commission and the General Court had incorrectly applied a deterrence multiplier to the size of the fine in recognition of YKK’s economic power. Read More

CJEU Affirms Commission’s Decision Against MasterCard Interchange Fees

On Sept. 11, 2014, the Court of Justice of the European Union (CJEU) rejected MasterCard’s appeal against the General Court’s 2012 judgment that the European Commission (Commission) had been correct in its assessment that MasterCard’s multilateral interchange fees (MIFs) breached Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). CJEU also simultaneously dismissed cross-appeals from Royal Bank of Scotland and Lloyds Banking Group.

In December 2007, the Commission found that the decisions of the MasterCard payment organization in setting MIFs constituted decisions by an “association of undertakings” falling within the scope of Article 101(1) TFEU, and that the MIFs had appreciable restrictive effects on competition, which affected trade between EU Member States. The Commission concluded that the MIFs were not objectively necessary for MasterCard’s system to operate and to compete. MasterCard appealed to the General Court in the first instance and its appeal was dismissed. Read More

CJEU Narrows Scope of “By Object” Antitrust Infringements

On Sept. 11, 2014, the Court of Justice of the European Union (CJEU) upheld an appeal by Groupement des Carte Bancaires (GCB) against a General Court judgment that had concluded that fees charged by GCB on the issuing of cards were anticompetitive and a breach of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). The fees were higher for banks that were not sufficiently active in installing ATMs or making contracts with acquiring merchants. In practice, such banks were new members of GCB, and included online banks and the banking arms of major retailers.

The CJEU held that the General Court had erred in law with regard to the criteria that it used to determine that the fee agreement constituted a “by object” restriction of competition. The General Court held that by object restrictions must not be interpreted restrictively, and that the wording of the fee agreement made it clear that it was restrictive of competition by object. In contrast, the CJEU stated that only certain types of coordination, where the undertaking clearly reveals such a degree of harm to competition that there is no need to examine their effects, can be found to be restrictions by object. Read More

Vestager Appointed as EU Competition Commissioner

On Sept. 10, 2014, the European Commission (Commission) President-elect Jean-Claude Juncker nominated Margrethe Vestager, former deputy prime minister of Denmark, for the position of new EU Competition Commissioner. Subject to approval of the European Parliament, she will succeed Joaquín Almunia when his term ends on Oct. 31. On Oct. 2, Vestager faced a confirmation hearing in the European Parliament and answered questions on the ongoing Google investigation, the impact of competition fines on small and medium-sized enterprises and how competition policy can keep up with technological developments. The European Parliament will vote on the suitability of all appointees for the new Commission on Oct. 22. If, as is expected, all appointees are confirmed, Vestager will take office in November.

Vestager, 46, served as Denmark’s deputy prime minister as well as minister for Economics and Interior Affairs between October 2011 and August 2014, when she was appointed as the Danish candidate for the new Commission. Vestager represents the Danish Social Liberal Party (DSLP, also known as Radikale Venstre, or Radical Left), which she has led since 2011. Vestager was elected to the Danish Parliament in 2001. Between 2001 and 2011 she was chairwoman of the DSLP’s parliamentary group, and under former Prime Minister Poul N. Rasmussen, she served as minister of Education and Ecclesiastical Affairs from 1998 until 2001. Read More

European Court Rejects Appeal Challenging the Commission’s Dawn Raid Powers

On June 25, 2014, the Court of Justice of the European Union (CJEU) dismissed a challenge brought against the European Commission (Commission) by the French cable manufacturer Nexans SA in which it sought to challenge the Commission’s powers to seize documents in dawn raids.

In January 2009, the Commission launched dawn raids at the premises of Nexans France in relation to its potential participation in a suspected cartel in the market for high-voltage cables. The documents inspected during the Commission’s raid included business records that concerned projects outside EU markets.

Nexans challenged the inspection decision, and its appeal was partially upheld by the General Court in 2012. The General Court found that the Commission did not have reasonable grounds to seize documents in relation to products other than high-voltage underwater and underground electric cables and associated materials. However, the Commission decision with regard to the geographical scope of its powers was upheld by the General Court. Read More

European Court Upholds Fine Against Electrabel for ‘Gun-Jumping’

On July 3, 2014, the Court of Justice of the European Union (CJEU) upheld the decision of the European Commission (Commission) to impose a €20 million fine (about U.S.$27 million) on Electrabel SA for implementing its acquisition of Compagnie Nationale du Rhone (CNR) without prior approval.

Electrabel acquired 17.68 percent of the shares and 16.88 percent of the voting rights in CNR in June 2003 and increased its shareholding to 49.95 percent of shares and 47.92 percent of the voting rights on Dec. 23, 2003. In August 2007, Electrabel commenced discussions with the Commission as to whether it had acquired control of CNR, and formally notified the Commission of its acquisition of CNR from Electricité de France (EDF) on March 26, 2008. Read More

European Commission Sets Out Proposals for Changes to Merger Rules

On July 9, 2014, the European Commission (Commission) launched a public consultation on proposals contained in its White Paper, “Towards More Effective EU Merger Control.” The proposals aim to introduce a tailor-made review system targeting non-controlling minority shareholdings that may affect competition and to simplify existing referral procedures.

The proposals surrounding minority shareholdings aim to address the current “enforcement gap” that has emerged due to the Commission’s current lack of power to address competition concerns arising from acquisitions of minority shareholdings. The Commission proposes to introduce a light review system requiring parties to submit an information notice containing basic information about a proposed acquisition to allow the Commission to determine which cases could potentially be problematic and therefore suitable for full review. The proposals would bring the Commission’s powers in line with those held by regulators in some EU Member States (regulators in the UK, Austria and Germany are currently competent to assess the national effects on competition of acquisitions of minority shareholdings) and would allow such acquisitions to be reviewed where they have European Economic Area (EEA)-wide effects. Read More

Commission Adopts Revised Rules for Agreements of Minor Importance (De Minimis)

On June 25, 2014 the European Commission (Commission) issued a revised Notice on agreements of minor importance (De Minimis Notice), which are not subject to the prohibition of Article 101(1) of the Treaty of the Functioning of the European Union (TFEU). The revised Notice is accompanied by a separate guidance paper that contains a checklist of “by object” restrictions that do not benefit from the protection granted in the De Minimis Notice.

The Court of Justice of the European Union (CJEU) has consistently held that the prohibition in Article 101(1) is not applicable where the impact of the agreement on competition is not appreciable. The objective of the De Minimis Notice is to provide guidance on whether the impact of an agreement is “appreciable” and whether it therefore may be caught by Article 101(1). The original 2001 notice established that restrictive agreements entered into between undertakings whose combined market share is below certain thresholds are not capable of producing “appreciable” effects. The thresholds were fixed at 10 percent for agreements between competitors and at 15 percent for agreements between non-competitors, except were the relevant market was characterized by networks of parallel agreements, in which case the threshold was 5 percent. The thresholds remain unchanged in the revised notice. Read More