Competition: Court of Justice of European Union hands down ruling on Post Danmark's retroactive rebate scheme

On 6 October 2015, the Court of Justice of the European Union ("CJEU") handed down a ruling on a reference from the Danish Maritime and Commercial Court on the assessment of rebate schemes under Article 102 of the Treaty on the Functioning of the European Union ("TFEU"). In June 2009, the Danish Competition Council concluded that the universal post service provider in Denmark, Post Danmark A/S ("Post Danmark"), had abused its dominant position by operating a rebate scheme for direct advertising mail in breach of Article 102 TFEU and the Danish competition legislation. Thus, the Competition Council prohibited Post Danmark from operating that scheme. In May 2010, the Danish Competition Appeals Tribunal upheld the Competition Council's decision.

Subsequently, Post Danmark brought an action before the Danish Maritime and Commercial Court, which stayed proceedings and referred several questions to the CJEU. The Danish court sought to ascertain in particular whether there is a legal requirement to perform an as-efficient-competitor ("AEC") test in order to confirm the existence of an abuse of a dominant position, and whether an appreciability threshold can be used when assessing the possible exclusionary effects of a rebate scheme.

In its judgment, the CJEU found that to determine whether Post Danmark's retroactive rebate scheme breaches Article 102 TFEU it is necessary to examine all the circumstances of the case. According to the CJEU, the criteria and rules governing the grant of the rebates, the extent of the dominant position of the undertaking concerned and the particular conditions of competition prevailing on the relevant market should be considered in the assessment. The CJEU also held that the fact that the rebate scheme covers the majority of customers on the market may constitute a useful indication of the extent of that practice and its impact on the market, which may bear out the likelihood of an anti-competitive exclusionary effect. Regarding the AEC test, the CJEU concluded that the application of such test does not constitute a necessary condition for a finding that a rebate scheme is abusive under Article 102 TFEU. In a situation where a market is characterized by high market shares, barriers to entry and inherent advantages of a monopoly provider, applying the AEC test is of no relevance. Finally, the CJEU held that Article 102 TFEU must be interpreted as meaning that, while the anti-competitive effect of a rebate scheme operated by a dominant undertaking must be probable, there is no need to show that it is of a serious or appreciable nature. Source: Case C-23/14 Post Danmark A/S v Konkurrencerådet, judgment of the Court of Justice of the European Union, judgment of 6 October 2015

Competition: General Court dismisses appeal against re-imposition of sodium chlorate cartel fine

On 6 October 2015, the General Court ("GC") dismissed an appeal by Corporación Empresarial de Materiales de Construcción SA ("COEMAC"), formerly Uralita SA, against the Commission's decision to re-impose a fine on Uralita for its participation in the sodium chlorate cartel. In 2011, the GC annulled the fine that the Commission imposed in June 2008 jointly and severally on Aragonesas and its parent company Uralita. The GC found that the Commission had failed to prove the participation of Uralita's subsidiary, Aragonesas, in the entire duration of the infringement. However, the Commission re-imposed a fine in March 2012.

In its judgment, the GC rejected COEMAC's claim that the Commission was time-barred from imposing the fine. According to the GC, the Commission had not adopted a new decision to impose a fine on the applicant because the annulment of the decision in 2011 was only partial and was limited to the amount of the fixed fine. Thus, the Commission's decision to re-impose the fine in 2012 was to give the applicant the benefit of the effects of the GC judgment in 2011. The GC found that the limitation period began to run on the day the infringement ceased, namely when the Commission adopted its first decision on 11 June 2008. Accordingly, the GC concluded that the Commission's June 2008 decision, as partially maintained by the March 2012 decision, was adopted within the five-year limitation period taking into account interruptions resulting from the Commission's decision to grant conditional immunity to another cartel participant and the Commission's request for information sent to Uralita's subsidiary, Aragonesas. Source: Case T-250/12 Corporación Empresarial de Materiales de Construcción, SA, formerly Uralita, SA, v European Commission, judgment of 6 October 2015

Competition: Commission opens formal investigation into International Skating Union's eligibility rules

On 5 October 2015, the Commission announced it will formally investigate whether the eligibility rules of the International Skating Union ("ISU") infringe Article 101 and/or Article 102 of the Treaty on the Functioning of the European Union ("TFEU"). Under the ISU's rules, skaters can be permanently banned from competitions, such as the Winter Olympics and the ISU World and European Championships, if they take part in events that are not approved by the ISU.

The Commission is concerned that the eligibility rules could constitute anti-competitive agreements and/or abuse of a dominant market position, in breach of EU antitrust rules, because they may prevent alternative event organizers from entering the market or drive them out of business. The opening of proceedings does not prejudge the outcome of the investigation.

Source: Commission Press Release 5/10/2015

Competition (Finland): Finnish Competition and Consumer Authority closes investigation regarding suspected abuse of dominance in the Finnish market for insulation boards

On 5 October 2015, the Finnish Competition and Consumer Authority ("FCCA") announced that it had closed an abuse of dominance probe into the activities of thermal insulation materials producer Finnfoam Oy ("Finnfoam") on the Finnish market for insulation boards. The FCCA investigated in particular whether Finnfoam engaged in predatory pricing and in locking customers into exclusivity agreements.

