1. More on online commerce. The new European Comission proposals
On 25th, the European Commission made the Communication on measures for the stimulation of cross-border online commerce public.
The document is included in the Strategy for the creation of a Unique Digital Market and sets forth a pack of measures that the European Commission considers necessary to promote online commerce between Member States.
The pack of measures is divided into three blocks. The first one considers various initiatives aimed at limiting the practices known as geoblocking, which were addressed here. The second one proposes measures to allow the packaging services to work more efficiently between Member States. The third one is based on the defence of consumers and unfair practices in online commerce.
As the analysis following these lines will show, the European Commission’s proposal involves, in some aspects, an intense regulation of the activities in relation to electronic commerce.
Block I: Measures to limit geoblocking
The European Commission is looking to prohibit the unjustified limitations on cross-border online commerce.
In order to do so, it proposes not only the prohibition of geoblocking as such (i.e. the measures that block online shopping through web pages from other Member States), but also what is known as “geo-discrimination” (discrimination on prices or conditions due to a certain nationality, residence or establishment of the online shopper).
In particular, the European Commission proposes:
- The prohibition of certain cases in which there is no justification for geoblocking (for instance, when the sale does not include the physical delivery of the good).
- The prohibition of the refusal to access those web pages from other territories or to redirect sales to the local web page without the consumer’s consent.
- Prohibition of discrimination on payment methods. Even if online sellers will still be free to choose the accepted payment method, they will not be allowed to treat buyers differently according to their nationality, residence, location of bank account or emission of credit card.
Certain sectors (transport, retail financial services and audiovisual services) will be excluded from these measures since they shall be subject to a specific regulation.
The prohibitions considered in this block complete those resulting from Competition Law, which impedes, except for certain cases, the imposition by providers of limitations on sales for distributors (including those taking place online). This issue was analysed here and here.
Block II: Measures to improve cross-border packaging services
The aim is to improve the prices and reduce the obstacles to the contracting of packaging services between Member States.
In order to do so, the Commission proposes:
- More supervision of packaging services providers.
- More transparency on prices, including the obligation of publishing prices for minor services.
- Access to third parties in non-discrimination conditions to multilateral agreements in which the universal post services providers are part.
Block III: Defence of consumers and unfair competition
On the one side, the European Commission proposes a modification of the Regulation on cooperation between national authorities responsible for the enforcement of consumer protection.
Essentially, it pretends to reinforce the power of national authorities to act in coordination against the practices in online commerce that harm consumers and affect various Member States.
On the other side, the Commission is willing to pass a new guide on the implementation of the Directive concerning unfair practices that clarifies its application on more recent commercial practices in online commerce.
The convenience of the creation of a Unique Digital Market is rarely questionable. In order to do so, the adoption of measures on the suppression of barriers (artificial) on online commerce between Member States is essential. Nevertheless, the regulation of certain aspects can lead to an excessive or even counter-producing functioning of competition in the markets at issue. For instance, certain prohibitions can hinder the establishment of efficient distribution systems. The fact that a provider cannot re-direct clients to the distributors located in other Member States favours the integration of markets but may demotivate distributors when it comes to the participation in these systems of distribution, in which they have to compete with their provider. On the other hand, these measures, as with the introduction of more transparency over prices in the packaging services sector, can also be considered doubtful from a competition law perspective.
ARDAGH / BALL REXAM DIVESTMENT BUSINESS (M.8048)
18/05/2016. The producer of metal and plastic containers ARDAGH has notified the Commission of its intention to acquire 12 beverage cans production plants owned by the companies BALL and REXAM in the EEA.
The authorisation of this transaction is the last obstacle for the execution of the acquisition by the American company BALL of its English competitor REXAM, which was authorised in January 2016 by the Commission subject to the commitment of selling the plants to an appropriate buyer, eliminating the competition concerns raised by the transaction in the beverage can production market (press release).
