Competition: Commission launches e-commerce sector inquiry

On 6 May 2015, the Commission announced that it has launched an antitrust inquiry into the e-commerce sector in the European Union. The inquiry will allow the Commission to identify possible competition concerns affecting the European e-commerce markets and it complements actions launched in the context of the Commission's Digital Single Market Strategy ("Digital Single Market Strategy") adopted on the same day. According to the Commission, more and more goods and services are traded over the internet but cross-border online sales within the EU are growing slowly. The Digital Single Market Strategy identifies and proposes actions to address a number of regulatory barriers hindering cross-border e-commerce. However, there are also indications that companies may establish barriers to cross-border online trade with a view to fragmenting the market according to national borders and preventing competition.

The sector inquiry will focus particularly on these potential barriers set up by companies to cross-border online trade in goods and services where e-commerce is most widespread, such as electronics, clothing and shoes and digital content. These barriers may include, inter alia, contractual restrictions in distribution agreements that prevent retailers from selling goods or services purchased online or cross-border to customers located in another EU country.

According to the Commission, the sector inquiry will gather market information in order to better understand the nature, prevalence and effects of these and similar barriers, and to assess them in light of EU antitrust rules. The Commission can open separate antitrust investigations to ensure compliance with EU competition rules if it identifies specific competition concerns after having analyzed the results of the inquiry. The Commission expects to publish a preliminary report for consultation in mid-2016 and the final report in the first quarter of 2017. Source: Commission Press Release 06/05/2015 and Commission Fact Sheet 06/05/2015

Competition: Advocate General delivers opinion regarding inclusion of non-EEA sales in calculation of InnoLux's fine in LCD panels cartel

On 30 April 2015, Advocate General Wathelet ("AG Wathelet") delivered his opinion on the appeal brought by InnoLux Corp. ("InnoLux") against a General Court ("GC") judgment dismissing its appeal against the Commission's decision in the liquid crystal display ("LCD") panels cartel. In 2010, the Commission imposed fines totaling approximately EUR 649 million on six Korean and Taiwanese manufacturers of LCD panels, including InnoLux, for their participation in a cartel from October 2001 to February 2006. LCD panels are the main component of flat screens used in televisions and computers. Subsequently, InnoLux brought an action before the GC seeking to annul the Commission's decision and reduce the fine imposed. The GC upheld the Commission's decision but reduced the fine imposed on InnoLux because the value of the relevant sales the Commission used to calculate the fine wrongly included sales other than those of cartelized LCD panels. InnoLux then brought a further action before the Court of Justice of the European Union ("CJEU") seeking a greater reduction of the fine and annulment of the GC's ruling.

In his opinion, AG Wathelet stated that internal sales must be taken into account in the same way as sales to third parties, unless these sales are made outside the European Union. That being said, the AG Wathelet agreed with InnoLux's argument that the GC had erred in finding that when setting the amount of the fine, the Commission could include turnover derived from the sales in the EEA of the cartel products as incorporated into "transformed products", i.e., products that incorporated LCD panels that InnoLux had sold to group companies outside the EEA.

According to AG Wathelet, taking such non-EEA sales into account extended the Commission's territorial competence. AG Wathelet also stated that there was insufficient evidence of even "qualified effects" on competition in the EEA that could justify the Commission's jurisdiction with regard to the sales at issue. Therefore, AG Wathelet held that the GC had erred in law by concluding that the intra-group deliveries of LCD panels to InnoLux's factories in China and Taiwan fell within the scope of Article 101 of the TFEU just because InnoLux sold the finished products that incorporated LCD panels in the EEA. Consequently, AG Wathelet recommended that the CJEU reduce the fine imposed on InnoLux from EUR 288 million to EUR 173 million. Source: Case C-231/14 P – InnoLux Corp. v European Commission, Opinion of Advocate General, 30/04/2015

Competition: General Court upholds appeal by Total and Elf Aquitaine against payment of overdue interest relating to acrylic glass cartel

On 29 April 2015, the General Court ("GC") handed down its judgment upholding an appeal by Total SA ("Total") and Elf Aquitaine SA ("Elf Aquitaine") against letters from the Commission claiming payment of overdue interest for the fine imposed for their participation in the acrylic glass cartel. In May 2006, the Commission announced that it had imposed a fine of EUR 219 million on Arkema France SA ("Arkema") and its wholly-owned subsidiaries Altuglas International SA and Altumax Europe SAS for the participation of these subsidiaries in an illegal cartel between 1997 and 2002 on the market for acrylic glass. The Commission also found that Total and Elf Aquitane, the parent companies of Arkema, were jointly and severally liable for the fine.

In September 2006, Arkema paid the full amount of the fine imposed on it and on Total and Elf Aquitaine. All the three companies brought actions before the GC, which in June 2011 dismissed the appeals by Total and Elf Aquitaine in their entirety but reduced the fine imposed on Arkema to EUR 113 million. Subsequently, the Commission sent two letters to Total and Elf Aquitaine demanding the payment of the remainder of the fine imposed on them plus interest that had accrued since September 2006. Total and Elf Aquitaine paid the amount but brought further actions before the GC in September 2011 seeking a declaration of invalidity of the letters.

