Douglas Lahnborg and Matthew Rose present a comparative discussion on the recently issued National Security and Investment White Paper, which proposes a significant expansion of the UK government’s powers to scrutinize foreign investment beyond those available in other leading economies. The white paper introduces powers to intervene in a broad range of transactions in any sector, regardless of deal value, the transaction parties’ market shares, or their revenues. If the proposals are brought into force in their current form, the UK regime would be one of the most stringent in the world, with wide-ranging implications for foreign and domestic companies and projects in sensitive sectors, including technology, energy, infrastructure, telecommunications, real estate and financial services. Read more here.
Last year on this Blog we wrote about the uptick in enforcement action by European competition authorities against violations of merger control procedure (see here).
Yesterday, the UK Competition and Markets Authority (“CMA”) indicated that this trend is set to continue, issuing a fine of £100,000 for a breach of an Interim Order imposed on Electro Rent in its acquisition of Microlease. This is the first time the CMA has fined a company for such a procedural breach.
On the face of it, the fine seems harsh given that the relevant action – serving notice of termination of a lease without the CMA’s prior consent – was discussed with the appointed Monitoring Trustee prior to coming into effect. Indeed, the European Court of Justice (“ECJ”) recently confirmed that parties may take certain actions without violating the standstill obligation imposed under the EU Merger Regulation – including terminating agreements – where such actions do not contribute to the implementation of a transaction. In doing so, the ECJ’s ruling confirmed the commonly held view that merging parties are permitted to take certain steps allowing them to prepare for implementation of a transaction without violating merger control procedural rules.
Given the developing case law on standstill obligations, companies involved in M&A will need to revisit pre-completion protocols, noting that the EU approach seems to be diverging from the CMA’s somewhat more rigid approach to merger control. READ MORE
The UK government considers that transactions in the following sectors can raise national security concerns:
1. quantum technology;
2. computing hardware; and
3. the development or production of items for military or military and civilian use.
In order to allow the UK’s Secretary of State to intervene in transactions in these sectors, the UK government has proposed amendments to the Enterprise Act 2002 that would expand the Competition & Markets Authority’s (“CMA”) jurisdiction to review transactions in these sectors from a competition perspective. READ MORE
Online platforms have become a crucial infrastructure for businesses. They enable small businesses to have easy access to millions of potential customers and create an unprecedented choice of products and services for them. According to a recent Eurobarometer survey on the use of online marketplaces and search engines by small and medium-sized enterprises (“SMEs”), 42% of the respondents declared that they use online platforms and marketplaces to sell their products or services. This survey also indicates that 82% of the respondents rely on search engines to promote and sell their products or services. In short, online platforms play a key role in the growth of the economy and help the digital transformation of small businesses. READ MORE
Orrick antitrust practice team attorneys Matthew G. Rose, Jay Jurata and Emily Luken recently published an article in the e-Competitions Bulletin August 2017 discussing the implications of the UK High Court of Justice ruling that enjoins Huawei from selling wireless telecommunications products in Britain due to Huawei’s failure to enter into a patent license for Unwired Planet’s worldwide portfolio of standard-essential patents (SEPs), even though Huawei was willing to enter into a license for Unwired Planet’s United Kingdom (UK) SEPs.
The article examines the potential competitive harms that would result from a regime in which licensees are required to take worldwide SEP licenses.
On 6 September 2017, the Court of Justice of the European Union (“CJEU”) handed down its long-awaited ruling in Intel v Commission (the “Ruling”). The Ruling, which sets aside the appealed judgment of the EU General Court and orders the case to be re-examined for failing to consider the effects of anticompetitive conduct on competition, has potentially broad implications for how the European Commission (“Commission”) conducts its analysis and reasons its decisions in ongoing and future EU antitrust investigations.
- The Ruling signals a return of “effects-based” analysis in EU antitrust cases and a move away from a “form-based” approach where certain conduct is deemed per se illegal.
- The Ruling not only clarifies how the General Court should assess appeals of Commission decisions, but is likely to have implications for how the Commission approaches its analysis and reasons its decisions in EU antitrust cases going forward. In particular, the burden of proving that specific conduct or practices have anticompetitive effects is placed firmly with the Commission.
- Intel’s victory may embolden other entities facing similar allegations to defend their corners more aggressively.
- This is not the end of the road. It cannot be ruled out that the General Court, when it re-examines the case and applies the appropriate analysis, comes to the same ultimate conclusions and upholds the Commission’s original fine.