AB INBEV / SABMILLER (press release)
24/05/2016. The European Commission has authorised with commitments the acquisition by the Belgian-Brazilian brewer AB INBEV of its Anglo-Southafrican competitor SABMILLER. The commitments entail the sale of practically all SABMILLER’s beer business in Europe.
From the beginning, AB INVEB proposed to the Commission the sale of the “Peroni”, “Grolsch” and “Meantime” brands from SABMILLER, as well as other brands and businesses of the same company in Italy, the Netherlands and the United Kingdom which, as published by AB INBEV in February 2016, will be acquired by the Japanese ASAHI.
In addition to this, by the end of April, AB INBEV proposed the sale of SABMILLER’s business in Central and Eastern Europe in a new attempt to obtain the authorisation of the European Commission to the merger with that company.
Together, these commitments address the concerns detected by the European Commission, which foresaw an increase in prices in all European countries where SABMILLER was previously active due to the execution of this operation. As underlined here and here, this operation means the concentration in one entity of 30% of the beer consumed in the world.
SYSCO / BRAKES (M.7986)
29/04/2016. The American food distributor SYSCO has notified the European Commission of its intention to acquire the UK-based group BRAKES, which supplies food and drink products to customers, including the on-trade channel. BRAKES is present in the markets of the United Kingdom, France, Spain, Ireland, Belgium and Luxembourg. The deal was agreed in February 2016 and is valued at about USD 3.1 billion. On May 11, the Commission published a notice in the official journal inviting interested parties to comment on the deal.
JUST EAT/ LA NEVERA ROJA (C/0730/16)
31/03/2016. The Spanish CNMC authorised with commitments the acquisition by JUST EAT, a worldwide Internet-based food delivery operator, of its major competitor in Spain: LA NEVERA ROJA. The total share of both entities in the Spanish home delivery market is nearly 80%.
The commitments accepted by the parties in order to obtain the authorisation are based on the prohibition of establishing exclusive obligations to the restaurants that will join the resulting network, or penalties for joining third parties’ platforms. The CNMC considers that, with the fulfilment of these commitments, the final clients and the restaurants have enough different alternatives after the implementation of the concentration.
According to the CNMC, the management of food delivery services by these Internet platforms accounted for 5-15% of the total home delivery services in 2015.
AHEMON - EMCASA (C/074/16)
5/05/2016. The CNMC has authorised in first phase and without commitments the creation of a joint venture by Embotelladora de Canarias and AHEMON for the production and marketing of all its products in the Canary Islands. The newly created company, AHEMBO, will have two production plants and will market a wide range of products on all of the islands.
The CNMC’s resolution has not been published yet, although it will surely be interesting to analyse the definition of the markets conducted by the CNMC for possible notifications of mergers reaching the market share threshold.
Spain and Portugal
25/04/2016. Following the withdrawal of the previous notification (view here), BIMBO has once again notified the CNMC and the Portuguese Autoridade da Concorrência of its intention to purchase PANRICO.
In turn, the company NUTPOR, the Portuguese branch of ADAM FOOD, S.L., has notified the Portuguese Autoridade da Concorrência of the acquisition of PANRICO’s assets for the production of tin loaf. This operation responds to the commitments offered by BIMBO to address the competition concerns raised by the acquisition of PANRICO in the tin loaf market.
HAIN FROZEN FOODS / ORCHARD HOUSE FOODS (Press release)
17/05/2016. The CMA has decided to investigate the acquisition of ORCHARD by HAIN, the leading freshly squeezed fruit juices providers for supermarkets and other retail stores, such as cafes, in the United Kingdom.
SODIAL / HAUTE-NORMANDIE (Ruling)
15/04/2016. The Autorité de la Concurrence has authorised the acquisition by the agricultural cooperative SODIAL of the agricultural cooperative HAUTE-NORMANDIE. Even if the resulting entity will have a share of 20-30% in the French market of milk collection at a national level (and higher in certain regions), the Autorité does not consider this operation as problematic since the milk collection is assured by the statutory obligations for cooperatives in France and the excess of demand in the country assures the access to milk production of competitors of SODIAL regardless of its increasing position in the market.