The FCCA made no definitive decision on whether Finnfoam had a domimant market position. However, the FCCA stated that Finnfoam produces 70% of the relevant products on the Finnish market. The FCCA ultimately concluded that no anti-competitive intention had been established and that Finnfoam had not sold the relevant products below average variable costs. Accordingly, no finding of predatory pricing could be made. Concerning the exclusivity clauses, the FCCA concluded that neither Finnfoam nor the customers actually enforced the exclusivity in practice. Further, during the investigation Finnfoam had informed the FCCA of its intention to remove the contested clauses from its agreements. Finally, the FCCA stated that there was no evidence that Finnfoam's actions were an abuse of a dominant market position, and therefore the FCCA closed the investigation. Source: The Finnish Competition and Consumer Authority Press Release 5/10/2015 (in Finnish) and The Finnish Competition and Consumer Authority Decision 29/9/2015 (in Finnish)

Competition (Sweden): Swedish Competition Authority closes its investigation of the online travel agency Expedia

On 5 October 2015, the Swedish Competition Authority ("SCA") announced that it has closed its investigation of Expedia Inc., of the U.S. Expedia operates and provides services in the online travel agency sector. Expedia operates under the trademarks of Expedia, Hotels.com and Venere, among others.

In 2013, the SCA investigated certain conditions in Expedia's agreements with Swedish hotels. The investigation concerned so-called parity clauses, which oblige hotels to offer Expedia the same or better room prices as the hotel offers on all other channels. The SCA had concerns that these clauses may harm competition by restricting competition between Expedia and other online travel agents and hinder new booking platforms from entering the market.

The investigation of Expedia's contract terms and conditions was conducted in parallel with the investigation of Booking.com, concerning equivalent conditions in agreements with Swedish hotels. On 15 April 2015, the SCA accepted voluntary commitments from Booking.com. As of 1 August 2015, Expedia voluntarily amended its terms and conditions, meaning Expedia no longer applies parity clauses regarding price or other conditions (such as cancellation rules and breakfast) that hotels offer via competing online travel agencies, or that are not published or marketed online to the general public, i.e., offered via hotels' offline channels or to members of the hotel's loyalty programs. Furthermore, Expedia will not apply parity requirements regarding the number of rooms that hotels make available via competing online travel agencies or via the hotels' other sales channels. As the possibly anti-competitive conditions no longer apply, the SCA closed its investigation.

Source: Swedish Competition Authority Press Release 05/10/2015 and Swedish Competition Authority Decision 5/10/2015

Merger control: Commission opens in-depth investigation into proposed acquisition of BASE Belgium by Liberty Global

On 5 October 2015, the Commission opened an in-depth investigation (so-called "Phase II") into the proposed acquisition of BASE Belgium ("BASE") by Liberty Goal. BASE, one of the three mobile network operators ("MNO") in Belgium, offers retail mobile telecommunications services to consumers and businesses in Belgium. Liberty Control controls the Belgian cable operator Telenet, which offers fixed telecommunication services in Flanders and parts of Brussels. Telenet is also the largest mobile virtual network operator ("MVNO") in Belgium; it offers mobile services using the Mobistar network, because Telenet does not have its own mobile network.

The Commission's initial investigation showed that the transaction would combine a strong fixed line telecommunications company, Telenet, with a mobile network operator, BASE. The transaction could thus reduce competition in the retail mobile telephony market in Belgium, where Telenet and BASE are currently competitors. The Commission is concerned that the merged entity will have limited incentives to exercise significant competitive pressure on the remaining competitors, Proximus and Mobistar, in the retail mobile market. In addition, the Commission has concerns that the transaction would significantly reduce incentives for BASE to offer virtual operators access to its mobile network. The Commission is also investigating whether the transaction would increase Telenet's ability to sell its fixed line services to BASE's mobile customers, notably by bundling them together, and whether this would increase the merged entity's market power and allow it to exclude competitors.

The Commission now has 90 working days, until 18 February 2016, to investigate the proposed acquisition and determine whether these initial concerns are confirmed. The opening of an in-depth inquiry does not prejudge the result of the investigation. Source: Commission Press Release 5/10/2015 On 5 October 2015, the Commission opened an in-depth investigation (so-called "Phase II") into the proposed acquisition of BASE Belgium ("BASE") by Liberty Goal. BASE, one of the three mobile network operators ("MNO") in Belgium, offers retail mobile telecommunications services to consumers and businesses in Belgium. Liberty Control controls the Belgian cable operator Telenet, which offers fixed telecommunication services in Flanders and parts of Brussels. Telenet is also the largest mobile virtual network operator ("MVNO") in Belgium; it offers mobile services using the Mobistar network, because Telenet does not have its own mobile network. 

The Commission's initial investigation showed that the transaction would combine a strong fixed line telecommunications company, Telenet, with a mobile network operator, BASE. The transaction could thus reduce competition in the retail mobile telephony market in Belgium, where Telenet and BASE are currently competitors. The Commission is concerned that the merged entity will have limited incentives to exercise significant competitive pressure on the remaining competitors, Proximus and Mobistar, in the retail mobile market. In addition, the Commission has concerns that the transaction would significantly reduce incentives for BASE to offer virtual operators access to its mobile network. The Commission is also investigating whether the transaction would increase Telenet's ability to sell its fixed line services to BASE's mobile customers, notably by bundling them together, and whether this would increase the merged entity's market power and allow it to exclude competitors.

The Commission now has 90 working days, until 18 February 2016, to investigate the proposed acquisition and determine whether these initial concerns are confirmed. The opening of an in-depth inquiry does not prejudge the result of the investigation. Source: Commission Press Release 5/10/2015

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 joint control over a portfolio of hotels by Benson Elliot, Walton Street and Starwood
  • Commission approves acquisition of Energy2Market by Trailstone
  • Commission approves acquisition of LeasePlan by TDR Capital
  •  approves acquisition of joint control of Lowell and GFKL by Permira and OTPP in debt recovery sector