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
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
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
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
On June 26, 2014, the criminal chamber of the French Supreme Court (Cour de Cassation) held that during antitrust procedures, the defendants’ rights of defense must be respected during the entire procedure, including during the preliminary inquiry and especially dawn raids. Cour de Cassation, 26 June 2014, n° 25.06.2014.
In this case, the date of the investigation is of crucial importance. The challenged dawn raid was held on March 18, 2008. At that time, the attendance of external lawyers during dawn raids was not provided for by French law, and their presence was thus not a right. In the interim, article L. 450-4 of the French code of commerce (which provides for the French dawn raid proceedings) was modified by an order on Nov. 13, 2008. The new rules provide that parties may be assisted by the counsel of their choice during antitrust investigations. Read More
Many manufacturers of branded goods, who have expressed concerns about the image of their products and worry that these are sold on the cheap, have sought to restrict the use of the Internet by their distributors. In particular, distribution agreements oftentimes include provisions that ban sales via online marketplaces such as eBay and Amazon Marketplace. The legality of such sales bans has repeatedly been questioned by the German competition authority (Bundeskartellamt) and before the German courts. The manufacturer adidas AG, for instance, recently changed its distribution agreements following pressure from the German competition authority to allow the members of its distribution system the sale of adidas sports gear via online platforms. Read More
In April 2014, the European Parliament approved legislation governing antitrust damages actions brought in the national courts of European Union Member States. The Parliament’s approval followed several years of debate, and was the last significant hurdle for developing a private damages law for the EU. The Directive requires the approval of the European Council, which will be a formality, at which point it will be formally adopted. EU Member States then have two years to implement it into their national laws. The Directive aims to make it easier for companies and consumers to bring damages actions against companies involved in EU antitrust infringements. The text of the Directive is available here.
There has been a great deal of commentary concerning the extent to which EU private damages law will become like that of the United States—with all of its benefits for those harmed by anticompetitive conduct and all of its burdens for those accused of engaging in the conduct. Now that the Parliament has approved the Directive and the scope and contours of the forthcoming EU law have become clearer, this article compares some of the key features of the new law with U.S. law in price-fixing cases. For simplicity, the article focuses on U.S. federal law, with references to state law only where important. Our discussion of the new EU law similarly omits reference to national laws. Although brevity is the soul of wit, it also can be a source of potentially incomplete short-cuts that can lead to debatable, or even misleading, conclusions. Accordingly, while this article provides a general overview and comparison of some important issues under U.S. and EU law, it is not meant to substitute for independent legal research and analysis. Read More
Note: This article was adapted from a speech given by Mr. Popofsky at the Oxford Centre for Competition Law & Policy in the UK on May 2, 2014.
Will opt-out class actions proposed by the UK Parliament’s Consumer Rights Bill bring the dreaded U.S.-style litigation culture to the United Kingdom? My personal assessment—that of a seasoned American antitrust practitioner—is that it’s doubtful.
But first, some background. Opt-out class actions are a form of what are known as collective actions or collective proceedings. Such actions are currently permitted in UK and European courts only on an opt-in basis—essentially a form of voluntary joinder—but then only in private claims for redress in the high court that follow on a prior public agency decision of wrongdoing under the competition laws of the UK or EU. Private antitrust actions in the UK are quite rare; only 27 such cases resulted in judgment in the 2005-2008 period. Only one collective action for damages has been brought on behalf of consumers. Read More
The European Commission has issued a Statement of Objections against Marine Harvest ASA for the early implementation of its acquisition of Morpol ASA. Marine Harvest is a Norwegian seafood company and Morpol is the largest salmon processor in the European Economic Area.
In December 2012, Marine Harvest acquired a 48.5 percent stake in Morpol from Friendmall Ltd. and Bazmonta Holding Ltd., and subsequently submitted a mandatory public offer for the remaining 51.5 percent of shares in January 2013. Following the settlement and completion of the mandatory offer on March 12, 2013, Marine Harvest acquired 87.1 percent of the shares in Morpol. On August 9, 2013, Marine Harvest notified the Commission of its acquisition of Morpol, and the transaction was conditionally approved on Sept. 30, 2013. Marine Harvest completed its acquisition of the remainder of Morpol’s shares in November 2013. Read More
On May 6, 2014, the European Union’s General Court dismissed an appeal filed by Unión de Almacenistas de Hierros de España (UAHE)—a Spanish association of iron warehouses—against a decision of the European Commission to refuse access to documents exchanged with the Spanish competition authority, the Comisión Nacional de la Competencia (CNC), during an investigation, but required the Commission to pay all costs in the appeal because of the length of time the Commission took to issue its refusal.
