Posted by Chantal Lavoie on 31 December 2017
This post contains a selection of competition law (and other related) developments of interest which occured in 2017.
12.01.2017 Court of Justice judgment in Timab
The Court of Justice has rendered an important judgment this week upholding the Commission's decision against Timab in relation to the Animal Phosphates cartel. The appeal involved a hybrid decision in which a decision against Timab was adopted by the European Commission under the standard cartel procedure whilst the other parties to the cartel agreed to settle under the cartel settlement procedure.
19.01.2017 Audible and Apple remove exclusivity clauses
Audible and Apple agree to remove exclusivity obligations on the supply and distribution of audibooks following European Commission and German competition investigations.
24.01.2017 Amazon offers commitments in e-books investigation
Amazon offers to do away with MFN (most- favourable-nation) clauses in their e-books contracts with publishers to address European Commission concerns. If accepted, this means publishers will no longer have to offer Amazon more favourable or similar terms to those offered to competitors of Amazon, including having to offer Amazon any new alternative business models. Discount pool provisions - which link discounts for e-books to the retail price of an e-book on a competing platform - will also be removed. This case confirms the competition concerns raised by MFN clauses in distribution agreements involving a dominant party.
25.01.2017 EU merger control clearance in Abbott Laboratories/Alere
Global divestments needed to obtain EU clearance for Abbott’s acquisition of Alere’s medical clinical tests systems.
30.01.2017 DGComp willing to act against excessive pricing
In a speech this month, Commission Vestager reiterated her willingness to use competition rules to act directly against excessive prices, as has been done recently by the UK and Italian competition authorities. This is in line with her earlier statements at a conference in November 2016 (https://lnkd.in/gS_BmPb) regarding the European Commission's renewed interest in acting on exploitative abuses such as excessive pricing and dealing on unfair terms. Intervention in this area will be a delicate balancing act as there is potential to do more harm than good, particularly with respect to innovation and stimulating growth. To be followed.
2.02.2017 E-commerce sector inquiry triggers new European Commission investigations
With the e-commerce investigation still ongoing, the Commission has opened three investigations in the areas of consumer electronics (alleged restrictions on the ability of online retailers to set their own prices), video games (geo-blocking concerns) and hotel accommodation (concerns over discrimination based on nationality or country of residence). The consumer electronics investigation raises an interesting novel issue regarding the role of pricing software - used to adapt retail prices to those of leading competitors -which might have aggravated the effect of the price restrictions.
13.02.2017 Reinforcing powers of NCAs
European Commission expected to propose legislation before the summer to reinforce the powers of national competition authorities.
27.02.2017 NKT/ABB merger cleared
European Commission clears in Phase I without conditions an acquisition by NKT of ABB in the high voltage power cables market. Interestingly the market was the subject of a cartel investigation in 2014. The main producers of high voltage power cables, including the parties to this acquisition, were found guilty in 2014 of market and customer allocation. The European Commission's merger review was therefore conducted taking into account the high level of coordination which had previously existed in this market.
1.03.2017 Geo blocking investigations of 20th Century Fox and SkyTV
One to watch. Interestingly, both 20th Century Fox and SkyTV continue to be under investigation by the European Commission in relation to geo-blocking concerns over clauses in film licensing contracts for pay-tv.
1.03.2017 Load syndication arrangements under EU competition spotlight
Loan syndication arrangements could be placed under closer competition scrutiny by the European Commission. DGComp has indicated it may embark on a study to assess the potential for coordination. For more on this, see my recent post.
7.03.2017 EU dawn raids in the paper sector
European Commission carries out dawn raids at premises of companies in the paper sector...again. Dawn raids were also conducted a year ago.
7.03.2017 General Court annuls EU prohibition decision in UPS/TNT
In a landmark decision, the General Court has annulled the Commission' merger prohibition decision in UPS/TNT Express. The Court agreed with UPS that its rights of defence were infringed as a result of the Commission's failure to communicate the econometric model which it relied upon for its decision. The Court concludes there was no need to show that the merger decision would have been different; it suffices to show that there was a "slight chance that it would have been better able to defend itself". Great win for UPS. We can expect an appeal from the Commission.
