On 31 March 2016, the Helsinki Court of Appeal handed down its judgment, dismissing Atoy Oy's ("Atoy") action for damages in the car spare parts cartel case and ordering Atoy to compensate the respondents' legal fees by nearly EUR 4 million.
The case is based on a Supreme Administrative Court ("SAC") judgment of 2012 finding that five car spare parts wholesalers – Oy Arwidson Ab, HL Group Oy, Oy Kaha Ab, Koivunen Oy and Örum Oy Ab – had participated in a concerted practice to collectively boycott a car spare parts retail chain Osaset Oy ("Osaset") for various periods between 2004 and 2005. The boycott followed Osaset's announcement of a new strategic cooperation agreement with Atoy, a competitor of the five wholesalers. The SAC imposed a total fine of EUR 1.03 million on four of the five wholesalers. Oy Arwidson Ab received full immunity from fines under the leniency program.
Atoy brought an action for damages, claiming that the infringement caused the partial failure of its cooperation with Osaset. Atoy claimed that several Osaset retailers did not join the cooperation, exited the cooperation or went bankrupt because of the infringement. This further led to the failure to recruit the planned number of repair shops to join the cooperation. Atoy claimed that the infringement caused it to lose profits of approximately EUR 56 million, which was reduced to approximately EUR 35 million in the Court of Appeal.
The Court of Appeal confirmed the Helsinki District Court's judgment of 31 March 2014 dismissing Atoy's action for damages in its entirety. The Court of Appeal found that even though it is apparent that without the infringement more retailers and repair shops would have joined the cooperation, Atoy had failed to demonstrate that its alleged damage was caused by the infringement. The Court of Appeal considered Atoy's plan to be in part unrealistic and found that Atoy's alleged damage was mainly caused by other factors, such as not being properly prepared to implement the planned cooperation. Atoy has announced that it is considering whether to apply for leave to appeal the decision to the Supreme Court. Helsinki Court of Appeal judgment S 14/2868 (in Finnish), 31 March 2016
On 6 April 2016, the Commission announced that it has imposed a fine totaling EUR 5.2 million on Grupo Riberebro Integral S.L. and its subsidiary Riberebro Integral S.A.U. (together "Riberebro") for their participation in a cartel to coordinate prices and allocate customers of canned mushrooms in the European Economic Area ("EEA") in violation of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). Riberebro received a 50% reduction of fines for its cooperation with the Commission in the investigation. The cartel concerned the sales of private label canned mushrooms in tins and jars through tender procedures to retailers and food wholesalers, such as cash and carry companies, as well as to professional customers, such as catering companies, in the EEA. The Commission found that the overall aim of the cartelists was to stabilize their market shares and stop a decline in prices. In order to achieve this aim, the cartelists exchanged confidential information on tenders, set minimum prices and agreed on volume targets and customer allocation. The cartel was a non-aggression pact with a compensation scheme in case of customer transfer and application of minimum prices, which had been agreed beforehand. According to the Commission, Riberebro participated in the cartel from 10 September 2010 until 28 February 2012. The Commission started its investigation with unannounced inspections carried out at the premises of several companies in February 2012. In June 2014, the Commission adopted a settlement decision concerning Bonduelle's, Lutèce's and Prochamp's participation in the same cartel. Because Riberebro chose not to settle the case, the Commission continued its investigation under the standard cartel procedure. Source: Commission Press Release 06/04/2016
On 1 April 2016, the Council of European Energy Regulators ("CEER") published a benchmarking report on removing barriers for energy suppliers in the EU retail energy market (the "Benchmarking Report"). The CEER is the voice of National Regulatory Authorities ("NRAs"). One of the CEER's key objectives is to facilitate the creation of a single, competitive, efficient and sustainable EU internal energy market that operates in the public interest. Following on from its previous work, the Benchmarking Report aims to identify barriers to entry for energy suppliers into retail gas and electricity markets across the EU as well as to point out examples of actions NRAs have taken, are taking or envisage taking to remove them. The Benchmarking Report is based on consultations with 22 NRAs.
