Competition: Commission sends Statement of Objections to the Lithuanian railway incumbent AB Lietuvos geležinkeliai

On 5 January 2014, the Commission announced that it had sent a Statement of Objections to the Lithuanian railway incumbent AB Lietuvos geležinkeliai ("LG") according to which it suspects the company of having limited competition on the rail markets in Lithuania and Latvia by removing a railway track connecting the two countries. The sending of a Statement of Objections is a formal step in the Commission investigations into suspected violations of EU competition law and does not prejudge the outcome of the investigation. In September 2008, LG suspended traffic on a railway track running between Lithuania and Latvia and dismantled the track one month later. Since then the track has not been rebuilt. Following a complaint, the Commission carried out inspections at the premises of LG in 2011 and opened formal antitrust proceedings in March 2013. The Commission has concerns that the actions of LG could have limited competition on the rail markets in Lithuania and in Latvia, in particular by obstructing the plans of a major customer of LG from redirecting its railway freight to Latvia using the services of other rail operators. Such behaviour, if established, would breach EU antitrust rules that prohibit the abuse of a dominant market position. SourceCommission Press Release 5/1/2015  

Competition: Commission rejects complaint about motor vehicle distribution by Suzuki

On 23 December 2014, the Commission published a decision rejecting a complaint against Magyar Suzuki Corporation (“Suzuki”). In January 2013, Auto Team 4x4 s.r.o. (“Auto Team”) requested that the Commission investigate Suzuki’s behavior in motor vehicle distribution, which Auto Team considered to have been in breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) and to be contrary to the provisions of Article 4(1) of Commission Regulation 1400/2002. Auto Team alleged that Suzuki abused a dominant position within the meaning of Article 102 TFEU by Limiting Auto Team's ability to order cars by switching off the Suzuki electronic ordering system, withholding Auto Team's monthly deposit, not reimbursing Auto Team for pre-delivery inspections of cars, failing to communicate regarding Auto Team's 2011 sales plan, failing to communicate as regards commercial activities for Suzuki customers, terminating Auto Team's dealer agreement on 27 January 2011 and removing mention of Auto Team from the Suzuki website. Auto Team alleged that the underlying motivation behind this behavior was to prevent Auto Team from selling vehicles to consumers from other Member States. In its decision the Commission concluded that there were insufficient grounds for conducting a further investigation into the allegations. The Commission found it very unlikely that it could, on any credible market definition, be established that Suzuki had a dominant market position. Accordingly, in its discretion to set priorities, the Commission concluded that there were insufficient grounds to conduct a further investigation into the alleged infringements and rejected the complaint. SourceCase AT.40072 Magyar Suzuki Corporation

Competition: Commission rejects complaint about UEFA Financial Fair Play Rules

On 23 December 2014, the Commission published a decision rejecting a complaint against the Union des Associations Européennes de Football (“UEFA”). In May 2013, the complainant, SPRL MAD Management, asked the Commission to launch an investigation into the UEFA Club Licensing and Financial Fair Play Regulations (“FFP”). The FFP contains a set of licensing criteria that have to be fulfilled by football clubs in order to compete in UEFA club competitions. In particular, the complainant requested that the Commission launch an investigation into the “break-even” requirement contained in Articles 58 and 63 of the FFP. According to this requirement, over a period of three years, the relevant income of clubs has to at least match their relevant expenses with an acceptable deviation of EUR 5 million. Moreover, clubs may exceed the acceptable deviation of EUR 5 million provided that such excess is entirely covered by contributions from equity participants and/or related parties, up to EUR 45 million for the monitoring period assessed in the 2013/2014 and 2014/2015 seasons. The complainant alleged that the break-even requirement constitutes a violation of Article 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) firstly because it distorts competition between clubs since it imposes a limit on the level of debt and investment in players of clubs. Secondly, according to the complainant, the break-even requirement breaches Article 101 and 102 of the TFEU because it negatively affects the salaries and professional mobility of players since clubs will spend less money on transfers and consequently fewer transfers will take place. Thirdly, the complainant claimed that it distorts competition on the market for the services of players' agents since there will be fewer transfers and transfer fees will be lower. In addition, the complainant claimed that the break-even requirement infringes Articles 45, 56 and 63 TFEU. In June 2013, the complainant lodged an action in the Court of First Instance of Brussels (“the Brussels Court”) seeking damages from UEFA for breach of Articles 101 and 102 of the TFEU. The complainant raised virtually identical arguments in the Brussels Court action as in its complaint to the Commission. In its decision, the Commission rejected the complaint against the UEFA for reasons of priority setting. The Commission concluded that the Brussels Court is well placed to deal with the matters raised in the complaint and that it can adequately protect the complainant’s rights. SourceCase AT.40105 UEFA Financial Fair Play Rules 24/10/2014