The CNC fined UAHE in May 2010, alleging that it implemented a system of concerted billing and surcharging practices by sending recommendations to its members on how to charge its services to customers. During the course of its investigation, the CNC sent documents and other information to the Commission pursuant to the framework of cooperation set out in Article 11(4) of Regulation 1/2003. UAHE was fined again by the CNC in a separate but related investigation in 2012. In February 2013, UAHE made a request to the Commission to hand over the documents and correspondence exchanged with the CNC during its 2010 investigation. Following various exchanges and requests for extension, the Commission responded to UAHE’s request in June 2013 stating that it could not provide a response, extending indefinitely the period for its responding to the requests. UAHE subsequently filed an appeal before the General Court alleging that the Commission denied access to the documents by failing to provide an answer within the timescale prescribed by EU transparency rules, and requested that the Court annul the Commission’s decision to extend and require the Commission to disclose the documents. Read More
In June 2013, Romano Pisciotti, an Italian national, was arrested at Frankfurt Airport in Germany while in transit from Nigeria to Italy. His arrest was executed upon request of the U.S. Department of Justice’s Antitrust Division (DOJ) for price-fixing charges, pursuant to a bilateral extradition treaty between Germany and the United States. On April 3, 2014, Pisciotti was extradited to the United States to appear before a U.S. District Court in Florida. Two weeks later, he pleaded guilty and was sentenced to serve 24 months in prison and to pay a $50,000 fine, but was credited the nine-month period already served in Germany pending the extradition. He also must cooperate with the DOJ in its ongoing probe of the marine hose industry.
For more than 20 years, until he left the company in 2006, Pisciotti was a manager at Parker ITR. In 2007, it was uncovered that Parker ITR had participated in a worldwide cartel with respect to marine hoses. The cartel agreed to allocate shares of the marine hose market, to use a price list for marine hose, and not to compete for customers with other sellers either by not submitting prices or bids or by submitting intentionally high prices or bids. Pisciotti and his co-conspirators would also provide information gleaned from customers about upcoming marine hose jobs to another conspirator, who would serve as a coordinator. The coordinator would act as a clearinghouse for bidding information, and was paid by the manufacturers for coordinating the conspiracy. Read More
Following complaints by two single-serve coffee capsule makers, the French Competition Authority (FCA) recently launched a market test relating to undertakings proposed by Nespresso with respect to single-serve coffee capsules. As a market leader for both coffee machines (73 percent market share) and for Nespresso-compatible coffee capsules (85 percent market share), the FCA was concerned at the risk of foreclosure of Nespresso’s competitors. First, Nespresso could have rendered its competitors’ capsules incompatible by not publishing details of technical updates of its machines. Second, Nespresso could abuse its dominant position by pushing consumers to use only Nespresso-branded capsules through various means, including the media, its “Nespresso Club,” labeling/branding on its machines or in Nespresso’s guarantee terms and user guides.
In response to the FCA’s concerns, on April 17, 2014, Nespresso offered commitments, to be enforced for seven years, as part of which the company will communicate technical updates to any third-party capsule maker that requests them, three months before implementation. Nespresso also will refrain from dissuading customers from using competing capsules in the press or through “Club Nespresso,” and will amend its guarantee terms.
The market test ended on May 19, and the FCA’s conclusions are expected soon.
On March 21, 2014, the European Commission adopted a new package of rules for the assessment of technology transfer agreements (TTAs) under EU competition law. The package consists of: (1) an updated Block Exemption Regulation for TTAs (TTBER) substituting the previous TTBER adopted in 2004; and (2) new guidelines to reflect the changes in the TTBER, the most recent case law and developments on the assessment of TTAs that fall outside the TTBER. The main changes focus on the scope of the TTBER, patent pools, termination clauses, exclusive grant-back obligations and settlements.
TTAs are licensing agreements where the licensor authorizes one or more licensee(s) to exploit its patents, know-how, utility models, design rights and software copyrights for the production of goods and services. Read More
In her recent opinion to the Court of Justice of the European Union (CoJ), Advocate General Juliane Kokott stated that loss resulting from “umbrella pricing” is recoverable from cartel members. Umbrella pricing is when a company that is not a member of a cartel raises its prices by more than the amount that would be expected under normal competitive conditions, as a result of the cartel. The opinion, from Jan. 30, 2014, follows a reference to the CoJ by an Austrian court hearing a damages action brought against providers of services for escalators and lifts (see COMP/38.823).
AG Kokott considered that loss resulting from umbrella pricing is not unforeseeable by the cartel members, and that the reparation of that loss is consistent with the objectives of Article 101 of Treaty on the Functioning of the European Union (TFEU). It would, she suggested, run counter to the practical effectiveness of EU competition rules for national civil law to exclude compensation for such loss. Read More
The Court of Justice of the European Union (CoJ) has held that collecting societies with exclusive rights to gather royalties for protected works do not contravene Article 56 (which establishes the freedom to provide services across the EU) of the Treaty on the Functioning of the European Union (TFEU). The CoJ found, however, that if the collecting society imposes fees that are appreciably higher than those charged in other Member States, or that are excessive in relation to the economic value of the service provided, this could be indicative of an abuse of a dominant position contrary to Article 102 of the TFEU.
