Government Enforcement

European Crackdown on Violations of Merger Control Procedural Rules Continues

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.[1] 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.[2] 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

Stock Compensation May Trigger HSR Filing

The requirements of the Hart-Scott-Rodino (“HSR”) Act and Rules are well known to companies that engage in significant M&A transactions. But less well known is their applicability to acquisitions of stock by individuals as part of compensation practices. Especially where relatively young and successful companies are involved, HSR obligations may unexpectedly arise where equity compensation is given to founders, board members, executives, and other employees (whom we will group together and call “Insiders”). Companies and individuals potentially caught in the HSR process for this reason should ensure they are aware of the trigger rules, as a failure to file can result in significant fines.
READ MORE

Enhancing Fairness in Platform-to-Business Relations in the EU Through a Change of Legal Landscape

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”),[1] 42% of the respondents declared that they use online platforms and marketplaces to sell their products or services.[2] 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

Don’t Hold Back: FTC Offers New Guidance on HSR Filing Obligations

As discussed previously on this blog, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain proposed transactions to submit detailed premerger notification filings and wait for clearance before consummating the deal. To facilitate the antitrust review, merging companies that meet the HSR thresholds are required to submit a wealth of information about their businesses and the proposed transaction, including annual reports, market analyses, and agreements and other documents bearing on the deal. Despite these broad requirements, the FTC found that some merging companies were withholding side agreements relevant to the antitrust review process on the theory that they were ancillary to the main agreement and/or protected by a common interest privilege or joint defense agreement. READ MORE

Antitrust Analysis of Joint Ventures: How Big Is Too Big?

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues.  In the second installment, we unpacked some of the major antitrust issues surrounding the threshold question of whether a JV is a legitimate collaboration.  The third post in the series discussed ancillary restraints–what they are and how they are analyzed. READ MORE

Putting China’s Fair Competition Review System Into Action

National emblem of the People's Republic of China Law360 Article on Putting China’s Fair Competition Review System Into Action by Shelley Zhang and David Goldstein

In June 2016, China promulgated a Fair Competition Review System (FCRS), which is intended to ensure that competition agencies foster competitive markets in China.  Recently, China’s competition agencies jointly issued the Implementing Rule of the Fair Competition Review System, which provides guidance regarding the FCRS,  including review mechanisms and procedures, review criteria, policy guidance, and supervision and accountability.  Orrick partners Shelley Zhang and David Goldstein have published an article, “Putting China’s Fair Competition Review System Into Action,” in Law360 today providing an overview of the implementing rules.  Click here to access the article.

 

 

The Chips Are Down: Intel’s Victory in the European Court of Justice Has Implications on How Anticompetitive Conduct Is Analysed in EU Antitrust Cases

 

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”).[1] 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.

Key Takeaways

  • 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.

READ MORE

European Competition Authorities Crack Down on Violations of Merger Control Procedural Rules

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

Antitrust Analysis of Joint Ventures: Ancillary Restraints

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues. In the second installment, we unpacked some of the major antitrust issues surrounding the threshold question of whether or not a JV is a legitimate collaboration. This third post in the series discusses ancillary restraints—what they are and how they are analyzed. READ MORE

Antitrust Issues on Collection and Use of Big Data in Japan

On June 6, 2017, a committee within Japan’s Fair Trade Commission published a report on competition policy and big data. The report is based on a concern that dominance of big data by certain major technology companies could impede competition and innovation, and addresses how Japan’s Antitrust Act (Act) could be applied in this context.

A main focus of the report is how certain cases of “collection of data” and “use of data” could trigger antitrust issues. READ MORE

Janssen Cilag S.A.S v. France: Approval of Broad and Indiscriminate Seizures by the European Court of Human Rights

European Court of Human Rights Logo Janssen Cilag S.A.S v. France: Approval of Broad and Indiscriminate Seizures by the European Court of Human Rights

On April 13, 2017 in Janssen Cilag S.A.S v. France,[1] 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, [2] 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.”

