On 21 January 2016, the Court of Justice of the European Union ("CJEU") handed down a preliminary ruling on a reference from the Lithuanian Supreme Administrative Court on whether restrictions on granting discounts through travel agents' common online booking system constituted a concerted practice for purposes of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). The referring court made the request in the proceedings between Eturas UAB ("Eturas"), 19 travel agencies and the Lithuanian Competition Council ("LCC") concerning a decision by which the LCC had fined travel agencies for entering into and participating in anticompetitive practices. In June 2012, the LCC found that the travel agencies took part in anticompetitive agreements through Eturas’ online travel booking system E-TURAS. The LCC found that the companies participated in a network system for selling travel packages where the system administrator sent a notice imposing a technical restriction of a maximum 3 percent discount. After the LCC's fining decision, the case went to the Vilnius Administrative Court and finally to the Lithuanian Supreme Administrative Court. In January 2014, the Lithuanian Supreme Administrative Court stayed the proceedings and asked the CJEU to rule on whether the travel agencies had participated in a concerted practice, within the meaning of Article 101 of the TFEU, because an administrator of an online booking system sent a message to those travel agencies informing them that the discounts on products sold through that system would henceforth be capped.
In its ruling, the CJEU held that each economic operator must determine independently the policy that it intends to adopt on the common market. In addition, the CJEU held that passive participation in the infringement, without the undertaking clearly opposing them, are indicative of collusion that would make the undertaking liable under Article 101 of the TFEU. As for the question of whether the mere dispatch of a message may constitute sufficient evidence to establish that its addressees were aware, or ought to have been aware, of its content, the CJEU noted that the burden of proving an infringement of Article 101 of the TFEU rests on the party or the authority alleging the infringement. Further, the CJEU ruled that the principle of effectiveness requires that national rules on the assessment of evidence and the standard of proof must not render the implementation of EU competition rules impossible or excessively difficult. The CJEU held that the existence of a concerted practice or an agreement might be inferred from a number of factors read together and not merely by direct evidence. However, the CJEU noted that the presumption of innocence precludes the referring court from considering that the mere dispatch of the message constitutes sufficient evidence to establish that its addressees ought to have been aware of its content. Further, the referring court cannot require that the companies take excessive or unrealistic steps in order to rebut that presumption. Finally, the CJEU stated that a company may rebut the presumption that it participated in a concerted practice by proving that it publicly distanced itself from that practice or reported it to the administrative authorities. Accordingly, the CJEU ruled that the travel agencies participated in a concerted practice, within the meaning of Article 101 of the TFEU, because an administrator of an online booking system sent a message to those travel agencies informing them that the discounts on products sold through that system would henceforth be capped, if the travel agencies were aware of that message. Source: Case C-74/14 – Eturas AB and others v Lietuvos Respublikos konkurencijos taryba, judgment of 21 January 2016
On 21 January 2016, the Court of Justice of the European Union ("CJEU") handed down its judgment on an appeal by Galp Energía España SA, Petróleos de Portugal (Petrogal) SA and Galp Energía SGPS SA ("jointly Galp") against a General Court ("GC") judgment on Galp's action challenging the Commission's decision finding a cartel in the Spanish bitumen market. In October 2007, the Commission issued a decision finding that 13 companies, within 5 corporate groups, had participated in a complex of market-sharing and price-coordination agreements in the road construction penetration bitumen business in Spain. The Commission imposed total fines of approximately EUR 184 million, of which Galp was liable for approximately EUR 8.7 million.
Galp appealed the decision to the GC, which held that even though the Commission had failed to establish that Galp participated in the cartel monitoring system and compensation mechanism connected with the implementation of the agreements, Galp could be held liable for these two aspects of the cartel. However, the GC reduced the fine by an additional 4% due to mitigating circumstances, but dismissed the appeal in all other respects. Galp further appealed to the CJEU, challenging in particular the GC's exercise of its unlimited jurisdiction and the GC's obligation to adjudicate within a reasonable time.
