Disclosure of Leniency Documents. An increasing number of private damages claimants in European jurisdictions are requesting access to documents obtained by competition authorities under cartel leniency programs. Following the EU Court of Justice’s 2011 judgment in Pfleiderer (Case C-360/09), it is for national courts to weigh whether such documents should be disclosed. Pfleiderer returned to the German courts, where disclosure was ultimately denied on the basis that it would damage the leniency procedure. It was argued that cartelists would be less likely to “blow the whistle” if there were a risk of incriminating evidence being disclosed in damages actions. The European Commission (“Commission”) has intervened in cases in the United Kingdom, United States, and Canada, arguing against disclosure of leniency documents. It has largely been successful in its interventions. Recently, in an ongoing UK case brought by National Grid against participants in the gas-insulated switchgear cartel, the court decided to review the relevancy of leniency documents to determine whether they should be disclosed (National Grid Electricity Transmission Plc v ABB Ltd. and others). In its submission, which has been made public, the Commission articulates the risks of damaging the leniency procedure, arguing that leniency documents should only be sought by claimants as a last resort. The court’s decision on disclosure is pending.
European Commission Blocks NYSE Euronext/Deutsche Börse Merger. On February 15, 2011, NYSE Euronext (NYSE) and Deutsche Börse (DB) announced their intent to create the world’s largest stock exchange, and notified both U.S. and EU competition authorities of their intent. The U.S. Department of Justice cleared the merger in December 2011 on the condition that DB divest its share in Direct Edge, the fourth-largest U.S. stock exchange. The European Commission, however, analyzed the effects of the proposed merger on exchange-traded derivatives (ETDs) and found that ETDs constituted a separate market. Specifically, the Commission noted that Eurex (operated by DB) and Liffe (operated by NYSE) were the two largest competitors in facilitating the trade of European ETDs and that the merged entity would hold a 90% share of the global market for European ETDs, thereby significantly restricting competition. The parties offered commitments, which included the sale of part of Liffe’s European single stock derivatives business as well as allowing third parties to access Eurex. Nevertheless, the Commission decided to prohibit the deal on the basis that only the outright sale of either Eurex or Liffe would alleviate competition concerns. This is only the fourth time the Commission has prohibited a deal under current merger legislation (although several deals have been abandoned voluntarily in anticipation of a prohibition).
EU Judge Moots Effects-Based Approach for Cartel Fines. An EU General Court judge recently delivered a speech at the European Competition Forum calling for a review of the guidelines used by the Commission to set cartel fines. Under current Commission penalties guidelines, the Commission looks at the value of sales and the gravity and duration of the cartel to establish the basic level of fine. Speaking on February 2, 2012, Judge van der Woude said he would “invite the review of the guidelines and focus on the effects of the [cartel] infringement.” The current guidelines, he said, largely neglect the actual effect of the cartel on the market, specifically the damage done to downstream customers and ultimate consumers. Referring to a recent case that upheld the status quo, he stated that more nuanced rules would help judges review Commission penalties (Case C-272/09P KM Europe v. Commission). Although the Commission initially sets cartel penalties, the EU courts provide the fora in which parties may challenge Commission decisions. A departure from the existing penalties system is likely to be contentious, especially if a more effects-based route were pursued, largely because the Commission would run the risk of, at least partly, replacing the role of national courts in determining the scope of damages caused to market participants.