Competition: General Court dismisses Orange’s action and confirms the validity of the Commission’s inspection decisions

On 25 November 2014, the General Court (“GC”) handed down its judgment confirming the validity of the Commission’s inspection decisions in the context of an investigation into the possible abuse of a dominant position by Orange (known as France Télécom until 1 July 2013). In 2011, prior to the Commission’s inspections, Orange had been investigated by the French Competition Authority (“FCA”) regarding alleged abuse of a dominant position by a number of practices in the sector for reciprocal interconnection services in the area of Internet connectivity. In 2012, the FCA found that the alleged practices had not taken place or did not constitute an abuse of a dominant position. In parallel, the Commission had opened an investigation regarding very similar practices by Orange. In June 2013 the Commission conducted a surprise inspection (i.e. a dawn raid) at four of Orange’s premises. Subsequently, Orange brought an action before the GC seeking annulment of the Commission’s inspection decisions. Firstly, Orange challenged the proportionality and necessity of the decisions, in so far as the FCA had already investigated identical allegations of infringement and found that Orange’s conduct was in compliance with EU competition law rules. In its ruling the GC pointed out that the Commission is not, in principle, bound by decisions taken by a national court or authority pursuant to Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) and that the Commission may at any time take decisions relating to competition, even if they conflict with a national decision. Secondly, Orange argued that communicating the national case-file to the Commission might have been a less onerous but equally effective alternative to an inspection, in so far as the Commission could have accordingly obtained additional information on the alleged infringements. In its ruling the GC accepted that such a choice of procedure by the Commission may appear unfortunate but found, however, that this did not lead to the illegality of the inspection decision. Finally, Orange contended that the GC must ensure that inspection decisions are not arbitrary by ascertaining whether the information the Commission has in its possession was sufficiently reliable and detailed so as to justify the adoption of such a decision. On this point, the GC found that the nature of the suspected restrictions of competition was defined in sufficiently precise and detailed terms in the inspection decisions and that those decisions clarify in what way Orange’s conduct could fall within the suspected practices. Accordingly, the GC dismissed Orange’s action and confirmed the legality of the Commission’s inspection decisions. Source: General Court Press Release 25/11/2014

Competition: Advocate General Wathelet delivers opinion on licencing of standard-essential patents

On 20 November 2014, Advocate General (“AG”) Melchior Wathelet delivered his opinion regarding the preliminary ruling requested by a German court from the Court of Justice of the European Union (“CJEU”) in a standard-essential patents case between Huawei Technologies Co. Ltd (“Huawei”) and ZTE Deutschland GmbH (“ZTE”). In 2013, the German court referred a number of questions to the CJEU seeking to ascertain whether an action for infringement brought by the holder of a patent which is essential to a standard developed by a standards body, a so-called standard-essential patent (“SEP”), against a manufacturer of products which comply with that standard constitutes an abuse of a dominant position under EU competition rules if the holder of a SEP has made a commitment to grant licences on fair, reasonable and non-discriminatory (“FRAND”) terms. The questions were based on the case examined by the German court where Huawei, a Chinese telecommunications company holding a European patent regarded as essential to the Long Term Evolution (“LTE”) standard, had brought an action for infringement against ZTE seeking an injunction prohibiting continuation of the infringement. In the opinion, AG Wathelet first noted that the fact that a company owns a SEP does not necessarily mean that it holds a dominant position but it is for the national court to determine this on a case-by-case basis. That being said, AG Wathelet proposed that where the holder of a SEP is in a dominant position and has made a commitment to a standard setting body to grant licences on FRAND terms and where the infringer is ready, willing and able to enter into a licencing agreement on such terms, the holder of a SEP may be required, before seeking an injunction, to make the infringer a specific licencing offer containing all the terms normally included in licences in the sector concerned to avoid abuse of a dominant position. Further, according to AG Wathelet, the infringer must respond to that offer and if it does not accept the offer, it must promptly present the holder of a SEP a reasonable counter-offer. However, if the conduct of the infringer is purely tactical and/or dilatory and/or not serious, an application by the SEP holder for corrective measures or for an injunction does not constitute an abuse of a dominant position. AG Wathelet further proposed that failure to commence negotiations or unsuccessful negotiations or a request by the alleged infringer for FRAND terms to be fixed by a court or an arbitral tribunal should not be regarded as dilatory and not serious behavior on the part of the alleged infringer. Moreover, reserving the right to challenge the validity, use and essential nature of the patent after entering into a licensing agreement should also not be regard as dilatory behavior. Finally, AG Wathelet suggested that taking legal action to secure the rendering of accounts or bringing claims for damages in respect to past use of the patent should not be considered an abuse of dominance by the SEP holder. Source: Court of Justice of European Union Press Release 20/11/2014

Competition: Commission sends statement of objections to suspected participants in trucks cartel

