EU Mergers

Phase I Mergers

M.7497 – Daimler AG / Kamaz OJSC (Joint Venture) (24/02/2015)

Phase II Mergers

Commission opens Phase II investigation in acquisition of the industrial chocolate business of Archer Daniels Midland by Cargill. On 23 February 2015, the European Commission announced that it has decided under Article 6(1)(c) of the EU Merger Regulation to initiate an in­depth Phase II investigation into the proposed acquisition of the industrial chocolate business of Archer Daniels Midland by Cargill. Following its initial investigation, the Commission has identified potential competition concerns in the markets for the supply of industrial chocolate to customers in Germany and the UK, where the proposed transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets. The Commission has until 8 July 2015 to reach its final decision.

Commission opens Phase II investigation into acquisition by General Electric of Alstom’s energy businesses. On 23 February 2015, the European Commission announced that it has decided under Article 6(1)(c) of the EU Merger Regulation to initiate an in­depth Phase II investigation into the proposed acquisition by General Electric (GE) of the Thermal Power, Renewable Power & Grid businesses of Alstom. Following its initial investigation, the Commission has potential competition concerns in the markets for the sale and servicing of heavy­duty gas turbines (HDGT) which are mainly used in gas­fired power plants. The transaction would bring together the activities of GE, the world’s largest manufacturer of HDGTs, with those of Alstom, eliminating one of the three main global competitors to GE in this market. The Commission is concerned that the transaction may lead to an increase in prices, a reduction in customer choice and a reduction of R&D in the HDGT industry, leading to less innovation. The Commission has until 8 July 2015 to reach its final decision.

Commission conditionally approves acquisition by Liberty Global of controlling stake in De Vijver Media. On 24 February 2015, the European Commission announced that, following a Phase II investigation, it has decided under Article 8(2) of the EU Merger Regulation to grant conditional approval to the proposed acquisition by Liberty Global of a stake giving it joint control of De Vijver Media NV. The Commission was concerned that, after the transaction, De Vijver would refuse to license its channels to TV distributors that compete with Telenet, a cable company controlled by Liberty Global. To address these concerns, De Vijver has agreed, for a period of seven years, to license its channels Vier, Vijf and any other similar channel it may launch to TV distributors in Belgium under fair, reasonable and non­discriminatory terms. During the course of the Commission’s investigation, De Vijver and Telenet concluded agreements with some TV distributors to license Vier and Vijf, or to prolong already­existing agreements with others. Telenet also amended its agreement with VRT to ensure that VRT’s content would not be disadvantaged compared to that of De Vijver Media, and offered to amend its agreement with Medialaan in the same way. As part of the commitments package, Telenet has agreed to maintain this offer to Medialaan for at least six months. The Commission is satisfied that, together, these agreements and commitments fully remove its competition concerns (Case T– 135/12 – France v Commission and Case T–385/12 – Orange v Commission, judgments of 26 February 2015 (not yet available in English)).

State Aid

General Court dismisses appeal against Commission conditional approval of French  state aid scheme for France Télécom pensions. On 26 February 2016, the General Court dismissed appeals by France and Orange, formerly France Télécom, against a decision of the European Commission approving a scheme introduced by France for the financing of retirement pensions of public sector employees working for France Télécom. The General Court upheld the Commission’s finding that the pensions reform improved the legal situation of France Télécom as compared with the previous regime and, therefore, created a selective advantage for that undertaking that distorted, or threatened to distort, competition on the telecommunications services market. The Commission was entitled to conclude that the new system of financing the pensions concerned did not achieve a competitively fair rate given that the rate applied to  France Télécom included only the contributions corresponding to the risks common to ordinary employees and civil servants and, as a result, excluded the contributions corresponding to non­ common risks. The General Court also confirmed that the Commission correctly took into account the extent of the effects of the exceptional flat­rate contribution paid by France Télécom in neutralising the effects of the aid.

Commission approves Danish support for offshore wind farm. On 26 February 2015, the European Commission announced that it has decided, under the state aid rules, to approve Danish plans to provide support to a 400 MW wind farm at Horns Rev, off the Danish west coast. The Commission is satisfied that the state aid measures supports the development of renewable energy in a market based way, as required by the Commission’s Guidelines on state aid for environmental protection and energy. In particular, to ensure that the state support is limited to the minimum necessary, the premium will be determined in a competitive bidding process. The contract will be awarded to the operator that offers the lowest premium level. In addition, no state subsidies will be paid for periods in which wholesale price is negative. The Commission, therefore, concluded that the measure would further common energy and environmental objectives without unduly distorting competition in the single market.

UK Mergers

CMA reference decision on acquisition by Sonoco Products of Weidenhammer Packaging. On 25 February 2015, the Competition and Markets Authority (CMA) published its decision to refer for a Phase 2 investigation the completed acquisition by Sonoco Products Company of Weidenhammer Packaging Group GmBH. The CMA found that the parties are each other’s closest competitors and that other suppliers will not impose a sufficient constraint on the merged entity. The CMA concluded that there is a realistic prospect of the merger giving rise to a substantial lessening of competition in relation to the supply of composite cans for food products absent any countervailing factors. Although Sonoco offered undertakings in lieu of a reference (a behavioural pricing undertaking and a divestment undertaking), the CMA did not consider that either of these proposed undertakings was sufficiently clear cut or capable of ready implementation. Therefore, the CMA decided not to exercise its discretion to accept undertakings in lieu of reference. The CMA also published its Issues Statement as part of its Phase 2 investigation. This document sets out the issues that the CMA is likely to consider in reaching its decision. The CMA invites responses to its issues statement by 11 March 2015.

UK Competition

CAT extends stay in Lafarge Tarmac and Hope Construction Materials appeals. On 24 February 2015, the Competition Appeal Tribunal (CAT) published an order, made on 23 February 2015, by which it has extended the stay in the appeals brought by Lafarge Tarmac and Hope Construction Materials against the final report on the aggregates, cement and ready­ mix concrete market. The appeals had been stayed until 1 April. The stay has now been extended until the earlier of the completion of the proposed merger between Lafarge SA and Holcim Ltd or 31 July 2015.

Speeches & Publications

Commission announces Energy Union package: regulatory aspects. On 25 February  2015, the European Commission announced its strategy for achieving an Energy Union. This update focuses on the implications of the Commission’s announcements for energy regulation. The Energy Union strategy focuses on five mutually supportive dimensions: energy security, solidarity and trust; the internal energy market; energy efficiency as a contribution to the moderation of energy demand; decarbonisation of the economy; and research, innovation and competitiveness. The strategy identifies various actions to be taken by the Commission and also by member states to achieve the objectives of a resilient Energy Union. In relation to the internal energy market, the Commission intends, in particular, to conduct a review of electricity market design, with a view to proposing new legislation in 2016. The Commission has also set out measures for achieving the target for electricity interconnection of at least 10% of installed electricity production capacity for all member states.