Competition: Commission sends Statements of Objections to Qualcomm concerning exclusivity payments and predatory pricing

On 8 December 2015, the Commission announced that it has sent two Statements of Objections ("SO") to Qualcomm in two separate investigations. The SOs outline the Commission's preliminary view that Qualcomm has abused its dominant position in the worldwide markets for 3G ("UMTS") and 4G ("LTE") baseband chipsets, in breach of Article 102 of the Treaty on the Functioning of the European Union ("TFEU").

The first SO alleges that since 2011 Qualcomm has paid significant amounts to a major smartphone and tablet manufacturer on the condition that it exclusively uses Qualcomm's baseband chipsets in its smartphones and tablets. The Commission takes the preliminary view that this conduct has reduced the manufacturer's incentives to source chipsets from Qualcomm's competitors and has harmed competition and innovation in the markets for UMTS and LTE baseband chipsets. In the second SO, the Commission alleges that between 2009 and 2011 Qualcomm engaged in predatory pricing by selling certain baseband chipsets at prices below cost, with the aim of forcing its competitor Icera out of the market.

Sending an SO is a formal step in the Commission's investigations into suspected violations of EU competition rules. However, the sending of an SO does not prejudge the outcome of the investigation. Qualcomm now has the opportunity to respond to the Commission's allegations. Source: Commission Press Release 08/12/2015

Competition: Commission opens formal investigation in biofuels sector concerning ethanol benchmarks

On 7 December 2015, the Commission announced that it has opened a formal antitrust investigation into whether three ethanol producers have manipulated ethanol benchmarks published by a price reporting agency in breach of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). The companies suspected of illegal conduct are Abengoa S.A., Alcogroup SA, and Lantmännen ek för, together with their relevant subsidiaries. All these companies produce, distribute and trade ethanol. Ethanol is an alcohol made from biomass, such as wheat, maize or sugar beet, which is mainly added to gasoline and used as a biofuel for certain motor vehicles.

The Commission has concerns that the companies may have colluded to manipulate the ethanol benchmarks published by the price-reporting agency Platts. Price-reporting agencies publish and assess prices, which serve as benchmarks for trade in the physical markets and in the financial derivative markets for a number of commodities both in Europe and worldwide. According to the Commission, the alleged illegal behavior may have taken the form of the companies agreeing their submissions between themselves, seeking to inflate the benchmarks and drive up ethanol prices. If confirmed, such practices may harm competition and undermine EU energy objectives by increasing prices for renewable energy, namely biofuels used for transport. According to the Commission, this could lead to a reduction of the use of biofuels as an alternative to fossil fuels and thereby have negative consequences both for consumers and the environment.

The Commission's investigation started with unannounced inspections in May 2013. The Commission made further inspections in October 2014 and March 2015. The opening of formal proceedings does not prejudge the outcome of the investigation. The Commission will now conduct an in-depth investigation as a matter of priority. Source: Commission Press Release 07/12/2015

Competition: Commission closes proceedings against 13 investment banks in credit default swaps case

On 4 December 2015, the Commission announced that it has closed antitrust proceedings against 13 investment banks involved in its investigation into the credit default swaps market. The investment banks in question are Bank of America Merrill Lynch, Barclays, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Royal Bank of Scotland, and UBS.

In July 2013, the Commission adopted a Statement of Objections ("SO") against Markit, the International Swaps and Derivatives Association ("ISDA") and 13 investment banks (together the "parties"). The Commission raised preliminary concerns that the parties had infringed EU antitrust rules by colluding to prevent exchanges from entering the credit derivatives business between 2006 and 2009. With respect to the 13 investment banks, the Commission has now closed the proceedings due to lack of evidence. This closure does not prejudge the outcome of the Commission's investigation regarding Markit and ISDA, which is ongoing. The Commission will also continue to monitor the practices of investment banks in financial markets, including the credit default swaps sector. Source: Commission Press Release 04/12/2015

Competition: Advocate General gives opinion on liability for anticompetitive behavior of third-party service providers

