Competition: Commission seeks feedback on commitments offered by container liner shipping companies

On 16 February 2016, the Commission announced that it is seeking comments from interested parties on commitments offered by fifteen container liner shipping companies to address the Commission's competition concerns about their publication of future pricing information. Container liner shipping is the transport of containers by ship at a fixed time schedule on a specific route between a range of ports at one end and another range of ports at the other end. 

In May 2011, the Commission announced that its officials had conducted unannounced inspections at the premises of companies active in the container liner shipping sector. In November 2013, the Commission opened formal proceedings against several of said companies. During its preliminary assessment, the Commission found that fifteen container shipping companies had regularly announced their intended future increases of freight prices on their websites, via trade press, or in other ways. These price announcements, known as General Rate Increases or GRI announcements, did not indicate the fixed final price for the relevant shipping services, but only the amount of the increase in US-Dollars per transported container unit, the affected trade route and the planned implementation date.

The Commission has concerns that GRI announcements do not provide full information on new prices to customers but merely allow carriers to explore each other's pricing intentions and coordinate their behavior. Such conduct is in breach of EU and European Economic Area ("EEA") competition rules and their ban on concerted practices between companies. To address the Commission's concerns, the shipping companies have offered to stop publishing and communicating the price increases, make pricing more transparent for customers and limit the time window for any price announcements. These commitments are offered for a period of three years. Interested parties may submit comments within one month of the date of publication. Source: Commission Press Release 16/02/2016 and Commission Press Release 22/11/2013

Competition: Guardian Europe seeks damages for excessively long court proceedings

On 15 February 2016, details were published of an action by Guardian Europe Sarl ("Guardian Europe") to claim damages from the European Union ("EU") for harm suffered as a result of excessively long court proceedings before the General Court ("GC"). In November 2007, the Commission imposed fines totaling EUR 487 million on four corporate groups, including Asahi, Guardian, Pilkington and Saint-Gobain, for coordinating price increases and other commercial conditions for the deliveries of flat glass in the European Economic Area ("EEA"). The Commission found that Guardian Europe and its parent company Guardian Industries Corp (together "Guardian"), were jointly and severally liable for the infringement and fined these companies a total of EUR 148 million. 

Guardian sought to challenge the Commission's decision before the GC, but the GC dismissed the appeal in its entirety. Guardian lodged a further appeal with the Court of Justice of the European Union ("CJEU") to set aside the GC's judgment and reduce the fine. In particular, Guardian claimed that the GC had failed to grant effective judicial review within a reasonable time, as required under Article 47 of the Charter of the Fundamental Rights of the European Union. Furthermore, Guardian asserted that the GC breached the principle of equal treatment by upholding the Commission's decision that excluded captive sales in the calculation of the fines imposed on the other addressees, thereby discriminating against Guardian. In November 2014, the CJEU upheld Guardian's appeal concerning unequal treatment and reduced the fine by EUR 44.4 million. The CJEU also noted that the length of the proceedings before the GC, which amounted to almost four years and seven months, could not be justified by any of the circumstances specific to the case. However, it found that a claim for compensation should have been brought before the GC and not the CJEU. 

Guardian Europe has now sought damages before the GC. It seeks compensation for damages resulting from the GC's failure to rule within a reasonable time and the Commission's and the GC's infringement of the principle of equal treatment, consisting of compensation for guarantee costs, opportunity costs and loss of profit, plus non-pecuniary losses. To support its action, Guardian asserts that the delay in the proceedings increased the costs related to the bank guarantee for the amount of the fine that Guardian did not immediately pay. The delay also caused loss of profit because the interest rate paid on the amount of the fine that was reimbursed to Guardian following the CJEU's judgment was lower than the return Guardian would have secured by investing the same amount in its business. Finally, Guardian claims compensation for non-pecuniary losses resulting from the Commission's decision that wrongly imposed an inflated fine on Guardian, thereby suggesting that the company bore a particular responsibility for the cartel and resulting in additional costs. This error was only corrected when the CJEU reduced the fine in November 2014. However, Guardian asserts that the reduction of the fine did not compensate the harm that the company suffered from November 2007 to November 2014. Source: Case T-673/15 – Guardian Europe v European Union, OJ 2016, C 59/23

