EU Competition

Slovenska Posta appeals General Court judgment on re-monopolisation of Slovakian postal services. On 14 September 2015, details were published in the Official Journal of the European Union (“OJEU”) of an appeal by Slovenská Pošta against a General Court judgment that upheld the European Commission’s 2008 decision finding that amendments to Slovakia’s postal law breached Articles 102 and 106 of the Treaty on the Functioning of the European Union (“TFEU”). In its appeal to the European Court of Justice (“ECJ”), Slovenská Pošta claims that the General Court erred in law and misapplied the standard of proof in finding that the grant of an exclusive right constituted a breach of Articles 102 and 106 of the TFEU. Slovenská Pošta also claims that the General Court applied an insufficient standard of review and distorted evidence in its acceptance of the European Commission’s definition of the relevant market.

ECJ reduces fine imposed on Total for paraffin wax cartel but dismisses appeal by Total Marketing. On 17 September 2015, the ECJ handed down judgments on appeals by Total SAand its subsidiary, Total Marketing Services, against judgments of the General Court relating to the paraffin wax cartel. The ECJ held that the General Court erred in not reducing the fine imposed on Total SA to reflect the reduction granted, in a separate judgment, to Total Marketing Services. The ECJ also held that where the liability of a parent company is purely derivative of that of its subsidiary, the liability of the parent company cannot exceed that of its subsidiary. Further, where a parent company and its subsidiary each bring parallel applications that have the same object, the outcome of the appeal by the subsidiary should be taken into account and the parent company must, in principle, also benefit from any reduction in the liability of the subsidiary which had been imputed to it. Therefore, the fine imposed on Total was reduced from EUR128 million to EUR125 million. However, the ECJ dismissed the appeal by Total Marketing Services in its entirety. The ECJ held that whilst the General Court had erred in law in considering that the public distancing by an undertaking from a cartel is the only way to prove that the undertaking had ceased participation in the cartel, this error did not justify the annulment of the General Court’s judgment.

EU Mergers

KPN challenges Liberty Global/Ziggo merger decision. On 14 September 2015, details were published in the OJEU of an application by KPN to annul the European Commission’s decision under Article 8(2) of the EU Merger Regulation to grant conditional approval of the acquisition by Liberty Global plc of Ziggo NV. In its application to the General Court, KPN claims that the Commission erred in not assessing the possible vertical anti-competitive effects of the merger on the market for premium-pay TV sports channels. KPN also claims that the Commission erred in its consideration of the impact of the role and influence of Liberty Global’s largest shareholder, Mr. Malone, in other media companies.

Phase I Mergers

  • M.7538 KNORR BREMSE / VOSSLOH (15/09/2015)
  • M.7585 NXP SEMICONDUCTORS / FREESCALE SEMICONDUCTOR (with conditions) (17/09/2015)
  • M.7633 KIA / GAS NATURAL FENOSA / GPG (14/09/2015)
  • M.7709 BRIGHT FOOD GROUP / INVERMIK (15/09/2015)
  • M.7711 ADVENT INTERNATIONAL / BAIN CAPITAL / ICBPI (17/09/2015)
  • M.7735 FOSUN / BHF-KB (16/09/2015)
  • M.7755 MAHINDRA / MHI / MAM (14/09/2015)

State Aid

ECJ fines Italy for failure to comply with state aid judgment. On 17 September 2015, the ECJ handed down its judgment (presently only available in French) on an action brought by the European Commission to seek penalty payments from Italy for Italy’s alleged failure to comply with a state aid ruling. In 1999, the European Commission adopted a decision finding that reductions in and relief from social security contributions granted between 1995-1997 to certain firms in Venice and Chioggia constituted unlawful state aid and required Italy to recover the unlawful aid. Italy failed to recover most of the aid. In 2011, the ECJ handed down a judgment finding that Italy had failed to adopt, within the period prescribed, all the measures necessary to recover the aid. By 2014, Italy still had not recovered all the aid and so the Commission brought a fresh action for failure to fulfil obligations against Italy. The ECJ has now held that Italy has once again failed to fulfil its obligations to recover the aid and the recovery procedure is still on-going. The ECJ concluded that the difficulties which have arisen in the aid recovery procedure did not justify the failure to execute the ECJ’s 2011 judgment. Given the long duration of the infringement and the gravity of the infringement, the ECJ ordered Italy to pay a fine of EUR12 million per semester of delay in the execution of the ECJ’s 2011 judgment. The ECJ also imposed a lump sum penalty of EUR30 million as a dissuasive measure.