3. Restrictive practices
FOOD SERVICE PROJECT (S/DC/0510/14)
10/03/2016. The CNMC has recently published its resolution of the FOOD SERVICE PROJECT (FSP) case. As underlined here, this case was particularly interesting as the CNMC had to state its opinion on the possibility of the franchisor fixing resale prices of its franchisees and on the legality, from a Competition Law point of view, of the obligation to acquire all products and services from the providers selected by the franchisor.
The issue has finally been solved via an agreed settlement. The FSP commitments are the following: (i) in relation to the system of retail prices, the FSP will guarantee the possibility of the franchisees of separation from the maximum retail prices fixed in the letter (even if the centralised impression must be respected, as it is considered part of the brand’s image); (ii) in relation to the supply system, the FSP will distinguish between “mandatory goods”, which will be purchased from the authorised/homologated providers and “free goods” not tied to the image and homogeneity of the FSP, for which the franchisees are not subject to conditions imposed by the franchisor, only to simple recommendations which they may or may not accept.
It must be taken into account that FSP, in order to achieve the agreed settlement of the case, has had to offer commitments that may go beyond the Competition standards. In this sense, the FSP’s market share is less than 10% both in the wide market of informal restaurant service delivery as well as in the narrow market of restaurant service (to take away/home delivery). Moreover, the decision does not analyse whether the providers’ share in the markets in which each one supplies their own products to the franchisees is higher than the 30% threshold established by the Regulation 330/2010 of exemption of vertical agreements, in relation to a single brand obligation lasting less than five years.
MUSHROOMS (Press release)
06/04/2016. The European Commission has sanctioned RIBEREBRO with a EUR 5.2 million fine for its participation in a cartel of tinned mushrooms and fungi affecting white labels. The members of the cartel exchanged confidential information on offers, fixed minimum prices, agreed on the volume objectives and assigned each other clients. In June 2014, the Commission adopted a decision in relation to the remaining participants of the same cartel, BONDUELLE, LUTÈCE and PROCHAMP, under the framework of a settlement procedure, that grants a 10% reduction of the fine to the companies acknowledging the facts and their responsibility in the infringement. However, RIBEREBRO decided not to participate in the settlement, and the investigation proceeded normally.
NOUGAT (Press release)
20/04/2016. The CNMC has sanctioned six nougat producers (ALMENDRA Y MIEL, ENRIQUE GARRIGÓS, SANCHÍS MIRA, TURRONES JOSÉ GARRIGÓS, DELAVIUDA and TURRONES PICÓ) with a EUR 6.12 million fine for having exchanged strategic information on prices, clients and other commercially sensitive data between April 2011 and November 2013. According to the CNMC, with this practice the infringing companies aimed to distribute the market of the main white label nougat distributors in Spain among themselves (ALCAMPO, CARREFOUR, MERCADONA, etc.), as well as guaranteeing their market shares.
SHERRY WINES OF JEREZ (Press release)
13/05/2016. The CNMC has sanctioned Bodegas José Estévez with a higher fine than the one previously imposed for its participation in the cartel of sherry wines of Jerez (case S/120/08) after the Spanish National Court ruled that the sanctioning procedure had expired. For more information on this case, click here.
DIAPERS FOR ADULTS (Press release)
31/05/2016. The CNMC has sanctioned eight producers of diapers for adults, as well as the federation FENIN and four executives with a EUR 128.8 million fine.
Since the end of 1996, the companies had put in place agreements and negotiated with distributors to fix the prices of the diapers for adults for wholesaler companies for their commercialisation in pharmacies. Additionally, the companies had used a strategy of appeal of administrative and judicial review resolutions against the public contracts convened by the Sanitary Authorities in different Autonomous Communities to acquire and deliver the product directly to non-hospitalised patients, so that they could maintain their income by selling the products in pharmacies.
