Hutchison's proposed acquisition of Telefónica UK
On 30 October 2015 the European Commission started an in- depth investigation under the EU Merger Regulation to assess the proposed acquisition of Telefónica UK by Hutchison.
Telefónica UK and Three UK, a subsidiary of Hutchison, are the second and fourth largest mobile network operators in the UK. Together they would become the UK's largest operator. The Commission is concerned that the merged entity would have limited incentives to exercise significant competitive pressure on the remaining competitors. In turn this might result in higher prices, less choice and reduced innovation for customers of mobile telecommunications services in the UK.
The Commission has until the middle of March 2016 to investi- gate the extent to which the merger parties are close competi- tors, the market incentives that would be faced by the merged entity and the potential response by its competitors.
Safe Harbour on transatlantic data exchange invalidated
On 6 October 2015 the European Court of Justice (ECJ) decided that the EU-US data sharing agreement known as Safe Harbour is operating illegally by compromising the essence of the fundamental right to respect for data protec- tion. Since 2000 the agreement has given protection to over 4,000 companies that transfer European citizen’s personal data to the US. However the ECJ ruled that US authorities violate Europeans' fundamental rights when national secu- rity, public interest and law enforcement requirements of the United States prevail over the Safe Harbour scheme.
Following Edward Snowden's leaks, Austrian law graduate Max Schrems had filed a complaint against Facebook with Irish authorities in 2013. He claimed that Facebook abused his privacy rights by transferring his data to the US. In 2014 an Irish court referred the Safe Harbour case to the ECJ.
On 23 September 2015 the ECJ Advocate General, Yves Bot, had called the Safe Harbour illegal. The ECJ verdict was published only 2 weeks later, apparently because two ECJ judges would end their terms the same day, and opportunity to rule on a prominent case was taken. The US Mission to the EU took the unusual step of rejecting Bot’s accusations about surveillance and said that the United States has not engaged in indiscriminate surveillance of anyone, including “ordinary” European citizens.
Based on the ECJ's decision the Irish court will take up Schrems' case again. The decision will also urge the European Commission and its US counterparts to make progress with a new Safe Harbour deal. Several stakeholders asked for legal alternatives for businesses handling transatlantic data transfers. In addition, businesses are having to deal with a patchwork of national rules in the European Union. The European Commission recognised that with the European Directive on data protection dating back to 1995, it has become urgent to replace the existing rules and to give greater protection to personal data across the EU.
Court judgment confirms cartel facilitator's liability
On 22 October 2015 the ECJ considered the European Com- mission to be right in the case C-194/14 and upheld an earlier General Court judgment. It thereby confirmed a Commission decision of 2009 to hold AC Treuhand liable under EU compe- tition law for facilitating two cartels.
AC Treuhand is a Swiss consulting firm that played an essen- tial role in two cartels involving suppliers of plasticisers and heat stabilisers for PVC products up to the year 2000. The consulting firm was remunerated by these suppliers for organ- ising regular cartel meetings at its Zurich premises. It attended and actively participated in the meetings, collected and sup- plied sales data to the participants, monitored the implementa- tion of the agreements, offered to act as a moderator in case of disagreements between them and encouraged them to find compromises.
It is the first time the ECJ ruled on the practice of facilitating of cartels. The ECJ confirmed that the service agreement between AC Treuhand and suppliers of heat stabilisers consti- tuted an illegal agreement under EU competition rules. AC Treuhand did not have any sales in these markets. Therefore the ECJ confirmed that the Commission could determine a lump sum fine payment instead of using value of sales as a basis.
Commission imposes €116m fines on disc drive suppliers
On 21 October 2015 the European Commission fined eight opti- cal disc drive suppliers a total of €116m for the coordination of their behaviour in relation to procurement tenders organised by two computer manufacturers. The Commission said these oper- ations violated EU antitrust rules.
Optical disc drives aim to read or record data stored on optical disks that are used in personal computers, CD and DVD players and video game consoles. The eight suppliers are Philips, Lite-On, the joint venture of Philips and Lite-On, Toshiba Samsung Storage Technology, Hitachi LG Data Storage, Sony, Optiarc and Quanta. The suppliers had struck agreements to collude in procurement tenders for discs used in laptops and desktops produced by Dell and Hewlett Packard between 2004 and 2008.
The suppliers shared information about bidding strategies and results of tenders using code names or abbreviations. The contacts between the suppliers took place mostly in Asia and the US. However, as the disk drives were sold into the EU, the cartel’s effects were very much felt in Europe. Philips, Lite-On and their joint venture were eventually not fined because all three had revealed the cartel and therefore Commission applied it leniency discretion.
Aircraft servicing contracts scrutinized
On 12 October 2015 the European Commission started gath- ering information regarding the maintenance and servicing policies of aircraft engine makers and other aircraft equipment manufacturers and maintenance companies. The collection of information on contracts and policies was initially done by send- ing questionnaires to the leading companies in this large and growing market. Based on these surveys the Commission might start a formal investigation procedure.
It is too early to predict the outcome of any investigation and the Commission could conclude that there was no cause for concern, endorsing the current model. The European Com- mission declined to give any formal comment, but confirmed that it is closely monitoring competitive conditions as regards maintenance of engines and components for large commercial aircraft.
When purchasing some types of planes the airlines do not have a choice of engine supplier or maintenance companies. On the one hand, airlines may like long term maintenance contracts because of the high level of quality services received from their partners. On the other hand, the way equipment manufactur- ers and maintenance companies operate might be the cause for concern, for example, whether or not there is enough con- tractual transparency or sufficient competition in the respective markets.
General Electric’s acquisition of Alstom's power unit cleared
On 8 September 2015 the European Commission approved the acquisition of Alstom's energy businesses by General Electric (GE). However the decision is subject to a divestment of central parts of Alstom's heavy duty gas turbines business to Ansaldo.
As anticipated earlier this year, the Commission’s concerns were mainly focused on the gas turbine market, where GE is the world's largest manufacturer and Alstom is the third or fourth player globally. The market for heavy duty gas turbines is concentrated, with only four globally active full technology competitors. This is due to the large upfront investments in R&D, testing and manufacturing required, setting very high technological and financial barriers to enter the market. The fifth player, Ansaldo, has more limited R&D capabilities, a narrower product range and a limited geographic reach. The Commission argued that the takeover would have led to less innovation and higher prices in a market for a technology vital to modernising Europe’s energy supplies and meeting climate change goals. The Commission agreed that the offer by GE addressed these concerns.
The Commission referred to a successful cooperation with the Antitrust Division of the US Department of Justice during the investigation. Together they worked on the analysis of the case and the imposition of suitable remedies, eventually leading to satisfactory and mutually aligned remedial solutions for both EU and US concerns. The Commission has also cooperated throughout the procedure with agencies in Brazil, Canada, China, Israel and South Africa. Regarding the other businesses that are involved in the transaction, namely the thermal power generation businesses (other than gas), grid and renewables, the Commission did not identify any competition concerns essentially because the activities of the two companies are complementary.