Competition: Court of Justice of European Union confirms Pikington Group's fine of EUR 357 million for its participation in car glass cartel

On 7 September 2016, the Court of Justice of the European Union ("CJEU") handed down its judgment and confirmed the fine of EUR 357 million imposed by the Commission on Pilkington Group ("Pilkington") for its participation in the car glass cartel. 

In November 2008, the Commission concluded that a number of companies, including Pilkington, had infringed EU competition law by participating in a set of agreements and concerted practices in the automotive glass sector. The infringement consisted of an allocation of the supply of car glass, designed to maintain an overall stability of the parties’ positions in the market concerned. The Commission initially fined Pilkington EUR 370 million. However, in February 2013, the Commission reduced the fine to EUR 357 million, in order to correct errors made in the initial calculation. Pilkington then asked the General Court ("GC") to annul that decision and to substantially reduce the amount of the fine. In December 2014, the GC dismissed Pilkington's appeal and confirmed the Commission's decision and the amount of the fine. After that, Pilkington appealed the GC's judgment to the CJEU. 

In its ruling, the CJEU firstly concluded that, for the purpose of calculating the fine, the Commission was entitled to take into account the sales made during the infringement period on the basis of contracts concluded prior to that period. The overall plan of the cartel was to allocate all supplies of automotive glass between the cartel participants, with respect to both existing supply contracts and new contracts. According to the CJEU, it follows that the sales made pursuant to contracts that pre-dated the infringement period and had not been renegotiated during that period had to be regarded as coming within the scope of the cartel and could be taken into account for purposes of determining the fine. Secondly, concerning the applicable exchange rate and the conversion of Pilkington's turnover from pounds to euros, the CJEU confirmed that the Commission was entitled to use the exchange rate applicable in the business year preceding the adoption of the decision at issue. Thus, the CJEU dismissed Pilkington's argument that the Commission should have used the exchange rate applicable at the time of the decision's adoption. In addition, the CJEU concluded that it is not contrary to the principles of proportionality and equal treatment that an undertaking, whose activities are more focused than others on the sale of goods or services connected directly or indirectly to the infringement, may receive a fine which represents a proportion of its overall turnover that is greater than that imposed on the other undertakings. Accordingly, the CJEU dismissed Pilkington's appeal and confirmed the fine of EUR 357 million. Source: Court of Justice of European Union Press Release 7/9/2016

Competition: Riberebro appeals Commission decision on canned mushroom cartel

On 8 August 2016, details were published in the Official Journal of Grupo Riberebro Integral SL's and Riberebro Integral SA's ("Riberebro") appeal against a Commission decision to fine Riberebro for its participation in the canned mushrooms cartel. 

The cartel investigation initially began in February 2012, when the Commission conducted unannounced inspections at the premises of four producers of canned mushrooms. Subsequently, in June 2014, the Commission announced that it had reached a settlement with three canned mushroom producers, who were fined a total of EUR 32.2 million after settlement reductions. However, Riberebro was not able to reach a settlement with the Commission at this stage, and the investigation into the company's alleged cartel involvement continued under the standard procedure. In April 2016, the Commission fined Riberebro EUR 5.2 million. Riberebro received a 50-percent reduction in its fine for cooperating with the investigation. 

Riberebro is now contesting the assessment and proportionality of said fine. In support of its action, Riberebro relies on two pleas in law. Firstly, Riberebro alleges that the Commission committed a manifest error of assessment in refusing to recognize Riberebro's inability to pay the fine. Secondly, Riberebro submits that the Commission did not consider Riberebro's limited portfolio of products in the contested decision and therefore failed to observe the principle of proportionality. Consequently, Riberebro argues that the fine should either be annulled or reduced. Source: Case T-313/16 Grupo Riberebro Integral and Riberebro Integral v. Commission, Official Journal C287/28, 8 August 2016

Merger control: Commission conditionally approves Hutchinson/VimpelCom jpint venture in Italy

On 1 September 2016, the Commission announced that it has conditionally approved a joint venture between the telecommunications activities of VimpelCom and Hutchinson in Italy. The transaction combines VimpelCom's subsidiary WIND with Hutchinson's subsidiary H3G, the third and fourth largest mobile network operators in Italy, respectively. As a result, the number of mobile network operators in Italy would fall from four to three. 

The Commission's investigation revealed that the transaction, as initially notified, would reduce competition in the market and impede the ability of mobile virtual operators to compete. In particular, the Commission was concerned that the proposed transaction would eliminate competition between two large undertakings in the market, leaving only two mobile network operators, TIM and Vodafone, to challenge the joint venture. The Commission was also concerned that the consolidated market would made it easier and more likely for the remaining mobile network operators to coordinate competitive behavior. Finally, the Commission argued that the transaction would reduce the number of mobile network operators willing to host virtual network operators, which rely on access to the physical network of mobile network operators to provide their services to customers. According to the Commission, the proposed transaction could have led to higher retail mobile prices and less consumer choice; the transaction would also, the Commission feared, decrease the quality of services.

In order to address the Commission's competition concerns, the parties have offered to divest assets to allow a French telecommunications operator, Iliad, to enter the Italian retail mobile market as a fourth mobile network operator. The proposed remedies include selling mobile base station sites and capacity in the mobile radio spectrum to Iliad as well as a transitional agreement that allows the new entrant to use the joint venture's mobile network until the end of the transitional period. According to the Commission, the proposed remedies fully address the competition concerns, because they allow Iliad to enter the Italian market and replace the competition that would have been lost as a result of the transaction. The Commission is confident that Iliad has sufficient expertise and resources to effectively operate and compete with the existing mobile network operators in Italy. Consequently, the Commission has conditionally approved the proposed transaction. 
Source: Commission Press Release 1/9/2016