EU Competition

Commission opinion to English High Court on disclosure of documents obtained from access to file in Commission investigation. The European Commission (Commission) published a (non-binding) opinion that it provided, under Article 15(1) of Regulation 1/2003, to the English High Court in relation to the proposed disclosure by MasterCard of documents in a damages action brought by Sainsbury’s Supermarkets Limited against MasterCard. MasterCard obtained certain documents as a result of access to the Commission’s file in the investigation into MasterCard’s cross-border multilateral interchange fees. The Commission noted that the High Court should balance the interests of the claimant against the harm that would be caused to the effective enforcement of EU competition rules. The Commission considered that concern for the harm that disclosure may cause to the effective enforcement of the EU competition rules should prevail.

General Court Order on interim measures in appeal against retail food packaging cartel.The General Court published an order by which it has suspended, subject to certain conditions, the obligation on the Consorzio Cooperative di Produzione e Lavoro SCWefalische Drahindustrie GmbH group (CCPL) to provide a bank guarantee in relation to a fine over €33 million imposed on it by the Commission, in June 2015, for its participation in the retail food packaging cartel. A number of the companies, including CCPL, appealed the Commission’s decision to the General Court. CCPL also sought interim measures to suspend the operation of the Commission’s decision and its obligation to pay the fine or provide a bank guarantee. The General Court upheld CCPL’s application for interim measures on the basis it was impossible for CCPL to obtain a bank guarantee and because it was sufficiently probable that the judge in the main proceedings would reduce the fine.

Bundeskartellamt fines LEGO for vertical resale price maintenance. On 12 January 2016, the German competition authority, the Bundeskartellamt, fined LEGO GmbH (LEGO) €130,000 for enforcing vertical resale price maintenance on the sale of so-called “highlight articles”. The Bundeskartellamt decided that during 2012 and 2013, retailers in northern and eastern Germany were forced by sales representatives of LEGO to raise their retail prices. In some cases, the retailers were informed that a failure to comply would lead to a reduction or a refusal to supply the product. In other cases, the level of discount on retailers’ purchase price granted by LEGO was conditional on such compliance.

EU Mergers

Phase I Mergers

  • M.7793 LONE STAR FUND IX / MRH (11 January 2016)
  • M.7819 FREUDENBERG / TORAY INDUSTRIES / JAPAN VILENE COMPANY JV (14 January 2016)
  • M.7823 ACCIONA / NORDEX (13 January 2016)
  • M.7870 FONDO STRATEGICO ITALIANO / ENI / SAIPEM (12 January 2016)
  • M.7876 PANALPINA / DUTCH FLOWER GROUP / AIRFLO (12 January 2016)
  • M.7879 SAUDI ARAMCO / LANXESS / JV (11 January 2016)
  • M.7884 ATOS / UNIFY (12 January 2016)

Public Procurement

ECJ preliminary ruling on whether Directive 2004/18 precludes tender specifications which require bidders to enter into legal agreements with entities it relies on to perform contract. On 14 January 2016, the European Court of Justice (ECJ) handed down its preliminary ruling on a reference from a Latvian court relating to the interpretation of Articles 47 and 48 of Directive 2004/18. The Latvian local authority for Talsi, Talsu novada pašvaldïba, published a call for tenders for a contract for road infrastructure improvement works. The specifications provided that, in the event that the contract was awarded to a tenderer which relied on the capacities of other contractors for its performance of the contract, the tenderer had to enter into co-operation agreements or partnerships with those contractors before the contract could be awarded. A Latvian construction company, Ostas celtnieks SIA (Ostas celtnieks), submitted a bid for the contract, however, contested the tender specifications relating to co-operation and partnership agreements. The ECJ agreed with the Advocate General, concluding that such an obligation was contrary to Directive 2004/18, noting that Articles 47(2) and 48(3) of Directive 2004/18 recognizes the right of every economic operator to rely upon the capacities of other entities, regardless of the nature of the links which it has with them, provided that the economic operator proves to the contracting authority that it will have at its disposal the resources necessary for the performance of the contract.