Is a wind of change blowing through the European merger control enforcement landscape?
The response is yes, certainly.
Very recent cases or investigations launched by the European Commission alleging potential violations of merger control procedural rules by notifying parties have sent a clear signal to companies: you’d now better think twice before breaking the merger control procedural rules.
It is even truer when one considers that this may well be a trend throughout Europe. These cases have echoed back to recent similar cases, pending or closed, at the member state level (the Altice case in France, the CEE Holding Group limited/ Olympic International Holdings Limited case in Hungary, the AB Kauno Grudai / AB Vievio Paukstynas case in Lithuania, and a very recent bakery case in Slovakia). READ MORE
On April 13, 2017 in Janssen Cilag S.A.S v. France, the European Court of Human Rights (the “Court”) confirmed the validity of search and seizure operations carried out by the French Competition Authority at Janssen Cilag’s company premises. In keeping with its findings in Vinci Construction and GTM Génie Civile et Services v. France,  the Court considered that the broad and indiscriminate seizure by the FCA amounted to interference with the rights guaranteed by Article 8 of the European Convention of Human Rights (the “Convention”), but that the interference was while pursuing a legitimate aim and therefore “in accordance with the law.”
On March 16, 2017, the European Commission (“EC”) introduced a new tool to make it easier for individuals to alert the EC about competition law violations, mainly secret cartels, while maintaining the anonymity of the whistle-blowers.
The EC presented the objectives of the new tool (I) and how it works (II); this tool, which is not new in Europe, leaves several questions unanswered (III).
Regulations implementing EU Directive 2014/104 (the “Damages Directive”) have come into force in the UK. The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (SI 2017/385) (the “Regulations”) entered into force on 9 March 2017 and were published on 14 March 2017. The Regulations amend the UK Competition Act 1998 by adding a new section 47F and new Schedule 8A.
In Sullivan v. Barclays PLC, Judge P. Kevin Castel, of the Southern District of New York, raised an interesting point regarding the relationship between the viability of antitrust claims subject to the Foreign Trade Antitrust Improvement Act (FTAIA) and constitutional requirements for personal jurisdiction: The FTAIA “arguably may apply a less-exacting standard than the due process threshold to exercise personal jurisdiction over a foreign defendant.” In other words, even though the standard for the FTAIA might be met to allow an antitrust claim to proceed against a foreign defendant, the court nonetheless might not be able to assert personal jurisdiction. The question whether the FTAIA should be read more strictly than has been the case to conform to due process requirements, or that foreign defendants should be more diligent in challenging personal jurisdiction, are interesting ones that warrant further analysis.
On January 12, 2017, the Court of Justice of the European Union (“CJEU”) dismissed Roullier group’s appeal and thereby confirmed a fine of €59,850,000 imposed by the European Commission (“EC”) in the phosphates cartel case. This blog post summarizes the decision and discusses the CJEU’s reasoning, which provides valuable guidance to a firm in a cartel investigation that is evaluating a settlement proposal from the EC. In particular, the firm must weigh the fact that, pursuant to the CJEU’s decision, the EC may ultimately impose fines greater than those it proposed in a rejected settlement offer, even if it determines that the firm’s cartel participation was significantly less than it thought at the time of settlement discussions.
Last September, we discussed the U.S. Court of Appeals for the Second Circuit’s opinion in In re Vitamin C Antitrust Litigation vacating a $147 million judgment against Chinese vitamin C manufacturers based on the doctrine of international comity. That case stemmed from allegations that the defendants illegally fixed the price and output levels of vitamin C that they exported to the United States. In reversing the district court’s decision to deny the defendants’ motion to dismiss, the Second Circuit held that the district court should have deferred to the Chinese government’s explanation that Chinese law compelled the defendants to coordinate the price and output of vitamin C.
The possibility for a claim to be brought against the European Union (the “EU”) as a result of “damage” caused by its institutions is enshrined in Article 340 of the Treaty on the Functioning of the European Union (“TFEU”). In a General Court judgment of 10 January 2017, Case T-577/14 Gascogne Sack Deutschland and Gascogne v European Union (EU:T:2017:1), the appellants successfully brought a claim for material and non-material harm suffered as a result of the “excessive” length of the judicial proceedings in the context of an appeal against a European Commission (“Commission”) decision of 30 November 2005.