READ MORE

FTC Sues Louisiana Appraisers for Price Fixing

Close-up Of Person Hand Filling Real Estate Appraisal Form With House Model At Desk FTC Sues Louisiana Appraisers for Price Fixing

On May 31, 2017, the FTC filed an administrative complaint alleging that the Louisiana Real Estate Appraisers Board (“Board”), a state agency controlled by real estate appraisers, violated Section 5 of the FTC Act by fixing real estate appraisal fees paid by appraisal management companies (“AMCs”). AMCs act as agents for lenders in arranging real estate appraisals and are licensed and regulated by the Board.  The FTC alleges that the Board required AMCs to pay appraisal fees that are equal to or exceed the median fees identified in survey reports commissioned and published by the Board.  This action represents the FTC’s first enforcement action against a state agency since its victory in North Carolina State Board of Dental Examiners v. FTC, 135 S.Ct. 1101 (2015).  An administrative trial is scheduled to begin on January 30, 2018.

READ MORE

Antitrust Analysis of Joint Ventures: Structural Considerations

Businessman hand touching JOINT VENTURE sign with businesspeople icon network on virtual screen Antitrust Analysis of Joint Ventures Antitrust Analysis of Joint Ventures – Structural Considerations

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues. In this installment, we will unpack some of the major antitrust issues surrounding the threshold question of whether or not a JV is a legitimate collaboration.  In particular, we will first try to separate the analyses of, on the one hand, JV formation, and on the other, JV operation and structure.  Then we will consider whether a JV (i) constitutes a “naked” agreement between or among competitors which is per se unlawful, (ii) presents no significant antitrust issue because there is only a single, integrated entity performing the JV functions, or (iii) involves restraints within the scope of a legitimate collaboration that are virtually per se lawful.

READ MORE

China’s NDRC Seeks Comments on Draft Guidelines for Price-Related Behavior of Industry Associations

Flag map of People's Republic of China China’s NDRC Seeks Comments on Draft Guidelines for Price-Related Behavior of Industry Associations

On March 24, 2017, the PRC National Development and Reform Commission (“NDRC”) issued draft Guidelines for Price-Related Behavior of Industry Associations (“Guidelines”). The Guidelines encourage industry associations in the People’s Republic of China to engage in price-related behavior that benefits industry development, market competition and consumers’ legal interests; outline the legal risks that may be involved in various price-related behavior by industry associations; and provide guidance for industry associations to assess whether price-related behavior poses legal risk. The NDRC is accepting public comments until April 24, 2017.

READ MORE

Makan Delrahim Likely to Follow Conservative Path at DOJ Antitrust Division

Headshot of Delrahim Makan in front of the U.S. Captiol Makan Delrahim Likely to Follow Conservative Path as Chief of DOJ Antitrust Division

Last week, President Trump nominated Makan Delrahim to serve as the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Mr. Delrahim, who is currently serving as White House Deputy Counsel, is a former lobbyist and veteran of the George W. Bush Justice Department.  He served as Deputy Assistant Attorney General for International from 2003–2005.  Mr. Delrahim had a good working relationship with the career staff who he will now rely upon to advance the Trump Administration’s antitrust enforcement agenda and priorities.

READ MORE

New Anonymous Whistle-Blower Tool Launched By The European Commission

Businessman in black suit hiding face behind sign whistle blower New Anonymous Whistle-Blower Tool Launched By The European Commission

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).

READ MORE

Fine in Phosphates Cartel Case Confirms Need to Carefully Evaluate European Commission Settlement Proposals

Businessman's hands exchanging euro on blue background, closeup shot Fine in Phosphates Cartel Case Confirms Need to Carefully Evaluate European Commission Settlement Proposals

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.[1] 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.

READ MORE

DOJ and FTC Stand Their Ground on Comity Policy Despite Second Circuit’s Decision in Vitamin C Case

International Flags on poles DOJ and FTC Stand Their Ground on Comity Policy Despite 2d Circuit’s Decision in Vitamin C Case

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.

READ MORE

Antitrust Analysis of Joint Ventures: An Introduction

Businessman hand touching JOINT VENTURE sign with businesspeople icon network on virtual screen Antitrust Analysis of Joint Ventures Antitrust Analysis of Joint Ventures – Structural Considerations

Joint ventures (“JVs”) can require navigation of a potential minefield of antitrust issues, which we’ll explore in a series of six blog posts beginning with this introductory post. Not all of the law in this area is entirely settled, and there remain ongoing debates about some aspects of the antitrust treatment of JVs.  Indeed, arriving at a coherent and unified view of JV law is like putting together a jigsaw puzzle with missing and damaged pieces.

READ MORE

U.S. DOJ and FTC Issue Updated Antitrust/IP Guidelines and International Enforcement and Cooperation Guidelines

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.