Competition: Commission consults on commitments offered by Paramount Pictures in pay-TV investigation

On 22 April 2016, the Commission invited comments on commitments offered by Paramount Pictures International Limited and Viacom Inc. (together "Paramount") to address competition concerns relating to contractual clauses in licensing agreements that prevent the cross-border provision of pay-TV services. In January 2014, the Commission opened formal antitrust proceedings to investigate bilateral agreements between Sky UK Limited ("Sky UK") and six major film studios, namely Paramount, Disney, NBCUniversal, Sony, Twentieth Century Fox and Warner Bros. During the investigation, the Commission identified clauses in the agreements that prevented Sky UK from allowing EU consumers located outside the UK and Ireland to access, through satellite or the internet, its pay-TV services available in these countries (a practice known as "geo-blocking"). Some agreements also contained clauses that required the film studios to ensure in their licensing agreements with broadcasters other than Sky UK that these companies are prohibited or limited from making their pay-TV services available in the UK and Ireland. As a result, these clauses granted absolute territorial exclusivity to Sky UK and other broadcasters. They also eliminated cross-border competition between pay-TV broadcasters and partitioned the internal market along national borders, in breach of Article 101 of Treaty on the Functioning of the European Union ("TFEU"). In July 2015, the Commission informed the film studios and Sky UK of these concerns in a statement of objections.

In order to address the Commission's concerns, Paramount offered a set of commitments that would apply throughout the European Economic Area ("EEA"). Firstly, when licensing its film output for pay-TV to broadcasters located in the EEA, Paramount offered not to reintroduce contractual obligations that prevent or limit such broadcasters from responding to unsolicited requests from consumers within the EEA, but outside the broadcasters' licensed territory (a so-called “Broadcaster Obligation”). Paramount also offered not to bring any actions before a court or a tribunal for violation of the Broadcaster Obligation included in its existing licensing agreements. Secondly, under a so-called paramount obligation ("Paramount Obligation"), Paramount offered not to reintroduce new obligations or enforce the existing obligations that require it to prohibit or limit pay-TV broadcasters located outside a licensed territory from responding to unsolicited requests from consumers within the licensed territory. The commitments would apply for a period of five years. They cover both standard pay-TV services and, to the extent they are included in the licenses with broadcasters, subscription video-on-demand services, whether broadcast online or by satellite. Interested parties can now submit comments within one month. If the comments indicate that the commitments address the Commission's competition concerns, the Commission may adopt a decision making them legally binding on Paramount. The Commission continues its investigation into the conduct of Disney, NBCUniversal, Sony, Twentieth Century Fox, Warner Bros and Sky UK. Source: Commission Press Release 22/04/2016 and Commission Press Release 23/07/2015

Competition (Sweden): Swedish Competition Authority discontinues investigation of free admission to public museums

The Swedish Competition Authority ("SCA") has, after an initial investigation, decided not to conduct a more thorough investigation regarding whether free admission to certain public museums could be considered restrictive of competition.

The SCA initiated its investigation following a complaint submitted by inter alia Fotografiska (a photography museum in Stockholm). The complainants claimed that the decision to introduce free admission to certain public museums could be an infringement of the rules on anti-competitive public sales activities under the Swedish Competition Act. The complaint asserted for example that free admission to public museums could be considered as predatory pricing, which could imply that public and private actors do not compete on equal conditions.

The SCA has, on the basis of its preliminary review, decided to close the investigation. According to its decision, the main reason for the discontinuance is that the complainants have failed to demonstrate concrete, measurable and documented damage, or risk of such damage, following the public sales operation. Source: Swedish Competition Authority Press Release 22/04/2016 (in Swedish) and Swedish Competition Authority Decision 22/04/2016 (in Swedish)

Merger control: Commission conditionally approves acquisition of Equens and its subsidiary PaySquare by Worldline

On 20 April 2016, the Commission approved the acquisition of Equens and its subsidiary PaySquare by Worldline, subject to conditions. Equens, based in the Netherlands, and Worldline, based in France, are both active in the provision of payment and related services in several EU Member States and Switzerland. Therefore, the transaction combines two large payment systems operators, active across the full value chain in both payment processing and card processing services. The activities of Equens and Worldline are mostly complementary. However, the transaction results in overlaps in a number of Member States including Belgium, Germany, Luxembourg and the Netherlands.

The Commission's investigation revealed that the overlapping merchant acquiring services in Belgium and Germany raised competition concerns. In Belgium, Wordline is the former incumbent, whereas PaySquare is a recent entrant that exerts significant price pressure on Worldline. Therefore, the Commission had concerns that the removal of an important competitive constraint would lead to higher prices. In Germany, Worldline operates software called Poseidon and its modules, which are used by a large majority of German network service providers, including PaySquare, in the provision of their services. Since there are currently no readily available alternatives to Poseidon, the Commission found that post transaction Worldline would have the ability and incentive to favor its new subsidiary PaySquare, in terms of price and quality, over other network service providers relying on Poseidon. The Commission notes that the competition concerns are increased by the fact that the value of licensing Poseidon is a fraction of the value of the merchant acquiring market, thereby making it profitable for the merged entity to discriminate against users other than Paysquare in order to gain market shares in merchant acquiring.

In order to address the Commission's competition concerns in Belgium and Germany, the parties submitted remedies consisting of the divestment of PaySquare's business in Belgium and of granting licenses for Poseidon on fair, reasonable and non-discriminatory terms for a period of ten years. The Commission concluded after a market test that the commitments remedy the competition concerns and decided consequently to approve the transaction, as modified by the commitments. Source: Commission Press Release 20/04/2016

Merger control (Sweden): Swedish Competition Authority opens in-depth investigation into Visma's acquisition of Fortnox

On 16 March 2016, Visma AS ("Visma") filed a voluntary notification of its planned acquisition of Fortnox AB ("Fortnox") to the Swedish Competition Authority ("SCA"). Fortnox is listed on NGM Nordic MTF and the acquisition is intended to be carried out as a public takeover bid. On 22 April 2016, the SCA opened an in-depth investigation into the notified acquisition. According to the SCA's preliminary review, the acquisition affects the market for business software for finance and administration for small and medium-sized enterprises and could substantially distort competition.

Visma has contended that it's and Fortnox's collective market shares after the proposed acquisition would not be sufficient to result in a significant impediment of effective competition, regardless of the final definition of the relevant markets. Conversely, based on the SCA's preliminary investigation, the proposed acquisition may result in very high market shares on certain relevant markets. Moreover, according to the SCA, there are concerns about potential vertical restraints of competition. Therefore, the SCA concluded that an in-depth investigation is required to determine the effects of the proposed acquisition. Source: Swedish Competition Authority Press Release 22/04/2016 (in Swedish) and Competition Authority Decision 22/04/2016 (in Swedish)

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of Baxalta by Shire
  • Commission approves acquisition of Kuoni by EQT
  • Commission approves joint venture between Bekaert and OTPP in wire ropes
  • Commission approves acquisition of Biomassa by Cosan and Sumitomo
  • Commission approves acquisition of Garda by Rhône Capital and Apax Partners
  • Commission approves acquisition of sole control over Dow Corning by Dow