NEWSLETTER COMPETITION I 4th Quarter 2014 I National Highlights 2 II European Highlights 3
NEWSLETTER I COMPETITION WWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 2/7 NEWSLETTER COMPETITION
I NATIONAL HIGHLITHS Portuguese Competition Authority Competition Authority publishes Priorities of the competition policy for 2015 On 30 December 2014, pursuant to Article 7(3) of Law Nr 19/2012, of 8 May (“Competition Law”), the PCA published its priorities for the competition policy for 2015. In 2015, the fight against cartels will continue to be one of the PCA’s enforcement priorities, in particular the fight against concerted practices in the public procurement sector, as these practices cause significant harm to the country and to the taxpayers, and also reduce the trust in the adoption of competitive public procurement proceedings, the economy losing the benefits of competitive markets. The leniency regime will continue to be main instrument for the identification of serious infringements to the competitions rules, and the enhancement of its regime is expected to increase with the issuance of final decisions in proceedings currently under investigation by the PCA, through the imposition of fines with a sufficient deterrent effect. For its fight against concerted practices in the public procurement sector, measures to be adopted by the PCA will include the exploration of databases in order to identify existing concerted practices; the improvement of the relationship with the Institute of Construction and Real Estate (Instituto da Construção e do Imobiliário) and the Court of Auditors (Tribunal de Contas); and the collaboration with public contracting authorities, providing them with the tools necessary for the detection of situations likely to infringe competition law. Another priority of the PCA will be the detection of vertical restraints included in agreements between companies at different levels of the value chain. The PCA will continue to promote the use of the settlement regime and to closing cases with commitment decisions, thus ensuring a quicker intervention in the proceedings. Under its powers of supervision, the PCA will continue to monitor the sectors of energy and telecommunications. Portuguese Competition Authority Competition Authority launches two public consultations on commitments WWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 3/7 In December 2014, the PCA launched, for the first time, two public consultations regarding the commitments offered by two companies under investigation in two infringement proceedings before the PCA. In a press release dated 17 December 2014, the PCA announced it had launched a public consultation on the commitments offered by Group Controlinveste Media (“Group CIM”), in the context of an infringement proceedings, opened in April 2013, regarding the agreement for the concession of the broadcasting television and multimedia rights of the matches of the first and second national league, entered into between football clubs and Group CIM. According to the PCA, the agreement is likely to have a foreclosure effect on the market, due to, in particular, the duration of the exclusivity clause of the agreement and the granting of a right of preference to Group CIM in the negotiation of a new agreement. Group CIM commits, inter alia, not to include, in future agreements exclusivity clauses with a duration of more than three years and to renounce to its right of preference. On 30 December 2014, the PCA launched a public consultation on the commitments presented by Peugeot Portugal Automóveis, within the infringement proceedings, initiated in June 2013, regarding a guarantee extension agreement, which prevented the consumers to repair their vehicles in independent repairers, in order not to lose the right to the manufacturer’s guarantee. The commitments include the explicit reference in all contracts that the benefit of the guarantee is not conditional to the realization of maintenance and repair operations in the Peugeot’s Official Network. Pursuant to the Competition Act, the PCA notifies the companies under investigation of its Preliminary Appreciation of the Facts, where it provides the companies with the opportunity for the submission of commitments that are likely to eliminate the effects on competition arising from the practices at issue. The PCA is responsible to monitor the compliance of the commitments, which is mandatory for the company who offered the commitments. These public consultations launched, for the first time, by the PCA are one of the several procedural novelties introduced by the Competition Act. The public consultation, set out in Article 23(2) of the Competition Act, allows the interested parties to submit their observations to the commitments presented, in a period of no less than 20 working days. II EUROPEAN HIGHLIGHTS European Legislation Directive on damages actions under national law for infringements of the competition law provisions was published in the Official JournalWWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 4/7 The Directive on actions for damages under national law for infringements of the competition law provisions, also known as the Private Enforcement Directive (“Directive”), was published in the Official Journal of the European Union on 5 December 2014. The Directive aims to facilitate actions for damages, by the citizens and companies harmed by competition infringements. Although the right for all victims of competition infringements to claim compensation for the harm suffered has been a principle recognized by the European Court of Justice since 2001 (judgment of 20 September of 1999, Case C-453/99 - Courage c. Crehan), such actions for damages are still under developed in the European Union, as they represent excessive costs for the applicants and because there is no harmonization of the procedural rules between the Member States. With the adoption of the Directive, the European legislator intended to promote the elimination of the procedural difficulties that impede an effective compensation for the infringements to articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) (and the corresponding national provisions), harmonizing the procedural rules between Member States. The rules that are now harmonized at the European level include the following: Damage compensation Any natural or legal person who has suffered harm caused by an infringement of competition law is able to claim and to obtain full compensation for that harm, which covers the right to compensation for actual loss and for loss of profit, plus the payment of interest. The Directive establishes the rebuttable presumption that cartel infringements cause harm. The infringer has the right to demonstrate that the infringement did not cause harm. The European legislator also intended to ensure that the standard of proof required for the quantification of harm does not render the exercise of the right to damages practically impossible or excessively difficult. In that sense, whenever it is practically impossible or excessively difficult precisely to quantify the harm suffered on the basis of the evidence available, national courts are empowered to estimate the amount of harm if it is established that a claimant