In its judgment, the GC annulled the Commission's letters. According to the GC, the letters constituted challengeable measures under Article 263 of the Treaty of the Functioning of the European Union ("TFEU"), since the letters clearly affected the interests of Total and Elf Aquitaine and could not be regarded as preparatory measures because they were written after the Commission issued its cartel decision. Regarding the Commission's right to demand overdue interest, the GC held that Arkema had paid the full amount of the fine in September 2006, and it also had made clear that the payment was executed on behalf of Total and Elf Aquitaine. As it was evident that this payment was made within the set time limits, the GC concluded that there had never been any delays in payments of the imposed fines. Consequently, the Commission was not entitled to collect overdue interest from Total and Elf Aquitaine. Source: Case T-470/11 Total SA and Elf Aquitaine SA v European Commission, 29/4/2015

Competition (Sweden): Swedish government investigates need to increase decision-making powers of the Swedish Competition Authority in antitrust cases

The Swedish government has on 30 April 2015 initiated an inquiry into whether the Swedish Competition Authority ("SCA") should be given increased decision-making power to impose sanctions in antitrust cases. According to Dan Sjöblom, Director-General of the SCA, increasing the SCA's decision-making power would shorten handling times in enforcement cases, which would benefit the consumers and users of the goods and services that the SCA is investigating. Furthermore, Sjöblom held that increased decision-making power for the SCA would be more in line with the general practice applied in other countries within the European Union. The results of the inquiry will be published on 12 May 2016. Source: Swedish Competition Authority Press Release 30/4/2015

Merger control: Commission approves coffee joint venture between DEMB and Mondelēz, subject to conditions

On 5 May 2015, the Commission announced that after an in-depth investigation it has approved the proposed creation of a joint venture between D.E. Master Blenders 1753 B.V. ("DEMB") and Mondelēz International Inc. ("Mondelēz"), subject to conditions. DEMB, of The Netherlands, is an international coffee and tea company that offers a wide range of coffees in Europe, Asia, Australasia and Brazil, and runs coffee houses in the Netherlands. Mondelēz, based in the US, is a multinational company active on the markets for beverages, confectionary and food, producing biscuits, chocolate, candy, cheese, grocery, powdered beverages, chewing gum and coffee. Both companies are leading coffee manufacturers in the world. The creation of the joint venture, which will operate under the name of Jacobs Douwe Egberts ("JDE"), will combine all material assets of DEMB and the coffee business of Mondelēz.

The Commission had preliminary concerns that the creation of the joint venture, as originally notified, would have reduced competition on the markets on which the parties' existing consumer brands of various coffee formats are in close competition with each other. According to the Commission, the creation of the joint venture would have led to price increases in roast and ground coffee products in France, Denmark and Latvia, and in filter pads in Austria and France, because the remaining companies on the market would not be able to exert sufficient competitive pressure on the joint venture to avoid price increases. To address the Commission's concerns, Mondelēz offered to divest its Carte Noire business in France. Furthermore, DEMB offered to divest its Merrild business in Denmark and Latvia and to license its Senseo brand for five years for re-branding purposes in order to alleviate concerns regarding the Austrian filter pads market.

The Commission also investigated the effects of the transaction on the markets for single-serve coffee machines. The Commission had initial concerns that the joint venture could lead to higher prices and less innovation because DEMB and Mondelēz could influence the price paid for these machines by consumers, e.g., by offering cash-back and coupons. This would further increase their sales of compatible capsules, pads and pods. However, the Commission finally concluded that the joint venture would face strong competition pressure from Nestlé, which is the owner of the other two single-serve systems offered on the market. Consequently, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. Source: Commission Press Release 5/5/2015

State Aid: Commission refers Italy to Court of Justice of the European Union for failure to recover illegal state aid

On 29 April 2015, the Commission announced that it has decided to refer Italy to the Court of Justice of the European Union (“CJEU”) for failure to implement a previous ruling by the CJEU. The previous ruling concerned Italy's failure to fulfill its obligations to ensure the recovery of illegal state aid. The first ruling of the CJEU in 2012 confirmed the Commission's decision from 2008 that the aid granted by Italy to support investment projects in the Sardinian hotel industry had been granted unlawfully and that Italy was obligated to recover almost EUR 15 million of illegal aid.

Since almost EUR 13 million of unlawfully granted aid remain unrecovered due to national court decisions suspending recovery orders issued by the Italian authorities, the Commission referred Italy to the ECJ for the second time.

As this is a second court referral for non-compliance with the Commission decision, the Commission has requested the ECJ to impose on Italy a lump sum penalty payment of approximately EUR 20 million, in addition to a daily penalty payment of approximately EUR 160,000 until Italy has fully recovered the unlawfully granted state aid and ended its infringement. Source: Commission Press Release 29/4/2015

State Aid: Commission launches sector inquiry into mechanisms to ensure electricity supplies

On 29 April 2015, the Commission announced that it had launched a state aid sector inquiry into national measures in order to ensure that adequate capacity to produce electricity is available at all times to avoid black-outs (so-called "capacity mechanisms"). Capacity mechanisms are measures taken by Member States to ensure that electricity supply can match demand in the medium and long term. Typically, capacity mechanisms offer additional rewards to capacity providers, on top of income obtained by selling electricity on the market, in return for maintaining existing capacity or investing in new capacity needed to guarantee security of electricity supplies. The purpose of this inquiry is to gather information on capacity mechanisms to examine, in particular, whether they ensure sufficient electricity supply without distorting competition or trade in the EU and to better understand the capacity mechanisms already implemented or under consideration.

In a sector inquiry, the Commission uses its market investigation tools to obtain the requested information from public authorities and market participants. While several antitrust sector inquiries have been carried out, including in the energy field, this is the first inquiry at a sector from a state aid perspective.

The scope of the sector inquiry is initially restricted to eleven EU countries (Belgium, Croatia, Denmark, France, Germany, Ireland, Italy, Poland, Portugal, Spain and Sweden). However, the Commission may extend the scope to additional member states based on relevant developments in other markets. The Commission plans to publish its preliminary findings on the sector inquiry before the end of 2015, with the final results in mid-2016. Source: Commission Press Release 29/04/2015 and Commission Fact Sheet 29/04/2015