The CoJ held that the territorial monopoly on gathering royalties might constitute an illegal restriction, but that this is justified because it meets a public interest pursued by EU law (i.e., the effective management of intellectual property rights) and does not go beyond what is necessary to achieve the public interest. It was not shown that another equally efficient but less restrictive method would allow the same level of copyright monitoring and protection as the current, territory-based system of copyright supervision.
The CoJ’s judgment, of Feb. 27, 2014, is available here.
The Court of Justice of the European Union (CoJ) ruled on Feb. 27, 2014 that the European Commission was entitled to refuse Energie Baden-Wurttemberg AG (EnBW) full access to the Commission’s file relating to the gas insulated switchgear cartel.
In January 2007, the Commission fined 11 companies for participating in a collusive tendering cartel in the gas insulated switchgear market. EnBW, an energy distribution company, requested global access to the Commission’s cartel file under EU Regulation 1049/2001 (the Regulation), which grants rights of public access to documents held by EU institutions. The Commission rejected EnBW’s request for access. In doing so, it relied on certain exceptions in the Regulation, namely that granting access to the documents would jeopardize the protection of inspections and investigations and of sensitive commercial interests of the parties to the proceedings. Moreover, the Commission found that there was no overriding public interest in granting access to the requested documents. EnBW appealed to the General Court, which annulled the decision on the ground that the Commission had erred in refusing EnBW’s request without carrying out specific analysis of each document in its file. Read More
On Feb. 25, 2014, the European Commission announced it is investigating the alleged provision of misleading market data by the parties to the Ahlstrom-Munksjö merger.
In October 2012, Ahlstrom and Munksjö notified the EC that the label and processing businesses of Ahlstrom Corporation and Munksjö AB were to be transferred to a new company, later named Munksjö Oyj. The Commission’s review of the proposed transaction found that the parties were the only manufacturers of heavyweight abrasive paper backings in the European Economic Area (EEA), and that their combined share of the global market was over 80 percent. In its decision of May 2013 (which will not be affected by the current proceedings), the Commission approved the transaction subject to the divestment of Ahlstrom’s abrasive paper business. Read More
On Feb. 13, 2014, the French National Assembly adopted the so-called “loi Hamon,” an Act of Parliament related to consumers’ rights and, supplier-distributor relations. Following the French Constitutional Council Decision confirming the act on March 13, 2014, it was published in the Official Journal of the French Republic on March 18, 2014.
France was one of the last major countries in Europe not to have a collective redress system, although it was discussed for several years by different French governments. The new law allows consumers who suffered similarly or identically from a professional’s breach of its legal or contractual obligations, to introduce an action against the professional. The class action may only take place in the case of a sale of goods, a provision of services, or a breach of any competition law provisions (abuse of dominant position or a cartel established by a competition authority), as only compensation for pecuniary losses may be claimed (no punitive damages). Only a few consumer associations are authorized to bring an action on behalf of consumers. Read More
In March 2014, following its provisional findings in the previous month, the UK Competition Commission (UKCC) formally cleared two mergers that resulted in the reduction of competitors in the relevant markets from four to three and three to two respectively.
The completed joint venture between Tradebe Environmental Services Limited (Tradebe) and SITA UK Limited (Sita), and the anticipated acquisition by Telefonaktiebolaget LM Ericsson (Ericsson) of Creative Broadcast Services Holdings (2) Limited (Creative), were referred to the UKCC by the UK Office of Fair Trading (OFT) in late 2013. The OFT considered that the transactions raised realistic prospects of a substantial lessening of competition: (1) in the case of the Ericsson acquisition, in the market for the provision of complex, highly reactive outsourced linear playout services; and (2), in the case of the Tradebe/Sita joint venture, in relation to the collection, processing and disposal of healthcare risk waste for “large quantity generator” customers in the Birmingham and Gloucester areas. Read More
The UK Office of Fair Trading (OFT) has accepted binding commitments from Booking.com B.V., Expedia, Inc. and InterContinental Hotels Group plc, which address concerns that restrictions on discounting a hotel’s room-only accommodation rate may limit competition between online travel agents (OTAs) and between OTAs and hotels, and may create barriers to entry into the market for new OTAs.
The OFT launched a formal investigation in September 2010 following the receipt of information suggesting that vertical arrangements between OTAs and hotels could be in breach of UK and EU competition law.
To address the OFT’s concerns, Booking.com, Expedia and IHG agreed to ensure that their existing and future commercial arrangements allow OTAs and hotels to offer reductions on headline room-only rates, so long as customers sign up to the membership scheme of an OTA or hotel and make one undiscounted booking with the OTA or hotel in question prior to becoming eligible for such a reduction.
The OFT believes the commitments will allow greater competition on price between OTAs and between OTAs and hotels and will allow new OTAs to enter the market.
The OFT’s press release of Jan. 31, 2014 is available here.