Competition: General Court dismisses UAHE's appeal against Commission decision refusing access to communications with Spanish competition authority

On 12 May 2015, the General Court ("GC") handed down its judgment dismissing an appeal by the Unión de Almacenistas de Hierros de España ("UAHE") against the Commission's decision refusing UAHE's confirmatory application under Article 7(2) of Regulation 1049/2001 requesting access to documents exchanged between the Commission and the Spanish competition authority, Comisión Nacional de la Competencia ("CNC"). In 2013, UAHE, a professional association, requested that the Commission grant access to all correspondence exchanged between the Commission and the CNC concerning two antitrust procedures opened by the CNC in Spain.

The Commission granted access to some of the documents requested but refused access to the CNC's draft decision concerning the two national procedures in question and to the CNC's summaries of the cases in English. The Commission justified its refusal due to a general presumption that the disclosure of documents such as those requested here would undermine the protection of the commercial interests of the undertakings concerned and the protection of the purpose of investigations. Following the Commission's decision, UAHE brought an action before the GC seeking to annul the Commission's decision.

The GC dismissed UAHE's action in its entirety. The GC confirmed the existence of a general principle that the disclosure of documents submitted by a national competition authority in proceedings concerning an infringement of competition rules may, in principle, undermine the protection of the commercial interests of the undertakings concerned and the protection of the purposes of the national competition authority’s investigation activities. According to the GC, the presumption applies independently of the question whether the request for access concerns an investigation procedure that is pending or one that is already closed.

Furthermore, the GC stated that the effectiveness of the information exchange mechanism within the public authority network ensuring compliance with EU competition rules requires that the information exchanged shall remain confidential and, in addition, the regulation does not state that the protection should end after the investigation has been closed. Finally, the GC held that the period during which the presumption applies cannot be limited in the present case by the right to compensation of those harmed by an infringement because only the investigation file of the CNC, and not that of the Commission, could provide the necessary evidence for a claim for compensation. Source: General Court Press Release 12/05/2015

Competition: Commission accepts commitments by SkyTeam members Air France/KLM, Alitalia and Delta

On 12 May 2015, the Commission announced that it has accepted commitments offered by Air France/KLM, Alitalia and Delta to lower barriers to entry or expansion on three transatlantic flight routes. The companies are members of the world-wide SkyTeam airline alliance. Member airlines conclude diverse cooperation agreements regarding passenger and air cargo transport.

In January 2012, the Commission opened a formal investigation, following the signing of agreements in 2009 and 2010 between Air France/KLM, Alitalia and Delta establishing a transatlantic joint venture. The Commission had concerns that the joint venture might harm competition in the internal market. The Commission was alarmed by the extensive cooperation between the parties involving profit-sharing and the joint management of schedules, pricing and capacity, and was concerned that it could lead to higher prices for all passengers on Amsterdam-New York routes and Rome-New York routes, and for premium passengers on Paris-New York routes. Furthermore, the Commission considered that new and existing competitors would not be able to challenge the joint venture's ability to set and maintain prices above the level of a competitive market due to barriers to entry and expansion on the market.

In order to address the Commission's competition concerns, the companies jointly offered commitments, on which the Commission consulted in 2014. As a result of the market-testing, the parties proposed some modifications and clarifications to the initial commitments. Under the final commitments, the airlines offered to make available landing and take-off slots at Amsterdam, Rome and/or New York airports on the Amsterdam-New York and Rome-New York routes in order to facilitate the market entry of competitors. Furthermore, the airlines are also committed to enter into agreements which would enable competitors to offer tickets on their flights and facilitate access to connecting traffic, as well as to provide access to their frequent flyer programs on all three routes and allow passengers of competitors, who have no equivalent frequent flyer program, to accrue and redeem miles on the parties' program. Finally, the airlines committed to submit data concerning their cooperation which will facilitate an evaluation of the alliance's impact on the markets over time.

The Commission held that the final commitments address its competition concerns. Therefore, the Commission decided to make them legally binding for a period of ten years. The fulfillment of the commitments will be monitored by an independent trustee. Source: Commission Press Release 12/5/2015

Merger control (Finland): Finnish Competition and Consumer Authority approves Valio Oy's application to lift conditions set on two acquisitions by Valio

On 23 April 2015, the Finnish Compeittion and Consumer Authority ("FCCA") approved the application of Valio Oy ("Valio") to lift certain conditions attached to the FCCA's decision from 2000 approving the acquisition of several businesses of Osuuskunta Maito-Pirkka and Kainuun Osuusmeijeri and the business of Aito Maito Fin Oy, a joint venture between the two former companies, by Valio. The conditions were revised in 2004 when the FCCA approved Valio's acquisition of the cheese business of Meijeriosuuskunta Milka in Vöyri and a sourcing arrangement under which Milka undertook to sell all raw milk collected from its members to Valio. The FCCA originally held that the acquisitions, as originally notified, would have created or strengthened Valio's dominant position, thereby significantly impeding effective competition on several markets in Finland.

