EU Competition

Portuguese Competition Authority sends Statement of Objections to five companies for office consumables. On 16 October 2015, the Portuguese Competition Authority (PCA) confirmed that it has sent a Statement of Objections (SO) to five companies active in the office consumables sector for suspected participation in a cartel involving price fixing and market sharing over a period of 14 years.    

Investment firms must pay fines for cartel participants, Dutch competition authority confirms. On 20 October 2015, the Authority for Consumers & Markets (ACM) upheld its decision of December 2014 that two investment firms, Bencis Capital Partners and Bencis Buyout Fund II General Partner (together, Bencis), are required to pay penalties due to investments they held in Meneba, a grain producer penalised for involvement in a flour cartel. According to the ACM, investment firms can be held responsible for the behaviour of the companies they own, particularly, if they have decisive influence over such companies. The Bencis companies have previously argued that they did not have decisive influence over Meneba, while the ACM argued that the companies had the power to appoint Meneba board members, influence Meneba’s business plan, and cast deciding votes on the supervisory board. Bencis is entitled to further appeal the decision before the district court in Rotterdam.    

Commission fines suppliers of optical disc drives €116 million. On 21 October 2015, the European Commission (Commission) announced that it has fined eight optical disc drives (ODD) suppliers a total of €116 million for agreements to collude in procurement tenders organised by Dell and Hewlett Packard (HP) for ODDs for laptops and desktops between June 2004 and November 2008. The cartelists communicated to each other their intentions regarding bidding strategies, shared the results of procurement tenders, and exchanged other commercially sensitive information concerning ODDs used in laptops and desktops. They organised a network of parallel bilateral contacts that pursued a single plan to avoid aggressive competition in procurement tenders organised by Dell and HP. It was demonstrated that the companies were aware that their behaviour was illegal and tried to conceal their contacts and evade detection of their arrangements. For example, they avoided naming the competitors concerned in their internal correspondence but used abbreviations or generic names; and avoided leaving traces of anti-competitive arrangements arranging to meet in parking lots and cinemas, instead. In setting the level of fines, the Commission took into account, in particular, the companies' sales of the products concerned in the EEA, the serious nature of the infringement, its geographic scope and its duration.    

Commission decides selective tax advantages for Fiat in Luxembourg and Starbucks in the Netherlands are illegal under EU State aid rules. On 21 October 2015, the Commission announced that selective tax advantages for Fiat Finance and Trade (FFT) in Luxembourg and Starbucks in the Netherlands were illegal under EU State aid rules. In both cases, a tax ruling issued by the respective national authority artificially lowered the tax paid by the two companies. The tax rulings, which are ordinarily legal, in these two cases however endorsed artificial and complex methods to establish taxable profits for goods and services by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that did not correspond to market conditions. As a result, most of Starbucks’ profits were shifted abroad where they were not taxed and FFT only paid taxes on underestimated profits. Therefore, the Commission ordered the two Member States to recover €20 million and €30 million of unpaid tax from Fiat and Starbucks respectively in order to remove the unfair competitive advantage they enjoyed.    

ECJ dismisses AC Treuhand’s appeal against chemicals antitrust fine. On 22 October 2015, the European Court of Justice (ECJ) handed down its landmark judgment upholding the General Court’s judgment that the Commission is entitled to fine companies for facilitating cartel conduct even if they do not manufacture the product at the heart of the cartel. The ECJ upheld a fine imposed on AC Treuhand for helping a chemicals cartel, stating it did not provide “mere peripheral” services and that its conduct was directly linked to the cartel. The ECJ further added that AC Treuhand’s grounds of appeal were in part unfounded and inadmissible. The case relates to a heat stabilisers (a chemical which strengthens plastic products during processing) cartel which goes back to 2009 when the Commission levied fines totaling €173 million. Some of the cartelists used AC Treuhand to organise and participate in meetings; this led to the company receiving two separate fines of €174,000. AC Treuhand had appealed the fines on the principal basis it was not active in the chemicals market.    

The Bundeskartellamt concludes mattress case with fine. On 22 October 2015, the German competition authority, the Bundeskartellamt, published a statement that it has fined Tempur Deutschland GmbH (Tempur) €15.5 million for imposing resale price maintenance on retailers selling its products. The President of the Bundeskartellamt stated that Tempur’s anti-competitive conduct of agreeing with retailers the minimum price at which they should offer mattresses both online and in physical outlets took place between August 2005 and July 2011. More specifically, according to the statement, if a retailer’s online price lay more than 5% below the recommended price, a Tempur sales representative would induce the retailer to raise its prices. Furthermore, Tempur withdrew the right of a retailer to use the brand name for online advertising. In relation to physical outlets stocking the mattresses, Tempur attempted to induce retailers to explicitly exclude their products from general advertising campaigns such as “25% off everything”. According to the statement, most retailers adhered to the agreement as they were concerned about supply issues if they deviated from the prices imposed by Tempur. In setting the fine, account was taken of the fact that Tempur had co-operated with the authority and a settlement could be reached. The fine is subject to appeal before the Düsseldorf Higher Regional Court.

