On 12 January 2016, the Commission published an opinion that it provided to the English High Court ("High Court") concerning disclosure in the context of a damages action against MasterCard Incorporated ("Mastercard") by Sainsbury's Supermarkets Ltd ("Sainsbury"). The High Court asked for the Commission's views on MasterCard's proposed disclosure of certain documents that it had obtained as a result of access to the Commission's file in the ongoing investigation into MasterCard's cross-border multilateral interchange fees.
The Commission gave its opinion on 29 October 2015. In its opinion, the Commission noted that the documents at issue were prepared for the Commission's investigation in cases still pending before the Commission. Further, the Commission stated that when ordering the disclosure of the documents in question, the High Court should balance the interests that the claimants have in disclosure of these documents, against the harm disclosure may cause for the Commission's effective enforcement of Articles 101 and 102 of the Treaty on the Functioning of the European Union ("TFEU"). The Commission considered that, in balancing such interests concerning the disclosure of documents specifically prepared for an ongoing Commission investigation, concern for the harm that disclosure may cause to the effective enforcement of EU competition rules should prevail.
In its opinion, the Commission also considered the application of the Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of Member States and of the European Union ("the Damages Directive"). Although the Damages Directive does not yet apply, the Commission expressed the view that the principle of sincere co-operation in Article 4(3) of the Treaty on European Union ("TEU") requires the High Court to give considerable weight to the considerations reflected in those legislative provisions when carrying out its balancing test.
On 17 December 2015, the General Court ("GC") dismissed an appeal by Orange Polska S.A. ("Orange"), formerly Telekomunikacja Polska S.A. ("TP"), against a 2011 Commission decision fining it EUR 127 million for abusing its dominant position on Polish broadband markets. Orange did not dispute the existence of the infringement as such; instead Orange alleged, in particular, that the Commission erred in assessing the proportionality of the fine and by not taking into account various mitigating circumstances.
The GC held early on that the Commission had lawfully adopted the infringement decision and imposed a fine on the company for its anticompetitive conduct, even though the infringing behavior had already ceased. The GC also noted that the Commission had been entitled to find that the infringement was serious in nature, and that the Commission did not err in its assessment of the gravity of the infringement as a whole. Further, the Commission had not erred by not establishing the actual effects of the infringement.
Regarding the alleged mitigating circumstances, the GC held that even if the Commission had not amended the size of the fine, the appellant had still been heard. Further, the GC held that the Commission had been entitled to consider that certain investments that TP had made to its network in settlement of a regulatory action brought by the Polish telecoms regulator did not constitute mitigation, because this was not intended to compensate the alternative operators and end-users who suffered from the effects of the infringement. In addition, the GC held that TP's offering of commitments to the Commission did not constitute effective cooperation that justified a reduction of the fine, especially since the commitments referred mainly to the termination of an infringement whose existence was no longer in doubt. Accordingly, the GC dismissed the appeal in its entirety. Source: Case T-486/11, Orange Polska S.A. v Commission, Judgement of the General Court, 17/12/2015
On 16 December 2015, the General Court ("GC") handed down 13 judgments in which it annulled the Commission's 2010 decision on the air freight cartel, because the GC found that there is a contradiction between the grounds of the decision and its operative part.
On 9 November 2010, the Commission fined 11 air freight carriers for operating a worldwide cartel which affected freight services within the European Economic Area. The Commission's operative part of the decision refers to either four separate single and continuous infringements or just one single and continuous infringement, liability for which is attributed only to the carriers that, as regards certain specified routes, participated directly in the unlawful conduct or were aware of the collusion on those routes. However, in the grounds of the decision the Commission concluded that the cartel constitutes a single and continuous infringement in relation to all of the routes covered by the cartel and in which all of the carriers at issue participated, and that the coordination had taken place at a worldwide level and therefore affected simultaneously all the routes discussed in the decision. All of the concerned air freight carriers, except Qantas Airways, brought actions before the GC to challenge the Commission's decision.
