EU Competition

Reference by French court on application of Article 101 to patent licence. On 2 March 2015, details were published in the Official Journal of a reference from the French Cour d’appel de Paris to the European Court of Justice for a preliminary ruling on the application of Article 101 of the TFEU. The question referred asks whether Article 101 of the TFEU must be interpreted as “precluding effect being given, where patents are revoked, to a licence agreement which

requires the licensee to pay royalties for the sole use of the rights attached to the licensed patent” (Case 567/14 – Genentech Inc. v Hoechst GmbH, formerly Hoechst AG, Sanofi­Aventis Deutschland GmbH (OJ 2015 C73/12)).

EU Cartels

Appeal by Philips against smart card chip cartel decision. On 2 March 2015, details were published in the Official Journal of an appeal lodged by Philips and Philips France against the European Commission’s decision on the smart card chips cartel. In its appeal, Philips claims that the Commission failed to establish the alleged infringement of Article 101 of the TFEU to the requisite standard. In addition, it claims that the Commission committed procedural errors, failed to handle the case fairly and impartially, and breached its rights of defence. In addition, Philips also claims that the Commission erred in the calculation of the fine imposed (Case T–762/14 – Philips and Philips France v Commission (OJ 2015 C73/37)).

Summaries published of decisions in Swiss Franc interest rate derivatives cartels. On 28 February 2015, the European Commission published summaries of its October 2014 decisions on two separate cartels involving Swiss Franc interest rate derivatives (CHIRD). Both decisions were reached under the cartel settlement procedure. In the first case (CHF LIBOR), JP Morgan was fined EUR 61,676,000. In the second case (Bid Ask Spread Infringement), UBS, JP Morgan and Credit Suisse were fined a total of EUR 32,355,000. Royal Bank of Scotland (RBS) received full immunity from fines in each decision under the Commission’s Leniency Policy. The Opinions of the Advisory Committee and the Final Reports of the Hearing Officer in each case have also been published (OJ 2015 C72/7–14).

Summary of Commission decision in paper envelopes cartel. On 3 March 2015, the European Commission published in the Official Journal a summary of its December 2014 decision to fine five envelope producers a total of EUR 19.4 million for their participation in a cartel to co­ordinate prices and allocate customers for certain types of envelope (OJ 2015 C74/5). The decision was reached under the Commission’s settlement procedure. The Opinion of the Advisory Committee and the Final Report of the Hearing Officer have also been published (OJ 2014 C74/3–4).

ECJ dismisses appeals by Versalis, Eni and the Commission in chloroprene rubber cartel case. On 5 March 2015, the European Court of Justice (ECJ) handed down its judgment in the appeals by Versalis SpA (Versalis) (formerly Polimeri Europa) and its parent company Eni SpA (Eni) against the General Court judgments that dismissed their appeals against the European Commission’s decision on the chloroprene rubber cartel. The ECJ also handed down its  judgment in the appeal by the Commission against the same General Court judgment (the cases were joined by the ECJ). The ECJ dismissed the appeals in their entirety. (Joined cases C­93/13 – Commission v Versalis SpA and Eni SpA and C­123/13 – Versalis SpA and Eni SpA v Commission, Judgment of 5 March 2015 (ECLI:EU:C:2015:150)).

EU Mergers

Phase I Mergers

  • M.7387 – BP/Statoil Fuel and Retail Aviation (02/03/2015)
  • M.7490 – Macquarie European Infrastructure Fund 4 LP (MEIF4)/Wren House Infrastructure Management Ltd/E.On Spain (02/03/2015)
  • M.7492 – Banco Bilbao Vizcaya Argentaria (BBVA) of Spain/Garanti of Turkey (04/03/2015)
  • M.7524 – Lone Star/Hanson Building Entities (05/03/2015)

State Aid

Commission approves tax aid scheme to promote investment in French outermost regions. On 2 March 2015, the European Commission announced that it has decided under the state aid rules to approve a French tax scheme that is intended to promote investment in the French outermost regions (MEX/15/4527). Under the scheme, tax assistance will provided for investments in companies located in Guadeloupe, French Guiana, Martinique, Reunion, Mayotte, Saint Barthélemy or Saint Martin. The tax incentive scheme will be in force until the end of 2017. The French authorities will carry out an evaluation of the effectiveness of the plan  before the end of 2017. In this case, the Commission concluded that the aid scheme will encourage the development of the French outermost regions, without distorting competition in  the internal market.

ECJ ruling on validity of state aid decision on unlawful state guarantee to Portuguese bank. On 5 March 2015, the ECJ handed down a preliminary ruling on a reference from a Portuguese court on questions relating to the validity of a European Commission state aid decision. The Commission had found that a state guarantee granted to the Portuguese bank BPP constituted unlawful and incompatible aid, which must be recovered. In the context of national insolvency proceedings, the Portuguese Court raised questions about the validity of the Commission decision. The ECJ ruled that the questions referred disclosed nothing that was capable of affecting the validity of the Commission’s decision. According to the ECJ, the Commission had correctly applied its Banking Communication on state aid to banks during the financial crisis and concluded that the state aid could not be approved under Article 107(3)(b) of the TFEU (Case C­667/13 – Estado português v Banco Privado Português SA and Massa Insolvente do Banco Privado Português SA, judgment of 5 March 2015 (ECLI:EU:C:2015:151)).

