Competition: General Court rules on appeals against Commission’s re-adoption of Italian concrete reinforcing bar cartel decision

On 9 December 2014, the General Court (“GC”) handed down nine separate judgements on appeals brought against the Commission’s decision to re-adopt its Italian concrete reinforcing bar cartel decision. Concrete reinforcing bars are long steel bars, usually with a ribbed surface, used for strengthening columns and other concrete structures in buildings. In December 2002, the Commission imposed fines on Alfa Acciai S.p.A (“Alfa Acciai”)., Ferriere Nord S.p.A. (“Ferriere”), Feralpi Holding S.p.A. (formerly Feralpi Siderugica S.p.A.) (“Feralpi”), IRO Industrie Riunite Odolesi S.p.A. (“IRO”), Leali S.p.A. and Acciaierie e Ferriere Leali Luigi S.p.A. (“Leali”), Lucchini S.p.A. (“Lucchini”) and S.P. S.p.A. (formerly Siderpotenza S.p.A.) (“SP”), Riva Fire S.p.A. (formerly Riva Acciaio S.p.A.) (“Riva Fire”) and Valsabbia S.p.A. and Ferriera Valsabbia S.p.A. (“Valsabbia”), for a cartel in the sector for concrete reinforcing bars in Italy on the basis of Article 65(4) and (5) of the Treaty establishing the European Coal and Steel Community (“ECSC Treaty”). The companies sanctioned by the Commission brought actions with the Court of First Instance (“CFI”) which subsequently ruled that the ECSC Treaty, which had expired at the time when the Commission’s decision was adopted, could not serve as a legal basis for the decision. As a consequence, the Commission adopted a new decision in September 2009 finding the same infringement but based on Articles 7(1) and 23(2) of the Regulation 1/2003 and imposed fines totaling EUR 83 250 000 on the companies concerned (“September 2009 Decision”). All the companies brought actions with the GC against the re-adopted decision. To support their appeals, the companies claimed, inter alia, that there was no legal basis for the Commission to adopt the September 2009 Decision, the Commission had committed several serious procedural errors and it had also breached the companies’ right of defence during the administrative procedure. In its rulings, the GC rejected all these arguments and dismissed six of the appeals in their entirety. Firstly, as regards the legal basis for the Commission’s decision, the GC noted that the legal basis for the decision must be in force at the time of the adoption of the decision. In its assessment of the cases concerned, the GC took into account that a diligent undertaking could not have been unaware of the consequences of its conduct and could not rely on the argument that the succession of the legal framework of the EC Treaty to that of the ECSC Treaty would allow the company to escape penalties for the past violations of the ECSC Treaty. Accordingly, as the ECSC Treaty had expired, the Commission was entitled to base its September 2009 Decision on Articles 7(1) and 23(2) of the Regulation 1/2003. Further, in its September 2009 Decision the Commission had imposed a fine jointly and severally on Lucchini and SP, which was in liquidation at the time, on the grounds that these  two companies formed a single economic unit. The GC disagreed on this point and found that the Commission had failed to establish that Lucchini and SP formed a single economic unit at the time when the Commission adopted its decision. Therefore, the GC annulled the Commission’s decision in so far as it found SP to be liable for the fine imposed on Lucchini and failed to individually apply the ceiling of 10 % of the fine on SP. Source: Case T-472/09 and T-55/10 – SP SpA v European Commission and judgement of the General Court on 9 December 2014, T-489/09, T-490/09 and T-56/10 Leali SpA and Acciaierie e Ferriere Leali Luigi SpA v European Commission, judgement of the General Court on 9 December 2014, T‑69/10 - Industrie Riunite Odolesi SpA (IRO) v European Commission, judgement of the General Court on 9 December 2014, T-70/10 - Feralpi Holding SpA v European Commission, judgement of the General Court on 9 December 2014, T‑83/10 - Riva Fire SpA v European Commission, judgement of the General Court on 9 December 2014, T‑85/10 - Alfa Acciai SpA v European Commission, judgement of the General Court on 9 December 2014, T‑90/10 - Ferriere Nord SpA v European Commission, judgement of the General Court on 9 December 2014, T‑91/10 - Lucchini SpA v European Commission, judgement of the General Court on 9 December 2014 and T‑92/10 - Ferriera Valsabbia SpA and Valsabbia Investimenti SpA v European Commission, judgement of the General Court on 9 December 2014