The GC handed down separate but largely identical judgments on all the appeals, where the GC emphasized that the principle of effective judicial protection requires that the operative part of a decision adopted by the Commission, finding infringements of competition rules, must be particularly clear and precise and that the concerned undertakings must be in a position to understand and to contest the imputation of liability and the imposition of penalties, as set out in the wording of the operative part. In addition, the GC noted that national courts are bound by the Commission's decision, and that they must be in a position to understand the scope of the infringements and to identify the liable undertakings, in order to draw the necessary inferences concerning claims for damages. Therefore, the GC noted firstly that there is a contradiction between the grounds of the decision and its operative part. Secondly, the GC noted that the grounds of the decision themselves are not entirely internally consistent, and that the internal inconsistencies in the decision were liable to infringe the appellants' rights of defense and prevent the GC from exercising its power of review. Accordingly, the GC annulled the decision as it relates to the appellants. These GC's judgements can be appealed before the Court of Justice of the European Union within two months. Source: General Court of the European Union Press Release 16/12/2015
On 17 December 2015, the Court of Justice of European Union ("CJEU") handed down an order rejecting appeals by four companies against the orders of the General Court ("GC") that dismissed as inadmissible the companies' appeals against the Commission's amendment decision in the prestressing steel cartel. In June 2010, the Commission fined 17 producers of prestressing steel approximately EUR 518.5 million for their participation in a long-running price-fixing and market-sharing cartel. In September 2010, the Commission adopted an amendment decision to correct errors in the calculation of the fines imposed on certain companies in its original decision.
Moreda-Riviere Trefilerías, S.A ("Moreda-Riviere Trefilerías"), Trefilerías Quijano, S.A ("Trefilerías Quijano"), Trenzas y Cables de Acero PSC, S.L ("Trenzas y Cables de Acero") and Global Steel Wire, S.A ("Global Steel Wire"), which had appealed against the Commission's original decision to the GC, also brought actions against the amendment decision. Although the amendment decision did not alter the fines imposed on these companies, they alleged that the Commission made various procedural errors and breached the principles of non-discrimination and good administration. Furthermore, the companies applied to amend their appeals against the Commission's original decision as a result of the amendment decision. In November 2014, the GC dismissed the appeals as inadmissible in their entirety. The GC held that the companies would derive no benefit from the annulment of the amendment decision because the decision had no impact on the fines imposed on them. In February 2015, Moreda-Riviere Trefilerías, Trefilerías Quijano, Trenzas y Cables de Acero and Global Steel Wire lodged further appeals with the CJEU seeking to set aside the GC's orders.
The CJEU dismissed the appeals as unfounded in their entirety and concluded that the GC had not erred in finding that the companies would gain no benefit from the annulment of the Commission's amendment decision. According to the CJEU, an applicant's interest in bringing proceedings must exist at the time when the action is brought and must continue until the court makes its final decision. Furthermore, if successful, the action must also be able to procure an advantage to the party bringing it. Thus, even if the appeal before the GC would have been successful, the GC would only have annulled the Commission's amendment decision. Such annulment would not have had any legal consequences for the companies concerned because the fines imposed on them and the deadlines for payment of the fines were set out in the Commission's original decision. Accordingly, the CJEU dismissed the appeals as unfounded in their entirety. Source: Cases C-53/15 P - Moreda-Riviere Trefilerías, S.A., C-54/15 P - Trefilerías Quijano, S.A., C-55/15 P - Trenzas y Cables de Acero PSC, S.L. and C-56/15 P - Global Steel Wire, S.A. v Commission, ECJ order of 17 December 2015 (not yet available in English)
On 11 January 2016, the Finnish Competition and Consumer Authority ("FCCA") announced that it has opened an in-depth investigation to assess whether the proposed acquisition of a grocery retailer Suomen Lähikauppa Oy ("Suomen Lähikauppa") by a rival Ruokakesko Oy ("Ruokakesko") would harm competition in the Finnish sector for daily consumer goods. Both parties operate in the markets for retail and procurement of daily consumer goods in Finland.