Competition: Commission launches new anti-dumping investigations and imposes duties on several steel products

On 12 February 2016, the Commission opened new anti-dumping investigations to determine whether Chinese imports of seamless pipes, heavy plates and hot-rolled flat steel have been dumped on the EU market. Dumping is normally the result of state interference in economic operations, or of protection or lack of competition in the exporting countries’ markets, which allows local producers to charge artificially high prices in their home market and subsequently use the profits from such activities to "subsidize" exports at prices below real market costs.

The Commission states that in confirmed cases of dumping, the Commission will take measures to protect European industry from the damaging effects of unfair trade. Similarly, the EU Trade Commissioner Cecilia Malmström states that she is determined to use all means possible to ensure that the trading partners play by the rules. 

In addition to opening new investigations, the Commission imposed provisional anti-dumping duties in another on-going steel product case, concerning cold-rolled flat steel imported from China and Russia. This follows similar anti-dumping measures adopted recently on so called "high fatigue performance rebars" from China. Consequently, the EU now has 37 trade defense measures in place on imports of steel products, while nine investigations are still ongoing. Source: Commission Press Release 12/02/2016

Merger control: Commission conditionally approves Staples's acquisition of Office Depot

On 10 February 2016, the Commission approved the acquisition of an office supplies distributor Office Depot, Inc. ("Office Depot") by Staples Incorporated ("Staples"), subject to conditions. Both companies supply office products, such as stationery, paper and printer cartridges, in several European countries. Both are also active in a number of sales channels, including wholesale, contract sales and online sales. The Commission focused its investigation on the effects of the transaction in the international contract sales channel and the national contract sales channels in the Netherlands and Sweden. Contract sales customers typically buy office supplies by entering into framework contracts following a tender.

The Commission's investigation showed that the transaction, as initially notified, would have critically reduced competition in the already concentrated markets for international contracts for office supplies. According to the Commission, only Staples, Office Depot and their competitor Lyreco are capable of entering into international supply contracts for large business customers in Europe, because of their international presence. Customers do not consider switching to several national contracts a sufficiently attractive alternative because international contracts provide lower prices and savings on administrative costs. Further, competition from other suppliers is limited. Specialist suppliers, such as companies supplying only printer cartridges, offer a smaller product range and typically cannot provide the same services as contract stationers. Respectively, online commerce companies, such as Amazon, cannot be considered competitors in the contract business market because of their presence in the online channel only. The Commission's investigation also revealed that entry barriers are high. In order to meet the specific requirements of large contract customers who purchase under tenders, suppliers must offer a wide range of office products at competitive prices in a number of countries. Finally, the Commission concluded that the transaction would have reduced competition in the markets for national contracts with large business customers in the Netherlands and Sweden, as well as the markets for wholesale supply of office products in Sweden. It found that all these markets were particularly concentrated with only few active alternative suppliers.

To address the Commission's concerns, the companies offered to divest Office Depot's entire contract distribution business in the European Economic Area ("EEA") and Switzerland and Office Depot's entire business operations in Sweden. According to the Commission, the commitments will remove the entire overlap between the companies in all problematic markets. They also ensure that an important alternative will remain available. The implementation of the transaction is conditional upon the Commission approving the buyer of the divestment business. Source: Commission Press Release 10/02/2016

Merger control (Sweden): Swedish Competition Authority initiates proceedings to prohibit Logstor's acquisition of Powerpipe

On 12 February 2016, the Swedish Competition Authority ("SCA") initiated proceedings before the Stockholm City Court ("SCC") to prohibit Logstor Sverige Holding AB's acquisition of all shares in Powerpipe Systems AB ("Powerpipe"). In September 2015, Logstor A/S notified Logstor Holding AB's (jointly "Logstor") acquisition to the SCA. In October 2015, the SCA opened an in-depth investigation to assess potential competition concerns raised by the proposed transaction. In November 2015, the SCA applied to the SCC for an extension of the investigation, to which Logstor and Powerpipe gave their consent. In December 2015, the SCC approved the application and set the extension until 12 February 2016. 

