Competition: Court of Justice of European Union dismisses appeals by Versalis, Eni and the Commission in chloroprene rubber cartel case 

On 5 March 2015, the Court of Justice of European Union (“CJEU”) handed down its judgement dismissing the appeals brought by Versalis SpA (“Versalis”), formerly Polimeri Europa SpA (“Polimeri”); its parent company Eni SpA (“Eni”); and the Commission against the General Court (“GC”) judgement in the chloroprene rubber cartel. In December 2007, the Commission announced that it had imposed fines totaling EUR 243.2 million on companies within six corporate groups (namely Bayer, Denka, DuPont, Dow, Eni and Tosoh) for operating an illegal price-fixing and market sharing cartel on the market for chloroprene rubber. The Commission also increased the basic amount of the fine imposed on Eni and Versalis by 60% because of the previous participation of Eni’s subsidiaries Anic SpA in a cartel in the polypropylene sector and EnicChem SpA in a cartel in the PVC sector. Versalis and Eni brought a joint action with the GC seeking annulment of the Commission’s decision.

 In December 2012, the GC upheld the Commission’s finding that the companies were liable for the infringement committed by their subsidiaries. At the same time, the GC reduced the fine imposed on the companies because the Commission had erred in increasing its calculations because of repeated past infringement. Versalis and Eni later brought actions with the CJEU seeking the annulment of the GC’s judgment. The Commission also appealed the GC’s judgment, claiming that the judgment should be set aside in so far as it reduced the amount of the fine imposed. 

The CJEU dismissed all the appeals in their entirety. Firstly, the CJEU held that the GC had not erred in finding that the Commission had been correct to attribute liability to Eni and Versalis for the infringements of their subsidiaries. Regarding the aggravating circumstances of repeated infringement on Eni’s and Versalis’ part, the CJEU noted that the GC had wrongly stated that in the proceedings concerning the first infringement the legal person must be able to dispute that it formed a single economic unit with other entities involved in the proceedings. According to the GC, what matters is that a legal person must be able to defend itself at the time when the repeated infringement is alleged against it. However, since the GC’s argumentation was otherwise well founded, the CJEU concluded that the error should not result in the annulment of the GC’s judgment. Accordingly, the CJEU dismissed all the appeals and upheld the GC’s ruling. Source: Joined cases C-93/13 P European Commission v Versalis SpA and Eni SpA and C-123/13 Versalis SpA and Eni SpA v European Commission, judgement of the Court of Justice of the European Union, 5 March 2015 and Commission Press Release 05/12/2007

Competition (Sweden): Swedish government proposes clarification of Swedish dawn-raid rules 

On 5 March 2015, the Swedish government announced a proposal for clarification of the rules concerning the Swedish Competition Authority (“SCA”) investigatory powers, mainly how it handles electronically stored material in connection with surprise inspections. The aim of the new law is to increase legal certainty regarding the SCA’s existing procedures. The proposed amendments would give the SCA the right to review electronically stored information at its offices only if the company subject to the inspection explicitly consents to the material being moved from the company’s premises. If approved, the new law could enter into force on 1 January 2016. Source: Swedish government referral to the Council of Legislation 05/03/2015

Competition (Sweden): Swedish Competition Authority welcomes Swedish government proposal to shorten litigation chain

On 5 March 2015, the Swedish Competition Authority (“SCA”) welcomed a reviewed Swedish government proposal to shorten the litigation chain in competition law cases. The original proposal was to discontinue the Market Court and create a new court for the purposes of handling competition law related litigation. The SCA raised concerns regarding the proposal in relation to the suggestion that a decision of such a new court could be appealed to the Supreme Court potentially increasing the duration of the litigation. The Swedish Ministry of Justice suggested in the reviewed proposal that the Svea Court of Appeal should, as a general rule, be the final instance in antitrust cases instead of the Supreme Court. The SCA welcomed the reviewed proposal and emphasized the importance of giving courts sufficient resources to reduce the time needed to make a decision. Moreover, the SCA stressed that the need for a quick final decision is particularly important in merger control cases and thus eliminating the possibility to appeal a merger control decision to the Supreme Court is recommended.Source: Swedish Competition Authority Press Release10/03/2015 

Merger control: General Court confirms Commission’s decision prohibiting proposed merger between Deutsche Börse and NYSE Euronext 

On 9 March 2015, the General Court (“GC”) handed down its judgment dismissing Deutsche Börse’s appeal against the Commission’s decision declaring the merger between Deutsche Börse and NYSE Euronext incompatible with the internal market. Deutsche Börse, based in Frankfurt, and NYSE Euronext, based in New York, both operate in the financial markets sector. They compete on the markets for exchange traded derivatives based on European underlyings through their derivatives exchanges Eurex and Liffe.

On 29 June 2011, the Commission was notified of a proposed merger which involved the creation of a company incorporated under Dutch law by the name HoldCo. HoldCo was to acquire, by way of a public tender offer, all the outstanding shares issued by Deutsche Börse, in exchange for its own shares. Following the closure of the offer, a newly-formed company, incorporated under United States law and wholly owned by HoldCo, was to merge with NYSE Euronext, which was to become a wholly-owned subsidiary of HoldCo. 