15.03.2017 Court of Justice rules on the protection afforded to leniency applicants
In an important judgment delivered yesterday, the Court of Justice provides greater clarity on the protection afforded to leniency applicants seeking to prevent the disclosure of certain information in the published version of infringement decisions. The Court also finds that hearing officers have wide terms of reference to decide on objections to the disclosure of confidential information. See my post for my views on the judgment.
16.03.2017 Anonymous whistleblower tool
Anonymous whistleblowing: a new tool introduced today by the European Commission. Combined with the EU leniency programme, this sort of disruptive technology could boost EU competition enforcement.
16.03.2017 Algorithms under competition law scrutiny
Algorithms and other automated systems are coming under more intense competition scrutiny from the European Commission. For consideration by businesses in their competition compliance reviews.
26.03.2017 Procedural irregularities in merger control cases under review by DGComp
DGCOMP is showing its teeth post-merger clearance as it appears to be taking a look back at whether companies have provided incorrect or misleading information in merger control filings. An important reminder for companies of their obligations under EU merger control rules which continue to apply even after clearance.
27.03.2017 EU conditional merger clearance in Dow/DuPont
Is innovation competition a new theory of harm in EU merger control reviews? In its conditional clearance of the Dow/DuPont merger, the reduction in "innovation competition" (as the expression was coined by the European Commission) for pesticides resulting from the merger was identified as one of three significant competition concerns. Remedies provided addressed not only concerns to preserve competition and price competition but also innovation through the divestment of DuPont's global R&D organisation. This is not a new development but it does put into focus a continuing trend, going from strength to strength in EU merger control reviews, to consider the impact of a merger on innovation, particularly in the pharma sectors and other sectors relying heavily on R&D. This also begs the question whether substantial competition concerns over innovation alone could suffice to give rise to a substantial impediment to effective competition and therefore result in a prohibition decision or remedies to address solely "innovation competition" concerns.
29.03.2017 General Court extends general presumption against access to documents
In a judgment delivered today, the General Court ruled that access to documents contained in a competition case file relating to an abuse of dominance investigation must benefit, by analogy, from the same protection developed by the Court of Justice of the European Union in the context of cartels. As a result the European Commission may rely on a general presumption which protects from disclosure all documents contained in its competition file, without having to carry out an individual examination of each document.
29.03.2017 Deutsche Börse/London Stock Exchange merger prohibited
As expected, the European Commission confirms its prohibition of the proposed Deutsche Börse/London Stock Exchange merger. Clearing of fixed income instruments was at the heart of the concerns. Proposed remedies were considered insufficient to address concerns.
5.04.2017 EU merger prohibition in Heidelberg/Schwenk
European Commission prohibits Heidelberg/Schwenk proposed merger. The announcement comes less than one week after another prohibition decision in Deutsche Börse/London Stock Exchange. The parties' decision to offer an access remedy instead of divestiture was insufficient to address concerns.
19.04.2017 Behavioral commitments in Rolls Royce/ITP merger clearance
The European Commission cleared today Rolls Royce's acquisition of ITP, an aircraft engine components maker. The acquisition was cleared with behavioral conditions attached. The conditions seek to ensure that Rolls Royce will not be able to exercise additional influence on the ETP consortium of which both Rolls-Royce and ITP are members. The ETP consortium manufactures the engine for an Airbus aircraft which competes with a Lockheed aircraft powered by a Rolls-Royce engine. This is not the first time that the European Commission has resorted to behavioral commitments to address governance/information flow concerns impacting on the competitiveness of the aerospace sector. In the Arianespace acquisition by ASL last year, behavioral commitments were also offered in the form of firewalls to address Commission concerns regarding the risk of sensitive information exchange between ASL and Arianespace relating to competing satellite manufacturers and launch service providers.
27.04.2017 Court of Justice judgment in Akzo on parental liability
In a judgment delivered today in Akzo v Commission, the Court of Justice confirms the extensive reach of parental liability in cartel infringements. In this case the Court found that even though the Commission was time-barred from imposing fines on its subsidiary, the Commission was entitled to impose fines on the parent against whom the proceedings were not time-barred, and to do so even in relation to the period of time during which the cartel infringement resulted from the actions of the subsidiary and not the parent.