suffered harm. Access to evidence In principle, all documents should be available for disclosure, except for leniency statements and settlement submissions, these documents would never be accessible. Exchanges and documents between the competition authority and the party should only become available after the authority’s final decision. Confidential information and business secrets will be duly protected. WWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 5/7 Access to evidence would be primarily done through court orders. The national court will have to ensure that disclosure orders are proportional, balancing the legitimate interests of all the parties and third parties, in favor and against access evidence. This is in line with the TJEU case law on this matter (see Judgment of 6.06.2013, in Case C-536/11 – Bundeswettbewerbsbehörde v. Donau Chemie and others). Disclosure of evidence Upon request of a claimant, national courts are able to order the defendant, a third party or, in case of necessity, a competition authority to disclose relevant evidence which lies in their control. The claimant’s request must present a reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of its claim for damages. In any case, national courts shall not order the disclosure of leniency statements and settlements proposals. Probative value of the decisions of competition authorities Infringements of competition law found by a final decision of a national competition authority or by a review court are deemed to be irrefutably established for the purposes of an action for damages brought before their national courts, thus binding the national courts. In damages action before the national courts of other Member States, such final decisions will be presented as at least prima facie evidence that an infringement of competition law has occurred. Joint and several liability When the infringement is the result of a behavior adopted by several companies, these companies will be jointly and severally liable for the harm in full caused by the infringement of competition law, and the injured party has the right to require full compensation from any of them until he has been fully compensated. Under the Directive, an infringer may recover a contribution from any other infringer, the amount of which shall be determined in the light of their relative responsibility for the harm caused by the infringement of competition law. The Directive limits, however, the contribution of the successful immunity applicants, in the context of the leniency regime, who will only be responsible for the harm caused to their direct and indirect purchasers and providers. Passing-on defence According to the Directive, Member States shall ensure that compensation of harm can be claimed by anyone who suffered it (direct or indirect purchasers from an infringer), and that compensation of harm exceeding that caused by the infringement of competition law to the claimant, as well as the absence of liability of the infringer, are avoided. Limitation periods The limitation periods for bringing actions for damages must be at least five years. The limitation period is suspended whenever a competition authority takes action for the WWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 6/7 purpose of the investigation of an infringement of competition law to which the action for damages relates. In such cases, the victims will have one year after the infringement decision has become final or after the proceedings are otherwise terminated to bring actions for damages. The limitation period is also suspended for the duration of any consensual dispute resolution process. Limitation periods shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know, of the behavior that constitutes an infringement of competition law, of the fact that the infringement of competition law caused harm and the identity of the infringer. Transposition of the Directive The Directive entered into force in 27 December 2014. Member States have two years from the date of the entry into force of the Directive to implement it. The important rules introduced in the Directive are expected to enhance the actions for damages by those harmed by infringements to European and national competition rules. Court of Justice of the European Union Order of the Court of Justice, of 4 December 2014 (Case C-384/13) Estación de Servicio Pozuelo 4 SL c. Galp Energía España SAL Long-term exclusivity clauses in distribution agreements On 4 December 2014, the Court of Justice of the European Union (“CJEU”) handed down its Order in Case C-384/13, regarding compliance with competition law of long-term exclusive purchasing clauses in distribution agreements. The Order, following a preliminary ruling request a Spanish civil court, regarded the supply agreement between Galp Energia España, an oil supplier, and Estación de Servicio Pozuelo, a gas station operator, which included a single branding clause on the basis of which the gas station operator was bound to exclusively purchase oil products from Galp for at least 30 years. The CJEU started to note that, although exclusive purchasing clauses may not have the object to restrict competition, it is nevertheless necessary to ascertain whether such clauses have the effect of restricting competition under article 101 of the TFEU. The assessment of the effects of exclusive purchasing clauses should take into account the legal and economic context, including similar contracts in the relevant market. If the market is not easily accessible as a result of a cumulation of long-term exclusivity clauses in the relevant market, it should be assessed the extent of the contribution of the contract at stake to this foreclosure effect, taking into consideration, in particular, the market position of the contract parties and the duration of the exclusivity. WWW.CUATRECASAS.COM NEWSLETTER I COMPETITION 7/7 The CJEU added that, as Galp’s market share was only 3%, it would be contrary to the purpose of free competition to declare a long-term exclusivity clause void, which would make it more difficult for GALP to penetrate the market, thus favoring the other players with stronger market positions (in fact, three competitors were responsible for 70% of the Spanish market). The CJEU concluded that long-term exclusivity clauses may not have the effect of restricting competition, and will not, in principle, be in violation of Article 101 of the TFEU when the parties to the agreement have a limited market share and the duration of the exclusivity clause is not manifestly excessive of what is common in the relevant market (what is manifestly excessive is to be decided by the referring court). This Order gives important guidance on exclusive purchasing clauses, confirming that such clauses with a duration that extends beyond the five year exemption for parties with a market share of 30% or less under Article 5 of the Block Exemption Regulation for vertical agreements (Regulation 330/2010) may still comply with competition law. In such situations, national courts must undertake an effects based approach, considering particularly the market position and relative duration of the clauses in the market context.
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