On 1 February 2012, the Commission announced that it had prohibited the proposed merger because the merger would have eliminated healthy competition between trading and clearing platforms in Europe and would have caused significant harm to worldwide users of European financial derivatives and to the European economy as a whole. According to the Commission, the two companies’ proposed remedies by were insufficient to dispel the Commission’s concerns.

Following the Commission’s decision, Deutsche Börse brought an action before the GC seeking annulment of the decision. In its judgment, the GC concluded that Deutsche Börse’s arguments did not call into question the Commission’s conclusions on the definition of the relevant market. Contrary to Deustche Börse’s arguments, the GC held that the Commission did not make errors of law or assessment in considering that exchange-traded derivatives (“ETDs”) and over-the-counter derivatives (“OTC derivatives”) constituted separate markets. The GC also rejected Deutsche Börse’s arguments relating to the merger’s potential efficiency gains. Deutsche Börse’s arguments concerning the companies’ commitments to counteract the significant restrictions of effective competition were also rejected. Thus, the GC fully confirmed the Commission’s findings and upheld the Commission’s 2012 decision. Source: General Court Press Release 09/03/2015 and Commission Press Release 09/03/2015

Merger control (Norway): Norwegian Competition Authority approves Coop Norway’s acquisition of ICA Norway with remedies

On 4 March 2015, the Norwegian Competition Authority (“NCA”) cleared Coop Norway’s (“Coop”) acquisition of ICA Norway (“ICA”, subject to conditions. ICA operates approximately 550 grocery stores in Norway. To avoid anti-competitive effects, Coop offered to sell a total of 93 stores to Bunnpris and Norgesgruppen. The NCA’s approval is conditional on the completion of these sales. According to the NCA, the acquisition would have led to restrictions on competition in a number of local markets. The sale of the stores would protect national competition and consumer interests as well as strengthen Bunnpris’ position in the market, which could be favorable for competition. Source: Norwegian Competition Authority Press Release 04/03/2015

State aid: Court of Justice of the European Union confirms Commission decision’s validity concerning state guarantee to Portuguese Bank 

On 5 March 2015, the Court of Justice of the European Union (“CJEU”) handed down its preliminary ruling on a reference from a Portuguese court regarding the validity of the Commission’s state aid decision concerning a guarantee granted to a Portuguese bank, Banco Privado Português (BPP). In March 2009 the Commission approved the state guarantee underwriting a EUR 450 million loan to BPP by six Portuguese banks. The Commission found the temporary rescue measure to be in line with the Commission’s Banking Communication when Portugal agreed as a condition of clearance to submit a restructuring plan for BPP within six months. Any prolongation of the state aid beyond that period had to be notified separately to the Commission.

In June and December 2009, the Portuguese authorities extended the state guarantee, without formally notifying the Commission. In July 2010 after a formal, in-depth state aid investigation the Commission found the state guarantee in favor of BPP unlawful and incompatible with the internal market between 5 December 2008 and 15 April 2010. The Commission thus ordered it to be recovered. BPP and the representatives of its insolvency estate (Massa Insolvente do Banco Privado Português) brought an action before the General Court (“GC”) seeking to annul that decision.

In December 2014 the GC dismissed the appeal in its entirety. Meanwhile, the Portuguese State brought an action before the Lisbon Commercial Court seeking the registration and inclusion of the State’s claim in BPP’s liabilities as ordered in the Commission’s decision. The Lisbon Commercial Court had doubts about the validity of the Commission’s recovery decision, in particular relating to the sufficiency of the reasoning for categorizing the guarantee as "state aid" and whether the guarantee had an effect on trade between member states, why the aid was found to be incompatible taking into account the Commission’s 2009 decision, and the application of Article 107(3)(b) of the TFEU.

The CJEU, however, considered that the Commission had presented sufficient evidence that the advantage enjoyed by BPP was liable to affect trade between member states because it strengthened BPP’s position in comparison with other banks. The CJEU stated that an aid measure that is put into effect in breach of the notification obligation is unlawful. In addition, the March 2009 decision was provisional in nature and was adopted in light of Portugal’s commitments not to extend the guarantee beyond June 2009 and to submit a restructuring plan for BPP. As Portugal did not comply with these conditions, the Commission concluded that the guarantee was incompatible with the internal market.

Finally, the CJEU noted that aid covered by Article 107(3)(b) is not automatically compatible with the internal market. The Commission has the exclusive competence to assess this, subject to a review of lawfulness by the EU courts. The Banking Communication provides that a grant of state guarantee must be accompanied by restructuring or liquidation measures and be regarded as an emergency measure. According to the CJEU, the Commission had correctly applied the state aid rules and thus the state guarantee could not be approved under Article 107(3)(b) of the TFEU. Therefore, the CJEU’s  examination disclosed nothing capable of affecting the validity of Commission Decision. Source: Case C-667/13 Estado português v. Banco Privado Português and others, 5 March 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 Hanson Building by Lone Star
  • Commission approves acquisition of CNP Barclays Vida y Pensiones by Barclays Bank in insurance sector