Competition: Commissioner Vestager agrees with Japan Fair Trade Commission to upgrade EU/Japan Cooperation Agreement on Anticompetitive Activities

On 15 March 2016, the Commission announced that Margrethe Vestager, European Commissioner for Competition, and Japan Fair Trade Commission ("JFTC") Chairman Kazuyuki Sugimoto have agreed to amend the existing EU/Japan Cooperation Agreement on Anticompetitive Activities ("Agreement"). The Agreement was signed in 2003. Its purpose is to help effectively enforce competition laws in the EU and Japan by promoting cooperation and coordination between the Commission and the JFTC. 

The amendment would enable the Commission and the JFTC to exchange evidence during common investigations and was agreed during Commissioner Vestager's visit to Japan for meetings with JFTC Chairman Sugimoto and other political counterparts to discuss competition policy and how to enhance competitiveness. Sources: Commission Press Release 15/03/2016 and Agreement between the Government of Japan and the European Community Concerning Cooperation on Anticompetitive Activities

Competition: Five optical disk drive suppliers appeal Commission cartel decision

On 14 March 2016, details were published in the Official Journal of the European Union ("OJ") of appeals brought by five optical disk drive suppliers against the Commission optical disk drive ("ODD") cartel decision and the fines imposed in that decision. 

In October 2015, the Commission fined eight ODD suppliers a total of EUR 116 million for having coordinated their behavior in procurement tenders organized by two computer manufacturers, Dell and Hewlett Packard ("HP"), in breach of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). The eight ODD suppliers that engaged in the illegal practices were Phillips, Lite-On, their joint venture Phillips & Lite-On Digital Solutions, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc and Quanta Storage. The Commission found that the companies communicated to each other their intentions regarding bidding strategies, shared the results of procurement tenders and exchanged other commercially sensitive information concerning ODDs used in laptops and desktops. Further, they organized a network of parallel bilateral contacts that pursued a single plan to avoid aggressive competition in procurement tenders organized by Dell and HP. Philips, Lite-On and their joint venture Philips & Lite-On Digital Solutions received full immunity from fines because they were the first to reveal the existence of the cartel. 

The five other companies have now appealed to the General Court ("GC"), challenging the Commission decision. Sony and Sony Optiarc have filed two separate appeals on identical grounds. They claim that the Commission erred in finding that they participated in a single and continuous infringement of Article 101 of the TFEU. Quanta Storage and Toshiba Samsung Storage Technology rely on this same plea in law. In addition, they claim that the Commission violated their right of defense, the duty to state reasons and the right to good administration. Hitachi-LG Data Storage claims that the Commission breached the principle of good administration and its duty to state reasons by failing to assess, in the context of the administrative procedure, its request to reduce its fine due to its "particular circumstances". Sources: Case T-762/15 – Sony and Sony Electronics v. CommissionCase T-763/15 – Sony Optiarc and Sony Optiarc America v. CommissionCase T-772/15 – Quanta Storage v. CommissionCase T-1/16 – Hitachi-LG Data Storage and Hitachi-LG Data Storage Korea v. CommissionCase T-8/16 – Toshiba Samsung Storage Technology and Toshiba Samsung Storage Technology Korea v. Commission and Commission Press Release 21/10/2015

Competition: Court of Justice of European Union annuls Commission information requests in cement cartel investigation

On 10 March 2016, the Court of Justice of the European Union ("CJEU") gave four separate rulings annulling the General Court ("GC") judgments dismissing appeals against the Commission's decisions requesting information from several cement manufacturers as part of an antitrust investigation. Following unannounced inspections in 2008 and 2009, the Commission opened a formal antitrust investigation against a number of cement manufacturers suspected of illegal conduct in breach of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). Before opening the investigation, the Commission had sent informal information requests to a number of cement companies. It had also informed the companies that it intended to adopt decisions under Article 18(3) of Regulation 1/2003 to request certain information. Such decisions were adopted finally in March 2011, several months after the opening of the investigation. In these decisions, the Commission asked the companies to provide excessive and detailed data covering a long period of time. 