27.04.2017 Advocate General opinion on parental liability
Important opinion today from Advocate General Kokott regarding the interpretation of the concept of concentration applied to joint ventures under the EU merger control regulation. The Commission's arguments and concerns over the risk of creating an enforcement gap were rejected. The Advocate General concluded that a stricter interpretation of the concept of concentration applied to JVs, and was of the view that the creation of a new joint venture or a change from sole to joint control is subject to EU merger control only if the joint venture is full function.
10.05.2017 Final report on e-commerce sector inquiry
The European Commission published today the final report of its e-commerce sector inquiry. One of the important findings is that, notwithstanding the notable increase in the use of selective distribution systems in the online space, the study should not put into question the Commission's approach to selective distribution. A change to existing rules is therefore unlikely. Nevertheless selective distribution systems are likely to come under heightened scrutiny to prevent their use beyond the accepted scope.
15.05.2017 European Commission investigates Aspen Pharma for alleged excessive pricing
The European Commission has just opened its first excessive pricing investigation in the pharma sector, 6 months after Commissioner Vestager's statement that the European Commission will not shy away from acting on excessive prices if it has to. Since this statement, both the UK and Italian competition authorities have fined pharma companies for excessive pricing. The investigation will bring to the fore important questions regarding the appropriate benchmarks against which to measure when a price is unfair and whether any objective justifications can be accepted. AG Wahl's opinion of 6 April 2017 in case C-177/16 is very timely, in particular his view that an excessive price should be found unfair only if there is "no rational economic explanation" and "only prices significantly and persistently above the benchmark may be considered excessive".
18.05.2017 Altice under review for alleged breach of suspensory obligation under EU merger control
Interesting case just opened by the European Commission against Altice for alleged breach of its standstill obligation in relation to its acquisition of PT Portugal in 2014. Only a handful of cases have been opened by the European Commission for similar alleged breaches. It highlights the need for caution by merging parties during merger negotiations and in drafting the sale and purchase agreement to ensure the purchaser is not placed in a position to exercise decisive influence prior to merger clearance. As previous cases have shown, this can be a costly mistake (Electrabel and Marine Harvest were each fined EUR 20 million for similar breaches in separate cases).
18.05.2017 Facebook fined for providing misleading information
Companies involved in EU merger control filings beware: providing incorrect or misleading information can be very costly. Facebook's was fined today EUR110 million for providing incorrect or misleading information during a 2014 EU merger review in connection with its acquisition of WhatsApp.
30.05.2017 Advocate General opinion in British Airways v Commission
Interesting opinion of AG Mengozi in British Airways v Commission. The Court is asked to consider whether it has the power to annul a Commission infringement decision (in this case in relation to the airfreight market) based on an argument of public policy raised by the Court itself, but not by the parties. AG Mengozi concludes that in this case the principle of effective judicial protection did not require the Court to go beyond the order sought by the parties.
6.06.2017 Distribution practices under review
Guess' distribution practices are currently under review by the European Commission, as announced today. This is the first investigation launched by the Commission since it adopted its final report on the e-commerce sector inquiry last month. The investigation comes as no surprise as the Commission had already hinted to upcoming investigations as a follow-up to findings made during the sector inquiry. Nonetheless, the investigation is of great interest as it will address an on-going debate regarding whether cross-border sale restrictions, particularly as applied to online consumer sales, can be justified under the existing EU competition law framework including the Vertical Restraints Block Exemption.
9.06.2017 EU commitments in Johnson & Johnson/Actelion merger decision
Interesting commitments to note in the Johnson & Johnson/Actelion merger decision in which concerns over the ability of J&J to influence decisions in a newly created competitor required commitments. This included a reduction in the proposed shareholding of J&J from up to 32% to up to 16% as well as a commitment that J&J will not nominate a board member. These commitments highlight more generally the competition concerns which can be raised with minority shareholdings held by competitors, such as the ability to influence, to a certain extent, strategic decisions and the access it may provide to sensitive competitor information. Minority cross-shareholdings amongst competitors combined with cross-board seat positions is an issue which companies must be cautious about, even outside a merger context, given the competition risks it can potentially give rise to, including a 'softening' of competition.
