Competition: Commission opens three investigations into suspected anticompetitive practices in e-commerce

On 2 February 2017, the Commission announced that it has opened three investigations into e-commerce practices concerning (i) consumer electronics, (ii) video games and (iii) hotel accommodations.

Regarding the consumer electronics investigation, the Commission is ex officio investigating whether Asus, Denon & Marantz, Philips, and Pioneer have breached competition law by limiting online retailers' ability to set prices for consumer electronics products such as household appliances, notebooks and hi-fi products. According to the Commission, the effects of these price restrictions may be aggravated considering that many online retailers use pricing software in order to automatically adapt prices to those of leading competitors.

The investigation of the video games sector concerns bilateral agreements between Valve Corporation (owner of the Steam game distribution platform) and Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax (PC video game publishers). The Commission will ex officio investigate geo-blocking practices. Geo-blocking prevents consumers from purchasing a certain product based on the consumers' location or country of residence. The investigation's focus is whether so-called "activation keys" (used by customers to confirm that purchased games are not pirated) are used for the purpose of geo-blocking.

Following complaints from customers, the Commission is also investigating agreements concerning hotel accommodations. The investigation concerns agreements between Kuoni, REWE, Thomas Cook and TUI (tour operators) and Meliá hotels. The agreements may contain provisions that discriminate among customers based on their nationality or residence. As a result, not all customers may receive the best prices or see all available rooms.

Source: Commission Press Release 2/2/2017

Competition: General Court awards damages for its own delay in ruling to Kendrion but not Aalberts Industries

On 1 February 2017, the General Court ("GC") delivered judgments in two cases concerning damages for the excessive length of its own procedure. The GC awarded damages of almost EUR 600 000 to Kendrion due to the time it took the GC to handle the appeal process lodged by Kendrion against the Commission decision in the industrial bags cartel. However, the GC rejected a similar claim for damages by Aalberts Industries in relation to the copper fittings cartel.

Kendrion appealed to the GC in 2005 and the GC (then the Court of First Instance) took five years and nine months to make its decision to dismiss the appeal. Kendrion appealed the GC's decision to the European Court of Justice which ruled that Kendrion was entitled to compensation for an excessive long appeal process. Kendrion sought damages from the GC and according to the GC's own view its appeal process had taken 20 months longer than what was reasonable, including a period of unjustified inactivity. In the GC's view the reasonable time for it to take from the closing of the written procedure to the opening of the oral procedure was 15 months, which could be extended by one month for each parallel proceeding in the same cartel. The GC therefore awarded Kendrion compensation in the amount of EUR 588 769 for material damages (dues to fees having been paid for a bank guarantee). In addition, Kendrion was awarded EUR 6 000 in non-material damages (due to the prolonged state of uncertainty it suffered). The damages awarded to Kendrion were significantly lower than what was sought, i.e. over EUR 13 000 000.

In 2006, the Commission fined Aalberts Industries for its involvement in a cartel for copper and copper alloy fittings. Aalberts Industries appealed the decision to the GC in 2006. The GC delivered its judgment on the appeal in 2011. Aalberts Industries claimed compensation from the GC for an excessively long procedure. The GC rejected this claim for damages, stating that the total time of the proceedings was justified considering the complexity of the case, the parties' behavior, and the absence of an unexplained period of inactivity in any stage of the proceedings.

Source: Case T-479/14 Kendrion v European Union, Judgment of the General Court, 1 February 2017 (in French) and Case T-725/14 Aalbert Industries v European Union, Judgment of the General Court, 1 February 2017 (in Finnish) 

Competition: Commission fines three companies EUR 60 million for car battery recycling cartel

On 8 February 2017, the Commission fined Campine (Belgium), Eco-Bat Technologies (UK) and Recylex (France) a total of EUR 68 million for fixing the purchase prices of scrap automotive batteries. A fourth company, Johnson Controls (USA), was not fined because it revealed the existence of the cartel to the Commission. According to the Commission, these four companies participated from 2009 to 2012 in a cartel to fix the purchase prices of scrap lead-acid automotive batteries in Belgium, France, Germany, and the Netherlands.

Automotive batteries are the world's most recycled consumer product. Recycling companies purchase used automotive batteries (from cars, vans or trucks) from scrap dealers or scrap collectors. The used batteries are obtained from collection points such as garages, maintenance and repair workshops, battery distributors, scrapyards and other waste disposal sites. Recycling companies carry out the treatment and recovery of scrap batteries and then sell recycled lead, mostly to battery manufacturers, who use it to make new car batteries.

According to the Commission, the cartel deviated from most cartels as the participants did not conspire to increase prices, and instead colluded to reduce the purchase price paid to scrap dealers and collectors for used car batteries. This behavior was intended to lower the value of used batteries sold for scrap, to the detriment of used battery sellers. According to the Commission, the participants were aware of the illegal character of their conduct, and tried to disguise it by using coded language, for example referring to weather conditions to signal different price levels.

Source: Commission Press Release 8/2/2017 

Competition (Sweden): Swedish Match fined nearly SEK 38 million for abuse of dominance in the form of anti-competitive labelling system in snuff fridges

The Swedish Patent- and Market Court ("PMC") has found that Swedish Match North Europe AB ("Swedish Match") abused its dominant position during certain months in 2012-2013. During this period, Swedish Match provided snuff fridges from which both the products of Swedish Match and its competitors were sold, to a great number of distributors. Swedish Match implemented a labelling system for the shelves in these fridges which implied that the labels used on the products of its competitors had to apply a certain template designed by Swedish Match. Before the introduction of the new system, competitors had designed their own labels. Failing to follow the instructions and use of the template designed by Swedish Match resulted in Swedish Match replacing the labels of its competitors with generic labels in grey and white.

According to the PMC, Swedish Match has through the labelling system abused its dominant position on the market for the sale of snuff to retailers in Sweden. In its assessment, the PMC concluded that labels attached to the shelves in fridges are an important means of competition for the purpose of communicating price and furthering branding awareness, in particular as there are significant legal restrictions for the marketing of snuff. The PMC therefore found that the labelling system imposed by Swedish Match constituted a marketing ban which could not be sufficiently compensated in another way. The PMC also found that there was an anti-competitive strategy behind the imposition of the labelling system by Swedish Match.

Source: Swedish Patent- and Market Court Judgment delivered on 08/02/2017, Case PMT 16822-14 (not available online) and Swedish Patent- and Market Court's Press Release 08/02/2017 (in Swedish)