EU Competition

Toshiba appeals ruling on imposition of gas insulated switchgear cartel fines. On 17 May 2016, details were published in the Official Journal of an appeal by Toshiba Corporation (Toshiba) challenging the General Court’s decision to uphold the European Commission’s (Commission) decision to impose fines in respect of its participation in the gas insulated switchgear cartel. Toshiba is challenging the decision on the grounds that the General Court made legal errors in its dismissal of Toshiba’s appeal of the original decision, namely that it erred in law in finding that Toshiba's rights of defence were not breached by the Commission; in its methodology in calculating the fines; and by not concluding that Toshiba’s fines should be reduced to reflect its level of participation in the cartel.

Commission refers McKesson acquisition of Welcoop pharmaceutical businesses to Belgian Competition Authority. On 17 May 2016, the Commission published its decision to refer McKesson Corporation’s acquisition of Belmedis, Espafarmed, Cophana and Alphar Partners and the sole control of Sofiadis (the Target Companies) from Welcoop Group to the Belgian Competition Authority. McKesson is already active in Belgium through Celesio AG, which indirectly controls affiliates within the Belgian pharmaceutical sector. The Target Companies are active in pre-wholesale services for pharmaceuticals. The Commission’s initial assessment has identified the Belgian market for ‘full-line’ wholesale distribution of pharmaceutical products to be the only affected market, where it is proposed that the acquisition will result in a combined market share of 20-30%. Therefore, it considers the Belgian Competition Authority to be best placed to investigate the acquisition at local level.

Commission partially refers McKesson acquisition of UDG Healthcare to CMA. On 17 May 2016, the Commission published its decision to partially refer the acquisition by McKesson Corporation of the pharmaceutical wholesale and associated businesses of UDG Healthcare plc to the UK Competition and Markets Authority (CMA). The Commission found that there was an overlap in the activities of the parties in relation to the wholesale supply of pharmaceuticals, General Sales List Medicines and Health and Beauty products specifically in Northern Ireland, which could give rise to coordinated behaviour between the remaining broad-line wholesalers. The Commission has, therefore, referred the review of horizontal overlaps within the UK to the CMA, while it undertakes its own assessment of the vertical overlaps in the Republic of Ireland.

Commission refers McKesson acquisition of Bupa Home Healthcare to CMA. On 19 May 2016, the Commission published its decision to refer McKesson’s acquisition of Bupa Home Healthcare, through Celesio AG, which supplies pharmaceuticals and other healthcare-related products through its pharmaceutical wholesale business and retail pharmacies, to the CMA. The transaction concerns the market for the provision of clinical homecare services in the UK and in particular the Low Tech segment, in which both the Target Business and Celesio are active.

EU Mergers

Phase I Mergers

  • M.7941 SAINT-GOBAIN GLASS FRANCE / CORNING / JV (17 May 2016)
  • M.7985 SEGRO / PSPIB / TARGET ASSETS (17 May 2016)
  • M.7987 TOWERBROOK CAPITAL PARTNERS / INFOPRO DIGITAL (13 May 2016)
  • M.7992 STARWOOD CAPITAL GROUP / BANCO SABADELL / JV (17 May 2016)
  • M.8009 CPPIB / GIP / PACIFIC NATIONAL BUSINESS OF ASCIANO (13 May 2016)

State Aid

UK Court of Appeal hands down judgment confirming loan in respect of Ricoh Arena does not constitute State aid. On 13 May 2016, the Court of Appeal (CoA) handed down its judgment upholding the decision of the High Court which found that a loan made by Coventry City Council (CCC) to Arena Coventry Limited (ACL) (the leaseholder of the Ricoh Arena) does not constitute State aid. The CoA considered that ACL, which is 50% owned by CCC, found itself in financial difficulties when Coventry Football Club had ceased to pay rent for its use of the arena and, as such, by providing the loan CCC was merely protecting its commercial interests in the same manner as a private investor. ACL was, therefore, not deemed to have received any competitive advantage as a result of the investment.

Ellinikos Chrysos files appeal against ruling on the recovery of illegal State aid. On 17 May 2016, details were published in the Official Journal of an appeal brought by Ellinikos Chrysos AE Metalleion kai Viomichanias Chrysou (Ellinikos), a Greek mining company, against the General Court’s judgment upholding the Commission’s decision to request the recovery of illegal State aid. The Commission had found the sale of the Cassandra Mines to Ellinikos at a price lower than market value, and a waiver of tax in relation to the land value of the mines to constitute illegal State aid, requiring recovery. Ellinikos argues, among other things, that the assessment in the judgment under appeal with regard to any advantage received, “is vitiated by errors in law, combined with defective reasoning and procedural irregularity”, with respect to the value calculated for the mines and the land value.

