Merger control: Commission conditionally approves acquisition of Morpho Detection by Smiths

On 19 January 2017, the Commission announced that it had conditionally approved the proposed acquisition of Morpho Detection by Smiths. Morpho Detection is a subsidiary of the French Safran Group, which develops and manufactures threat detection equipment, in particular explosive trace detectors used in airports for screening baggage and passengers. This equipment is also used in other facilities, such as at ports and borders, critical infrastructure, and by the military and emergency response services. UK-based Smiths also develops and manufactures, through its Smiths Detection division, threat detection equipment. The transaction would combine the portfolio of two of the main global providers of such equipment.

The Commission investigated the parties' overlaps concerning threat detection equipment, namely hold baggage detection systems and cabin baggage explosive detection systems. The Commission then concluded that concerning the latter two, the merged entity would face sufficient competitive pressure from a number of other competitors on these markets. However, the Commission had competition concerns that the merged entity would have faced insufficient competitive pressure from other competitors on the European market for the supply of explosive trace detectors to airports and on the worldwide market for the supply of explosive trace detectors to other end-users. According to the Commission, this could potentially lead to price increases and less innovation for explosive trace detectors.

In order to address the Commission's concerns, Smiths offered to divest Morpho Detection's global explosive trace detectors business, which fully removes the overlap for explosive trace detectors. The Commission notes that the commitments address all of its competition concerns. Subsequently, the Commission approved the transaction, as modified by the commitments.

Source: Commission Press Release, 19/1/2017

Merger control (Finland): Finnish Competition and Consumer Authority opens in-depth investigations into acquisition of Konekesko Ltd's Yamarin boat business by Yamaha Motor Europe N.V.

On 20 January 2017, the Finnish Competition and Consumer Authority ("FCCA") opened an in-depth investigation to assess whether the proposed acquisition of Konekesko Ltd's Yamarin and Yamarin Cross boat businesses, the import of Yamaha recreational machinery and the representations of certain other brands, such as Finnmaster, TG-Boats and Zodiac ("the acquisition") by Yamaha Motor Europe N.V., subsidiary of the Yamaha Motor Company Ltd, would harm competition on the Finnish motor boats market. Both parties are active on the markets for motor boats and other recreational machinery and equipment.

Based on its preliminary investigation, the FCCA is concerned that the acquisition could significantly impede effective competition on the Finnish market for motor boats due to the closeness of competition between the parties to the acquisition. The FCCA will now examine the contemplated acquisition in detail to assess whether its preliminary concerns are justified. The opening of an in-depth investigation does not prejudge the outcome of the investigation. The FCCA now has three months to investigate whether the proposed acquisition significantly impedes effective competition in the Finnish market, or parts of it, and to make a final decision.

Source: Finnish Competition and Consumer Authority Press Release, 20/01/2017 (only in Finnish) 

Competition: Court of Justice confirms that Commission was not entitled to demand default interest from parent companies after subsidiary paid full cartel fine

On 19 January 2017, the Court of Justice of the European Union ("CJEU") upheld the General Court's ("GC") judgment in a case concerning a request for payment of default interest on imposed cartel fines.

In 2006, the Commission imposed a fine on Arkema SA ("Arkema") for its participation in the acrylic glass cartel. Total SA and Elf Aquitaine SA ("the respondents"), were the parent companies of Arkema during the period of the infringement. The respondents were found liable jointly and severally for payment of the fine. In September 2006, Arkema paid the fine in full. The respondents and Arkema requested the annulment of the Commission's decision. The respondents' action was dismissed, but the GC reduced the fine imposed on Arkema.

In June and July 2011, the Commission sent letters to the respondents demanding payment of their fines, plus default interest. The respondents in turn brought an action for annulment. The Commission argued that the action was inadmissible. The GC found that the letters, as concerns the requested default interest, affected the respondents' interests by creating a distinct change in their legal position following the Commission's decision. Therefore, the respondents' claim was declared admissible. The GC further concluded that since Arkema had paid the whole fine, even the respondents' portion, the Commission had no right to demand default interest. Therefore, the GC annulled the letters as concerns the requested default interest. The Commission appealed to the CJEU.

In its judgment, the CJEU concluded that the joint and several liability of the respondents with regard to Arkema was purely derivative. Therefore, the Commission was not entitled to claim payment from the respondents after Arkema fully paid the fine. Accordingly, the Commission could not demand default interest from the respondents. The CJEU thus upheld the GC's conclusions that the respondents had a right to seek annulment of the letters and dismissed the Commission's appeal.

Source: Case C-351/15 P, Commission v Total and Elf Aquitaine, Judgment of the Court of Justice of the European Union, 19 January 2017