Competition: Infineon appeals against Commission’s card chip cartel decision

On 30 March 2015, details were published in the Official Journal of an appeal lodged by Infineon Technologies AG (“Infineon”) against the Commission's decision on the smart card chips cartel. On 3 September 2014, the Commission announced that it had fined four companies, including Infineon, a total of EUR 138 million for coordinating their market behavior for smart card chips in the EEA, in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). The Commission found that the parties discussed and exchanged sensitive commercial information on pricing, customers, contract negotiations, production capacity or capacity utilization and their future market conduct.

Infineon has now brought an action before the General Court seeking the annulment of the Commission's decision or a reduction of the fine by approximately EUR 82 million imposed on it. Infineon claims, in particular, that the Commission breached its right to be heard and its rights of defense. In addition, Infineon alleges that the Commission failed to establish that Infineon's contacts with competitors breached Article 101(1) of the TFEU; the Commission also erred in applying the concept of a single and continuous infringement. Finally, Infineon claims that the Commission made various errors in calculating the fine imposed on it. Source: T-758/14 – Infineon Technologies AG v European Commission, Official Journal C 107/28, 30 March 2015

Competition: Advocate General delivers opinions on appeals against General Court’s ruling relating to paraffin wax cartel

On 26 March 2015, Advocate General (“AG”) Nils Wahl issued his opinions on appeals by Total SA and its subsidiary Total Marketing Services against the General Court’s (“GC”) judgments on their challenges to the Commission's decision concerning the paraffin wax cartel. Total Marketing Services is a successor to Total Raffinage Marketing SA (“Total Raffinage Marketing”).

On 1 October 2008, the Commission announced that it would impose fines totaling approximately EUR 676 million on nine corporate groups for breaching Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”). The breach concerned their participation in a price-fixing and market-sharing cartel relating to paraffin wax between 1992 and 2005. In December 2008, the cartel participants asked the GC to annul the Commission's decision. In September 2013, the GC rendered its judgments in the appeals brought by Total SA and its subsidiary Total Raffinage Marketing. The GC rejected the appeal by Total SA in its entirety. In the appeal by its subsidiary, the GC reduced the fine by some EUR 3 million to EUR 125 million to reflect the true duration of Total Raffinage Marketing’s participation in the cartel. In late 2013, Total SA and Total Marketing Services appealed the GC’s judgments to the Court of Justice of the European Union. 

To support its action, Total SA claimed, in particular, that the GC erred in law in modifying the joint and several nature of the liability between it and its subsidiary. In his opinion, the AG stated that the GC had not erred in law by not reducing Total SA's fine in the same proportions as the fine imposed on Total Marketing Services. The AG considered that where the liability of the parent company is derived exclusively from that of its subsidiary and where the parent company and its subsidiary have brought parallel actions with the same object, the total amount that the parent company is required to pay cannot be greater than the amount the subsidiary must pay. However, the AG stated that it was the Commission’s responsibility, under Article 266 of the TFEU, to take the steps necessary to comply with the EU Courts’ judgments.

Total Marketing Services alleged that the GC had erred by holding that the company participated in the infringement between 12 May 2004 and 28 April 2005 because it had failed to show that it publicly distanced itself from the agreement during that period. As regards this allegation, the AG agreed and considered that the GC’s judgment should be annulled insofar as it concluded that Total Marketing Services continued to participate in the cartel after 12 May 2004; the evidence did not support this conclusion. Further, the AG stated that the fine should be reduced from EUR 125 million to EUR 116 million. Finally, the AG held that the rest of the claims should be dismissed as unfounded. Source: Case C-597/13 P – Total SA v European Commission and Case C-634/13 P – Total Marketing Services, successor in law to Total Raffinage v European Commission

Merger control: Commission approves acquisition of orthopedic implants producer Biomet by Zimmer, subject to conditions

On 30 March 2015, the Commission announced that it has approved the proposed acquisition of Biomet Inc. (“Biomet”) by Zimmer Holdings Inc. (“Zimmer”), subject to conditions. Biomet, of the US, is a wholly owned subsidiary of LVB and sells orthopedic and other medical devices and related products. Zimmer, also of the US, is active in the design, development, manufacture and marketing of orthopedics, reconstructive, spinal and trauma devices, biologics, dental implants and related surgical products.  The Commission had preliminary concerns that the merger, as initially notified in June 2014, could have resulted in price increases for a number of orthopedic implants in the European Economic Area (“EEA”). According to the Commission, the merged entity would have faced insufficient competitive constraint from the remaining (much smaller) players. Further, since barriers to entry are relatively high on these markets, the Commission had initial concerns that the proposed transaction would have led to less innovation and choice for the products concerned.