The Finnish daily consumer goods sector is one of the most concentrated in Europe. The FCCA has concerns that, following the acquisition, the Finnish markets for daily consumer goods would concentrate further because the acquisition would remove one national chain from the market. According to the FCCA, the acquisition would also create a monopoly for Ruokakesko in certain local areas where Suomen Lähikauppa currently operates. The opening of an in-depth investigation does not prejudge the outcome of the investigation. The FCCA now has three months to investigate whether the proposed acquisition significantly impedes effective competition in the Finnish markets or parts thereof and to make a final decision. Source: Finnish Competition and Consumer Authority Press Release 11/01/2016 (only in Finnish)
On 22 December 2015, the Finnish Competition and Consumer Authority ("FCCA") announced that it has closed its investigation into Digita's pricing of television and radio broadcasting services. The FCCA concluded that its review of Digita's overall profitability did not provide grounds for engaging in a product-specific investigation into Digita's television broadcasting services. The FCCA conducted a more detailed analysis of Digita's radio broadcasting services, but this provided no indication of pricing policies that could have been considered unfair within the meaning of the Finnish Competition Act. Accordingly, the FCCA decided to close its investigation. Source: Finnish Competition and Consumer Authority Press Release 22/12/2015
On 18 December 2015, the Stockholm District Court ("SDC") handed down its judgment, in which it held that three Swedish healthcare firms, Aleris Diagnostik AB ("Aleris"), Capio S:t Görans Sjukhus AB ("Capio") and Hjärtkärlgruppen i Sverige AB ("Hjärtkärlgruppen") had unlawfully coordinated their bids in the procurement of health care services in Stockholm.
The case came before the SDC in 2013 when the Swedish Competition Authority ("SCA") instigated an infringement procedure against the companies alleging that they had coordinated their bids. According to the SCA, Aleris had agreed with both Capio and Hjärtkärlgruppen before bidding that the parties would share the work that was subject of the tender irrespective of the winning tender. This constituted a "contract guarantee" or "volume sharing" arrangement, which is prohibited by the procurement rules. Accordingly the SDC fined the three companies approximately SEK 28 million.
On 21 December 2015, the Swedish Competition Authority ("SCA") released its second report for 2015 on the state alcohol retail monopoly. The SCA is obligated to submit such reports twice a year to the Commission, due to obligations incumbent on Sweden after joining the European Union in 1995 to retain the state monopoly of Systembolaget AB ("Systembolaget"), which is a state-owned company that runs a network of retail shops selling spirits, liquors and beverages with an alcohol content above a certain limit. The purpose of the reports is to clarify for the Commission whether the state monopoly discriminates between national and imported products and thereby impedes competition. The state monopoly is considered to be non-discriminatory if the distribution and sales terms for alcoholic beverages are objective, transparent and objectively applied.
In its report the SCA outlines the situation in terms of Systembolaget's planned conversion to lightweight bottles. The report also includes a brief summary of the Swedish Supreme Court's ruling on the validity of an arbitral award between Systembolaget and one of its suppliers, as well as a brief summary of the Court of Justice of the European Union ruling in case, C-198/14, concerning private e-commerce in alcoholic beverages. The report also highlights the development of e-commerce as a share of the total alcohol consumption during the years 2006-2014. Source: Swedish Competition Authority Press Release 21/12/2015 and Swedish Competition Authority Report 21/12/2015
On 21 December 2015, the Commission conditionally approved the proposed acquisition of Elster by Honeywell. Honeywell is a US-based diversified technology and manufacturing company. It is active worldwide in the business areas of aerospace, automation and control solutions, as well as performance materials and technologies. Elster is a German-based global supplier of integrated systems and components such as valves, burners and meters for heating applications and the measurement and regulation of gas flows.
The Commission's market investigation identified competition concerns about several upstream and midstream gas metering markets. The Commission's competition concerns related to the EEA-wide markets for turbine gas meters for fiscal applications as well as gas flow computers and gas chromatographs that operate by the Digitale Schnittstelle für Gasmessgeräte ("DSFG") protocol. The DSFG protocol is a data protocol for gas metering equipment that is prevalently used by customers in German speaking areas. As a result of the transaction, Gas Transmission System and Distribution System Operators that buy gas metering products would only have one other significant provider of gas meters in addition to the new merged entity.
To address the Commission's competition concerns, Honeywell committed to divest to an independent purchaser all its shares in a plant that manufactures gas meters in Butzbach, Germany. According to the Commission, the divestiture completely eliminates the overlap of the parties' activities and allows a purchaser to develop the acquired assets in competition with the merged entity. Accordingly, the Commission approved the proposed transaction, as modified by the commitments.
