EU Mergers

Phase I Mergers

  • M.8223 MICRO FOCUS / HPE SOFTWARE BUSINESS (08 March 2017)

EU Competition 

General Court annuls Commission’s decision relating to United Parcel Service’s acquisition of TNT Express. On 7 March 2017, the General Court annulled the European Commission’s (Commission) decision which refused to authorise United Parcel Service’s acquisition of TNT Express NV. The judgment was based on a procedural irregularity in that the Commission relied on a final version of an econometric analysis which had not been discussed during the administrative procedure and, therefore, the Commission infringed United Parcel Service’s rights of defence. Both parties are in the international express small package delivery market, and the Commission concluded the merger was likely to restrict competition in 15 Member States by reducing the number of players in that market and harming customers by causing price increases. The Commission therefore prohibited the merger. United Parcel Service appealed to the General Court arguing errors of law and manifest errors of assessment, infringement of their rights of defence and infringement of the obligation to state reasons. The General Court found United Parcel Service’s rights of defence had been infringed and annulled the decision in its entirety without the need to examine the other pleas.

Samsung lose their appeal against EU fines. On 9 March 2017, the Court of Justice upheld the fines imposed on Samsung SDI Co. Ltd and Samsung SDI (Malaysia) Bhd. for their participation in cartels on the market for cathode ray tubes for television sets and computer monitors. The Commission had found two separate infringements each constituting a single continuous infringement (SCI). The first related to the market for colour cathode ray tubes for computer monitors (CDTs) and the second to the market for colour cathode ray tubes for television sets (CPTs). Samsung SDI was found to have participated in the CPT cartel directly and to have participated in the CDT cartel indirectly through its subsidiary Samsung SDI (Malaysia). Each cartel consisted of price-fixing, output limitations, market-sharing and customer-sharing. On 5 December 2012, the Commission fined Samsung approximately €1.47 billion. Samsung sought an annulment of the decision relating to the CPT cartel and a reduction of the fine imposed in relation to the CDT cartel, however, the General Court dismissed their appeal. Samsung appealed the General Court’s judgment relying on four grounds of appeal: first, that the General Court breached its obligation to state reasons and infringed the Commission’s Guidelines when setting the fines; secondly, that the General Court breached their obligation to state reasons and the principle of equal treatment in rejecting their argument that the Commission could not state an end date for their participation in the CPT cartel; thirdly, that the General Court erred in law in that it approved the Commission taking into account certain inapplicable sales when calculating the fine; and finally, that the General Court erred in law in examining their line of argument in relation to the Commission’s refusal to grant them the maximum leniency reduction in respect of the CDT cartel. The Court of Justice rejected each ground of appeal put forward by the appellants and confirmed the fines imposed jointly and severally on Samsung SDI and Samsung SDI (Malaysia).

State Aid

Commission clears Hungary’s financial support for two nuclear reactors. On 6 March 2017, the Commission approved the financial support for the construction of two new nuclear reactors in Paks II nuclear power plant in Hungary. The Hungarian Government has made substantial commitments to limit the distortion of competition, namely to avoid overcompensation; to avoid market concentration; and, to ensure market liquidity. On this basis, the Commission was able to approve the investment under EU state aid rules.     

Commission clears €420 million Czech state aid. On 7 March 2017, the Commission approved a Czech support scheme which supports electricity produced from high-efficiency combined heat and power plants. The scheme has a total budget of €420 million and will allow operators to receive a fixed premium on top of the market price for electricity. The Commission was notified of the support scheme in November 2016 and has now approved it recognising how the measure helps the Czech Republic to achieve its 2020 environmental and climate change goals without distorting competition.        

General Court dismisses appeal by Greek mining company against the recovery of illegal aid. On 9 March 2017, the General Court dismissed the appeal by mining company, Ellinikos Chrysos, for an annulment of the Commission’s decision on state aid. Ellinikos Chrysos had been transferred assets consisting of gold mines, land, and gold stocks under a contract which stipulated the transaction was exempt from duties and taxes. Following complaints in connection with this transaction, the Commission opened a formal investigation and subsequently found the transaction transferring the assets amounted to aid incompatible with the internal market. They found the mines had been sold to Ellinikos Chrysos below market value and that the exemption from duties and taxes constituted aid. The General Court then confirmed this decision in their dismissal of Ellinikos Chrysos’ appeal. Ellinikos Chrysos disputed the General Court’s assessment of the amount of advantage they were granted as a result of the transfer of the mines and land. Whilst the Court of Justice upheld the first part of the appeal in so far as the General Court failed to respond to Ellinikos Chrysos’ argument and took account of an incorrect expert report, the Court of Justice dismissed the remainder of the appeal thus confirming the Commission’s decision on state aid. 

UK Competition

CMA varies initial enforcement order in respect of AMC’s acquisition of Odeon. On 6 March 2017, the Competition and Markets Authority (CMA) varied the initial enforcement order it made in relation to AMC (UK) Acquisition Limited’s (AMC) acquisition of Odeon and UCI Cinemas Holdings Limited (Odeon) pursuant to section 72(4)(b) of the Enterprise Act 2002. The CMA found the merger gives rise to a realistic prospect of a substantial lessening of competition within the market of cinema exhibition services due to the fact that AMC Great Northern and Odeon Printworks are each other’s closest competitors in the city of Manchester. The variation order amends the definition of “the Odeon Manchester businesses” in the initial enforcement order to mean the business of Odeon in Manchester carried on from the Odeon Printworks site only, as opposed to also including the site at the Trafford Centre. Consequently, only the business of Odeon carried on from Odeon Printworks is subject to the initial enforcement order.      

CMA makes initial enforcement order to Steven Eagell Limited. On 8 March 2017, the CMA announced an initial enforcement order pursuant to section 72 of the Enterprise Act 2002. The order is in relation to the completed acquisition of 7 Toyota dealerships and 2 Lexus dealerships in Cambridgeshire, Essex, and Suffolk by Steven Eagell Limited from Lancaster Motor Company. The CMA is considering whether the merger which has been created will result in a sustainable lessening of competition and wants to ensure no action is taken pending final determination. The order commenced on 3 March 2017 and is without prejudice to the CMA’s investigation into this merger.