The fines imposed were the following: SCA Hygiene Products, S.L: EUR 35.1 million; Laboratorios Indas, S.A.U: EUR 13.2 million; Ontex Peninsular, S.A.U, and Ontex ID, S.A.U: EUR 5.1 million; Laboratorios Hartmann, S.A.: EUR 4 million; Barna Import Medica, S.A: EUR 1.4 million; Textil Planas Oliveras, S.A: EUR 801,738; Algodones del Bages, S.A.U: EUR 251,456; and the Federación Española de Empresas de Tecnología Sanitaria (FENIN): EUR 200,000. In addition, the CNMC has sanctioned four executives of the infringing companies and of the sectorial association, with the fines amounting to EUR 15,000, 6,000, 4,000 and 4,000 respectively.
The high amount of the fines and imposition of sanctions to the companies’ executives are part of a series of practices implemented by the CNMC in 2016 in the light of their main priority for this year: the fight against cartels (click here).
BREWING SECTOR (Press release)
09/05/2016. The Bundeskatellamt has sanctioned important retailers in Germany with a EUR 90.5 million fine for the agreements reached with the brewery AB InBev on shop prices for beer, in particular the "Beck’s", "Franziskaner" and "Hasseröder" brands. More specifically, retailers as important as KEMPF, EDEKA, METRO o NETTO, among others, have been sanctioned.
Nevertheless, AB InBev and the distributor REWE have not been subjet to sanction due to their prompt and extensive collaboration with the competition authority during the investigation.
These sanctions are part of a wider investigation concerning resale price maintenance practices in the food sector in Germany, in the course of which, last year, sanctions were imposed in the coffee and confectionary sectors. These proceedings began with dawn raids by the Bundeskartellamt in January 2010 (click here).
04/05/2016. The food supplements producer ALMASED has won an appeal lodged by a consumer organisation against its price policy in Germany.
At the beginning of 2014, ALMASED informed pharmacies of an individual discount action, consisting of 30% discounts for direct orders. This action would last until the end of 2014. In order to obtain the mentioned discount, these pharmacies had to offer at least three tins of the product for a minimum retail price of EUR 15.95 euros. The consumer organisation requested to stop this action since the obligation to sell the products for more than EUR 15.95 was contrary to competition rules.
The Court of First Instance upheld the appeal considering that, despite the limited term and scope of the conduct, it was capable of restricting competition.
ALMASED appealed this decision before the corresponding Court, which considered that the action did not have a significant impact on competition and thus, was permitted: it was a punctual action affecting a small amount of products and the pharmacies where free to accept or reject the offer.
18/04/2016. The French supermarket chain CASINO has claimed before a court in London the damages deriving from a cartel sanctioned in 2011 by the European Commission in the washing powder market. The claim is directed against the members of the cartel: PROCTER & GAMBLE, HENKEL and UNILEVER, which were sanctioned with over EUR 315 million fines and in which HENKEL was exempted from the payment of the fine under the framework of the leniency program.
15/04/2016. The Cour d’appel of Paris has reduced the sanctions imposed by the french competition authority to the wallpaper producers for the exchange of commercially sensitive information. The Cour d’appel has taken into account that these companies are mono-product companies, due to which the sanctions based on their turnover are disproportional.
PROMOTIONS (Press release)
27/04/2016. The CMA has requested various supermarket chains to review their promotions to guarantee their accordance with the consumer and user legislation. This action derives from a complaint from 2014 following which the CMA committed itself to guarantee that before/now offers (i.e. promotions with reference to a previous price) and promotions for multiple purchases are more transparent.
In this sense, the CMA has worked together with the supermarket association ASDA to guarantee:
- The actual prices are not advertised for a period longer than that of the existence of the before price.
- The multiple purchases must imply a better opportunity than the purchase of individual products.
- The before/now promotions do not immediately follow the multiple purchase offers.