On 30 December 2015, the Swedish Competition Authority ("SCA") approved Karo Bio AB's ("Karo Bio") acquisition of the brand Allévo. This acquisition is related to the prior acquisition of Cederroth Intressenter AB by Orkla ASA, where in July 2015 the Stockholm District Court approved the SCA's request for conditions to be imposed on the merged entity in order to uphold competition on the Swedish market for sales of weight-loss products.
The commitments include that the brand Allévo must be divested to a third party acquirer approved by the SCA. In order for the acquirer to be approved, it must fulfill certain conditions intended to maintain fair competition. According to the SCA's assessment, Karo Bio meets all the required conditions. Consequently, the SCA approved the acquisition of the brand Allévo by Karo Bio.
Source: Swedish Competition Authority Press Release 30/12/2015 and Swedish Competition Authority Decision 29/12/2015
On 11 January 2015, the Commission decided that the Belgian "Excess Profit" tax scheme is illegal and ordered around EUR 700 million to be recovered from at least 35 multinational companies, who must now return unpaid taxes to Belgium. The Belgian "excess profit" tax scheme, applicable since 2005, allowed certain multinational group companies to pay substantially less tax in Belgium on the basis of tax rulings.
Under such tax rulings, the actual recorded profit of a multinational is compared with the hypothetical average profit a stand-alone company in a comparable situation would have made. The alleged difference in profit is deemed to be "excess profit" by the Belgian tax authorities, and the multinational's tax base is reduced proportionately. The scheme is based on a premise that multinational companies make "excess profit" as a result of being part of a multinational group, e.g., due to synergies, economies of scale, reputation, client and supplier networks, access to new markets. In practice, the actual recorded profit of companies concerned was usually reduced by more than 50% and in some cases up to 90%. In addition the Commission noted that Belgium's argument that the reductions are necessary to prevent double taxation could not be accepted, because in reality the scheme resulted in double non-taxation. Consequently, the Commission concluded that the scheme was illegal under EU state aid rules because it gives certain companies preferential tax treatment.
The Commission decision requires Belgium to stop applying the "excess profit" scheme in the future and to recover the full unpaid tax from the multinational companies that have benefitted from the illegal scheme, in order to restore fair competition. Which companies have in fact benefitted from the illegal tax scheme and the precise amounts of tax to be recovered from each company must now be determined by the Belgian tax authorities; however, the Commission estimates it to be around EUR 700 million.
Source: Commission Press Release 11/1/2016
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 Nordex by Acciona
- Commission approves acquisition of joint control over Saipem by ENI and FSI
- Commission approves acquisition of Unify by Atos
- Commission approves acquisition of Airflo by Panalpina and Dutch Flower Group
- Commission approves acquisition of MRH by Lone Star
- Commission approves joint venture between Saudi Aramco and Lanxess
- Commission approves acquisition of small package delivery services provider TNT Express by FedEx
- Commission approves joint venture by Triton and KKR in maritime transport
- Commission approves acquisition of GCA by Thomas H. Lee and Goldman Sachs
- Commission approves acquisition of Precision Castparts by Berkshire Hathaway
- Commission approves the acquisition of UTi Worldwide by DSV A/S
- Commission approves acquisition of Prefere Resins by Intermediate Capital Groupc and capiton
- Commission approves joint venture in data centre services by KKCG and Foxconn
- Commission approves the acquisition of joint control of CEOLCBH60 / CEOLCHA51 / CEOLAUX89 by la Caisse des Dépôts et Consignations
- Commission approves joint venture between Goldman Sachs and the Wellcome Trust for purpose built student accommodation in UK
- Commission approves acquisition of C+C Pfeiffer by Transgourmet
- Commission approves acquisition of a real estate property portfolio in Finland by Ratos and Varma
- Commission approves Novartis' acquisition of rights on auto-immune indications of GSK's drug ofatumumab
- Commission approves acquisition of joint control of PT Summit Oto Finance and PT Oto Multiartha by Sumitomo Corporation and Sumitomo Mitsui Banking Corporation
- Commission approves joint venture of Michelin and Fives
- Commission approves acquisition of joint control of Hernandez Edelstahl GmbH by Outokumpu and Hernandez Beteiligungs GmbH
- Commission approves acquisition of GETRAG by Magna