27.06.2017 European Commission fines Google EUR 2.42 billion
Almost 7 years since opening its investigation in Google Search (Shopping) and what will be a precedent-setting decision, the European Commission imposed today a fine of EUR 2.42 billion on Google and its parent Alphabet. Google is expected to appeal the decision to the General Court. The key conclusions of the Commission are that Google holds a dominant position in the general internet search market in all 31 EEA countries and abused it on the related market for comparison shopping services by giving preference to its own Google Shopping service. In addition to the fine imposed, Google must put an end to the conduct within 90 days and is required to apply a principle of equal treatment. The European Commission makes clear that it is Google's responsibility to ensure compliance with the decision and to explain how it will do so. No doubt there will be further arduous discussions ahead for Google as the Commission embarks on monitoring compliance.
28.06.2017 Google Shopping decision: putting an end to illegal practice
The Commission's decision announced yesterday in Google Shopping raises many interesting questions and is precedent-setting in many respects. One of them is how Google can effectively put an end to the abusive behavior it has been found guilty of. Google's illegal practice consists of giving its comparison shopping service prominence in its search results over rival services. Google is now required to put an end to this infringement. The Commission has left it to Google to decide how to ensure compliance. But how? At what point does a dominant company move from promoting its own products competitively to giving them an illegal advantage? Whatever option Google chooses to remedy its behaviour, it must now apply a principle of equal treatment to rival comparison shopping services and its own Google Shopping service. Really? This in itself is a highly subjective criteria. And what about competing on the merits? Since when have dominant companies' special responsibility extended to treating rival services and its own equally, without further analysis of effects. It seems that both complying with and enforcing this decision will pose significant challenges.
6.07.2017 Court of Justice judgment in Toshiba
The Court of Justice has found that Toshiba's rights of defence were not infringed, even though it did not receive a second statement of objections prior to the adoption by the Commission of an amended fining decision against it for participation in a cartel in the gas insulated switchgear market. The original fine imposed in 2007 was annulled by the General Court on the ground that the Commission infringed the principle of equal treatment when calculating the fine. The Commission revised the fine as a result and adopted an amended decision. Toshiba argued in this appeal that the letter of facts received from the Commission prior to adoption of the revised decision was insufficient to protect its rights of defence. The Court rejected Toshiba's pleas. In particular, the Court concluded that the Commission was entitled to rely on the statement of objections relating to the 2007 decision since the annulment of the 2007 decision "did not affect the validity of the measures preparatory to it".
6.07.2017 European Commission sends statement of objections for procedural merger irregularities
A few months after fining Facebook for providing incorrect or misleading information in the context of a merger filing, the European Commission has sent three separate statements of objections to each of Merck, Sigma-Aldrich and GE for allegedly committing similar irregularities in the context of other merger filings and one statement of objections to Canon for allegedly implementing a merger prior to clearance. A reminder to businesses that merger assessments and merger filings must be carried out with the utmost care and attention to detail given the risks involved for failing to comply with requirements. In relation to the failure to provide complete and accurate information, parties are exposed to fines of up to 1% of worldwide turnover. However implementation prior to clearance carries a potentially harsher sanction of up to 10% of worldwide turnover. These cases raise some interesting issues regarding warehousing arrangements, assessing whether information is relevant or not and the impact of allegedly incomplete information on commitments offered.
22.08.2017 European Commission send Bayer/Monsanto proposed acquisition into second phase
After rejecting commitments proposed in first phase, the European Commission has opened a second-phase investigation into Bayer's proposed acquisition of Monsanto. This is the third merger investigation in less than a year into the pesticides market after the Commission cleared with commitments the Dow/Dupont and Syngenta/ChemChina mergers. The investigation is focusing on pesticides, seeds and traits. In relation to pesticides, the impact of the deal on innovation competition - in addition to product competition - is likely to form part of the assessment. After the Dow/Dupont merger, this deal may further reduce the number of competitors active in the R&D sector. In addition to the impact on product competition, the Commission is therefore likely to look closely at the impact on R&D, as it did in the Dow/Dupont merger. It will be interesting to see how far back into product development/pipeline products the Commission will be taking its competition analysis. Its intense focus on the "R" in R&D had attracted much criticism in the context of its Dow/Dupont review.
31.08.2017 Big data and competition law
Very good overview on issues around big data and competition law. In my view a limited part of the concerns around big data can be resolved with EU competition law as the rules currently stand. However a number of the other concerns revolve rather around data/consumer protection going beyond the remit of EU competition rules.