On 3 December 2015, Advocate General ("AG") Wathelet gave his opinion on a reference for a preliminary ruling from the Latvian Supreme Court, which had asked whether an undertaking may be held liable for the anticompetitive conduct of an independent third-party service provider if the undertaking was not aware of such conduct or had not consented to it. The question arose in the second instance appeal proceedings against a decision of the Latvian Competition Council ("Competition Council"). The Competition Council imposed fines on three companies for their participation in bid-rigging tenders for supplying food to kindergartens. When preparing the bids, one of the companies, Pārtikas Kompānija SIA ("Pārtikas Kompānija") had sought legal advice from Juridiska sabiedrība 'B & Š partneri SIA, who relied on a sub-contractor MMD lietas SIA ("MMD lietas") to prepare Pārtikas Kompānija's bid. Pārtikas Kompānija independently set the price of its offer and MMD lietas was only mandated with the contract’s technical drafting. However, MMD lietas used Pārtikas Kompānija's bid as a reference to prepare the bids of the two other companies, Ausma grupa SIA and VM Remonts SIA. This was done without informing Pārtikas Kompānija. The Latvian Supreme Court asked the Court of Justice of the European Union ("CJEU") to confirm whether it is necessary to provide evidence that the officer of an undertaking was aware of or consented to the illegal behavior of an external third-party service provider in order to establish that the undertaking participated in an anticompetitive agreement.

In his opinion, the AG first noted that, in this case, MMD lietas acted as an independent undertaking for the following reasons: it did not share an economic risk, it did not act exclusively for the company, and it adopted initiatives that manifestly went beyond its mandate. According to the AG, finding a breach of Article 101 TFEU does not require evidence that an undertaking was aware of or consented to the infringing conduct of a third-party service provider. The importance of safeguarding free competition means that undertakings entrusting tasks to third-party service providers should take all precautions to ensure that such providers do not commit infringements of competition law, in particular by avoiding any negligence in the definition and monitoring of the tasks. Against this background, the AG proposed that the CJEU establish a rebuttable presumption that a company is liable for competition law infringements carried out by a third-party service provider who cannot be considered an auxiliary organ forming an integral part of the undertaking. This presumption would apply even if the actions of the third-party service provider involve separate functions entrusted to it and even if there is no evidence that the undertaking using the services was aware of the infringing actions or consented to them.

The AG also noted that an undertaking could rebut the presumption by proving that the third-party service provider acted outside its mandate and that the undertaking took all the necessary measures to prevent competition law violation when appointing the service provider and monitoring the execution of the tasks. Furthermore, the undertaking should also prove that once it became aware of the illegal conduct, it publicly distanced itself and denounced the conduct to the relevant competition authorities.Source: Case C-542/14 – VM Remonts SIA and others v Konkurences padome, opinion of the Advocate General, 3 December 2015 (in Finnish)

Competition: Commission confirms unannounced inspections in rail passenger transport sector

On 2 December 2015, the Commission confirmed that its officials carried out unannounced inspections in the sector of rail passenger transport and related services in Austria. The inspections were carried out on 24 November 2015 and the Commission officials were accompanied by their national counterparts from the Austrian competition authority. The inspections relate to the Commission's investigation into alleged anticompetitive practices that aim to exclude competing rail passenger transport operators from the market. The Commission has concerns that the companies in question may have violated Articles 101 and 102 of the Treaty on the Functioning of the European Union ("TFEU"). Unannounced inspections are a preliminary step into suspected anticompetitive practices. The fact that the Commission carries out such inspections does not mean that the companies are guilty of anticompetitive behavior, nor does it prejudge the outcome of the investigation. Source: Commission Press Release 02/12/2015

Competition (Finland): Finnish Competition and Consumer Authority closes investigations into VR Group's domestic freight transport