Regarding Galp's allegation that the GC had breached its obligation to adjudicate within a reasonable time, the CJEU held that this was evident and that the GC's breach was serious. The CJEU held in particular that the long period of inactivity, consisting of four years and one month, was neither objectively justified nor had Galp contributed to it. However, the CJEU ultimately dismissed this basis for the appeal, because a claim for any sanction for such a breach must be brought before the GC and not the CJEU. However, the CJEU upheld Galp's plea in relation to the GC having exceeded its powers. The CJEU held that the scope of the GC's unlimited jurisdiction is strictly limited to determining the amount of the fine and that the GC had erred in law by going beyond the assessment of the fine imposed by the Commission. Therefore, the CJEU ruled that the GC judgment must be set aside in so far as it fixed the new amount of the fines imposed on Galp. Consequently the CJEU reduced the fine to be imposed on Galp from approximately EUR 8.7 million, imposed by the Commission, to EUR 7.7 million. Source: Case C-603/13 P – Galp Energía España SA, Petróleos de Portugal (Petrogal) SA and Galp Energía SGPS SA v Commission, judgment of 21 January 2016
On 20 January 2016, the Court of Justice of the European Union ("CJEU") handed down a preliminary ruling on a reference from the Italian Consiglio di Stato ("Council of State") concerning a relationship between leniency applications made to the Commission and to national competition authorities ("NCAs") for the same cartel. The referring court made the request in the proceedings between DHL Express (Italy) and DHL Global Forwarding (Italy) (together "DHL") and the Italian competition authority, Autorità Garante della Concorrenza e del Mercato ("AGCM") concerning the AGCM's 2011 decision to impose fines on DHL and several other companies for their participation in a cartel in the markets for international freight forwarding by road to and from Italy. Schenker Italiana ("Schenker") was granted full immunity from fines because it was the first company to lodge an application for immunity to the AGCM on 12 December 2007. At that time, DHL had already submitted an application for immunity to the Commission concerning the air, maritime and road freight forwarding sectors. DHL also submitted a summary application to the AGCM in parallel, but the AGCM considered that DHL's application lacked evidence on the market for international freight forwarding by road. Because DHL did not provide such information until 2008, the AGCM considered that Schenker was the first company to submit its application for immunity and granted DHL only a reduction of the fine.
DHL sought to challenge the AGCM's decision with the Administrative Tribunal of Latium ("Tribunal"), but the Tribunal rejected DHL's appeal. DHL appealed the Tribunal's decision to the Council of State. It claimed that the leniency application made to the Commission and the summary application made to the AGCM should be considered as a whole. DHL also asserted that the AGCM's decision breached the principles set out in the Model Leniency Program of the European Competition Network ("ECN Model Leniency Program"), which is binding towards the AGCM. The Council of State decided to stay the proceedings and referred a number of questions to the CJEU on the interaction between the ECN Model Leniency Program and national leniency programs.
In its ruling, the CJEU first noted that, according to the established case law, the Commission's leniency program is not binding on Member States. According to the CJEU, this conclusion also applies to the instruments adopted within the ECN, such as the ECN Model Leniency Program. The CJEU held that there is no legal link between an application for immunity submitted to the Commission and a summary application submitted to an NCA concerning the same cartel. Therefore, the NCA is not required to assess the summary application in the light of the application submitted to the Commission, nor is it required to contact the Commission in order to obtain information even if the summary application would be more limited in material scope. Finally, the CJEU found that EU law does not preclude an NCA from accepting a summary application for immunity from a company which has not submitted an application for full immunity to the Commission, but rather an application for reduction of the fine. In such a situation, the company that was not the first to submit an application for immunity to the Commission may be granted full immunity from fines under the national leniency program because it may have been the first to inform an NCA of the cartel. This follows from the non-binding nature of the instruments adopted within the ECN. Source: Court of Justice of European Union Press Release 20/01/2016
On 20 January 2016, the Court of Justice of the European Union ("CJEU") handed down its judgment dismissing Toshiba Corporation's ("Toshiba") action to challenge a General Court ("GC") judgment that upheld the Commission's power transformers cartel decision. In October 2009, the Commission imposed fines totaling EUR 67.6 million on six companies for their participation in an illegal market-sharing cartel on the market for power transformers. The companies agreed in an oral agreement (so-called "Gentlemen's Agreement") that the Japanese cartel members would not sell power transformers in Europe and that the European members would not sell power transformers in Japan. Siemens AG ("Siemens") participated in the cartel but was granted full immunity from fines under the Commission's Leniency Notice.