6.09.2017 Court of Justice ruling in Intel
The Court of Justice rendered today a succinct but dense judgment in Intel. There are two immediate points which are worth highlighting in my view. First and at the risk of over-simplifying, the Court of Justice upheld the presumption of illegality applicable to exclusivity rebates but adds a 'clarification': If evidence is submitted during an investigation that the conduct 'was not capable of restricting competition', then the Commission is obliged to consider whether the conduct is capable of having foreclosure effects. This is a significant clarification which arguably 'softens' the presumption of illegality and introduces scope for an 'effects-based analysis'. How much scope is the question which many will be considering. Second, and not to be under-estimated, is the Court's finding that interviews conducted by the Commission in the context of investigations must all be reported. There is no such thing as formal or informal interviews. This is an important blow to the Commission's procedure and an important win for companies who see their rights of defence reinforced.
8.09.2017 Court of Justice clarifies interpretation of a 'concentration' as applied to joint ventures
For those interested in EU merger control, the Court of Justice delivered a ruling yesterday which might have gone under the radar in view of the 'post-Intel hype'. The ruling is very interesting as it deals with an 'interpretation gap' which existed under the Merger Regulation in relation to JVs and the concept of a 'concentration'. I'm afraid the interpretation proposed by the Court of Justice is another loss for the Commission.
13.09.2017 European protectionism?
The Commission's recent proposal to create a new EU investment screening framework is an unfortunate development. If adopted it is reported it will create an oversight role for the European Commission over foreign investments into the EU, outside the scope of the EU Merger Regulation. European protectionism?
14.09.2017 Court of Justice judgment in AKKA/LAA on excessive pricing
The Court of Justice provided today important guidance on the concept of excessive pricing and the conditions to be met to amount to an abuse of dominant position. The ruling follows closely the opinion of AG Wahl. Useful clarification is provided in the ruling on the criteria for selecting acceptable comparison benchmarks and for assessing when a difference in pricing is appreciable. The ruling is very timely given Commissioner Vestager's declared willingness last year to take on excessive pricing cases where circumstances warrant it and DGComp's decision this summer to open an investigation into excessive pricing against Aspen (not to mention recent decisions from national competition authorities in the UK and Italy). I will be writing an article shortly examining in more detail the Court's ruling.
18.09.2017 Google auction remedy in relation to Google Shopping
Will Google be able to propose a satisfactory remedy that addresses the Commission's concerns in the Google Shopping decision, including applying to rivals the principle of equal treatment? Quite a challenge.
20.09.2017 Quality, choice and innovation: key parameters for competition assessments
Interesting assessment from Director General Laitenberger on the current period of increased focus of EU competition law on non-monetary price markets. As recent cases have shown, we can expect more emphasis placed on the last three of the five parameters of competition (price, output, quality, choice and innovation). This also implies more challenging and speculative assessments based on reviews of dynamic and long-term effects.
21.09.2017 Court of Justice annuls Commission decision in reinforcing bars cartel
In yet another judgment (3 judgments in fact) finding in favour of the rights of defendants in EU competition investigations, the Court of Justice confirmed that the right to a hearing is an essential procedural requirement which must be complied with strictly by the European Commission under the terms of the relevant regulations. The Court of Justice also confirmed that the decision in this instance must be annulled, without the need to show that the decision could have been different had a hearing been held in accordance with existing regulations. The case had some unique characteristics due to the fact that the procedure was initially started under the ECSC Treaty and then continued under Regulation 1/2003. However it should not be discarded as of limited relevance in the context of today's competition investigations. Indeed it highlights the high standard to which the European Commission is held to in conducting its investigations. It is also noteworthy that only a few weeks since its judgment in Intel, the Court once again highlights a fundamental flaw in the Commission's procedure leading this time to the annulment of a decision.
13.10.2017 Acquisition of Abertis by Atlantia: insights into bidding markets
European Commission clears in Phase I the acquisition of Abertis by Atlantia resulting in the largest toll motorway operator in Europe and in the world. According to the press release, the competitive assessment was helped by the fact that toll motorway concessions is a highly regulated bidding market. The decision (not yet public) should prove useful for further insights into the Commission's analysis of bidding markets.
