Competition: Commission conditionally approves acquisition of St Jude Medical by Abbott Laboratories
On 23 November 2016, the European Commission ("Commission") announced that it has decided to grant conditional approval to the proposed acquisition of St Jude Medical ("St Jude") by Abbott Laboratories ("Abbott"). Both companies are US-based and develop and market medical devices. St Jude is active in the development, manufacturing and sale of cardiovascular medical devices, including traditional cardiac rhythm management products, cardiovascular products and atrial fibrillation products. Abbott is also active in the development, manufacturing and sale of various healthcare products, including medical devices comprising vascular products, optical products, diabetes care, diagnostic products and pharmaceutical products.
The Commission's decision followed an in-depth investigation, in which the Commission had focused on the two areas of cardiovascular devices in which Abbott and St Jude compete: vessel closure devices and devices used in electrophysiology procedures, in particular transseptal introducer sheaths. According to the Commission, the investigation showed that the combination of Abbott and St Jude's range of vessel closure devices could have led to price rises, given the insufficient competitive pressure from the remaining players on the market. In addition, the Commission has concerns that Abbott might abandon the proposed launch of Vado, a transseptal sheath, after the transaction, which has the potential to become a strong competitor and challenge St Jude's position as a leader in this market.
To address the Commission's concerns, Abbott has agreed to divest St Jude's global vessel closure devices business as well as the whole of Abbott's Vado business. The Commission is satisfied that these commitments address all identified competition concerns.
The Commission states that, given the global reach of the companies' activities, the Commission co-operated closely with competition agencies in other jurisdictions, including in particular the US Federal Trade Commission. Source: Commission Press Release 23/11/2016
Competition: Commission conditionally approves container liner shipping merger between Hapag-Lloyd and UASC
On 23 November 2016, the European Commission ("Commission") announced that it has decided to grant conditional approval to the proposed acquisition of United Arab Shipping Company ("UASC") by Hapag-Lloyd of Germany ("Hapag-Lloyd"). UASC is a global shipping company based in the Middle East. The company offers global containerised cargo transport services through a fleet of approximately 55 container ships. Hapag-Lloyd offers global transport services for containerised cargo under the Hapag-Lloyd brand through a fleet of approximately 170 container ships.
Like several other carriers, UASC and Hapag-Lloyd offer their services on trade routes mainly through co-operation agreements with other shipping companies, known as "consortia" or "alliances". Consortia and alliance members decide jointly on capacity setting, scheduling and ports of call, which are all important parameters of competition.
Prior to its decision, the Commission's conducted an in-depth investigation in which it identified concerns that the acquisition would lead to the combination of two competitors in the container liner shipping business and would create the fifth largest container liner shipping company worldwide. In particular, the merger, as initially notified, would have created links on the Northern Europe - North America trade routes between the consortia and alliances in which Hapag-Lloyd is a member and the NEU1 (ex-Pendulum) consortium, in which UASC is a member. The Commission concluded that as a result of the consortia and alliances it would belong to, the merged entity could have influenced capacity and prices on a substantial portion of those markets, to the detriment of customers and, ultimately, consumers. The Commission had concerns that on those routes, the merged entity would have faced insufficient competitive constraint from rival companies.
To address these concerns, Hapag-Lloyd has offered to terminate the participation of UASC in the NEU1 consortium. This will entirely remove the additional link between Hapag-Lloyd's and UASC's consortia. As a result, the mergerd entity's position on these trade routes will be comparable to that of Hapag-Lloyd today. The Commission is satisfied that these commitments address all identified competition concerns. Source: Commission Press Release 23/11/2016
Merger control (Sweden): Swedish Patent and Market Court of Appeal rejects the Swedish Competition Authority's claim that the acquisition of Powerpipe Systems AB by Logstor Sverige Holding AB should be blocked
In September 2015, Logstor A/S filed a merger notification with the Swedish Competition Authority ("SCA") concerning the acquisition of all of the shares in Powerpipe Systems AB ("Powerpipe") by Logstor A/S' subsidiary Logstor Sverige Holding AB (jointly "Logstor"). Both Logstor and Powerpipe are manufacturers of pre-insulated pipes used for district heating.