Public Procurement

General Court rules that Court of Justice was entitled to eliminate subcontractor from bid process. On 14 September 2015, the General Court dismissed an action by Alain Brouillard challenging a decision of the ECJ that effectively eliminated Mr. Brouillard from the list of approved subcontractors to be included in a bid by IDEST Communication SA (“IDEST”) for framework contracts for the translation of legal texts from certain official languages of the European Union into French. After examining IDEST’s request to participate in the tender, the ECJ invited it to participate in the negotiated tender procedure by submitting a bid in which it confirmed that Mr Brouillard would not be engaged as a subcontractor to provide legal translation services, as the Court did not consider that Mr Brouillard fulfilled the full legal education requirements set out in the contract notice. The General Court rejected claims that the Court of Justice abused its power and erred in its assessment of Mr Brouillard’s academic and professional qualifications, considering that the Court was entitled to conclude that Mr Brouillard did not meet the minimum conditions of professional competence laid down in the contract notice. The General Court also dismissed claims that the Court of Justice infringed Directives 2000/78 and 2005/36 and the principles of proportionality and transparency.

UK Competition

CMA announces sentencing of company director in galvanised steel water tanks cartel case. On 14 September 2015, the Competition and Markets Authority (“CMA”) announced that Mr. Peter Snee has been sentenced to six months imprisonment (suspended for 12 months) and ordered to do 120 hours community service for his involvement in the UK galvanised steel water tanks cartel. In January 2014, Mr. Snee pleaded guilty to dishonestly agreeing with others to fix prices, divide up customers and rig bids between 2005 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage. In handing down Mr. Snee’s sentence, the Southwark Crown Court judge, His Honour Judge Goymer, explained that his starting point in this case was that a prison sentence of two years was appropriate for Mr. Snee’s conduct. However, the judge went on to note that the sentence handed down reflects Mr Snee’s early guilty plea, his personal mitigating circumstances and the extent of his voluntary co-operation as a witness for the CMA in the trial of two other individuals involved in the same conduct, who were acquitted by a jury at Southwark Crown Court in June 2015.

CMA closes hotel online booking investigation. On 16 September 2015, the CMA announced that it has decided to close its investigation into pricing restrictions in hotel online booking on the grounds of administrative priority. The CMA re-opened this investigation in October 2014 after the Competition Appeal Tribunal annulled the decision of the Office of Fair Trading to accept binding commitments from Booking.com, Expedia and Intercontinental Hotels. The CMA states that it has re-examined the matter afresh, taking into account market developments. In particular, the CMA notes that as a result of investigations by other EU national competition authorities, Booking.com and Expedia have now removed certain rate parity (most favoured nation) restrictions that had previously prevented hotels from offering cheaper room rates on competing online travel agents’ sites. Taking into account the strategic significance, impact, risks and resource implications of continuing its investigation into the sector, the CMA has decided that it is appropriate to close the investigation on the grounds that it no longer constitutes an administrative priority. However, the CMA has opened a project to continue monitoring the pricing practices of online travel agents. This will include monitoring the effects of the changes made by Booking.com and Expedia, as well as the impact on competition and consumers of continuing rate parity restrictions in relation to prices offered on hotels’ own websites and certain other direct sales channels.

UK Mergers

Phase I

CMA considers Article 9 request in relation to Hutchison/ Telefonica (O2) merger. On 16 September 2015, the CMA announced that it is considering whether to make a request to the European Commission under Article 9 of the EU Merger Regulation in relation to the anticipated acquisition by CK Hutchison Holdings Ltd (“CKHH”) of Telefonica Europe plc (“O2 UK”). This merger was notified to the European Commission under the EU Merger Regulation on 11 September 2015 (M.7612). An Article 9 request is a request from a Member State to the European Commission to have the whole or part of a merger reviewed by the relevant Member State instead of the European Commission on the basis that the merger would affect competition in a distinct national market. The CMA is seeking views by 24 September 2015 on the appropriateness of such a reference and on whether the proposed merger may be expected to result in a substantial lessening of competition in the UK.

Phase II

Provisional findings on BT/EE merger delayed. On 14 September 2015, the CMA published an update to its administrative timetable for the Phase 2 investigation into the proposed acquisition by BT of EE. According to its published update, the CMA intends to notify its provisional findings and possible remedies in October 2015. The CMA had previously aimed to do so during September 2015. The 24 week statutory deadline for the CMA to report its findings expires on 23 November 2015.

Publications

Commission updates explanatory note on the conduct of dawn raids. On 11 September 2015, the European Commission published a revised version of its explanatory note on Commission inspections pursuant to Article 20(4) of Regulation 1/2003. In the revised explanatory note, the Commission has added further guidance on searches of businesses’ IT-environment, the retention of data to be searched after the end of the on-site inspection, the treatment of so-called final data selected by inspectors during the inspection, and the application of EU data protection rules to inspections.