The timing of the process was as follows. On 23 February 2006, two entities from the Gascogne group filed appeals before the General Court against the Commission decision of 30 November 2005 finding the existence of a cartel in the plastic industrial bags sector in a number of Member States. The written procedure of the General Court proceedings in each of these cases ended in February 2007 and the oral procedure began in December 2010. The appeal was not dismissed by the General Court until 16 November 2011. READ MORE
The UK Competition and Markets Authority (“CMA”) has a duty to refer a transaction for an “in depth” phase 2 investigation in instances where it believes that there is a realistic prospect of a transaction resulting in a “substantial lessening of competition”, subject to certain exceptions. This includes a de minimis exception in markets of “insufficient importance”, where the costs involved in investigating the transaction would be disproportionate to the size of the market concerned.
On January 13, 2017, the U.S. Department of Justice and the Federal Trade Commission issued their updated Antitrust Guidelines for the Licensing of Intellectual Property, first issued in 1995, which explains how the two agencies evaluate licensing and related activities involving patents, copyrights, trade secrets and know-how. Although the agencies have issued a variety of reports since 1995 regarding antitrust and IP issues, this is the first comprehensive update of the Guidelines. The final updated Guidelines do not differ significantly from the proposed Guidelines released in August 2016, which we analyzed in this blog post.
Also on January 13, 2017, the DOJ and FTC issued their revised Antitrust Guidelines for International Enforcement and Cooperation, first issued in 1995 as the Antitrust Enforcement Guidelines for International Operations. These Guidelines explain the agencies’ current approaches to international enforcement policy and their related investigative tools and cooperation with foreign enforcement agencies. The revised Guidelines differ from the 1995 Guidelines by adding a chapter on international cooperation, updating the discussion of the application of U.S. antitrust law to conduct involving foreign commerce (e.g., the Foreign Trade Antitrust Improvement Act, foreign sovereign immunity, foreign sovereign compulsion, etc.), and providing examples of issues that commonly arise.
The development of a digital single market is a key objective for the European Union. As Jean-Claude Juncker, President of the European Commission (“EC”) said in September, “We need to be connected. Our economy needs it.” Although this economic policy objective was initiated when the EC published its communication on the Digital Single Market Strategy for Europe in 2015, the various proposals it contains need to be formally adopted and implemented in the EU. This process is now underway.
The EU’s commitments contained in the Telecoms Single Market Regulation of 2015 to end roaming charges for periodic travel in the EU required the EC to adopt rules by 15 December 2016. A transition period—starting from 30 April 2016 to 15 June 2017—has been established to make the abolition of roaming charges sustainable throughout the EU without an increase in domestic prices. On December 8, the EC sent an implementing draft on the end of the roaming charges to the representatives of Member States (via the Communications Committee (“COCOM”)). They voted on the text on December 12, and the EC will adopt these new rules regarding the retail market in the coming days. READ MORE
The Competition and Markets Authority (“CMA”) has today announced that it has secured the first disqualification of a director of a company which has infringed competition law. Under the Company Directors Disqualification Act 1986 (as amended by the Enterprise Act 2002), the CMA can apply to the court for a disqualification order to be made against a director in cases where a company has breached competition law and the director’s conduct makes him or her “unfit to be concerned in the management of a company”. This is the first time that the CMA has utilised this power.
In this case, poster supplier Trod breached competition law by agreeing with a competitor that they would not undercut each other’s prices for posters and frames sold online, with the agreement between the competitors being implemented using automated re-pricing software. The company received a fine of £163,371 for this behaviour.
On November 8, 2016, the French Competition Authority (“FCA”) imposed the highest “gun-jumping” national and worldwide fine ever, €80 million, on Altice-Numericable, a major French telecommunications operator, in relation to its 2014 acquisitions of SFR (“Société Française du Radiotéléphone”) and OTL (“Omer Telecom Limited”).
“This is a world first decision when considering the amount of the sanction and the seriousness of the circumstances,” commented Isabelle de Silva, the President of the FCA since last October.
After gathering information from nearly 1800 stakeholders from all 28 EU Member States and collecting around 8000 distribution agreements, the EU Commission published on 15 September a preliminary report on the findings of its ongoing competition sector inquiry into e-commerce.
The inquiry was launched by the Commission in May 2015, after finding that despite the growing significance for e-commerce across EU countries over the last years (approximately 50% of the population of the Union shopped online in 2014), cross-border online trade remained limited.
While such limitations may have been attributable to language barriers, consumer preferences or differences in legal frameworks between Member States, the Commission sought to investigate the sector based on indications that companies active on the e-commerce market may be engaged in anticompetitive agreements.