Competition: Czech national railway operator appeals against Commission decision to conduct unannounced inspection

On 29 August 2016, details were published in the Official Journal of an appeal by České dráhy a.s, the Czech national railway operator, against a Commission decision to conduct an unannounced inspection. The Czech national railway operator seeks to annul the Commission decision dated 18 April 2016 to conduct an inspection concerning suspected participation in anti-competitive conduct. The company claims, in particular, that there are no grounds for suspicion, that the inspection is not necessary because information is available in the national competition authority's file, that the statement of reasons for the decision was insufficient, and the subject-matter and purpose of the inspection were stated too broadly in the decision. Source: Case T-325/16 České dráhy a.s v. Commission, Official Journal C 314/26, 29 August 2016

Competition (Sweden): Swedish Competition Authority appeals Stockholm District Court's judgment allowing Logstor's acquisition of Powerpipe

On 12 February 2016, the Swedish Competition Authority ("SCA") requested that the Stockholm District Court ("SDC") prohibit Logstor Sverige Holding AB's ("Logstor") acquisition of all shares in Powerpipe Systems AB ("Powerpipe"). On 4 August 2016, the SDC rejected the SCA's request.

On 25 August 2016, the SCA appealed the SDC's judgment. Logstor and Powerpipe are the two largest manufacturers and distributers of pre-insulated pipes used for heating in Sweden. According to the SCA, the relevant geographic market is limited to Sweden where the acquisition would result in an 80 per cent market share for Logstor. The SCA's conclusion is that as a result of the acquisition Logstor would gain a dominant position, resulting in competition being weakened thus harming Swedish customers of district heating. In its judgment the SDC however found the relevant geographic market to be broader, namely "northern Europe", and accordingly the SDC considered that Logstor would not gain a dominant position as a result of the acquisition.

In its appeal, the SCA claims that the SDC has erred in its methodology for defining the relevant geographic market, which in turn has resulted in a mistaken decision to allow the acquisition to proceed. As evidence, the SCA refers to the parties' internal documents, which in the SCA's view illustrate that the companies active and the competition conditions differ between countries in the EU. This, in the SCA's opinion, indicates that the relevant geographic market is national. The SCA also refers to internal strategy documents in which Logstor describes Powerpipe as "a key competitor threat" and "a major headache on the Swedish market". According to the SCA, these statements indicate that the purpose of acquisition is to eliminate an important competitor. Source: Swedish Competition Authority Press Release 25/8/2016 and Swedish Competition Authority Appeal 25/8/2016

State aid: Commission orders Ireland to recover illegal tax benefits granted to Apple

On 30 August 2016, the Commission announced that Ireland had granted illegal tax benefits to Apple amounting to EUR 13 billion as a result of selective tax treatment. Following an in-depth state aid investigation launched in June 2014, the Commission concluded that two of Ireland's tax rulings issued to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group, Apple Sales International and Apple Operations Europe, which did not correspond to the economic reality. The Commission found that almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. The profits allocated to the "head offices" were not subject to tax in any country under specific provisions of Ireland's tax law that are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1 percent in 2003 to 0.005 percent in 2014 on the profits of Apple Sales International. Consequently, the Commission has ordered the recovery of illegal state aid granted to Apple for a ten-year period preceding the Commission's first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014, amounting to up to EUR 13 billion, plus interest. Source: Commission Press Release 30/8/2016

This Review is a periodic publication of Roschier, Attorneys Ltd. and should not be construed as legal advice or legal opinion on any specific facts or circumstances. We have used reasonable efforts in collecting, preparing and providing the information in this review, but we do not warrant or guarantee the accuracy, completeness, adequacy or currency of the information contained herein. The contents are for general informational purposes only, and you are urged to consult a lawyer concerning your situation and any specific legal questions you might have.

Competition: Czech national railway operator appeals against Commission decision to conduct unannounced inspection

On 29 August 2016, details were published in the Official Journal of an appeal by České dráhy a.s, the Czech national railway operator, against a Commission decision to conduct an unannounced inspection. The Czech national railway operator seeks to annul the Commission decision dated 18 April 2016 to conduct an inspection concerning suspected participation in anti-competitive conduct. The company claims, in particular, that there are no grounds for suspicion, that the inspection is not necessary because information is available in the national competition authority's file, that the statement of reasons for the decision was insufficient, and the subject-matter and purpose of the inspection were stated too broadly in the decision. Source: Case T-325/16 České dráhy a.s v. Commission, Official Journal C 314/26, 29 August 2016

Competition (Sweden): Swedish Competition Authority appeals Stockholm District Court's judgment allowing Logstor's acquisition of Powerpipe

On 12 February 2016, the Swedish Competition Authority ("SCA") requested that the Stockholm District Court ("SDC") prohibit Logstor Sverige Holding AB's ("Logstor") acquisition of all shares in Powerpipe Systems AB ("Powerpipe"). On 4 August 2016, the SDC rejected the SCA's request.

On 25 August 2016, the SCA appealed the SDC's judgment. Logstor and Powerpipe are the two largest manufacturers and distributers of pre-insulated pipes used for heating in Sweden. According to the SCA, the relevant geographic market is limited to Sweden where the acquisition would result in an 80 per cent market share for Logstor. The SCA's conclusion is that as a result of the acquisition Logstor would gain a dominant position, resulting in competition being weakened thus harming Swedish customers of district heating. In its judgment the SDC however found the relevant geographic market to be broader, namely "northern Europe", and accordingly the SDC considered that Logstor would not gain a dominant position as a result of the acquisition.

In its appeal, the SCA claims that the SDC has erred in its methodology for defining the relevant geographic market, which in turn has resulted in a mistaken decision to allow the acquisition to proceed. As evidence, the SCA refers to the parties' internal documents, which in the SCA's view illustrate that the companies active and the competition conditions differ between countries in the EU. This, in the SCA's opinion, indicates that the relevant geographic market is national. The SCA also refers to internal strategy documents in which Logstor describes Powerpipe as "a key competitor threat" and "a major headache on the Swedish market". According to the SCA, these statements indicate that the purpose of acquisition is to eliminate an important competitor. Source: Swedish Competition Authority Press Release 25/8/2016 and Swedish Competition Authority Appeal 25/8/2016

State aid: Commission orders Ireland to recover illegal tax benefits granted to Apple

On 30 August 2016, the Commission announced that Ireland had granted illegal tax benefits to Apple amounting to EUR 13 billion as a result of selective tax treatment. Following an in-depth state aid investigation launched in June 2014, the Commission concluded that two of Ireland's tax rulings issued to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group, Apple Sales International and Apple Operations Europe, which did not correspond to the economic reality. The Commission found that almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. The profits allocated to the "head offices" were not subject to tax in any country under specific provisions of Ireland's tax law that are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1 percent in 2003 to 0.005 percent in 2014 on the profits of Apple Sales International. Consequently, the Commission has ordered the recovery of illegal state aid granted to Apple for a ten-year period preceding the Commission's first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014, amounting to up to EUR 13 billion, plus interest. Source: Commission Press Release 30/8/2016