Competition: General Court partly upholds Pacific Fruit's appeal against Commission decision in Southern Europe bananas cartel and reduces fines

On 16 June 2015, the General Court ("GC") handed down its judgment partly upholding an appeal by FSL Holdings, Firma Léon Van Parys and Pacific Fruit Company Italy SpA (together "Pacific Fruit") against the Commission's decision finding that there was an illegal price-fixing cartel for bananas sold in Southern Europe. In October 2011, the Commission found that Pacific Fruit and Chiquita Brands International Inc. ("Chiquita") had operated a price-fixing cartel and coordinated their pricing strategy regarding the importation, marketing and sales of bananas in Greece, Italy and Portugal during the period from 28 July 2004 to 8 April 2005; The Commission imposed a fine of EUR 8 919 000 on Pacific Fruit. Chiquita received full immunity from fines under the Commission's 2002 Leniency Notice.

Subsequently, Pacific Fruit brought an action before the GC seeking to annul the Commission's decision or, alternatively, to reduce the fine. Pacific Fruit claimed that, inter alia, the Commission breached essential procedural requirements and Pacific Fruit's rights of defense, misused its powers and unduly influenced Chiquita, the leniency applicant. Furthermore, according to Pacific Fruit, the Commission did not establish the requisite legal standard that Pacific Fruit infringed Article 101(1) TFEU; the Commission also incorrectly assessed the evidence and erred in the calculation of the fine.

The GC upheld Pacific Fruit's appeal in part and reduced the fine. The GC concluded that, although the Commission rightly established a single infringement based on the various manifestations of the infringement that concerned the same object and the same subjects, the Commission failed to establish its continuous nature. According to the GC, Commission had not provided documentary evidence of contacts between the parties for the period between 12 August 2004 and 19 January 2005. Rather, it relied on the body of evidence as a whole and on Chiquita's statements. This period thus constituted an interruption of the infringement. Furthermore, because Pacific resumed and repeated its participation in the infringement, the GC characterized the infringement as a single and repeated infringement that lasted from 28 July 2004 until 11 August 2004 and from 20 January 2005 until 8 April 2005. The GC reduced the fine on Pacific Fruit to EUR 6 689 000 to reflect the reduced duration of the infringement. Regarding Pacific Fruit's other claims, the GC found that the Commission had not breached essential procedural requirements by relying on documents that from the Italian tax authority and evidence that it obtained during another cartel investigation. The GC dismissed Pacific Fruit's arguments that the Commission had misused its powers by exerting undue influence over the other cartel participant, Chiquita, as a result of its status as leniency applicant and had erred in its assessment of the evidence.Source: Case T-655/11 FSL Holdings, Firma Léon Van Parys and Pacific Fruit Company Italy SpA v European Commission, Judgment of the General Court,16/6/2015

Competition: Evonik Degussa appeals against General Court judgment confirming refusal of confidential treatment for leniency information in cartel decisions

On 15 June 2015, details were published in the Official Journal of the European Union of an appeal by Evonik Degussa GmbH ("Evonik Degussa") against a General Court ("GC") judgment that upheld the Commission's refusal to grant confidential treatment for certain leniency information in the decision on the bleaching chemicals cartel.

Having published a non-confidential version of the cartel decision in 2007, the Commission decided, in the interests of transparency, to publish a more detailed non-confidential version of the decision, which included certain information provided by Evonik Degussa in the context of its leniency application. Evonik Degussa objected to the Commission’s approach and brought the matter before the Hearing Officer, who considers objections to the disclosure of information proposed by the Commission, asking that all the information provided under the 2002 Leniency Notice would be excluded from the non-confidential version to be published. In May 2012, the Hearing Officer rejected the request for confidential treatment, after which Evonik Degussa brought actions before the GC to challenge the respective decision of the Hearing Officer. In January 2015 the GC dismissed this action, holding that information voluntarily submitted to the Commission by an undertaking seeking to benefit from the leniency program does not automatically enjoy protection from disclosure based on obligations of professional secrecy.