State Aid

Commission decides that Belgian “excess profit” tax scheme breaches State aid rules.On 11 January 2016, the Commission announced that it has decided that the selective tax advantages granted by Belgium under its “excess profit” tax scheme constitute illegal State aid. Under the scheme, certain multinational group companies have been able to pay less tax than other companies to discount for “excess profits” that allegedly result from being part of a multinational group. The Commission has concluded that the Belgian scheme gave multinationals who were able to obtain a tax ruling a preferential, selective subsidy. The Commission has decided that Belgium must abandon the scheme and recover the full unpaid tax, estimated to be about €700 million.

Commission approves further prolongations of Cypriot and Portuguese bank guarantee schemes. On 12 January 2016, the Commission announced that it has decided to approve the prolongation, until 30 June 2016, of guarantee schemes for credit institutions in both Cyprus and Portugal. Both schemes have been prolonged several times. In each case, the Commission found the extension of the State aid measures to be in line with rules on State aid to banks during the crisis. In particular, the extended measure is well targeted, proportionate and limited in time and scope. The Commission has, therefore, concluded that the guarantee schemes represent an appropriate means of remedying a serious disturbance in the Cyprus and Portuguese economies and so are compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU).

General Court dismisses appeal against Commission decision to open a State aid investigation into ground-handling services at Milan airport. The General Court has dismissed, by order, an appeal by Italy challenging a Commission decision to open an in-depth State aid investigation regarding a capital injection into the ground handling subsidiary of the state-owned operator of Milan airport, SEA SpA (SEA). In December 2012, the Commission decided that State aid granted by SEA to SEA Handling was unlawful. In order to implement the Commission’s decision, SEA liquidated SEA Handling and created a new company, Airport Handling, to carry out ground handling at Milan Airport. Airport Handling was provided with a capital injection of €25 million to start operations. In July 2014, the Commission launched an in-depth State aid investigation in order to consider whether the capital injection was a circumvention of its decision. The General Court has dismissed Italy’s appeal as inadmissible, finding that the Commission’s decision to open an in-depth State aid investigation was not open to review under Article 263 of the TFEU on the basis that it did not concern measures that were on-going.

UK Competition

Fast track damages action and injunction application by NCRQ Limited settled. On 12 January 2016, the Competition Appeal Tribunal (CAT) published an order consenting to the settlement of proceedings brought by NCRQ Limited (NRCQ) against the Institution of Occupational Safety and Health (IOSH) under section 47A of the Competition Act 1998. NCRQ had brought a stand-alone damages action, alleging that IOSH (a health and safety membership organization) had abused a dominant position in breach of the Chapter II prohibition of the Competition Act 1998, and Article 102 of the TFEU by refusing to accredit NCRQ’s qualification of a diploma in Applied Health and Safety. The basis of the settlement is that IOSH will, for a period of three years, grant accreditation at the level of graduate membership to NCRQ’s diploma.

CMA publishes information regarding warning and advisory letters. On 14 January 2016, the Competition and Markets Authority (CMA) published details regarding its use of warning and advisory letters. The CMA may send such letters to businesses where it believes that the business may be harming competition but where the CMA has decided not to open a formal investigation on the grounds of priority. The CMA hopes to use the letters as a vehicle to express its concerns about possible breaches of competition law, and to encourage businesses to comply with competition laws. Businesses are warned of higher fines if an investigation is opened, a breach is found and the business received a letter from the CMA, following which, they failed to address its concerns.

Details of CAA Competition Act investigation published. On 14 January 2016, details were published regarding updates in the timetable to an investigation by the Civil Aviation Authority (CAA) into suspected breaches of the Chapter I and Chapter II prohibitions of the Competition Act 1998. The CAA opened an investigation in March 2015 into suspected breaches of competition law concerning access to facilities for airport car parking operators in the UK. In addition to investigating suspected price-fixing and price information exchange, the CMA is also investigating suspected abuse of a dominant position in the upstream market, for the provision of access to facilities at an airport to distort conditions of competition in the downstream market for the provision of car parking services at an airport. It is expected that the CAA will take a decision in March 2016 on whether to proceed with the investigation, close the case on grounds of administrative priority, or to move to a no grounds for action decision.