18.10.2017 EU approval of BD’s acquisition of Bard subject to conditions
Preserving fairness and innovation continues to be central to the European Commission's latest merger control objectives. In yet another case raising innovation concerns, the Commission has accepted commitments as a condition to clearance of the proposed acquisition of Bard by BD which was assessed as giving rise to the risk of removal of BD as a 'credible future competitor' of Bard.
26.10.2017 General judgment in Liberty Global/Ziggo merger appeal
In a rare appeal of a merger decision, the General Court has annulled the Commission's conditional clearance decision in Liberty Global/Ziggo. After UPS' successful appeal of the Commission's prohibition decision in UPS/TNT, this is the second time this year that the General Court reprimands the Commission for a procedural irregularity in merger proceedings, resulting in the annulment of a merger decision. The judgment highlights the need for the Commission to state at least briefly the reasons for its findings. The judgment serves as an important reminder to the Commission that leaving market definitions open has consequences. As it implies that the merger does not raise competition concerns under any of the possible market definitions, the Commission must provide the reasons for this under any of these definitions. In this case, the Commission failed to state the reasons why the merger did not give rise to a risk of vertical foreclosure on the possible market for premium pay TV sports channels.
30.10.2017 Possible exchange of information in reinsurance sector
DGComp investigation into possible exchange of information in the reinsurance sector. Interesting case to follow in relation to what constitutes illegal information exchange under EU competition law, given also the recent judgment of the CAT in relation to an exchange of information arising from a single meeting in the Balmoral tanks case.
31.10.2017 Blockchain technology on track to be included in French securities laws
French securities laws are on track to be amended by year-end to allow the recording and transmission of unlisted securities using blockchain technology (distributed ledger technology). Other countries are likely to follow, giving DLT scope for application in the securities industry.
8.11.2017 Big four consultancy firms guilty of bid-rigging in Italy
Big Four consultancy firms have been found guilty of bid-rigging by the Italian competition authority in relation to a government tender for EU funds. A stark reminder for professional services firms to exercise utmost caution in the context of tenders and other bids for work, in particular to avoid contact which could be viewed as amounting to collusion.
10.11.2017 China raises foreign ownership limits for its financial services firms
China has announced it is raising its foreign ownership limits in financial services firms, including allowing participation of up to 51% by foreign entities in JVs in the Chinese financial services sector. This is an important opening-up of the Chinese financial market which should lead to an increase in M&A activity from the financial services sector in Europe and the US. Merger control will play an important role in this context.
10.11.2017 General Court judgment in ICAP
General Court's judgment in ICAP: a must read for businesses and competition lawyers for further guidance on the cartel 'facilitation' test and the Commission's evidentiary burden in cartel cases. Once again the Commission sees one of its cartel decisions partially annulled for failing to meet the burden of proof and for procedural irregularity. The General Court found that: (1) the Commission failed to show in relation to one infringement that ICAP knew or ought to have known it was taking part in collusion between two banks; (2) the Commission fell short of showing ICAP's participation for its whole duration in some of the infringements; (3) the Commission breached the principle of presumption of innocence w/r to ICAP in the context of the 'hybrid' settlement procedure but this did not vitiate the decision; (3) the Commission failed to sufficiently state the reasons for departing from the fines methodology; as a result the General Court annulled the fine (in 2016, another cartel fine was also annulled in Printeos on the same ground). The General Court nevertheless found that the participation in discussions on LIBOR submissions was a restriction by object. It also confirms the 'facilitation' test developed in Treuhand and ICAP's role of 'amplifying' the collusion.
14.11.2017 Court of Justice judgment in British Airways v Commission
In its judgment published today, the Court of Justice upheld the General Court’s judgment. British Airways had originally requested before the General Court partial annulment of the Commission’s decision in the airfreight cartel. During the proceedings, the General Court also raised of its own motion a public policy plea, namely that the decision contained a defective statement of reasons. However, the General Court did not completely annul the decision on this public policy ground as it could not go beyond the partial annulment order sought by British Airways. On appeal, the Court of Justice found that whilst EU courts must raise public policy arguments, they do not have jurisdiction to amend of their own motion an order sought by an applicant. To do so would be to rule ultra petita.
20.11.2017 Geo blocking regulation
A political agreement has been reached on the geo blocking regulation. It will come in effect within nine months from publication of the Regulation in the OJ. Great news for consumers!