Toshiba sought to challenge the Commission's decision with the GC, but the GC dismissed the appeal in its entirety in May 2014. Subsequently, Toshiba lodged a further appeal with the CJEU to set aside the GC's judgment and to annul the Commission's decision. To support its action, Toshiba claimed that the GC was wrong to characterize the Gentlemen's Agreement as a restriction of competition by object. Toshiba also asserted that the GC erred in concluding that the Japanese manufacturers of power transformers were potential competitors to the manufacturers in the European Economic Area ("EEA") and distorted evidence by over-relying on a letter from a cartel participant, Hitachi Ltd. The GC also erred in its assessment on the duration of the cartel, Toshiba's participation in it, and the calculation of the fine.
In its judgment, the CJEU dismissed Toshiba's appeal in its entirety. First, the CJEU concluded that the GC had correctly characterized the Gentlemen's Agreement as an infringement by object. The CJEU also rejected Toshiba's claims regarding potential competition and noted that it had no jurisdiction to review the GC's findings of facts in this regard because the GC had properly assessed the evidence and observed the rules of procedure. According to the CJEU, the Gentlemen's Agreement itself indicated that the parties considered themselves to be at least potential competitors. Finally, the CJEU concluded that the GC had not erred in its reasoning concerning the duration of Toshiba's infringement or in its assessment concerning the calculation of Toshiba's fine. The CJEU agreed with the methodology used by the Commission and the GC to calculate Toshiba's fine and rejected Toshiba's claims that the Commission and the GC should not have used the company's worldwide market share in calculating the fine for the infringement that concerned only the EEA and Japan.Source: Case C-373/14 P Toshiba Corporation v Commission, judgment of 20 January 2016
On 19 January 2016, the European Parliament adopted a resolution on the Commission's Report on Competition Policy 2014 ("Resolution"). The resolution sets out Parliament's view on various aspects of competition policy, including antitrust enforcement, merger control, state aid and the role of competition in a globalized economy. The Resolution is non-binding.
According to the Resolution, the Parliament considers that the Commission's cartel enforcement has been successful and has significantly contributed to the realization of the internal market. However, the Parliament finds that the existing fining rules should be supplemented by penalties against natural persons. The Parliament also specifically comments on the need to adapt competition laws and assessment framework in relation to the digital economy. It notes that the original market models of competition policy may be inappropriate for the digital economy. It therefore calls on the Commission to carry out a comprehensive legal and economic assessment of fast moving markets and business models used by digital companies in order to obtain a clear understanding of the market structure, market trends and the best means of assessment.