EU Mergers

Phase I Mergers

  • M.7734 Lockheed Martin / Sikorsky Aircraft (16 October 2015)
  • M.7774 Antofagasta / Barrick / Zaldivar (16 October 2015)
  • M.7771 PARCOM / PON / IMTECH MARINE (19 October 2015)
  • M.7747 PGA / MSA (19 October 2015)
  • M.7767 FIS / SUNGARD (19 October 2015)
  • M.7809 GROSVENOR / PSPIB / REAL ESTATE ASSET IN MILAN (20 October 2015)
  • M.7708 ALSO / PCF (22 October 2015)

State Aid

Commission statement on agreement in principle with Germany on HSH Nordbank State aid case. On 19 October 2015, the Commission published a statement by European Commissioner Margrethe Vestager on an agreement in principle with the German authorities on the way forward to conclude the Commission’s State aid investigation concerning HSH Nordbank and approve a €3 billion guarantee increase. The procedure was opened in 2013 when the State’s guarantee in favour of HSH Nordbank was re-increased from €7 billion to €10 billion. The Commission temporarily approved the aid but required a new and deeper restructuring of the bank to enable a final approval of the re-increased guarantee. The restructuring involves a split of HSH Nordbank into a holding company taking over most of the guarantee fee payment obligations and an operating subsidiary which will continue the bank’s current operations. The operating subsidiary will subsequently be privatised in an open, transparent and non-discriminatory tender process and the proceeds from the sale will be used firstly to satisfy the State’s guarantee fee claims.

Trade

EU welcomes Canada’s reopening of market to European beef imports. On 20 October 2015, the Commission published a statement on a decision by the Canadian government to re-open Canada’s market for imports of European beef from 19 Member States. The Canadian market has been closed to any EU beef, including deboned beef, since 1996, when Canada introduced import restrictions on meat of ruminants on the basis of BSE concerns.

UK Competition

UK CMA accepts remedies in dairy merger. On 19 October 2015, the Competition & Market Authority (CMA) announced that it has accepted undertakings proposed by Müller UK & Ireland Group LLP (Müller) aimed at settling competition concerns arising from Müller’s proposed acquisition of Dairy Crest’s dairy operations. The CMA concerns related to the supply of fresh liquid milk in the catchment area of Dairy Crest’s Severnside dairy, particularly, in the South West and Wales. Müller has agreed to sell to competitor Medina Dairy Limited (Medina) an option to require Müller to process up to 100 million litres of fresh liquid milk per annum in Dairy Crest’s Severnside dairy for supply to national grocery retailers. The option will be for an initial term of five years, plus the option to extend by an additional three years. The CMA believes that Medina has the financial backing and the capability to succeed in serving large national retailers. The CMA is also of the opinion that Müller’s undertaking is a good outcome for the dairy industry and for retailers and will provide certainty for farmers. As a result of the undertakings, the merger will not be referred for an in-depth Phase II investigation.    

CMA proposes better deal for customers of banks. On 22 October 2015, the CMA published a statement stating that banks must make it easier for customers to take charge of their accounts. The investigation by the CMA identified a number of competition-related issues in both the personal current account (PCA) and small and medium-sized enterprise (SME) banking markets. Low rates of customer switching suggests that banks are not placed under competitive pressure. More specifically, the CMA suggested that there seems to be a particular problem in SME banking where many SMEs open a business account and seek loans at the same bank where they have their PCAs. However, the investigation also revealed a number of positive developments: there are new entrants in both the PCA and SME banking markets and innovative products are being made available. The CMA has proposed a working list of initial remedies to help increase competition and secure a better deal for consumers. Potential remedies include making it easier for consumers and businesses to compare bank products by upgrading Midata, an industry online tool, which was launched with the support of the government and which allows consumers to easily access their banking data from their bank and input it directly into a price comparison website which can then analyse their transactions and alert them to available bank accounts which best suit their needs. An upgraded Midata could have a positive impact on consumer choice in retail banking markets. The full provisional findings report will be published next week. The CMA will now consult and hold detailed discussions with all interested parties on the findings and possible remedies ahead of publishing its final report in May 2016.