Competition: Aalberts Industries brings damages action for excessively long court proceedings

On 1 December 2014, details were published of an appeal brought by Aalberts Industries NV (“Aalberts”) against the Court of Justice of the European Union (“CJEU”) and the Commission claiming damages for the harm suffered as a result of delay by the General Court (“GC”) in adjucating Aalberts’ appeal against the Commission’s copper fittings cartel decision. On 20 September 2006, the Commission imposed fines totaling EUR 314.76 million on 30 companies, including Aalberts, for having participated in a cartel in the copper fittings sector. Shortly after the Commission’s decision, Aalberts brought an action with the GC. The GC accepted Aalbert’s claims and handed down its ruling dismissing the Commission’s decision in so far as it related to Aalberts as well as the fine imposed on 24 March 2011. Aalberts have now brought an action with the GC claiming that the GC violated Aalbert’s right to a fair and public hearing within reasonable time by delivering its judgement on Aalberts’ appeal against the Commission’s decision only after 4 years and 3 months from the date on which the appeal was submitted. According to Aalberts, it should not have taken the GC more than three years to deal with its action in view of the circumstances of the case. Aalberts claims that the GC thereby infringed Article 47 of the Charter of the Fundamental Rights of the European Union and the European Union, represented by the CJEU or the Commission, should be ordered to compensate the damage caused to Aalberts due to delay consisting of EUR 1,041,863 compensation for material damage, EUR 5,040 000 compensation for non-material damage and costs. Source: Case T-725/14 Aalberts Industries v Commission and Court of Justice of the European Union, OJ C 431/43, 1 December 2014 and Case T-385/06 Aalberts Industries NV, Comap SA and Simplex Armaturen + Fittings GmbH & Co. KG v European Commission, judgement of the General Court on 24 March 2011

Competition: Mylan Laboratories, Krka and Niche Generics appeal against Commission’s Servier “pay for delay” decision

On 1 December 2014, details were published of three separate appeals brought by Mylan Laboratories Ltd and Mylan Inc (“Mylan”), Krka Tovarna Zdravil, d.d. (“Krka”) and Niche Generics Limited (“Niche Generics”) against the Commission’s decision fining them and three other companies for entering into “pay for delay” settlement agreements. In July 2014, the Commission announced that it had fined a French pharmaceutical company Servier and five producers of generic medicines, including Mylan, Krka and Niche Generics, for practices delaying generic entry of the cardio-vascular drug perindopril in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). Perindopril is a blood pressure control medicine and used to be Servier's best-selling product. Mylan, Krka and Niche Generics have now all brought actions with the General Court (“GC”) seeking the annulment of the Commission’s decision and the fines imposed. All these companies claim in their appeals that, inter alia, the Commission erred in its assessment of the relevant factual, legal and economic context in which the settlement agreements were entered into and erred in law by categorizing the settlement agreements as violations of competition law having the object of restricting competition or that the settlement agreements had anticompetitive effects. Furthermore, Mylan, Krka and Niche Generics claim that the Commission breached the companies’ right of defence in various ways. Finally, according to Mylan and Niche Generics, the Commission violated the principle of proportionality. Source: Case T-682/14 Mylan Laboratories and Mylan v Commission, OJ C 431/32, 1 December 2014, Case T-684/14 Krka v Commission, OJ C 431/34, 1 December 2014 and Case T-70114 Niche Generics v Commission, OJ C 431/38, 1 December 2014

Competition: Cooperation Agreement with Switzerland enters into force

On 1 December 2014, the cooperation agreement in competition matters concluded between the European Union (“EU”) and Switzerland (“Agreement”) entered into force. This is the first time when the EU concludes an agreement with a third country that will enable the two competition authorities to exchange evidence they have obtained in their respective investigations (a so-called “second-generation” agreement). According to the Commission, the Agreement will strengthen cooperation between the Commission and the Swiss Competition Commission and provides a framework for the co-ordination of competition enforcement activities. The Agreement will enhance co-operation in the fight against breaches of competition law, for instance through regular contacts between the two authorities to discuss policy issues and enforcement efforts and priorities. The Commission and the Swiss Competition Commission will also notify each other of concrete enforcement activities affecting each other’s major interests. The exchange of information under the Agreement is subject to strict conditions protecting business secrets and personal data. Information can under the scope of the Agreement be exchanged when both authorities investigate the same or a related conduct or a transaction and the receiving authority can use the evidence only for the enforcement of its competition rules. Furthermore, no evidence can be used to impose sanctions on individuals. The EU has previously concluded so-called “first generation” competition agreements with the United States, Canada Japan and South Korea. Source: European Commission press release 28/11/2014

Competition: General Court annuls Commission’s decision against Alstom and dismisses Alstom Grid’s appeal in power transformers cartel 