Logstor and Powerpipe are two out of four Swedish producers of pre-insulated pipes used for heating. According to Dan Sjöblom, Director General at the SCA, the parties are each other's main competitors, and the merger would substantially weaken competition because it would result in one very large and dominant producer with a 70-80% share of the Swedish market. In the SCA's summons application, the SCA also states that although internal documents indicate that Logstor expects synergies, these internal documents also state that Logstor has a defensive purpose in the acquisition. According to the SCA, the internal documents show that Logstor's intention in the acquisition is not only to eliminate a competitor who has aggressively competed on price towards Swedish customers, but also to remove the risk of another company acquiring Powerpipe. 

The SCA's petition to the SCC to prohibit the acquisition comes with a conditional fine of SEK 250 million. Source: Swedish Competition Authority Press Release 12/02/2016 (in Swedish) and Swedish Competition Authority Summons Application 12/02/2016 (in Swedish)

Public Procurement (Sweden): Swedish Competition Authority finds that Svenska Mässan and Gothia Towers are not considered contracting authorities

On 11 February 2016, the Swedish Competition Authority ("SCA") decided that Svenska Mässan och Möten AB ("Svenska Mässan") and Gothia Towers AB ("Gothia Towers") in Gothenburg should not be considered bodies governed by public law. Thus they are not required to apply the Swedish Public Procurement Act (the "Public Procurement Act"). Svenska Mässan and Gothia Towers are wholly owned subsidiaries of Stiftelsen Svenska Mässan ("Stiftelsen"). Svenska Mässan's business consists mainly of arranging fairs in one of the major buildings used for fairs in Gothenburg. Next door to Svenska Mässan, Gothia Towers runs three hotels, where it is also possible to use conference facilities and restaurants. 

The SCA initiated this investigation in summer 2014 based on an allegation that Svenska Mässan and Gothia Towers had entered into an agreement with the security company Global Security IPS ("IPS") without prior contract notice in accordance with the Public Procurement Act. The agreement became effective on 1 August 2014. In the context of the allegation it was asserted that security services are procured yearly for a value of up to at least SEK 3 million by Gothia Towers and approximately SEK 650,000 by Svenska Mässan. Therefore, the SCA asked Stiftelsen, Svenska Mässan and Gothia Towers to clarify whether they consider themselves to be a contracting authority and if they apply the Public Procurement Act. The parties' response was in the negative, because they are economically independent and are not governed by public law. 

In its decision, the SCA set out the requirements for an entity being considered to be a body governed by public law in accordance with the Public Procurement Act: the entity must be a legal person; it should be established for the specific purpose of meeting needs in the general interest without having an industrial or commercial character; and it should be closely linked to a public authority based on financing, control or number of board members appointed by the public authority. After an extensive analysis, the SCA concluded that Stiftelsen, Svenska Mässan and Gothia Towers are legal persons but that none of them fulfil the criteria of being closely linked to a public authority required in the Public Procurement Act. Thus, although these entities also meet the needs of the general interest, the SCA did not find it necessary to investigate whether those needs are industrial or commercial. Accordingly, the SCA decided not to further investigate Svenska Mässan and Gothia Towers' security contract with IPS. Source: Swedish Competition Authority Press Release 11/02/2016 (in Swedish) and Swedish Competition Authority Decision 04/02/2016 (in Swedish)

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 Procter & Gamble's beauty products businesses by Coty
  • Commission approves acquisition of joint control over RAC by CVC and Sphinx
  • Commission approves acquisition of joint control over SSO by Mitsubishi and KKR
  • Commission approves acquisition of King by Activision Blizzard
  • Commission approves acquisition of Comdata by The Carlyle Group
  • Commission approves acquisition of Walmark by Vita Central Europe
  • Commission approves acquisition of Kurt Geiger by Cinven