UK Mergers

CMA decision on anticipated acquisition by esure of Gocompare.com. On 2 March 2015, the Competition and Markets Authority (CMA) published the full text of its decision on the anticipated acquisition by esure Group plc (esure) of the remaining 50% of the share capital of Gocompare.com Holdings Limited (Gocompare). The CMA announced its decision not to refer this merger to a Phase 2 investigation on 23 February 2015. The CMA found that esure and Gocompare operate in different markets within the insurance industry and there are no horizontal overlaps between their activities. In assessing vertical effects, the CMA examined the national upstream markets for the supply of PMI and home insurance and the national downstream markets for price comparison website (PCW) services related to distributing PMI and home insurance. The CMA explored potential vertical theories of harm in relation to the foreclosure of insurers and information sharing. However, the CMA concluded that there was no realistic prospect of a substantial lessening of competition as a result of vertical effects in  relation to any of these markets.

CMA consults on material change of circumstance in acquisition by Ryanair of minority stake in Aer Lingus. On 3 March 2015, the CMA issued a notice inviting comments on any material change of circumstance and/or special reason within the meaning of section 41(3) of the Enterprise Act 2002 since the Competition Commission’s final report on the completed acquisition by Ryanair of a minority stake in Aer Lingus. Ryanair has made an application seeking review of the final report, which requires Ryanair to reduce its shareholding in Aer Lingus to 5% of Aer Lingus’ issued ordinary shares. Ryanair argues that a divestment remedy is no longer necessary or proportionate, given that IAG’s recent bid for Aer Lingus calls into question the Competition Commission’s finding that Ryanair’s shareholding prevented Aer Lingus from merging with, being acquired by, or otherwise entering into combinations with other airlines. Ryanair also considers that, whether or not the CMA still considers that a divestment is appropriate, the final remedies order in its current form, consulted on in 2013 and which  requires a trustee to sell Ryanair’s shares in a manner prescribed by the CMA, would be unworkable. The CMA invites comments by 17 March 2015.

CMA issues “preliminary” invitation to comment on BT/EE merger. On 4 March 2015, the CMA took the unusual step of issuing a “preliminary” invitation to comment in relation to the anticipated acquisition by BT of the mobile network operator EE. The CMA notes that this is an early opportunity for interested third parties to make their views known on the transaction. The CMA has not yet commenced a formal investigation of the transaction.

UK Competition

CAT grants CMA extension of time to apply for costs against Eurotunnel and SCOP. On 3 March 2015, the Competition Appeal Tribunal (CAT) handed down a ruling granting the CMA an extension of time to make an application for costs against Groupe Eurotunnel S.A (Eurotunnel) and Société Coopérative de Production SeaFrance SA (SCOP). This followed the CAT’s dismissal of the applications by Eurotunnel and SCOP for review of the CMA’s decision on the 

Groupe Eurotunnel/SeaFrance merger. Due to a clerical error, the CMA did not make its application for costs until nine days after the deadline that the CAT had directed. The CAT concluded that, with regard to all the circumstances and the overall justice of the case, despite the lack of good explanation for the delay, it was appropriate to extend the time for the CMA to apply for costs. It noted, in particular, that if an extension were refused, the CMA as the successful party, may have to bear very substantial costs which it otherwise had the prospect of recovering, whereas Groupe Eurotunnel and the SCOP, whose judicial review applications  failed, stood to gain an unexpected windfall (Groupe Eurotunnel S.A. and SCOP v Competition and Markets Authority ([2015] CAT 4)).

Trade

Commissioner calls for updating trade policy to reflect globalization. On 3 March 2015, EU Trade Commissioner, Cecilia Malmstrom, delivered a speech explaining that the European Commission is seeking to update its trade policy this Autumn in the face of an integrated world economy. According to the Commissioner, the EU must boost trust in its trade policy­making, and facilitate free movement for EU citizens, goods and services.

Speeches & Publications

Commission publishes second Competition Merger Brief. On 3 March 2015, the European Commission published the second edition of its “Competition Merger Brief”. This provides analysis of important recent merger cases, written by staff of DG Competition. The second edition includes an article on the Facebook/Whatsapp merger clearance. It also includes an article on the Commission’s phase II conditional approval of the Liberty/Global Ziggo merger, in another fast­moving technology market. It also includes an article on the Huntsman/Rockwood phase II conditional clearance. Finally, the Merger Brief includes an article on the acquisition of Lafarge by, as an example of an exceptionally large case, both in terms of the merger itself and the remedies package.