The FCCA concluded that there was a substantial cause to lift the condition that obliged Valio to buy raw milk and raw milk processed products from its competitors for export based on market prices and reasonable and non-discriminatory export costs and the condition which required Valio to divest any closed production facilities and related appliances to a potential competitor. According to the FCCA, the obligations under these conditions had been applied only to a limited extent or not at all during the last 15 years and therefore the conditions were no longer needed to ensure sound competition. The FCCA also noted that the condition that obliged Valio to divest the Into and Aito brands during a certain period of time was no longer in force because Valio had already sold the Into brand and the FCCA had previously removed the condition concerning the Aito brand.

Initially, Valio submitted an application to the FCCA in February 2011 where it requested the FCCA to lift all conditions attached to the implementation of the acquisitions in 2000 and 2004. Valio supplemented its 2011 application but subsequently withdrew it in its entirety. In 2014, Valio submitted a new application to the FCCA where it again requested the FCCA to lift all conditions in their entirety. The FCCA informed Valio in March 2015 of its preliminary view that the application could be accepted only with respect to certain conditions. Finally, Valio informed the FCCA in April 2015 that it will refine its application to concern only the conditions which the FCCA was willing to lift, i.e. the conditions described above, and will withdraw the application for other parts. The FCCA made its final decision based on Valio's amended application. Source: Decision of the Finnish Competition and Consumer Authority 23/04/2015 (in Finnish)

State Aid: Court of Justice of the European Union rules that Germany failed to recover state aid from Deutsche Post

On 6 May 2015, the Court of Justice of the European Union ("CJEU") handed down its judgment, ruling that Germany had failed to take the necessary measures to recover illegally granted state aid from Deutsche Post AG ("Deutsche Post"). Following complaints from competitors, the Commission made a decision in 2012, finding that Deutsche Post had operated under an undue economic advantage over competitors due to combination of high regulated prices and pension subsidies granted by the German state.

The Commission ordered Germany to recover the illegal state aid granted to Deutsche Post via subsidies since 2003. The Commission did not rule on the exact amount of aid to be recovered and left it to be calculated by the German state using the method provided in the decision. By the end of the four-month time period set out in the decision, Germany had recovered an amount significantly lower than the amount the Commission had estimated. This was because Germany considered only commercial post-related services as non-regulated, as opposed to the Commission's view of identifying even business-to-business services as non-regulated. In November 2013, the Commission referred Germany to the CJEU for failing to recover the incompatible aid from Deutsche Post.

In its ruling, the CJEU recalled that it is settled case law that a member state must take all measures necessary to ensure implementation of a state aid recovery decision. The CJEU noted that Germany should have carried out an assessment to determine whether business-to-business parcel services were a separate market from business-to-consumer parcel services, and to determine if Deutsche Post held a dominant position on this market. Such a dominant position would make Deutsche Post subject to control by the Bundesnetzagentur, which is responsible for regulating tariffs applied by Deutsche Post for its postal services.

Furthermore, the CJEU stated that Germany should have communicated the results of its assessment to the Commission, and its failure to do so meant that Germany breached its obligations under the state aid rules. Both Deutsche Post and Germany have appealed the Commission's 2012 decision to the General Court. However, the pending appeals do not have a suspensory effect on the obligation to recover the aid. Source: Case C-674/13 – European Commission v Federal Republic of Germany, 6/5/2015 

State Aid: Commission orders recovery of aid from former operator of Portuguese shipyard

On 7 May 2015, the Commission announced that it concluded, after an in-depth investigation, that Portugal had granted around EUR 290 million worth of illegal state aid to Estaleiros Navais de Viana do Castelo, S.A. ("ENVC"). ENVC is a Portuguese former shipyard operator that was fully owned by Portugal through a holding company. In 2013 the Portuguese State began selling ENVC's assets, which were partly acquired by private operator WestSea.

The Portuguese State has supported ENVC since 2000, when ENVC started making heavy losses. The support measures of EUR 290 million in aggregate were given through capital increases, loans, comfort letters and guarantees to underwrite financing agreements between ENVC and commercial banks.

After its in-depth investigation the Commission concluded that the subsidies constituted state aid because they had not been granted on market terms. The Commission deemed the aid incompatible with the internal market because Portugal granted the subsidies to ENVC at a time when the company did not have a realistic restructuring program to enable the company to remain viable in the future without state support. In addition, it gave ENVC a substantial economic advantage over its competitors, who had to operate without such subsidies. The Commission also noted that the subsidies breached the "one time last time" principle which allows granting rescue or restructuring aid only once in a ten-year period.

In considering who should be responsible for repaying the aid, the Commission took into account that  ENVC is in the process of being wound up. As only part of ENVC's assets had been acquired by WestSea, and since they were acquired at market conditions following a transparent open and competitive tender, the Commission concluded that WestSea is not the economic successor of ENVC. Therefore, the Commission decided that the obligation to repay the incompatible aid remains with ENVC and is not passed on to WestSea. Source: Commission's Press Release 7/5/2015

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 Fortum Distribution by Borealis
  • Commission approves acquisition of Domino by Brother
  • Commission approves acquisition of joint control over Quadrica by Omnes Capital, Predica Prevoyance and Quadran
  • Commission approves acquisition of Walz Group by Apollo