In its appeal of the GC decision, Evonik Degussa claims that the GC wrongly interpreted the function and terms of reference of the Hearing Officer and erred in its review of the Hearing Officer's decision. It also erred in finding that information from the statements of a leniency applicant did not automatically fall under the protection of professional secrecy. The publication of such information was a breach of the Commission's Leniency Notices. Further, Evonik Degussa claims that the GC erred in its application of the principles of legal certainty and the protection of legitimate expectations. Source: Case C-162/15 P – Evonik Degussa against the judgment of the General Court, Official Journal of the European Union C 198/24, 15/6/2014

Competition: Commission publishes Competition policy brief on ex post evaluation of competition policy enforcement

On 15 June 2015, the Commission published a competition policy brief on the ex post evaluation of competition policy enforcement. The policy brief summarizes the main conclusions of the recently published staff paper of the Commission that reviews the literature on this topic and discusses the main lessons to be learnt for ex post evaluation practice. The ex post economic evaluation of competition policy considers both micro and macroeconomic effects mainly in terms of prices, consumer benefits and growth. The scope of such evaluation activities is very broad, ranging from microeconomic evaluations of specific interventions on a well-defined market to the macroeconomic assessment of the broader impact of competition policy.

According to the policy brief, the existing work on the micro and macroeconomic impacts of competition policy confirms that competition policy contributes to the good functioning of markets and improves consumer welfare. The empirical research on the microeconomic impact of competition policy shows that the deterrent effects of merger control and antitrust enforcement largely outweigh the costs of maintaining an effective competition regime. In particular, the stronger enforcement against cartels has contributed to a decline in overcharges. Also the macroeconomic evaluations confirm that competition policy and competition have a positive effect on growth through their effects on mark-ups, business dynamism, innovation and productivity. Source: Competition policy brief on ex post evaluation of competition policy enforcement – What can we learn from the literature and the experience of competition authorities? 15/6/2015

Competition: Commission opens formal investigation into Amazon's e-book distribution arrangements

On 11 June, the Commission opened a formal antitrust investigation into certain business practices by Amazon in the distribution of electronic books ("e-books"). E-books have experienced a surge in popularity in recent years and are of increasing importance to online retail. Amazon is currently the largest distributor of e-books in Europe. The Commission's investigation will focus on certain clauses included in Amazon's distribution contracts that require publishers to inform Amazon about more favorable or alternative terms offered to Amazon’s competitors, offer Amazon similar terms and conditions than to its competitors, or through other means, ensure that Amazon is offered terms at least as good as those for its competitors. Initially, the investigation will cover the largest markets for e-books in the European Economic Area ("EEA"), namely the markets for e-books in English and German.

The Commission has concerns that the clauses in the distribution contracts may breach EU antitrust rules that prohibit the abuse of a dominant position and restrictive business practices. According to the Commission, the clauses may make it more difficult for other e-book distributors to compete with Amazon by developing new and innovative products and services. The opening of proceedings does not prejudge the outcome of the investigation. The Commission will now investigate whether such clauses may limit competition between different e-book distributors and may reduce choice for consumers. Source: Commission Press Release 11/6/2015

Competition (Finland): Report on the implementation of antitrust damages directive published for comments

On 16 June 2015, the Ministry of Employment and the Economy published a working group report on the national implementation of the antitrust damages directive (Directive 2014/104/EU) for comments. The working group proposes that the directive be implemented through a special Act on antitrust damages instead of amending several existing Acts concerning competition and procedural rules. The goal is to clarify the rules applicable to antitrust damages actions, to facilitate bringing and handling such actions, and to ensure that parties who suffer losses due to infringements of competition rules are able to obtain full compensation. The Act is proposed to apply to damages actions based on the infringement of both Articles 101 and 102 TFEU and Sections 5 and 7 of the Finnish Competition Act regardless of whether the infringement has an effect on trade between Member States. Thus, the Act would not apply to infringements of the provisions included in the Finnish Competition Act concerning neutrality of competition between public and private sector undertakings. Further, the working group proposes that the Act apply to antitrust damages actions both in general courts and before arbitration tribunals. 

According to the working group's proposal, each natural or legal person who suffers a loss as a result of an infringement of competition rules has the right to obtain full compensation, including interest from the time when the damage occurred. Even indirect purchasers, who are not in direct contractual relationship with the perpetrator(s), have the right to obtain compensation for the loss that was passed on to them. To ensure victims' right to full compensation, the working group proposes that the principle of economic succession, which applies within the realm of public enforcement of competition rules, also be included in the Act on antitrust damages, although in a more limited form. According to the proposal, a successor to a business that has infringed competition rules is liable for the damage if the successor was or ought to have been aware of the infringement when it took over the business. Further, the provision ensuring the right to full compensation would include the presumption that cartels cause damage, as required by the directive. The presumption reverses the burden of proof on causation. Nevertheless, plaintiffs must still show the amount of damages, which can be estimated if proving an exact amount is overly difficult based on available evidence.