On 27 November 2014, the General Court (“GC”) handed down two separate judgements in the appeals brought by Alstom (“Alstom”) and its former subsidiary Areva T&D SA (now Alstom Grid SAS) (“Alstom Grid”) against the Commission’s decision on the power transformers cartel. In October 2009, the Commission announced that it had imposed fines totaling EUR 67.644 million on seven companies, ABB, Areva T&D, Alstom, Fuji Electrics, Hitachi and Toshiba, for operating an illegal market sharing cartel between June 1999 and May 2003. Siemens also participated in the cartel but was granted immunity from fines for revealing the existence of the cartel to the Commission. Alstom and Alstom Grid were two of the companies lodging appeals with the GC to challenge the Commission’s decision. In its appeal, Alstom claimed that, inter alia, the Commission had not provided sufficient explanation why Alstom had not successfully rebutted the presumption according to which a parent company of a wholly-owned subsidiary exercises a decisive influence over the subsidiary’s conduct. Further, as regards the appeal submitted by Alstom Grid, Alstom Grid claimed that the Commission had erred when refusing to grant Alstom Grid immunity from fines under the 2002 Leniency Notice, had breached the principles of legitimate expectations and legal certainty as well as had failed to state reasons for such a decision. In its two judgements delivered on 27 November 2014, the GC annulled the Commission’s decision in so far as it related to Alstom but rejected Alstom Grid’s appeal on all grounds. Firstly, as regards Alstom, the GC firstly referred to the settled case law according to which a parent company having a 100 % shareholding in a subsidiary which has infringed the EU competition rules is capable of exercising a decisive influence over the subsidiary’s conduct. Accordingly, the GC noted that when the Commission relies exclusively on the presumption, the Commission is in any event required, if it is not to render that presumption irrebuttable in reality, to state adequate reasons why the elements of fact and of law put forward by a parent company attempting to rebut the presumption did not suffice. In its assessment of the facts of the case concerned, the GC took into account in particular that Alstom had submitted a number of detailed arguments to support the rebuttal of the presumption which could not be considered manifestly irrelevant, unimportant or clearly ancillary. However, the Commission’s decision was limited to simply stating that Alstom had not provided any arguments to reverse the presumption and did not explain how the Commission arrived in this conclusion. Accordingly, the GC found that the Commission had breached its obligation to provide sufficient reasoning and annulled the Commission’s decision in so far as it related to Alstom. Secondly, as regards the GC’s ruling on the appeal brought by Alstom Grid, the GC rejected all Alstom Grid’s claims. According to the GC, the Commission had not erred and breached the principles of legitimate expectations and legal certainty by refusing to grant Alstom Grid immunity from fines. Source: Commission Case T-517/09 Alstom v Commission, judgement of the General Court on 27 November 2014 and Case T-521/09 Alstom Grid SAS v European Commission, judgement of the General Court on 27 November 2014

Competition: General Court dismisses appeal of two Czech energy companies against fine for obstruction of Commission’s inspection

On 26 November 2014, the General Court (“GC”) handed down its judgement dismissing an appeal brought by two Czech energy companies, Energetický a průmyslový holding a.s. (“EPH”) and its subsidiary EP Investment Advisors s.r.o. (“EPIA”), against the Commission’s decision to impose a fine of EUR 2.5 million on these companies for obstructing the Commission’s inspection in an antitrust investigation. In November 2009, the Commission carried out an inspection at the premises of EPIA and EPH (a so-called “dawn raid”) as part of the investigation relating to a potential violation of EU competition rules. On the first day of the investigation, the Commission’s officials requested to block e-mail accounts of certain key persons until further notice by setting a new password only known to the Commission’s officials. Subsequently, on the second day of the inspection, the Commission’s officials discovered that the password for one account had been modified in the course of the first day of the inspection in order to allow the account holder to access the account. Furthermore, the Commission’s officials also further discovered that one of the key persons had requested the IT department to divert all e-mails arriving in certain blocked accounts away from these accounts to a computer server as a result of which the incoming e-mails did not become visible in the inboxes concerned, they could not be searched by the Commission’s officials and their integrity could be compromised. As a result of this conduct, the Commission found that EPH and EPIA had refused to submit to the inspection by negligently failing to block the e-mail accounts and by intentionally diverting incoming e-mails and imposed a fine of EUR 2.5 million jointly and severally on these companies under Article 23(1)(c) of the Regulation 1/2003. In June 2012, EPH and EPIA brought an action before the GC seeking that the Commission’s decision be set aside and the fine imposed be annulled. In its judgement, the GC dismissed all EPH’s and EPIA’s claims and found that the Commission had not erred when concluding that EPH and EPIA had refused to submit to the inspection. Firstly, the GC noted that the Commission may impose fines under Article 23(1)(c) of the Regulation 1/2003 where, intentionally or negligently, companies refuse to submit to a Commission’s inspection. The Commission has the burden of proof for such a refusal. As regards allowing access to the blocked e-mail account, EPH and EPIA had argued in their appeal that the mere fact of having allowed access could not be considered a negligent infringement. The GC did not accept this argument. According to the GC, the mere fact that the Commission’s officials did not obtain, as requested, exclusive access to the e-mail account concerned was sufficient to characterize the conduct of EPH and EPIA as a refusal to submit to the inspection in the case at hand. Therefore, the Commission was correct to find that EPH and EPIA had acted negligently when allowing access to the email account blocked by the Commission’s officials. Secondly, as regards the intentional diversion of e-mails, the GC held that a company must, if the Commission so requests, provide it with documents in its possession which relate to the subject-matter of the investigation, even if those documents could be used by the Commission to establish the existence of an infringement. Namely, EPH and EPIA had submitted in their appeals that the diverted e-mails were still relayed to the server and stored on that medium which was accessible to the Commission’s official at all times. On this point, the GC found that the Commission was not required to examine whether the missing data could be found elsewhere in EPH’s and EPIA’s IT systems but the Commission’s officials should have been able to access all the e-mails normally in the inboxes concerned and EPH and EPIA were under obligation to make e-mails available to the Commission’s officials. Accordingly, the GC dismissed all EPH’s and EPIA’s arguments and found that the Commission had not erred in finding that the diversion of the incoming e-mails to a server was intentional and clearly thwarted both the instructions given to EPH and EPIA and the purpose of the inspection. Source: Case T-272/12 Energetický a průmyslový holding a.s and EP Investment Advisors s.r.o. v European Commission, judgement of the General Court on 26 November 2014Commission Press Release 26/11/2014 and Commission Press Release 28 March 2012