Competition: Lupin appeals against Commission’s “pay for delay” decision

On 8 December 2014, details were published of an appeal brought by Lupin Ltd (“Lupin”) against the Commission’s decision fining it and five other companies for entering into “pay for delay” settlement agreements in breach of EU competition rules. In July 2014, the Commission announced that it had fined a French pharmaceutical company Servier and five producers of generic medicines, including Lupin, for practices delaying generic entry of the cardio-vascular drug perindopril in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). Perindopril is a blood pressure control medicine and used to be Servier's best-selling product. Lupin has now brought an action with the General Court (“GC”) seeking that the Commission’s decision be annulled in so far as it relates to Lupin and the fine imposed, EUR 40 million, be set aside. To support its action, Lupin relies on three pleas in law. Firstly, Lupin submits that the Commission erred in law in so far as it characterized the settlement agreement concluded between Lupin and Servier as a violation of competition law having the object of restricting competition. Secondly, according to Lupin, the Commission erred in law by finding that the settlement agreement had the effect of restricting competition. Finally, as its third plea in law, Lupin claims that the Commission was wrong to impose a fine on Lupin and alternatively that the fine imposed was too high and should be reduced. Source: Case T-680/14 Lupin Ltd v European Commission, OJ C439/39, 8 December 2014

Competition: Commission publishes fifth report on patent settlements in pharmaceutical sector

On 5 December 2014, the Commission published its 5th report on the monitoring of patent settlements (“Report”). The Report is based on the Commission’s fifth patent settlement monitoring exercise which was launched in February 2014 and relates to the 146 patent settlements concluded between originator and generic companies in the pharmaceutical sector during the time period from 1 January 2013 to 31 December 2013. According to the Report, the total number of patent settlements during this period was higher than ever in any year since 2000, except for the peak of 183 settlements in year 2012, and shows that pharmaceutical companies continue to settle a high number of patent disputes in Europe. The Report also shows that the number of settlements that might attract competition law scrutiny has stabilized at a low level as 92 % of the settlements fell into categories that prima facie raised no need for competition law scrutiny. According to the Commission, these statistics demonstrate the industry’s continued ability to effectively settle patient disputes in ways that do not raise antitrust concerns as well as that competition enforcement has in no way hindered companies in settling patent disputes nor driven them to litigate such disputes in the end. Finally, the Report concludes that the Commission may decide to continue the monitoring exercise in the future in order to examine further the development of the foregoing trends. Source: Commission Press Release 5/12/2014 and 5th Report on the Monitoring of Patent Settlements (period: January-December 2013) Published on 5 December 2014

Competition: Antitrust damages directive published in Official Journal

On 5 December 2014, Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (“Directive”) was published in the Official Journal (“OJ”). The Directive is based on the Commission’s proposal which was  submitted to the EU Council of Ministers (“Council”) and the European Parliament (“EP”) in June 2013. After both co-legislators had discussed the proposal and suggested amendments, informal meetings were launched between the three institutions (so-called trilogues) in February 2014 to achieve a political compromise. At the end of March 2014, the representatives of the EP and of Member States' governments agreed on a final compromise text which was subsequently approved by the EP in April and by the Council in November 2014. The Directive will help citizens and companies claim damages if they are victims of infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions. The Directive also aims to remove a number of practical difficulties which victims frequently face when they try to obtain compensation for the harm they have suffered. In particular, it will give victims easier access to evidence they need to prove the damage and more time to make their claims. At the same time it ensures that the effectiveness of the tools used by competition authorities to enforce antitrust rules, in particular leniency and settlement programmes, is preserved. Source: OJ L 349/1-19, 5 December 2014 and Commission Press Release 10/11/2014

Competition: Commission sends Statement of Objections to Pometon for suspected participation in a steel abrasives cartel

On 4 December 2014, the Commission announced that it had sent Statement of Objection to Pometon S.p.A. (“Pometon”) informing the company that the Commission suspects it of having colluded with competitors on the pricing of steel abrasives in the European Economic Area (“EEA”). Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy and petrochemical industries. They are also used for cutting hard stones such as granite and marble. The Commission has concerns that Pometon may have coordinated on a key price component of steel abrasives, the "scrap surcharge", and that this coordination with other market participants affected the whole EEA market. Moreover, the Commission takes the preliminary view that Pometon may have agreed with other participants not to compete on price with respect to individual customers. Such behaviours, if established, violate Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 53 of the EEA Agreement that prohibit anti-competitive business practices. The Commission's initial investigation relating to the steel abrasives cartel started with unannounced inspections in June 2010. In April 2014, the Commission settled with four companies that admitted their involvement in the cartel. The four companies in question were Ervin Amasteel (“Ervin”), WHA Holding SAS and Winoa SA (“Winoa”), Metalltechnik Schmidt GmbH & Co. KG (“MTS”) and Eisenwerk Würth GmbH (“Würth”). The fines imposed on these four companies amounted to EUR 30.7 million in total. As all four undertakings agreed to settle the case with the Commission, their fines were reduced by 10 per cent. The investigation concerning Pometon continued under the standard (non-settlement) cartel procedure. The sending of a Statement of Objection does not prejudge the outcome of the investigation.Source: Commission Press Release 4/12/2014 and Commission Press Release 2/4/2014 