The Benchmarking Report groups the barriers to entry into four different categories. Concerning the first category, the Benchmarking Report analyses barriers to market access arising as a consequence of the way the energy supply chain works, and of the characteristics of the gas and electricity products. The majority of responding NRAs consider that the lack of access to customer and market information presents a significant barrier. The most widely adopted solution to remove this barrier is to set up a data hub or a data warehouse under the supervision of the transmission system operator or the market system operator. In relation to the second category, the Benchmarking Report discusses barriers arising as a consequence of the regulatory framework. It discusses the impact of regulated end-user prices, the relationship between regulation and innovation, and the impact of legislative changes on new entrants. The consultation revealed that in the majority of the 22 responding countries, energy prices are no longer regulated. Where regulated prices remain, NRAs tend to consider them as a significant barrier to entry for alternative suppliers. About half of responding NRAs also view the disregard of innovation in regulation as a barrier to entry. Smart meters implemented with appropriate regulation are considered as a significant enabler for further innovation in the electricity market. In addition, for a majority of responding NRAs brand building and ineffective unbundling may still pose a barrier for new market entrants, even though their country complies with unbundling rules stipulated in the third EU energy reform package. In relation to the third category, the Benchmarking Report analyses barriers arising as a result of differences in processes and standards. The responding NRAs recognize different bill formats and IT systems in electricity and gas as barriers. In addition, about half of responding NRAs consider that business processes, including, inter alia, licenses and registration, may constitute a barrier to entry. In some markets, business processes to enter and operate in the retail market can be extremely detailed and burdensome. Finally, concerning the fourth category, the Benchmarking Report analyses barriers that are specific to cross-border entrants. With regard to national language and translations related to the energy market, NRAs frequently mentioned that key legislation and some information about the market are available in English. However, most responding NRAs consider non-homogeneity of systems and legislation to constitute a barrier to both electricity and gas markets. Cooperation at EU or regional level is the tool used most often for reducing this barrier.
The Benchmarking Report will serve as a basis for the upcoming CEER Guidelines of Good Practices on removing barriers to entry for energy suppliers in EU retail energy markets, planned to be introduced in 2016. Source: CEER Benchmarking report on removing barriers to entry for energy suppliers in EU retail energy markets, 1 April 2016
On 1 April 2016, the Council of European Energy Regulators ("CEER") published status reviews regarding the implementation of the Distribution System Operators' ("DSO") and Transmission System Operators' ("TSO") unbundling provisions set out in the third EU energy reform package ("Package"). Under the Package, the energy networks are subject to unbundling requirements, which oblige Member States to ensure the separation of vertically integrated energy companies. This means in practice the separation of the various stages of energy supply, i.e. generation, distribution, transmission and supply.
Specifically in relation to the unbundling of DSOs, the CEER concludes that the landscape remains heterogeneous for historical, political and geographical reasons; some Member States have hundreds of DSOs, whereas others only one or two. According to the CEER, the same conclusion can be drawn when it comes to the different unbundling regimes implemented in the Member States; some DSOs have separate ownership to the suppliers/producers whereas most of the others are part of the vertically integrated undertaking. According to the status review, all Member States have adopted detailed rules particularly on the independence of the staff and management of DSOs. However, it appears that both gas and electricity DSOs have created confusion in their branding and communication policy. This has led to the intervention of national regulatory authorities ("NRA") that have compelled the DSOs to rebrand and redefine their communications according to the unbundling requirements, for instance by providing guidance on logos, etc.
In the status review of TSO unbundling, it is noted that the Package requires TSOs to be certified by NRAs under one of the unbundling models provided for in the Package Directives, i.e. as fully ownership unbundled ("OU"), independent system operator ("ISO"), independent transmission operator ("ITO") or in special exceptional cases the so-called ITO+ model. However, TSOs can be granted or continue to benefit from a (temporary and partial) exemption in certain cases. The CEER found that the most prevalent unbundling model implemented is the OU, followed by the ITO and ISO models, with an important difference between gas and electricity TSOs, since 44% of the gas TSOs have been certified under the ITO model and only 40% by the OU model. In addition, it varies how often the Member States have chosen a combination of different unbundling models. Finally, it is noted that public ownership is stronger in the electricity sector than in the gas sector.
As regards ownership unbundling and financial investors, it is stated that the Commission has found that the simultaneous participation in transmission activities on the one hand, and in generation, production and/or supply activities on the other hand, did not give rise to any potential conflict of interest or incentive to exploit it per se, and as a consequence did not in any way risk having an adverse effect on the independent management of the TSO. Source: Status Review on the Implementation of Distribution System Operators' Unbundling Provisions of the 3rd Energy Package, 1 April 2016 and Status Review on the Implementation of Transmission System Operators' Unbundling Provisions of the 3rd Energy Package, 1 April 2016:
On 31 March 2016, the Swedish Competition Authority ("SCA") published a report on competition in the banking sector. The SCA concludes as the four major banking groups still have a considerable position on the market, it is difficult for new entrants to establish and gain market shares in the Swedish banking sector. The SCA has studied Nordea, SEB, Svenska Handelsbanken and Swedbank, focusing on the major areas of deposits, loans, mutual funds and life insurance, but other markets are also mentioned in the report.
The report shows that despite the fact that there is a relatively large number of other companies operating in the area of deposits and lending, the major banking groups have a very strong position on these markets. This may indicate a lack of customer mobility. On the mortgage side, the banking groups have significantly increased their gross margins in recent years, which indicates reduced price competition, but it may also be linked to increased capital requirements. The banking groups also have a strong position on the mutual funds market. However, according to the report, the dominance of the group's fund management companies has decreased because of declining management fees and increased international competition on the market in recent years.
