Competition (Sweden): Swedish Competition Authority closes investigation into bid consortium in the household waste market

On 13 November 2015, the Swedish Competition Authority ("SCA") closed an investigation into a bid consortium in the household waste market. The SCA suspected Umeå Energi AB ("Umeå Energi") and Sundsvall Energi AB ("Sundsvall Energi"), owned by the Swedish municipalities Umeå and Sundsvall, respectively, of unlawfully colluding in a public tender for the collection and incineration of household waste.

The SCA became aware that the companies had submitted near-identical bids, which also seemed to be higher than previous and other comparable bids by the same parties. In addition, the SCA suspected that the parties colluded against a third bidder, Sebnor AB ("Sebnor"), which won the tender contract with the municipality of Örnshöldsvik. Sebnor did not operate its own incinerator plant and was therefore dependent on concluding a contract with an incinerator operator in order for the waste to be dismantled. Both Umeå Energi and Sundsvall Energi burn household waste to supply heating and electricity, but Sebnor did not manage to enter into an agreement with either of them. Due to the suspicions of a bid consortium, the SCA conducted an unannounced inspection at the premises of Umeå Energi and Sundsvall Energi in September 2014.

After investigating the companies, the SCA stated that it had not found any evidence of illegal agreements between Umeå Energi and Sundsvall Energi, nor did it find evidence that the companies had colluded against Sebnor. Consequently, the SCA decided close the investigation. Source: Swedish Competition Authority Press Release 13/11/2015 (in Swedish) and Swedish Competition Authority Decision 13/11/2015 (in Swedish)

Merger control: Commission approves acquisition of Telecity by Equinix, subject to conditions

On 13 November 2015, the Commission announced that it has granted conditional approval of the acquisition of Telecity by Equinix. Equinix is a US based company that provides colocation services in 33 metropolitan areas worldwide. Colocation services providers rent out floor space and power in purpose-built data center facilities to customers who then install their own servers and data storage equipment. Telecity is a UK based company that operates data centers in 12 metropolitan areas in the European Economic Area ("EEA") and Turkey.

The parties' activities overlap in Amsterdam, Frankfurt, London and Paris. The Commission stated that the transaction will bring together two of the largest providers of data center colocation and related services in Amsterdam, London and Frankfurt. Both parties are currently close and important competitors in these areas and frequently compete against each other for customer contracts. The Commission's initial investigation found that in addition to new players having significant difficulties to enter the market, due to high investment and the deployment times necessary to build new competitive data centers, the remaining competitors are unlikely to replace the competitive pressure currently exercised by Telecity. According to the Commission, the proposed transaction would create a situation where only a very limited number of large and established providers of highly-connected, retail data centers would be left in the Amsterdam, London and Frankfurt areas. Thus the Commission has concerns that the transaction, as notified, would eliminate an important competitor in Amsterdam, London and Frankfurt, which could result in higher prices in those cities.

To address the Commission's concerns and to prevent a Phase II investigation, Equinix offered to divest two data centers in Amsterdam, five in London and one in Frankfurt. The Commission considered that the acquisition of these data centers by a new player or by an existing competitor would ensure that competition in colocation services is not diminished in these three metropolitan areas. Consequently, the commitments will address the Commission's competition concerns and the Commission approves the transaction as modified by the commitments. Source: Commission Press Release 13/11/2015

Public procurement: Court of Justice of the European Union gives preliminary ruling on whether award of public contracts may be subject to minimum wage law

On 17 November 2015, the Court of Justice of the European Union ("CJEU") gave a preliminary ruling on a reference from a German court, Oberlandesgericht Koblenz, on whether contracting authorities can require bidders to submit declarations stating that they will comply with national legislation on employment conditions for their employees and subcontractors in the performance of a public contract. In July 2013, the municipality of Landau excluded a German undertaking, RegioPost, from participating in a public procurement procedure relating to postal services in that municipality because RegioPost had not undertaken to pay a minimum wage to staff performing the services in question, as required under the law of the German Land of Rhineland-Palatinate. RegioPost brought proceedings before the Oberlandesgericht Koblenz, which referred several questions to the CJEU seeking to ascertain whether the legislation of the Land of Rhineland-Palatinate is compatible with EU law and, in particular, Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts ad public service contracts ("Directive 2004/18").