To address the Commission’s concerns, Zimmer offered to divest the Zimmer Unicondylar Knee implant (“ZUK”) and Biomet’s Discovery Elbow (“Discovery”), both across the EEA, and the Biomet Vanguard total Knee system for primary and revision implants (“Vanguard Knee”) in Denmark and Sweden. Zimmer also committed to grant to the purchaser of the Vanguard Knee in Denmark and Sweden an EEA-wide, non-exclusive license to the rights and know-how that are currently used and are needed for the manufacturing, marketing and sale of an exact copy of the Vanguard Knee. The three divestments include instrumentation, intellectual property rights and know-how, customer contracts, leases, key personnel, technical assistance and training. Furthermore, Zimmer committed to supply the divestment businesses' product lines at reasonable conditions for a transitional period. Consequently, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. Source: Commission Press Release 30/3/2015

Public procurement: Court of Justice of the European Union rules on award criteria based on staff qualifications  

On 26 March 2015, the Court of Justice of the European Union (“CJEU”) gave its preliminary ruling on a reference from a Portuguese court on the interpretation of Directive 2004/18 on the coordination of procedures for awarding public works contracts, public supply contracts and public service contracts.

The cases in the main proceedings stemmed from a tendering procedure for the purchase of training and consultancy services for a specified project, involving a number of different areas, including air quality, the environment and work health and safety. The contract notice stated that the contract would be awarded to the most economically advantageous tender determined on the basis of three factors. The first factor concerned evaluation of the team, taking into account the composition of the team, its proven experience and an analysis of the academic and professional background of its members. The second factor concerned the quality and merits of the service proposed, and the third factor concerned the overall price.

Ambiente e Sistemas de Informação Geográfica SA (“Ambisig”) submitted a tender. During the tendering procedure Ambisig raised concerns that the award criteria relating to the evaluation of the team was not valid. The contracting authority, Nersant - Associação Empresarial da Região de Santarém (“Nersant”), rejected this argument. By decision of 14 February 2012, Nersant awarded the contract for services to another bidder, Iberscal Consultores Lda. After that, Ambisig brought proceedings before the Administrative and Tax Court of Leiria to annul this decision. The Administrative and Tax Court dismissed the action in its entirety. The litigation went all the way to the Supreme Administrative Court, which stayed the proceeding and referred a question to the CJEU for a preliminary ruling. The Supreme Administrative Court asked the CJEU whether Article 53(1) of Directive 2004/18 precludes the contracting authority from using an award criterion enabling evaluation of the teams specifically put forward by the tenderers for the performance of the contract and which takes into consideration the composition of the team and the team members’ experience and academic and professional background.

In its preliminary ruling, the CJEU stated that Article 53(1)(a) of Directive 2004/18 provides that the most economically advantageous tender is to be identified from the point of view of the contracting authority. In addition, the CJEU noted that Directive 2004/18 does not contain an exhaustive list of the criteria which may be used by the contracting authorities in determining the most economically advantageous tender. Further, the CJEU ruled that the quality of performance of a public contract may depend decisively on the professional merit of the people entrusted with its performance. According to the CJEU, this is particularly true where the performance of the contract is intellectual in nature and concerns training and consultancy services. Accordingly, the CJEU concluded that Article 53(1) of Directive 2004/18 does not preclude the contracting authority from using a criterion enabling them to evaluate the teams by considering their composition, experience and background. Source: Case C-601/13 – Ambising – Ambiente e Sistemas de Informação Geográfica SA v Nersant – Associação Empresarial da Região de Santarém, 28 March 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 joint venture between Holtzbrinck and Springer Science + Business in publishing sector
  • Commission approves acquisition of MWV's European tobacco and packaging operations by AR Packaging
  • Commission approves acquisition of Delta Lloyd by investment fund Apollo
  • Commission approves acquisition of German fuel wholesaler by Varo Energy Germany
  • Commission approves joint venture between Global infrastructure Management and ACS in renewable energy sector
  • Commission approves restructuring of Swisscard joint venture between American Express and Credit Suisse
  • Commission approves joint venture between Wärtsilä and China State Shipbuilding Corporation
  • Commission approves acquisition of Lion Adventure by PAI Partners
  • Commission approves acquisition of South African retailer Pepkor by rival Steinhoff