"It is important to monitor the companies that operate on a highly concentrated oligopolistic market, such as the banking sector. If competition is reduced on a market that is already concentrated, customers could be severely affected", commented Director General of the SCA Dan Sjöblom.
As regards the life insurance market, the main operators on the market are different that the above mentioned banking groups.
The SCA concludes that high barriers to entry continue to characterize the Swedish bank sector, which affects competition. However, the report also notes that factors such as new digital solutions and alternative financial solutions that exist outside the banks' businesses are growing phenomena. It is therefore important to ensure that these growing dynamic factors are utilized in a way that benefits the customers by increasing competition but maintaining guarantees of secure management of the customers' interests. Source: Swedish Competition Authority Press Release 31/03/2016 (in Swedish) and Swedish Competition Authority's Report 31/03/2016 (in Swedish)
On 30 March 2016, the Commission opened an in-depth investigation to assess whether the proposed formation of a joint venture between Hutchison Europe Telecommunications S.á.r.l ("Hutchison") and VimpelCom Luxembourg Holdings S.á.r.l ("VimpelCom") in Italy restricts competition. The transaction would combine Hutchison's and VimpelCom's telecommunications businesses in Italy into a joint venture to be controlled by these two companies on a 50/50 basis. Currently, Hutchison operates in Italy through its subsidiary H3G S.p.A ("H3G") and VimpelCom through its subsidiary WIND Telecommunicazioni S.p.A ("WIND"). H3G and WIND are the third and fourth largest operators in the Italian retail mobile telecommunications market.
The Commission has concerns that the transaction could lead to higher prices, less choice and reduced innovation for mobile customers in Italy by reducing the number of mobile network operators ("MNOs") from four to three and creating the largest player in terms of the number of subscribers. First, as regards the Italian retail mobile telecommunications market, the Commission is concerned that the formation of the joint venture would remove important competitive forces. Following the transaction, the joint venture could have limited incentives to exercise significant competition pressure on the remaining competitors. Secondly, by reducing the number of MNOs that host mobile virtual network operators ("MVNOs"), prospective and existing MVNOs would have less choice of host networks and, thus, a weaker negotiating position to obtain favorable wholesale access terms. Finally, the Commission has concerns that the reduction in the number of competitors could weaken competitive pressure and increase the likelihood that MNOs coordinate their competitive behavior and raise prices on a sustainable basis on the retail and wholesale markets.
The Commission will now investigate the transaction in-depth in order to determine whether its competition concerns are confirmed. In particular, it will examine closeness of competition between the parties, the market incentives that would be faced by the joint venture, and the potential response of competitors. The Commission has 90 working days, until 10 August 2016, to take a final decision.Source: Commission Press Release 30/03/2016
Merger control (Finland): Finnish Competition and Consumer Authority opens in-depth investigation into Anvia Oyj's and Finda Oy's acquisition of Anvia Telecom Oy
On 5 April 2016, the Finnish Competition and Consumer Authority ("FCCA") announced that it has opened an in-depth investigation ("Phase II ") to assess whether the proposed acquisition of joint control over Anvia Telecom Oy ("Anvia Telecom") by Anvia Oyj ("Anvia") and Finda Oy ("Finda") restricts competition. Anvia Telecom is a subsidiary of Anvia, a telecommunications company operating mainly in the territory of Ostrobothnia. It offers IT and telecommunications services in fixed networks. Finda is a company specializing in development activities, holdings and investments in the ICT industry. Its most significant shareholder is telecom operator DNA Oy ("DNA").
The FCCA's initial investigation showed that the transaction might have detrimental effects on competition in the Finnish telecommunications market. In the Phase II investigation, the FCCA will assess in particular whether the transaction raises competition concerns resulting from the links that it creates between DNA and its competitor Elisa Oyj ("Elisa"). In April 2015, Elisa acquired control over Anvia. The current control structure relating to the company is unclear, but, due to Elisa's significant share of ownership, the FCCA will evaluate potential structural links between DNA and Elisa and the possibilities for these companies to coordinate their competitive behavior through Anvia Telecom. Finally, the FCCA will investigate whether the transaction affects potential competition between Anvia Telecom and DNA in the market for fixed broadband services.
The FCCA may approve the transaction with or without conditions or propose to the Market Court that it prohibit the transaction. The FCCA has three months from the opening of the Phase II to take a final decision. Source: Finnish Competition and Consumer Authority Press Release 05/04/2016 (in Finnish)
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 Smyk Group by Bridgepoint
- Commission approves acquisition of Xchanging by Computer Sciences Corporation