Naviera Armas files appeal requesting an annulment of the Commission’s decision that no State aid was granted to Fred Olsen S.A. On 17 May 2016, details were published in the Official Journal of an appeal brought by Naviera Armas, SA (Naviera), against the Commission’s decision finding that shipping company, Fred Olsen S.A. (Fred Olsen) had not received State aid, by virtue of its exclusive right to operate out of the port of Puerto de las Nieves, Spain, and its total or partial exemption from payment of the corresponding port dues, providing the company with a competitive advantage. Naviera contends, among other things, that the Commission erred in its assessment of the facts, by stating that no undertaking requested permission to operate out of Puerto de las Nieves using high speed ferries before 2013; that Fred Olsen was the only undertaking interested in using the port in the 1990s; and that only high speed ferries can operate out of that port.

Public Procurement

Crown Commercial Service publishes procurement policy note on concession contracts threshold. On 17 May 2016, the Crown Commercial Service published a procurement policy note setting out the threshold level to apply for the purposes of the Concession Contracts Regulations 2016 as £4,104,394 (€5,225,000), with effect from 18 April 2016.

UK Competition

CMA publishes full infringement decision in respect of Ultra Finishing’s engagement in RPM in respect of online sales. On 17 May 2016, the CMA published the full non-confidential version of its decision in respect of online resale price maintenance in the bathroom fittings sector, following its announcement that it had fined Ultra Finishing Limited (Ultra Finishing) £786,668 for its infringement of UK competition law. Ultra Finishing was found to have penalised retailers who failed to mark prices at or above their online recommended retail price, by charging the retailers higher prices for products, withdrawing their rights to use Ultra’s images online, and in some instances, ceasing supply.

CMA to refer the acquisition of Orchard House Foods by Hain Frozen Foods UK to a phase II investigation if undertakings in lieu are not offered. On 17 May 2016, the CMA announced that it would be referring the anticipated acquisition by Orchard House Foods Limited by Hain Frozen Foods UK Limited (Hain) for an in-depth phase II investigation, unless Hain provides acceptable undertakings to the CMA. The CMA’s investigation found that the two companies are the largest suppliers of freshly squeezed fruit juice to supermarkets and other retailers in the UK and that there is no intention on the part of the other juice manufacturers to start supplying freshly squeezed juices to replace the lost competition, raising competition concerns that there may be a potential increase in retailer and consumer prices.

CAT publishes order in Socrates damages claim against The Law Society. On 18 May 2016, the Competition Appeal Tribunal (CAT) published an order setting out how proceedings will be conducted going forward in the damages claim brought by Socrates Training Limited (Socrates) against The Law Society of England and Wales (The Law Society), under section 47A of the Competition Act 1998. Socrates argues that The Law Society abused its dominant market position in the provision of quality certification/accreditation services by its insistence on law firms buying, among other things, its anti-money laundering and mortgage fraud materials in order for firms to retain their Conveyancing Quality Scheme accreditation.

CMA publishes provisional findings following Clariant/Klifrost phase II investigation. On 19 May 2016, the CMA published a summary of its provisional findings following its in-depth phase II investigation into the potential acquisition of the European aircraft de-icing fluid and rail de-icing fluid business of the Kilfrost Group by Clariant. As the merger involves the two largest suppliers of aircraft de- and anti-icing fluids in the UK and the rest of the European Economic Area (EEA), the CMA has published a notice of possible remedies in order to address any competition concerns.

CMA publishes provisional findings following Ladbrokes/Coral phase II investigation.  On 20 May 2016, the CMA published a summary of its provisional findings following its in-depth phase II investigation into the potential merger of Ladbrokes plc (Ladbrokes) and certain businesses of Gala Coral Group Limited (Coral). Ladbrokes and Coral are both active in the betting and gaming sector and are, respectively, the second and third largest bookmakers in the UK by number of licensed betting offices. The CMA has published a notice of possible remedies in order to address any competition concerns, which include the divestiture of between 350-400 betting offices in order to obtain clearance.

Speeches & Publications

Commission publishes Communication on State aid. On 19 May 2016, the Commission published a Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union.