The SCA decided to open an in-depth investigation of the proposed merger and subsequently initiated proceedings before the Stockholm District Court (at that time the first instance in competition cases), claiming that the merger should be prohibited. According to the SCA, the merger would result in Logstor gaining a dominant position, with an approximately 80% share of the Swedish market. This would result in a reduction in competition and cause direct harm Swedish district heating customers. The SCA argued that the geographic market should be limited to Sweden, while Logstor and Powerpipe argued that the market was European wide.
In August 2016, the Stockholm District Court rejected the SCA's claim that the merger should be prohibited. The District Court concluded that the geographic market was northern Europe and that the proposed merger therefore would only result in the joint entity holding a 35% market share. The SCA appealed the District Court's ruling.
On 24 November 2016, the Swedish Patent and Market Court of Appeal delivered its judgment. Similarly to the District Court, the Court of Appeal rejected the SCA's proposal to prohibit the merger for reasons relating to the definition of the geographic market. The Court of Appeal took the view that the SCA had the burden of proof concerning the definition of the geographic market. The Court of Appeal concluded that the SCA had failed to establish to the requisite legal standard the definition of the geographic market as it had not considered or tested any alternative definitions. Therefore, the Court of Appeal sided with the definition of the geographic market proposed by Logstor's and Powerpipes, i.e. including the EEA and Switzerland. Accordingly, the Court of Appeal found no support for the finding that the merger would create or strengthen a dominant position or otherwise have a negative effect on competition. Source: Swedish Patent and Market Court of Appeal Press Release 24/11/2016 (in Swedish) and Swedish Patent and Market Court of Appeal Judgment 24/11/2016 Case No. PMT 7499-16
Merger control (Sweden): Swedish Competition Authority decides to carry out an in-depth investigation of NIBE Industrier AB's acquisition of Enertech Group
On 29 November 2016, the SCA published a decision to open an in-depth investigation of the proposed acquisition by NIBE Industrier AB ("NIBE") of Enertech Group ("Enertech"). The proposed merger primarily concerns the heat pump market.
The SCA has found indications that the proposed merger would significantly impede competition. According to the SCA, the parties would gain large market shares if the merger were approved. However, further investigation is needed to establish the market shares of different market players. Thus far, the investigation indicates, inter alia, that there are high barriers to entry for new competitors and that the merger would result in an unduly strong position for the merged entity vis-à-vis wholesalers. It cannot be excluded that this would lead to higher prices for consumers.
In order for the SCA to make a final decision, it considers that a further investigation and analysis of the potential effects of the proposed merger are needed. The decision to open in-depth investigation means that the SCA has until 28 February 2017 to decide whether to approve the merger or initiate proceedings in the Swedish Patent and Market Court. Source: Swedish Competition Authority Press Release 29/11/2016 (in Swedish) and Swedish Competition Authority Decision 28/11/2016 (in Swedish)
Competition (Sweden): Swedish Competition Authority fines companies for anti-competitive agreements on the household waste collection market
On 25 November 2016, the SCA published two decisions in which Ragn-Sells AB and Bilfrakt AB were found to have infringed competition law by agreeing not to submit competing tenders in procurements concerning the collection of household waste for a period of five years.
In 2014, the SCA received a tip concerning the agreement and also a leniency application from Transbothnia, a company which at that time had replaced Bilfrakt AB as party to the agreement. The information prompted the SCA to conduct surprise inspections i.e.dawn raids.
Ragn-Sells AB and Bilfrakt AB must now pay a total of SEK 4.5 million in fines for the infringement.
Source: Swedish Competition Authority Press Release 25/11/2016 (in Swedish)