The report also includes proposals to ensure the viability of the leniency system, as required by the directive. Leniency applicants are to be protected against discovery of certain documents provided to competition authorities and the immunity applicant's liability is to be limited to its own direct or indirect customers or suppliers, unless other parties who have suffered losses cannot obtain full compensation from other perpetrators. Further, the report includes proposals to amend current rules concerning, inter alia, the effect of final infringement decisions, burden of proof, discovery, joint and several liability and the statute of limitations.

The deadline for the national implementation of the antitrust damages directive is 27 December 2016. The Act on antitrust damages will only apply to antitrust damages actions brought after the Act has entered into force. Comments on the working group report must be submitted by 11 September 2015.Source: Working group report on antitrust damages (in Finnish) 16/6/2015 

Competition (Sweden): Swedish Competition Authority releases report on the state alcohol retail monopoly

On 12 June 2015, the Swedish Competition Authority ("SCA") released its first report for 2015 on the state alcohol retail monopoly. The SCA is obligated to submit such reports twice a year to the Commission, due to obligations incumbent on Sweden after joining the European Union in 1995 to retain the state monopoly of Systembolaget AB ("Systembolaget"), which is a state-owned company that runs a network of retail shops selling spirits, liquors and beverages with an alcohol content above a certain limit. The purpose of the reports is to clarify for the Commission whether the state monopoly discriminates between national and imported products and thereby impedes competition. The state monopoly is considered to be non-discriminatory if the distribution and sales terms for alcoholic beverages is objective, transparent and objectively applied.

In the report the SCA was positive towards the changes that Systembolaget had made with the aim to better adapt their supply to consumer needs and preferences, e.g., by evaluating the products in Systembolaget's inventory at shorter intervals and by creating a more fair assessment of the products' total sales. In general the SCA was also positive that Systembolaget in its development process had conducted a dialogue with the suppliers. Further, the SCA stated that more clarity is required regarding the Swedish state’s control over the domestic sale of alcohol to determine the boundaries of the monopoly. The Swedish government is currently awaiting clarifications from the Court of Justice of the European Union in a Finnish case, Case C-198/14, where the Helsinki Court of Appeal has requested a preliminary ruling concerning the justification of the Finnish system where "distance purchasing" of alcohol is partly permitted. Source: Swedish Competition Authority Press Release 12/6/2015 and Swedish Competition Authority Report 12/6/2015 

Merger Control: Commission approves acquisition of Sigma-Aldrich by Merck, subject to conditions

On 15 June 2015, the Commission approved the proposed acquisition of Sigma-Aldrich Corporation ("Sigma-Aldrich") by Merck KGaA ("Merck"), subject to conditions. Both companies are active worldwide in the life science sector and compete with each other in the markets for bioscience products, raw materials for pharmaceutical production, and laboratory chemicals.

The Commission's investigation in the main product areas showed that the activities of the parties are largely complementary, and that a number of important competitors, including multinational companies, remains active on the market. However, the Commission had concerns that the merged entity would have faced insufficient competitive pressure from the remaining players in the markets for certain laboratory chemicals, in particular in the markets for solvents and inorganics used in laboratories by companies and research centers, because the parties were the two leading suppliers in Europe and had the broadest product portfolios and had efficient channels to reach customers.

To address the Commission's competition concerns, the parties offered a comprehensive remedies package, covering all the main steps in the manufacture, supply and distribution of the products related to solvents and inorganics. In particular, the commitments included: divestment of Sigma-Aldrich's manufacturing asset in Seelze, Germany, where most of the solvents and inorganics sold by Sigma-Aldrich in Europe are manufactured; divestment of brands and trademarks such as Fluka, Riedel-de-Haen and Hydranal on a worldwide basis; granting a temporary license to Sigma-Aldrich brand for the supply of solvents and inorganics in the European Economic Area; and transfer of customer information and a solution to ensure a temporary channel to the market.

Following an extensive market test with customers and competitors, the parties offered improvements to their initial commitment proposal. The Commission concluded that in light of the market test the improved commitments addressed its competition concerns. Consequently, the Commission approved the proposed transaction, as modified by the commitments. The decision is conditional upon full compliance with the commitments. Source: Commission Press Release 15/6/2015

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 acquisition of certain manufacturing assets belonging to Alcatel-Lucent Italia by Flextronics
  • Commission approves joint venture for cross-border licensing of online music between PRSfM, STIM and GEMA, subject to commitments
  • Commission approves acquisition of VDM Metals Group by Lindsay Goldberg
  • Commission approves acquisition of APPE by Plastipak
  • Commission approves acquisition of ADM's cocoa business by Olam
  • Commission approves acquisition of RTI by Alcoa in titanium sector
  • Commission approves acquisition of International Flooring Systems by Mohawk Industries in wood panel and flooring products industries