On 20 November 2014, the Commission announced that it had sent Statements of Objections to a number of heavy and medium duty truck producers informing these companies that the Commission suspects them of having participated in a cartel in breach of EU competition rules. The Commission conducted unannounced inspections at the premises of the companies concerned in January 2011. The Commission now has concerns that the companies may have agreed or coordinated their pricing behaviour in the European Economic Area (“EEA”). Such behaviour, if established, would breach Article 101 of the Treaty on the Functioning of the European Union (“TFEU”), which prohibits cartels and restrictive business practices. The sending of a statement of objections does not prejudge the outcome of the investigation. Source: Commission Press Release 20/11/2014

Competition: Ombudsman criticizes Commission for delay in giving access to key evidence in cartel investigation

On 19 November 2014, the European Ombudsman Emily O’Reilly (“Ombudsman”) criticized the Commission for a delay in giving the German company Infineon access to evidence in the smart card chips cartel inquiry. On 3 September 2014, the Commission imposed fines totaling EUR 138 million on Infineon, Philips, Samsung and Renesas for operating a cartel in the smart card chips market. Although the Commission was since January 2014 in possession of an electronic copy of an internal e-mail of a competitor which implicated Infineon in the cartel, it waited until 28 July 2014 to send a so-called Letter of Facts containing the copy of this e-mail to Infineon. After receiving the Letter of Facts, Infineon sent a complaint to Ombudsman alleging that the Commission had breached its rights of defence in the cartel investigation. According to Infineon, the e-mail in question was key evidence in the Commission's inquiry. Although the company concerned had questioned its authenticity, the Commission considered the e-mail to be credible evidence. Moreover, according to Infineon, the delay meant that Infineon only had one week to carry out the complex analysis necessary to show whether the e-mail was genuine. In its decision, the Ombudsman found that whenever the Commission intends to rely on evidence received from third parties in order to prove the existence of an infringement of the EU competition rules, the parties against whom proceedings have been initiated must be given the opportunity to give their views on that piece of evidence. According to Ombudsman, the Commission had provided no good reason which would explain why the Commission waited until 28 July 2014 to send the evidence to Infineon. Therefore, Ombudsman closed her inquiry by making a critical remark. Source: European Ombudsman Press Release 19/11/2014 and Decision of the European Ombudsman closing the inquiry into complaint 150072014/FOR against the European Commission

Competition (Finland): Helsinki Court of Appeal rules against District Court decision that claims were time barred in raw wood cartel damages case

On 21 November 2014, the Helsinki Court of Appeal (“Court of Appeal”) handed down its 13 judgements concerning the actions for damages in the Finnish raw wood cartel and ruled that the District Court of Helsinki (“District Court”) had erred in dismissing the actions for damages brought by corporations and private forest owners against the cartel participants on the grounds that the statute of limitations had expired regarding the claimants’ right to compensation. The cases were referred back to the District Court for review on the merits. In 2009, the Market Court imposed fines totaling EUR 51 million on Metsäliitto Cooperative (“Metsäliitto”) and Stora Enso Plc (“Stora Enso”) for illegal price cooperation and information exchange in the market for purchase of timber during 1997–2004. UMP-Kymmene Plc (“UPM-Kymmene”) received full immunity from fines for its cooperation with the Finnish Competition Authority (today the Finnish Competition and Consumer Authority, “FCCA”) under the Finnish leniency program. After the judgment of the Market Court, 656 corporations and private forest owners brought actions for damages before the District Court against the above mentioned three forestry companies. The District Court dismissed the first 13 actions by finding that the cartel victims’ right to compensation had expired under the applicable statute of limitations. According to the District Court, the statute of limitations period had started on 25 May 2004, which was the date when the FCCA gave its press release on the alleged cartel, because due to the press release and the related wide publicity the claimants had had all the information needed to assess whether they had suffered damage from the alleged cartel. The Court of Appeal disagreed. As regards the statute of limitations period of five years under the Finnish Competition Act and the statute of limitations period of three years under the Finnish Tort Liability Act, the Court of Appeal found that, contrary to the District Court’s view, these statute of limitations periods did not start on 25 May 2004 when the FCCA’s press release was published but on 4 January 2010 when the Market Court’s judgement on the cartel became binding. Further, as regards the statute of limitations period of ten years under the Finnish Tort Liability Act, the Court of Appeal concluded that such period had started in the spring of 2004 when the cartel had ceased its operations following the leniency application of UPM-Kymmene. Accordingly, the Court of Appeal concluded that the actions for damages instituted in December 2011 and May 2012 could not be dismissed on the grounds that the cartel victims’ right to compensation had expired. Source: Helsinki Court of Appeal Press Release 21/11/2014 and Edilex News 21/11/2014 

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 TIBCO by Vista
  • Commission approves acquisition of Taminco by Eastman
  • Commission approves acquisition of Everett Smith Group by Lear Corporation
  • Commission approves acquisition of UK airport operator NDH1 by Macquarie and Ferrovial
  • Commission approves acquisition of Club Mediterranée by Fosun
  • Commission approves acquisition of CSC ServiceWorks by Ontario Teachers' Pension Plan Board and Pamplona Capital Partners
  • Commission approves acquisition of joint control over two Portuguese insurance companies by Aegon and Santander