Several companies, including HeidelbergCement AG, Schwenk Zement KG, Buzzi Unicem SpA and Italmobiliare SpA (jointly the "Appellants"), challenged the Commission's decisions before the GC. The GC dismissed most of the actions in their entirety and upheld the Commission's decisions. The GC, however, partially upheld the appeal by Schwenk Zement KG, finding that the Commission had imposed a disproportionate, two-week deadline for the provision of certain information. Subsequently, the Appellants appealed to the CJEU seeking to set aside the GC's judgments and the Commission's decisions. To support their actions, the Appellants claimed that the GC had erred in law by finding that the Commission had stated adequate reasons for its decisions. In particular, the Appellants asserted that the Commission's decisions lacked detail on the nature of the suspected infringements and the products and geographic markets concerned.

In its judgment, the CJEU upheld the appeals and set aside the GC's judgments as well as the Commission's decisions. The CJEU first noted that EU institutions must disclose clearly and unequivocally their reasoning. Regarding decisions requesting information, a statement of reasons must set out the legal basis and purpose of the request. Furthermore, it must also specify the information required and set the time limit for providing it. According to the CJEU, this obligation is a fundamental requirement that not only shows that the request is justified but also enables the company concerned to assess its duty to cooperate and safeguard its rights of defense. The CJEU further noted that the Commission had requested very extensive and detailed information, but had failed to describe the suspected infringements in a way that enabled the Appellants to determine whether the requested information was necessary for the investigation. In particular, the Commission's statement of reasons was excessively succinct, vague, generic and ambiguous. According to the CJEU, it did not justify the Commission's decisions, which were adopted several months after the opening of the investigation and at the time when the Commission already had information that would have allowed it to describe more precisely the suspected infringements. The CJEU therefore concluded that the statement of reasons for the Commission's decisions did not meet the requisite legal standard. Thus, the GC had erred in law when it found that the Commission's decisions were adequately reasoned.Sources: Court of Justice of European Union Press Release 10/03/2016Case C‑247/14 – HeidelbergCement AG v Commission, judgment of 10 March 2016Case C-248/14 Schwenk Zement KG v CommissionC-267/14 Buzzi Unicem SpA v Commission and C-268/14 Italmobiliare SpA v Commission

Competition: Court of Justice of the European Union orders interim measures in appeal against bleaching chemicals cartel 

On 2 March 2016, the Court of Justice of the European Union ("CJEU") granted an order for interim measures in relation to an appeal brought by Evonik Degussa GmbH ("Evonik Degussa") against the Commission intention to publish an updated version of its bleaching chemicals cartel decision. 

In May 2006, the Commission found that 16 companies, including Evonik Degussa, had participated in cartels in the markets for bleaching chemicals (hydrogen peroxide and perborates) in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). Evonik Degussa was the first to apply for leniency in 2002 and it therefore received complete immunity from fines. The Commission published a non-confidential version of the decision in 2007. In November 2011, the Commission informed Evonik Degussa that it intended to publish a new, more complete, non-confidential version of the decision, setting out the entire content of that decision with the exception of confidential information. Evonik Degussa objected to the proposed publication, claiming that the new non-confidential version contained a significant amount of information which it had sent to the Commission under the leniency programme. In May 2012, the Hearing Officer, on behalf of the Commission, rejected the requests for confidential treatment after which Evonik Degussa appealed to the General Court ("GC"). However, in January 2015, the GC dismissed the appeal and upheld the rejection decision. Following the GC decision, the Commission again informed Evonik Degussa that it intended to publish a new, more complete, non-confidential version of the decision. In April 2015, Evonik Degussa appealed further to the CJEU, and in October 2015 it applied for interim measures by a separate application.

As regards the first condition for an interim measure, the establishment of a prima facie case, the CJEU held that the condition is satisfied when at least one of the pleas in law appears, prima facie, not unfounded. The CJEU found that it is not obvious that the information at issue is not confidential. Therefore, according to the CJEU, a prima facie case is established. Concerning the condition for urgency, the CJEU confirmed that interim measures must be granted only where there would be serious and irreparable harm to the party seeking interim protection. It also held that the possibility of disclosure increasing the risk of private damages did not, in itself, establish that the damage would be irreparable. The CJEU agreed with Evonik Degussa that damage caused by the publication would be irreparable on the basis that information cannot be unlearned and concluded that the application for interim measures satisfied the criteria for urgency. Finally, the CJEU held that a judgment upholding the appeal would be rendered ineffective if the Commission could publish the disputed decision immediately. Accordingly, the CJEU ordered that the operation of the contested decision must be suspended, and the Commission must refrain from publishing a new, more complete, non-confidential version of the decision until the delivery of final judgment in the appeal proceedings.Source: Case C-162/15 P (R) Evonik Degussa GmbH v. Commission, Court of Justice of the European Union Order of 2 March 2016