In its judgment, the CJEU concluded that Directive 2004/18 does not preclude legislation that requires bidders and their subcontractors to undertake, by means of a written declaration enclosed with their tender, to pay their staff a predetermined minimum wage. According to the CJEU, such obligation constitutes a special condition acceptable under Directive 2004/18 because it relates to the performance of the contract and concerns social considerations. The obligation is also transparent, non-discriminatory and compatible with Directive 96/71 on the posting of workers. Furthermore, the CJEU held that the Directive 2004/18 does not preclude the legislation that allows contracting authorities to exclude bidders and their subcontractors who refuse to provide minimum wage declarations for workers who would perform the public contract in question.

Source: Court of Justice of European Union Press Release 17/11/2015

Public procurement: Advocate General gives an opinion on sub-contracting in public procurement

On 17 November 2015, Advocate General ("AG") Sharpston gave an opinion on questions referred by a Polish court on whether it is permissible under Directive 2004/18 to restrict a tenderer's use of sub-contractors. The request for a preliminary ruling stemmed from a procedure initiated in May 2007 for the award of a public contract for the construction of a ring road in Wroclaw, Poland. The City of Wroclaw stipulated in the tender specifications that the successful tenderer was to perform at least 25 percent of the works covered by the contract using its own resources.

In 2010, the City of Wroclaw concluded an agreement with the director of the Centre for EU Transport Projects ("CUPT"). The CUPT took the view that the City of Wroclaw had infringed the principle of fair competition with its 25 percent requirement. The parties initiated proceedings before the referring court, which decided to stay the proceedings and ask the Court of Justice of the European Union ("CJEU") whether the 25 percent requirement is compatible with Directive 2004/18.

In its opinion, the AG noted that one of the objectives of Directive 2004/18 is to guarantee that public procurement is open to competition. The AG also noted that Directive 2004/18 explicitly confirms that an economic operator may rely on the skills and capacities of other entities. The AG also considered that there may be works with special requirements necessitating a certain capacity which cannot be obtained by combining the capacities of more than one operator that would be unable to perform that work individually. However, the AG stated that that is not a specific ground for prohibiting or restricting subcontracting as such. Accordingly, the AG concluded that Directive 2004/18 precludes a contracting authority from stipulating in the tender specifications of a public works contract that the successful tenderer must perform part of the works covered by that contract using its own resources. Source: Case C-406/14 Wroclaw - Miasto na prawach powiatu v. Minister Infrastruktury i Rozwoju, Opinion of Advocate General Sharpston, 17 November 2015

State aid: Court of Justice of the European Union rules on state aid rules and the principle of effectiveness

On 11 November 2015, the Court of Justice of the European Union ("CJEU") gave a preliminary ruling on a request from a German court concerning the interpretation of Articles 107 and 108 of the Treaty on the Functioning of the European Union ("TFEU") and the principle of effectiveness. The request for a preliminary ruling stemmed from proceedings between Klausner Holz Niedersachsen GmbH ("Klausner Holz") and the Land Nordrhein-Westfalen ("Nordrhein-Westfalen") concerning a failure to execute agreements to supply wood.

Under the wood supply agreements, Nordrhein-Westfalen had agreed to sell fixed quantities of wood to Klausner Holz between 2007 and 2014, at predetermined prices depending on the size and quality of the wood. In 2007 and 2008, Nordrhein-Westfalen supplied wood to Klausner Holz, but the purchase amounts were not reached. In August 2009, Nordrhein-Westfalen ceased to supply wood to Klausner Holz on the terms set out in the contracts at issue. In February 2012, the Regional Court of Münster held that the contracts at issue remained in force. This decision was confirmed by a final judgment of the Higher Regional Court of Hamm.

In the context of a subsequent action for damages brought by Klausner Holz against Nordrhein-Westfalen, Nordrhein-Westfalen argued that the contracts involved the grant of state aid that had not been notified to the Commission. The referring court decided to stay the proceedings and ask the CJEU whether EU law, in particular Articles 107 and 108 TFEU and the principle of effectiveness, requires that a final declaratory judgment under civil law be disregarded. In its preliminary ruling, the CJEU held that it would be contrary to the principle of effectiveness to prevent a national court from addressing the consequences of a breach of Article 108(3) of the TFEU because of an earlier national court decision on the validity of contracts, which has become definitive but was given in a dispute that did not have the same subject-matter and did not concern the state aid characteristics of the contracts. Source: Case C-505/14 – Klausner Holz Niedersachsen GmbH v. Land Nordrhein-Westfalen, judgement of 11 November 2015

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 joint-control over LRG Group by Apollo and RBH
  • Commission approves acquisition of Swissport by HNA Group