Competition: Court of Justice of the European Union rules on application of Article 101 to collective labour agreements for self-employed service providers

On 4 December 2014, the Court of Justice of the European Union (“CJEU”) handed down its ruling on a reference from a Dutch court on the question of whether Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) applies to provisions of collective agreements which regulate the minimum fees to be paid to self-employed providers. The request for a preliminary ruling stemmed from the proceedings between FNV Kunsten Informatie en Media (“FNV”), a Dutch trade union, and the Staat der Nederlanden concerning the validity of a reflection document by which the Netherlands’ Competition Authority (the “NMa”) found that the provision of a collective labour agreement setting minimum fees for the supply of independent services is not excluded from the scope of Article 101(1) of the TFEU. In its preliminary ruling, the CJEU held that a provision of a collective labour agreement, in so far as it was concluded by an employees' organization in the name, and on behalf, of the self-employed services providers who are its members, does not constitute the result of a collective negotiation between employers and employees, and so cannot be excluded, by reason of its nature, from the scope of Article 101(1) of the TFEU. The self-employed are "undertakings" and the employees’ organization is acting as an "association of undertakings" for the purposes of Article 101 of the TFEU. However, the CJEU also stated that it must be established that the "self-employed" service providers are not in fact "false self-employed" such that they are actually in a situation comparable to employees. According to the CJEU, this will depend on factors such as whether they act under the same direction of the employer as regards their freedom to choose the time, place and content of their work, whether they share the employer's commercial risks and whether, for the duration of the relationship, they form an integral part of the employer's undertaking. Accordingly, the CJEU ruled that a provision of a collective labour agreement, in so far as it sets minimum fees for service providers who are "false self-employed", cannot, by reason of its nature and purpose, be subject to the application of Article 101(1) of the TFEU.Source: Case C 413/13 FNV Kunsten Informatie en Media v Staat der Nederlanden, 4 December 2014

Merger control: Commission opens in-depth investigation into proposed acquisition by Orange of Jazztel

On 4 December 2014, the Commission announced that it has opened an in-depth investigation to assess whether the proposed acquisition of Jazztel p.l.c. (“Jazztel”), a telecommunications company registered in the United Kingdom and active in Spain, by a rival Orange S.A. (“Orange”), of France, is in line with the EU Merger Regulation. Orange is a provider of telecommunication services in more than 30 countries and operates mobile and fixed telecommunications networks in Spain through its wholly-owned Spanish subsidiary Orange Espagne, S.A.U. Jazztel provides telecommunication services at both retail and wholesale level in Spain through its subsidiary Jazz Telecom, S.A.U. It also operates a fixed telecommunications network and offers mobile telecommunications services on Orange's network. The Commission's initial investigation revealed that the transaction may reduce competition in the retail market for fixed Internet access where Orange and Jazztel currently compete. According to the Commission, both companies are important competitive forces with a stronger influence on the competitive dynamics in these markets than suggested by their market shares. The Commission therefore has concerns that the transaction would change the incentive of the merged entity to exert significant competitive pressure on the remaining two nationwide competitors, namely incumbent operator Telefónica and Vodafone who acquired cable operator ONO earlier in 2014. Further, the Commission finds that these concerns are reinforced when considering a possible market for fixed-mobile triple-play offers (comprising fixed voice, fixed Internet and mobile telecommunications services) which became the most popular telecommunications product in Spain in 2013 and is expected to continue growing significantly in the future. According to the Commission, it is likely that only integrated providers with fixed and mobile networks would be able to compete in this possible market. In order to address the Commission’s competition concerns, Orange submitted commitments on 13 November 2014. However, the Commission considered that these commitments were insufficient to clearly dispel its serious doubts as to the compatibility of the transaction with the EU Merger Regulation and therefore decided not to test them with market participants. The Commission now has 90 working days, until 24 April 2015, to investigate the proposed transaction and to take a decision. During its investigation, the Commission will also analyze the impact of the transaction on the Fibre-to-the-Home (“FttH”) deployment currently carried out by Orange and Jazztel and in particular whether it could reduce their FttH footprint as compared to a stand-alone scenario. Source: Commission Press Release 4/12/2014

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 the creation of several joint ventures between Santander and Peugeot
  • Commission approves acquisition of Samancor by Anglo American and BHP Billiton
  • Commission approves acquisition of remaining shares in domestic appliances producer BSH by Robert Bosch
  • Commission approves acquisition of CIAT by United Technologies Corporation
  • Commission approves acquisition of HSBC Life's UK pensions business by the Swiss Re Group
  • Commission approves acquisition of joint control over Kensington by Blackstone and TPG
  • Commission approves acquisition of joint control over a training centre for pilots by Singapore Airlines and Airbus
  • Commission approves acquisition of joint control of PQ Holdings Inc. by CCMP and Ineos