Competition: Toshiba appeals General Court judgment upholding a Commission decision to re-impose fines for gas insulated switchgear cartel

On 17 May 2016, details were published in the Official Journal of the European Union ("OJ") of an appeal by Toshiba Corp. ("Toshiba") against a ruling of the General Court ("GC"). The GC upheld the Commission's decision to re-impose fines for Toshiba's participation in the gas insulated switchgear ("GIS") cartel, following annulment of the original decision.

In January 2007, the Commission imposed fines totaling EUR 750.71 million on 20 European and Japanese companies for their participation in a cartel on the market for GIS. Toshiba was fined EUR 86.25 million and EUR 4.65 million jointly and severally with Mitsubishi Electric Corporation ("Mitsubishi"). In 2011, the GC annulled the fines because the Commission had breached the principle of equal treatment in calculating the fines. However, the GC upheld the finding of an infringement. In 2012, the Commission reviewed the fines imposed on Toshiba, reducing them to EUR 56.79 million, and EUR 4.65 million jointly and severally with Mitsubishi. In January 2016, the GC dismissed an appeal by Toshiba and upheld the Commission's decision to re-impose the fines.

Toshiba has now appealed to the Court of Justice of the European Union ("CJEU") seeking to set aside the GC's judgement and to annul the Commission's re-imposition decision. Alternatively, Toshiba seeks a reduction in the re-imposed fine or a referral of the case back to the GC. Toshiba claims that the GC erred in law by rejecting Toshiba's argument that the Commission had breached its rights of defense by not sending a statement of objections prior to re-imposing the decision. In addition, Toshiba claims that the GC erred in law by concluding that the Commission's methodology in calculating Toshiba's fine had not infringed the principle of equal treatment. Finally, Toshiba claims that the GC erred in concluding that the Commission, by not reducing Toshiba's fine to reflect its relative participation in the infringement, did not infringe the principle of equal treatment. Source: Case C-180/16 P – Toshiba Corporation v. Commission, Official Journal C 175/14, 17 May 2016

Competition: General Court dismisses Trioplast's appeal against imposition of interest for late payment of cartel fines

On 12 May 2016, the General Court ("GC") handed down its judgment dismissing Trioplast Industrier AB's ("Trioplast") appeal against a Commission's decision to charge interest for the late payment of a fine for Trioplast's involvement in the industrial bags cartel. In 2005, the Commission fined Trioplast EUR 7.73 million. The GC reduced this fine to EUR 2.73 million in 2010 after concluding that fines on parent firms cannot exceed the subsidiary's fines.

The Commission asked Trioplast to pay the reduced fine plus default interest when the decision became final. Trioplast agreed to pay the reduced fine, but not the default interest. In 2014, the Commission sent a letter again requesting Trioplast to pay the default interest amounting to EUR 0.67 million. Trioplast paid the required amount, while expressing reservations as to the existence of an obligation to pay. Later, Trioplast contested the letter before the GC seeking the annulment of the interest obligation, as well as damages and reimbursements.

The GC accepted the Commission's reasoning that the letter merely confirmed the situation arising from the Commission's 2005 decision and court rulings, and that it did not constitute an act capable of being the subject of an action for annulment. The GC also noted that a court ruling reducing Trioplast's fines neither constitutes a new fining decision, nor requires the Commission to adopt a new decision, as claimed by Trioplast. Further, the GC held that the default interest and the costs accrued by Trioplast resulted from its own actions and were not due to any unlawful act by the Commission. Even though the GC held that the Commission's delays in the process were admittedly regrettable, it did not amount to a sufficiently serious breach of EU law. Consequently, the GC dismissed the action in its entirety. Source: Case T-669/14 - Trioplast Industrier v Commission, General Court judgment of 12 May 2016

Competition (Sweden): Swedish Competition Authority appeals judgment on non-compete clauses in share purchase agreements

In 2014, the Swedish Competition Authority ("SCA") proposed that a fine of MSEK 42 be imposed on three companies in the moving industry: Alfa Quality Moving AB ("Alfa"), NFB Transport Systems AB ("NFB") and ICM Kungsholms AB ("ICM"). According to the SCA, these companies had restricted competition by concluding, in the context of share purchase agreements relating to Alfa's acquisition of NFB and ICM's international moving-businesses in 2006 non-competition agreements with a duration of five years.

On 16 May 2016, the Stockholm District Court ("SDC") rendered its judgment. Although the SDC agreed that the non-compete clauses were too long to be considered ancillary, it held that they did not have as their object or effect the restriction of competition. Accordingly, the SDC ruled in favor of the companies and dismissed the SCA's proposed fines.

The SCA has decided to appeal the SDC's judgment to the Swedish Market Court. According to the SCA, these types of non-compete clauses are allowed for a period of two years only. Thus, the SCA considers it important to appeal the SDC's judgment in order to clarify the legality of such long-lasting non-compete clauses. Source: Stockholm District Court's Judgment T 10057-14 of 16 May 2016 and Swedish Competition Authority Press Release 16/05/2016 (in Swedish)

Merger control: Commission opens in-depth investigation into Wabtec's proposed acquisition of railway equipment manufacturer Faiveley

On 12 May 2016, the Commission opened an in-depth investigation into the proposed acquisition of French railway equipment manufacturer Faiveley Transport ("Faiveley") by US competitor Westinghouse Air Brake Technologies Corporation ("Wabtec"). Faiveley and Wabtec are two of the world's largest companies manufacturing and supplying various railway and train equipment such as complete brake systems and their subsystems and pantographs. The third largest railway and train equipment competitor is Knorr-Bremse from Germany. Wabtec has a number of subsidiaries in the European Economic Area ("EEA"), including Poli, MZT, Brecknell Willis and Stemmann-Technik.

The Commission's initial investigation raised concerns that the proposed merger would reduce competition in various, already concentrated, markets for railway equipment systems and subsystems in the EEA. The Commission is particularly concerned about the supply of brake systems, various brake components such as friction materials, and pantographs, because these markets have high barriers to entry. Safety-critical train equipment is subject to technical and regulatory requirements and, thus, entry and expansion in these markets requires significant investment in research and type approval of new products.

According to the Commission's initial assessment, the proposed merger would remove one significant competitor from an already concentrated market, with the end result that the remaining manufacturers would not be able to compete with and constrain the merged entity. This would harm innovation and lead to price increases for manufacturers, train operators and passengers. The Commission will now investigate in-depth the proposed transaction to determine whether these initial concerns are confirmed The Commission has 90 working days, until 20 September 2016, to make a final decision.

Source: Commission Press Release 12/05/2016

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves joint acquisition of four logistics assets by SEGRO and PSPIB
  • Commission approves joint venture by Starwood Capital Group and Banco Sabadell
  • Commission approves the creation of a joint venture by Saint-Gobain and Corning
  • Commission approves acquisition of InfoPro Digital by Towerbrook
  • Commission approves joint acquisition of Pacific National by CPPIB and GIP
  • Commission approves acquisition of certain chemical assets belonging to Celanese by INEOS