EU Mergers

Phase I Mergers

  • M.8362 LONZA GROUP / CAPSUGEL (21 April 2017)
  • M.8392 BOLLORÉ / VIVENDI (24 April 2017)
  • M.8417 KKR / TRAVELOPIA (21 April 2017)
  • M.8434 EMIL FREY FRANCE / PGA (25 April 2017)

EU Competition 

Court of Justice dismisses appeal of Pacific Fruit group in bananas cartel. On 27 April 2017, the European Court of Justice (ECJ) dismissed the appeal of FSL Holdings NV, Firma Léon Van Parys NV and Pacific Fruit Company Italy SpA. In 2011 the European Commission (Commission) found that the appellants had infringed Article 101 of the Treaty on the Functioning of the European Union (TFEU) by participating in a cartel relating to the sale of bananas in Greece, Italy, and Portugal from July 2004 until April 2005. The Commission imposed a fine of €8,919,200. The General Court had partially annulled the Commission’s decision and reduced the fine to €6,689,000 due to finding the infringement was interrupted between 12 August 2004 and 19 January 2005. In their appeal to the ECJ, the appellants sought to have the decision annulled on the following four grounds: first, that the General Court had infringed essential procedural requirements and their rights of defence, in particular in their assessment of the investigator’s use of documents received from the Italian tax authorities; second, that the General Court erred in finding that the Commission had not breached its 2002 Leniency Notice; third, that the General Court infringed the principle of effective judicial protection in that they only carried out limited judicial review of the fine; and four, that the General Court infringed the concept of an agreement having an anti-competitive object by failing to take into account the legal and economic context of the agreement. The ECJ dismissed each of these grounds of appeal and concluded that the General Court had conducted a sufficient review of the case. In particular it was found that the General Court had not erred in assessing the legality of the Commission’s use of the documents received from the Italian tax authorities.

Court of Justice dismisses Akzo Nobel’s appeal in heat stabilisers cartel. On 27 April 2017, the ECJ dismissed the appeal of Akzo Nobel NV, Akzo Nobel Chemicals GmbH and Akzo Nobel Chemicals BV in relation to infringements relating to two categories of heat stabilisers. The infringements consisted of price fixing, the allocation of markets through sales quotas, the allocation of customers, and the exchange of commercially sensitive information. The companies involved were held liable for different infringement periods and Akzo Nobel, as the ultimate parent company to the group, was held liable for the entire infringement period. By an application to the General Court, the appellants sought an annulment of the decision or in the alternative a reduction of the fine. The General Court partially annulled the decision in respect of the fines imposed on Akzo Nobel Chemicals GmbH and Akzo Nobel Chemicals BV for one of the infringement periods due to the expiry of the limitation period. However, it was held that this did not preclude Akzo Nobel from being found liable for that infringement and the remainder of the appeal was dismissed. On appeal to the ECJ, the appellants claimed that the ECJ should set aside the judgment of the General Court in so far as it holds that liability for the fines originally imposed on Akzo Nobel Chemicals GmbH and Akzo Nobel Chemicals BV for their participation in the infringements can still be attributed to Akzo Nobel, even after the annulment of those fines. The appellants had a single ground of appeal in relation to this, namely that the General Court infringed the rules concerning the liability of parent companies for the unlawful conduct of their subsidiaries. The ECJ found that this single ground of appeal was in part inadmissible and in part unfounded. The ECJ held that the fact that the fines could not be imposed on certain companies due to the expiry of a limitation period does not preclude another company, which is jointly and severally liable with those companies for the same anti-competitive behaviour, from being fined.

State Aid

Commission clears support for Latvian renewable energy and cogeneration plants. On 24 April 2017, the Commission found that the support granted to cogeneration power plants and renewable energy in Latvia were in line with EU state aid rules. This is because the Commission concluded that the measures will help Latvia achieve its 2020 energy and climate objectives, without unduly distorting competition. The support scheme is financed by final electricity users with a levy on electricity consumption. Latvia also reviewed the support mechanisms to ensure beneficiaries are not overcompensated and has limited the aid to the minimum necessary in order to achieve the objectives pursued by the scheme.

UK Competition

CMA accepts undertakings offered by Menzies Aviation in lieu of Phase 2 investigation. On 25 April 2017, the Competition and Markets Authority (CMA) accepted undertaking offered by Menzies Aviation Plc and Menzies Aviation, Inc. (Menzies Aviation) in lieu of referring its completed acquisition of ASIG Holdings Limited and ASIG Holdings Corp. (ASIG) to a Phase 2 investigation. On 15 December 2016, the CMA decided that in the absence of appropriate undertakings, the CMA would refer the transaction to a Phase 2 investigation in that the merger may be expected to result in a substantial lessening of competition in the supply of ground handling services at Aberdeen Airport. This is because both Menzies Aviation and ASIG provide a range of services to airlines both in the UK and internationally and are considered close competitors at Aberdeen Airport. In order to address the CMA’s concerns, Menzies Aviation offered to divest ASIG’s ground handling business carried out at Aberdeen Airport to a proposed purchaser, Dalcross. The CMA considered that the undertakings offered were sufficient to remedy their concerns and so accepted them in lieu of referring the merger to a Phase 2 investigation. Menzies Aviation and ASIG are both active at other airports as well, but the CMA found that there were a sufficient number of competitors at these sites.

CMA makes initial enforcement order in respect of LN-Gaiety’s acquisition of Isle of Wight Festival. On 25 April 2017, the CMA announced that it has issued an initial enforcement order addressed to LN-Gaiety Holdings Limited (LN-Gaiety) and Live Nation Entertainment, Inc., a Delaware Corporation (NYSE: LYV) and Live Nation Limited (together, Live Nation), in relation to LN-Gaiety’s completed acquisition of Isle of Wight Festival Limited. This order was made under section 72(2) of the Enterprise Act 2002 which allows the CMA to make initial enforcement orders to prevent any pre-emptive action in completed mergers while the CMA considers whether the merger situation has resulted in, or may result in, a substantial lessening of competition. The order commenced on 24 April 2017.

CMA publishes full text of its decision in acquisition of F J Need Foods Limited by Irish Dairy Board. On 28 April 2017, the CMA published the full text of its decision to clear the anticipated acquisition of F J Need Foods Limited (F J Need) by Irish Dairy Board (UK) Limited (IDB (UK)). The CMA assessed the impact of the merger in relation to the supply of hard cheese to the food service sector and the provision of contract packaging services for cheese in the UK. In doing so, the CMA found that the parties would hold a combined share of 20-30% in the supply of hard cheese to food service customers and that there would be a range of suppliers who would continue to constrain the parties post-merger. The CMA concluded therefore that the transaction did not give rise to a realistic prospect of a substantial lessening of competition in the supply of hard cheese to food service customers in the UK. The CMA also considered the vertical relationship between F J Need and IDB (UK) and the potential for foreclosure of the upstream supply of bulk cheese to cheese packers. However, the CMA found that there are a number of alternative suppliers which downstream cheese packers could switch to in the event of any price increase and, therefore, foreclosure was unlikely.