Merger control: Commission approves aerospace and defence joint venture between Airbus and Safran, subject to conditions

On 26 November 2014, the Commission announced that it had approved the proposed creation of a joint venture for space launchers, satellite subsystems and missile propulsion between Airbus Group N.V. (“Airbus”), of the Netherlands, and Safran S.A (“Safran”), of France, subject to conditions. Both Airbus and Safran are active in the aerospace and defence industries and would contribute their respective activities in space launchers, satellite subsystems and missile propulsion in the proposed joint venture. The Commission had concerns that, the joint venture, as initially notified, could have significantly reduced competition in the supply of satellites and space vehicles as the joint venture would have had the incentive to shut out Airbus' competitors or limit their access to a number of important components, namelyhall-effect electric satellite thrusters, carbon-carbon cylinders for optical satellites, standard accuracy pressure transducers (“SAPTs”) for satellites and thermal protection systems for civil re-entry bodies. As regards hall-effect thrusters, the Commission had concerns that the transaction might have significantly reduced competitors' customer base since Airbus, the most important satellite manufacturer in Europe, would have the incentive to buy exclusively from the joint venture. Finally, according to the Commission, the transaction might have led to exchanges of confidential information regarding satellites and satellite components between the joint venture and Airbus to the detriment of competitors. To address the Commission’s concerns, Airbus and Safran committed to exclude Safran’s activities in electric satellite propulsion from the joint venture as well as to maintain this business separated. Further, Airbus and Safran also committed to conclude a framework supply agreement with Safran's current main customer for carbon-carbon cylinders for optical instruments for space applications, thermal protection systems for civil re-entry bodies and SAPT, as well as to guarantee the supply of these components to any third party prime contractor on transparent and non-discriminatory terms. Therefore, the Commission concluded that the transaction, as modified by these commitments, would not raise serious competition concerns and accepted the transaction. Source: Commission Press Release 26/11/2014

Merger control: Commission approves acquisition of Covidien by Medtronic, subject to conditions

On 28 November 2014, the Commission announced that it has approved the proposed acquisition of Covidien plc. (“Covidien”), an Ireland-based manufacturer of medical devices with worldwide activities, by Medtronic Inc. (“Medtronic”), a US-based company active in medical technologies and therapies, subject to conditions. The decision is conditional upon the divestment of Covidien's Stellarex, a promising drug coated balloon currently in development, which, once launched, would compete with Medtronic's leading drug coated balloon device In.Pact. The Commission had concerns that the transaction, as initially notified, would have removed a credible future competitor of Medtronic and reduced innovation in this area. To address the Commission’s competition concerns, Medtronic committed to sell Covidien's worldwide Stellarex business, including manufacturing equipment, related IP rights and scientific and regulatory material necessary for ensuring the completion of the Stellarex trials. The parties to the transaction further committed to, for a transitional period, supply the purchaser with the balloons on which the drug is applied as well as to transfer staff, including some key personnel. This will provide the purchaser with all assets necessary to bring Stellarex to the market and remedy the identified competition concerns. According to the Commission, the commitments offered by Medtronic address the initial competition concerns. Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would not raise serious competition concerns. Source:Commission Press Release 28/11/2014

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 Alliance Automotive Group by Blackstone and Alliance Industries
  • Commission approves acquisition of S-Oil by Saudi Aramco