Competition: Court of Justice of European Union rules on marine hoses cartel appeal and intra-group economic continuity

On 18 December 2014, the Court of Justice of European Union (“CJEU”) handed down its judgement on an appeal brought by the Commission against the ruling of the General Court (“GC”) partially annulling the Commission’s decision and reducing the fine imposed on Parker ITR Srl (“Parker ITR”) and Parker-Hannifin Corp (“Parker-Hannifin”) for their participation in the marine hose cartel. In 2007, the Commission found that Parker ITR and its parent company Parker-Hannifin had participated in a cartel on the market for marine hoses between April 1986 and May 2007 and imposed a fine of EUR 25 610 000 on Parker ITR of which Parker-Hannifin was held jointly and severally liable for EUR 8 320 000. The Commission’s decision was based on the fact that for the period from 1 April 1986 to 31 December 2001, ITR SpA, a previous owner of the assets involved in the infringement, was held liable for its own conduct as well as that of its predecessor Pirelli Treg SpA, which it had entirely absorbed in December 1990. On 1 January 2002, ITR SpA’s rubber hose activities, including the marine hose business, were transferred to its wholly owned subsidiary ITR Rubber as part of an internal reorganization. As a result of the arrangement, ITR SpA and ITR Rubber were economically linked as a parent company and a wholly owned subsidiary and were part of the same undertaking. The Commission had therefore considered that in such a case, liability for the past unlawful conduct of the transferor, namely ITR SpA or its parent company Saiag SpA, may pass to the transferee, ITR Rubber, even if the transferor continues to exist in law. Parker-Hannifin became the owner of the assets that contributed to the cartel on 31 January 2002, when it acquired the shares in ITR Rubber, which was renamed Parker ITR a few months later. Following the Commission’s decision, the companies brought an action before the GC seeking annulment of the decision and reduction of the fine imposed. By its judgement, the GC found that the Commission had erred in attributing liability to Parker ITR for the infringements committed before 1 January 2002, i.e. before the execution of the internal reorganization, and reduced the fine imposed on Parker ITR to EUR 6 400 000 and the fine imposed on Parker-Hannifin to EUR 6 300 000. According to the GC, the incorporation of the rubber hose business into Parker ITR was clearly part of an objective of selling that subsidiary’s shares to a third undertaking and therefore, there was no structural link between the transferor, Saiag SpA or ITR SpA and the transferee, Parker-Hannifin. Subsequently, the Commission brought an action before the CJEU seeking that the GC’s ruling would be set aside in so far as it partially annulled the Commission’s decision and reduced the fine imposed. In its judgement, the CJEU upheld the Commission’s arguments regarding intra-group economic continuity and partially set aside the GC’s ruling. Firstly, the CJEU concluded that the GC had erred in law in so far as it held that there was no economic continuity because of the absence of structural links between the transferor and the transferee, which the GC identified to be Saiag SpA or ITR SpA and Parker-Hannifin. According to the CJEU, the GC wrongfully treated two distinct transactions as one and failed to take into consideration that ITR SpA had first transferred its activities in the marine hose sector to one of its subsidiaries, Parker ITR, and then transferred that subsidiary to Parker-Hannifin. That being said, the CJEU referred to settled case-law according to which when a parent company holds all or almost all of the share capital in a subsidiary which has committed an infringement, there is a rebuttable presumption that the parent company in fact exercises decisive influence over its subsidiary. Accordingly, the CJEU concluded that the GC failed to examine, for the purpose of verifying whether the Commission had correctly applied the principle of economic continuity, the existence of real links between ITR SpA and Parker ITR at the time of the transfer as it excluded from the outset the existence of economic continuity without examining the evidence submitted by the parties concerning the existence or absence of real links in the form of a decisive influence. Finally, the CJEU also held that the GC breached its obligation to state reasons regarding the reduction of the fine. In the light of these considerations, the CJEU partially set aside the GC’s judgement and referred case back to the GC for a ruling on the merits of the action. SourceCase C-434/13 P European Commission v Parker Hannifin Manufacturing Srl and Parker-Hannifin Corp, judgement of the Court of Justice of European Union 18 December 2014