On 3 December 2015, the Finnish Competition and Consumer Authority ("FCCA") announced that it has closed its investigation into state-owned railway company VR Group Ltd's ("VR") alleged abuse of dominance. The FCCA initiated the investigations in October 2012, following a request for action by Fenniarail Ltd ("Fenniarail"). Fenniarail alleged that VR had abused its dominant position in the freight transport sector by refusing to allow Fenniarail access to a service comprising locomotives and drivers needed for the operation of freight wagons. Fenniarail withdrew its request for action during the first half of 2015. According to the FCCA, there are no grounds to continue the investigation. The FCCA's investigation into VR's procedures in relation to freight transport between Finland and Russia is still pending. Source: Finnish Competition and Consumer Authority Press Release 03/12/2015 (in English)

Merger control: Commission continues investigation of the proposed acquisition of Telefónica UK by Hutchison 3G UK without referral to UK competition authority

On 4 December 2015, the Commission announced that it has decided not to refer the planned acquisition of Telefónica UK by Hutchison 3G UK to the UK competition authority. Hutchison 3G UK and Telefónica UK are both mobile network operators and provide mobile telecommunications services to end consumers in the UK and in related markets such as the wholesale of network access and call origination.

On 11 September 2015, Hutchison 3G UK notified its plans to acquire sole control of Telefónica UK. On 2 October 2015, the UK competition authority submitted a referral request. Although the proposed merger affects retail and wholesale mobile telecoms markets in the UK, the Commission concluded that, given its extensive experience in assessing cases in this sector, it was better placed to deal with the transaction and ensure consistency in the application of merger control rules in the mobile telecommunications sectors across the European Economic Area ("EEA"). Accordingly, the Commission will now continue its in-depth investigation into the proposed transaction. It has until 18 April 2016 to make a final decision. Source: Commission Press Release 04/12/2015

Merger control: Commission approves Solvay's acquisition of Cytec, subject to conditions

On 2 December 2015, the Commission conditionally approved Solvay's acquisition of Cytec. Cytec, based in the US, manufactures and supplies chemicals for the mining industry and composite materials and adhesives for the aerospace and automotive industries. Solvay manufactures a wide range of chemicals and plastics. The companies' activities are largely complementary and they are not active at the same level of the supply chain. However, both parties are present in the business for specialty chemicals for the mining and refining industry.

The Commission's investigation into the proposed acquisition focused on the manufacture and supply of phosphor-based solvent extractants used in the mining and refining industry to separate cobalt from nickel. In this market, Solvay sells its product Ionquest 290 ("Ionquest 290") and Cytec its product Cyanex 272 ("Cyanex 272"). The Commission had concerns that the merger would eliminate a significant competitive force in the market for phosphor-based solvent extractants. As a result, customers in the refining industry worldwide would have very little alternative because the existing competitors are small and their products' reputation is not as strong as those of Solvay and Cytec. According to the Commission, this could ultimately lead to price increases in the market.

To address the Commission's concerns, Solvay offered to divest its activities in the market for phosphor-based solvent extractants, including the "Ionquest" brand and all IP rights related to the Ionquest 290 business, technology, customer contracts, purchase history and related information since the market entry of Ionquest 290. Furthermore, Solvay committed to provide a transitional toll manufacturing agreement to supply Ionquest 290 until the purchaser has set up its own manufacturing line and provide support for the manufacturing line on which Ionquest 290 is currently produced. Accordingly, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns and approved the transaction.

Source: Commission Press Release 02/12/2015

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 joint control of GASAG by Vattenfall and ENGIE
  • Commission approves acquisition of UK consultancy firm ERM by OMERS and AIMCo
  • Commission approves acquisition of Top-Toy by EQT Services
  • Commission approves joint venture between EGP and F2i in renewable energy sector
  • Commission approves acquisition of certain OCI businesses by CF in the chemical sector
  • Commission approves acquisition of Solera by Vista
  • Commission approves acquisition of one additional bauMax Do-It-Yourself retail store in Austria by OBI
  • Commission approves acquisition of KPE by Gunvor
  • Commission approves joint venture between Danish Crown and Westfleisch
  • Commission approves acquisition of sole control over Selecta by KKR
  • Commission approves acquisition of Guardian Holdings Europe by Swiss Re Life Capital
  • Commission approves acquisition of a real estate property portfolio in the UK by Aviva and PSP
  • Commission approves acquisition of E.ON E&P Norge by LetterOne