Furthermore, the Parliament highlights the role of state aid rules in tackling tax evasion and unfair tax policies. It urges the Member States to cooperate fully with the Commission's state aid investigations in the field of taxation and also calls on the Commission to clarify the rules and procedures concerning state aid in the financial sector. Finally, the Parliament sets out its view that it should have co-decision powers in relation to competition policy, in particular where fundamental principles and binding guidelines are concerned. Source: European Parliament Press Release 19/01/2016 and European Parliament Resolution of 19 January 2016 on the Annual Report on EU Competition Policy
Competition (Finland): Finnish Competition and Consumer Authority proposes fine of EUR 38 million on seven bus companies, the Finnish Bus and Coach Association and Matkahuolto for anticompetitive behavior
On 25 January 2015, the Finnish Competition and Consumer Authority (“FCCA”) proposed that the Finnish Market Court impose a fine of EUR 38 million on seven bus companies, the Finnish Bus and Coach Association ("Bus and Coach Association") and a bus service and marketing company Oy Matkahuolto Ab ("Matkahuolto"), for their participation in a cartel on the markets for bus and coach transport services in Finland. In its decision the FCCA also orders these parties to seize the anticompetitive conduct. The bus companies suspected of the illegal behavior include J. Vainion Liikenne Oy, Koiviston Auto Group, Länsilinjat Oy, Oy Pohjolan Liikenne Ab, Pohjolan Matka Group, Savonlinja Group and Väinö Paunu Oy.
According to the FCCA the bus companies, together with Matkahuolto and the Bus and Coach Association, operated an illegal cartel since the autumn of 2008. The FCCA alleges that the anticompetitive practices were implemented one year before the Finnish markets for bus and coach transport services were opened up to competition under EU Regulation 1370/2007 on Public Passenger Transport Services by Rail and by Road and their purpose was to hinder or at least delay the liberalization of the market and to exclude new entrants. In practice, the cartel participants agreed within the Bus and Coach Association to restrict supply of their services and to prevent rival operators' access to Matkahuolto's travel and parcel services. As a result, the rival operators suffered damages because they were not able to reach customers through Matkahuolto's timetable and ticket sale services and were not entitled to provide Matkahuolto's parcel services, which normally constitute a central source of income.
In determining the level of the fine, the FCCA took into account the gravity and duration of the infringement, as well as the earlier fines imposed on the Finnish Bus and Coach Association for anticompetitive behavior. Source: Finnish Competition and Consumer Authority Press Release 25/01/2016 (in Finnish) and Consumer Authority's Order to Seize Anticompetitive Conduct and Penalty Payment Proposal to the Market Court 25/01/2016 (in Finnish)
On 22 January 2016, the Swedish Competition Authority ("SCA") initiated proceedings before the Stockholm City Court ("SCC") to prohibit Kronfågel Holding AB's ("Kronfågel") acquisition of Lagerberg i Norjeby AB ("Norjeby").
On 18 June 2015, Kronfågel, the largest undertaking on the Swedish chicken market, notified its acquisition of all shares in Lagerberg, the third largest undertaking on the same market, to the SCA. The SCA opened an in-depth investigation in July 2015 to assess the potential competition concerns raised by the proposed transaction. The in-depth investigation was extended on three occasions, because Kronfågel took the initiative to examine whether the competition concerns could be resolved by voluntary commitments.
According to the SCA, the commitments presented by the parties were not such as to counterbalance the negative effects of the transaction. Consequently, the SCA held that the transaction will significantly restrict the occurrence or the development of effective competition and that this applies especially to packaged fresh chicken in refrigerated display counters and for ready-roasted chicken in supermarkets. Therefore, the SCA submitted a summons application to the SCC petitioning for the acquisition to be prohibited. The petition comes with a conditional fine of SEK 100 million that will be imposed if the prohibition succeeds. Source: Swedish Competition Authority Press Release 22/01/2016 and Swedish Competition Authority Summons Application 22/01/2016 (in Swedish)
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 acquisition of Topaz, RPIF and Esso Ireland by Alimentation Couche-Tard
- Commission approves acquisition of Proffice by Randstad
- Commission approves acquisition of Moto Holdings by CVC and USS Way
- Commission approves acquisition of UniCarriers Holdings by Mitsubishi Heavy Industries
- Commission approves acquisition of TEN by Engie and REC
- Commission approves acquisition of HRA Pharma by Astorg Asset Management and Goldman Sachs
- Commission approves joint venture between Lov Group and De Agostini