Competition: General Court upholds Commission’s decision concerning the Pilkington group’s participation in the car glass cartel

On 17 December 2014, the General Court (“GC”) dismissed in its entirety the appeal brought by Pilkington Group Limited, and various subsidiaries, (together “Pilkington”) to challenge the Commission's decision fining Pilkington EUR 357 million for its participation in the car glass cartel. On 12 November 2008, the Commission announced that it had found that a number of companies, including Pilkington, had infringed EU competition law by participating in a set of agreements and concerted practices in the automotive glass sector. According to the Commission, the infringement in question was a single and continuous infringement consisting of the concerted allocation of contracts concerning the supply of carglass pieces and/or carsets (generally a windscreen, side windows and rear windows) to the major car manufacturers in the EEA. That concerted action, according to the Commission, took the form of the coordination of pricing policies and supply strategies aimed at maintaining an overall stability of the parties’ position on the market concerned. That stability was ensured, in particular, by correcting measures implemented when the cartel had not produced the results envisaged. In view of its participation from 10 March 1998 to 3 September 2002, the Commission initially imposed a fine of EUR 370 million on Pilkington. On 28 February 2013, the Commission reduced the fine to EUR 357 million, in order to correct two errors made in the initial calculation. In February 2009, Pilkington lodged an action with the GC seeking the annulment of the Commission's decision. As regards Pilkington’s arguments relating to the nature and duration of the infringement, the GC found that the Commission was right to characterize the conduct of the members of the cartel as a single and continuous infringement aimed at maintaining overall stability of the participants’ market shares. In addition, the GC noted that Pilkington had not put forward any evidence capable of establishing that its participation in the meetings of the members of the cartel between 10 March 1998 and 15 January 1999 was without any anti-competitive intention and that it distanced itself publicly from what was discussed at those meetings. As regards the calculation of the fine, the GC considered that the statements made in the contested decision enabled Pilkington to understand the factors on the basis of which the Commission examined the gravity and the duration of the infringement, as well as the method of calculation used in order to set the amount of the fine. Lastly, as regards Pilkington’s claims that the GC should exercise its unlimited jurisdiction by reducing the fine, the GC considered that, in the light of all the circumstances of the case, the fine appears proportionate and adequate. Accordingly, the GC dismissed Pilkington’s appeal in its entirety and upheld the Commission’s decision. SourceGeneral Court Press Release 17/12/2014

Competition: General Court rules on Commission’s rejection of a complaint on the ground that the competition authority of a Member State is dealing with the case 