Merger control: Commission conditionally approves Teva's acquisition of Allergan's generics business

On 10 March 2016, the Commission approved the acquisition of Allergan Plc's generics business ("Allergan Generics") by Teva Pharmaceutical Industries Ltd ("Teva"), subject to conditions. Allergan Generics includes the global generic pharmaceuticals business of Allergan Plc (formerly known as Actavis), which is an international pharmaceutical company headquartered in Ireland. Teva, of Israel, is a global pharmaceutical company conducting the development, production and marketing of generic and proprietary pharmaceutical products as well as biopharmaceutical and active pharmaceutical ingredients. Both companies are among the top four generic pharmaceutical manufacturers worldwide. They are also the two key competitors in the manufacturing, marketing and sale of generics within the European Economic Area ("EEA"). The Commission focused its investigation on the large number of generic molecules, both currently marketed and in the development pipeline, in all EEA countries where the parties had overlapping business activities. The Commission also investigated whether the combination of the parties' generics activities would affect competition in some EEA countries beyond the markets for individual molecules. Finally, the Commission assessed vertical relationships between the parties resulting from their offerings of active pharmaceutical ingredients and their out-licensing business. 

The Commission's investigation revealed that the transaction, as initially notified, would have led to serious competition concerns in the markets for marketed generics molecules and generic molecules in the development pipeline in 24 EEA countries, due to horizontal overlaps and vertical out-licensing relationships between the parties. In particular, the transaction would have hampered competition in Iceland, Ireland and the United Kingdom, where Allergan Generics and Teva are the two largest generics suppliers and active competitors. According to the Commission, the transaction would have restricted competition for the generics business in these countries, thereby leading to price increases and loss of quality of service and supply. Because of the prevalent distribution models and the structure of the national generics market, the remaining players would have been unable to compete effectively with the merged entity. On the other hand, the Commission did not identify any competition concerns with respect to vertical relationships resulting from the parties' supply of active pharmaceutical ingredients.

In order to address the Commission's concerns, the companies offered a comprehensive remedies package, including a number of divestments. First, the parties offered to divest each of the marketed generic molecules and generic molecules in the development pipeline that gave rise to the competition concerns in all 24 EEA countries. Second, the parties committed to divest Teva's portfolio of marketed molecules and molecules in the development pipeline in Iceland. Finally, the companies offered to divest a great majority of Allergan Generics' marketed generics activities and generics activities in the development pipeline in Ireland and the United Kingdom, covering all the main steps in the manufacture, supply and distribution of these products. The Commission concluded that these commitments addressed its competition concerns and approved the transaction, as modified by the commitments. Source: Commission Press Release 10/03/2016

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

On 9 March 2016, the Swedish Competition Authority (“SCA”) decided to open an in-depth investigation into Blocket AB's (“Blocket”) acquisition of Hemnet Sverige AB (“Hemnet”). Both companies are active on the digital residential brokerage services market and digital advertising market. The decision was based on the SCA's assessment from its initial investigation which, according to the SCA, indicated that the merger could significantly impede effective competition because it would make Blocket dominant on the digital residential brokerage services market. In its decision, the SCA also stated that actors on the digital advertising market and other related markets, such as that for the sale of marketing statistics, the market of mortgage advertising and the brokerage market, have expressed concerns about the merger. Sources: Swedish Competition Authority Press Release 9/3/2016 (in Swedish) and Swedish Competition Authority Decision 09/03/2016 (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 an office building in La Défense by AXA Assurances and Crédit Mutuel
  • Commission approves acquisition of USG People by Recruit Holdings
  • Commission approves acquisition of Mecaplast by Equistone
  • Commission approves acquisition of Global Closure Systems by RPC Group
  • Commission approves partnership between EDF and CGN