On 17 December 2014, the General Court (“GC”) handed down its judgement on an appeal brought by Si.mobil telekomunikacijske storitve (“Si.mobil”), a Slovenian company which operates in the mobile telephone sector and is wholly owned by Telekom Austria Group, against the Commission’s decision rejecting Si.mobil’s complaint that Mobitel telekomunikacijske storitve’s (“Mobitel”) had forced its competitors out of the Slovenian mobile telephone market. In 2009, Si.mobil lodged a complaint with the Commission criticizing Mobitel’s alleged strategy of outing its competitors from the retail mobile telephone market and the wholesale mobile access and call origination services market. Mobitel was the historical operator on the mobile telephone market in Slovenia before being taken over by Telekom Slovenije, a company in which the Slovenian State has a majority shareholding. By its decision issued in 2011, the Commission rejected Si.mobil’s complaint on the ground that, as regards the retail mobile telephone market, the Slovenian competition authority was already dealing with the case. Further, as for the wholesale mobile access and call origination services market, the Commission found that there was not a sufficient degree of EU interest in conducting a further investigation of the case. Si.mobil brought an action before the GC seeking annulment of the Commission’s rejection decision. In its judgment, the GC upheld the rejection of Si.mobil’s complaint and interpreted for the first time a provision included in Regulation (EC) No 1/2003 in order to ensure that cases are dealt with by the most appropriate authorities within the European Competition Network. Firstly, as regards the retail mobile telephone market, the GC observed that under EU law, the Commission may reject a complaint where a competition authority of a Member State is already dealing with the case. For that purpose, two conditions must be met. Firstly, the Commission must be satisfied that a competition authority of a Member State is dealing with the case that has been referred to the Commission (first condition) and secondly, that the case relates to the same agreement, decision of an association, or practice (second condition). Provided that those two conditions are fulfilled, EU law does not lay down any rules on the allocation of powers as between the Commission and the competition authorities of the Member States which would entitle Si.mobil to have the case dealt with by the Commission. When assessing the circumstances of the case at hand, the GC concluded that the first condition was fulfilled as the Slovenian competition authority was already actively dealing with the case. As for the second condition, the GC reached the same conclusion as the procedure before the Slovenian competition authority concerned the same infringements, on the same market and within the same timeframe as those referred to on the retail market in the complaint submitted to the Commission by Si.mobil. Lastly, as regards the wholesale mobile access and origination services market, the GC rejected Si.mobil’s arguments and found that there was not a sufficient degree of EU interest in conducting a further investigation of the case. SourceGeneral Court Press Release 17/12/2014

Merger control: Commission approves IMS Health’s acquisition of parts of Cedegim, subject to conditions

On 19 December 2014, the Commission announced that it had approved the proposed acquisition of part of Cedegim S.A.’s (“Cedegim”) customer relationship management and strategic data business (“the target”) by IMS Health (“IMS”), subject to conditions. IMS is a US based company listed on the New York stock exchange and Cegedim is based in France. IMS and the target provide for companies in the pharmaceutical, biotech, life sciences and healthcare sectors solutions to measure and improve their performance. IMS is market leader in the European Economic Area (“EEA”) for tracking sales of prescription drugs by which pharmaceutical companies measure their performance (so-called “sales tracking data”) whereas the target offers one of the largest databases of doctors' contact details in Europe on which pharmaceutical companies rely to target their sales efforts and is also an important provider of customer relationship management software to pharmaceutical companies in the EEA. The Commission’s investigation revealed that the proposed transaction would reduce competition on the market for standardized primary market research as the merged entity would face insufficient competitive constraint from the few small remaining players in the EEA. Standardized primary market research consists of studies and reports compiled on a regular basis by market research providers based on information and data gathered from panels of physicians. These reports are provided to pharmaceutical companies with a view to allowing them to assess the success of their marketing and sales efforts. Furthermore, the Commission also had concerns that IMS would shut out the target's competitors from access to its “brick structure” since this is an important input for these players to be able to operate in the market. Given IMS’s leading position in sales tracking data in the EEA, pharmaceutical companies typically expect that also providers of other data and services, such as doctors’ contact details and software products, are able to deliver their data based on the same structure or to use it in their software solutions. To address the Commission’s concerns, IMS offered to divest its standardized primary market research business and to grant the target's competitors access to the brick structure for ten years. According to the Commission, these commitments adequately address the identified competition concerns and therefore, the proposed transaction, as modified by the commitments, would raise no competition concerns. SourceCommission Press Release 19/12/2014

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 joint control over Czech national carrier České aerolinie by Travel Service and Český Aeroholding
  • Commission clears acquisition of Banca Carige's insurance business by investment funds of Apollo Management
  • Commission clears SoBazaar joint venture by Schibsted and Telenor
  • Commission clears acquisition of Naspers' online classifieds businesses in Bangladesh and Chile by SnT
  • Commission clears acquisition of Naspers' online classifieds businesses in Asia by Schibsted, Telenor and Singapore Press Holdings
  • Commission clears acquisition of Brazilian online classified business by Schibsted, Telenor and Naspers
  • Commission clears acquisition of Nutreco by SHV
  • Commission approves IMS Health's acquisition of parts of Cegedim, subject to conditions
  • Commission approves the acquisition of Betafence by CVC
  • Commission approves acquisition of joint control over Wärtsilä Switzerland by Wärtsilä Corporation and CSSC
  • Commission approves acquisition of Eggborough by EPH