Investigation

European Commission invites comments on Gazprom commitments

The Commission has invited comments from any interested parties on commitments submitted by Gazprom to address the Commission’s competition concerns as regards gas markets in Central and Eastern Europe.

Gazprom is the dominant gas supplier in a number of Central and Eastern European countries. In April 2015, the Commission sent a Statement of Objections expressing its preliminary view that Gazprom had been in breach of EU anti-trust rules by pursuing an overall strategy to partition Central and Eastern European gas markets.

In the Commission’s view, the commitments offered by Gazprom cover its competition concerns.

The Commission had concerns that Gazprom imposed territorial restrictions in its supply agreements with wholesalers and some industrial customers in eight Member States (Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Hungary and Slovakia). These restrictions prevented the free trade of gas within Central and Eastern Europe. Gazprom has committed to remove all contractual barriers to the free flow of gas in Central and Eastern European gas markets. In addition, it has committed to take active steps to enable their better integration.

The Commission also had been concerned that the territorial restrictions allowed Gazprom to carve up the market, as a result of which it may have been able to pursue an excessive pricing policy in five Member States (Bulgaria, Estonia, Latvia, Lithuania and Poland). Gazprom has committed to introduce a number of changes to its contractual price revision clauses to ensure competitive gas prices in these gas markets.

Lastly, the Commission had concerns that Gazprom leveraged its dominant market position on the gas supply market to obtain advantages relating to access to or control of gas infrastructure. The Statement of Objections raised concerns in relation to the South Stream project in Bulgaria and the Yamal pipeline in Poland. As regards South Stream, Gazprom has committed not to seek any damages from its Bulgarian partners following the termination of the South Stream project. This is without prejudice to whether such claims would have been valid in the first place. As regards the Yamal pipeline, the Commission’s investigation has shown that the situation cannot be changed by this anti-trust procedure due to the impact of an intergovernmental agreement between Poland and Russia.

Decision

European Commission fines air cargo carriers (again)

The Commission has re-adopted a cartel decision against 11 air cargo carriers and imposed a fine totalling over €776 million for operating a price-fixing cartel.

In November 2010, the Commission imposed fines of nearly €800 million on 11 air cargo carriers who participated in a price-fixing cartel. The cartel arrangements consisted of numerous contacts between airlines to fix the level of fuel and security surcharges.

The companies fined in 2010 were Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines. A 12th cartel member, Lufthansa, and its subsidiary, Swiss International Air Lines, received full immunity.

All but one of the companies (Qantas) subject to the 2010 decision challenged the decision before the EU’s General Court. The General Court annulled the Commission’s decision on procedural grounds. However, this new decision addresses the procedural error identified by the General Court and confirms that the Commission will not let cartels go unpunished.

EU Policies and Guidance

European Commission proposal to make national competition authorities more effective enforcers of EU competition rules

The Commission has proposed new rules to enable Member States’ competition authorities to be more effective enforcers of EU competition law.

The proposal for new rules (in the form of a Directive) follows the public consultation on empowering national competition authorities to be more effective, which the Commission launched in November 2015. The proposed rules, once adopted, will provide the national competition authorities with a minimum common toolkit and effective enforcement powers, making sure that they will:

  • act independently when enforcing EU competition rules and work in a fully impartial manner, without taking instructions from public or private entities
  • have the necessary financial and human resources to do their work
  • have the powers needed to gather all relevant evidence, such as the right to search mobile phones, laptops and tablets
  • have adequate tools to impose proportionate and deterrent sanctions for breaches of EU competition rules. The proposal includes rules on parental liability and succession so that companies cannot escape fines through corporate re-structuring. National competition authorities will also be able to enforce the payment of fines against infringing companies that do not have a legal presence on their territory
  • have co-ordinated leniency programmes which encourage companies to come forward with evidence of illegal cartels

European Commission introduces new anonymous whistleblower tool

A new tool to make it easier for individuals to alert the Commission about secret cartels and other anti-trust violations while maintaining anonymity has been launched.

The new tool:

  • as well as allowing individuals to provide information, gives them the option of asking for the Commission to reply to their messages
  • allows the Commission to seek clarifications and details
  • preserves the individual’s anonymity through encrypted communications and the use of an external service provider
  • aims to increase the likelihood that the information received will be sufficiently precise and reliable to enable the Commission to follow up the leads with an investigation

Practice Note

Merger Notifications: Requests for Further Information

When the CCPC reviews a merger notification, it can require any undertaking involved to supply it, within a specified period, specified information, in accordance with Section 20(2) of the Competition Act 2002, as amended (the “2002 Act”) (a “Formal Request”). Where the CCPC issues such a Formal Request, this has the effect of “stopping the clock” regarding the 30 working day period within which the CCPC has to give its Phase 1 determination. Once the CCPC receives a complete reply to its Formal Request, the CCPC then has 30 working days to make its Phase 1 determination.

The CCPC can also make a request for information, which does not involve exercising its powers under Section 20(2) of the Act (an “Informal Request”). The CCPC has ultimate discretion in whether to make a Formal Request or an Informal Request. An Informal Request does not have the effect of “stopping the clock”.

Merger Determination

Irish Post / Irish TV

This case involved the proposed acquisition by The Irish Post of certain assets of Irish TV, comprising the business name, website domains, computer systems, fixtures and fittings, records, social media and video content library (the “Target Assets”).

While the principal activity of The Irish Post is the printing, publication and distribution of The Irish Post in the UK and the sale of advertising space in The Irish Post; the principal activity of Irish TV is the production of television content and the sale of advertising time on Irish TV. Irish TV also publishes a quarterly magazine informing audiences what programmes will be broadcast on Irish TV and sells advertising space in this magazine.

The Competition Authority has concluded in previous merger determinations that newspaper advertising competes in a different product market to other media advertising platforms (e.g. television, radio and online). The CCPC saw no reason to depart from this view in this instance.

There was a minor horizontal overlap between The Irish Post and the Target Assets in the State with respect to the printing, publication and distribution of newspapers and magazines; and the sale of newspaper and magazine advertising. The CCPC did not need to come to a definitive view as to whether newspaper advertising competes in the same product market as magazine advertising. Only a small number of copies of The Irish Post are circulated in the island of Ireland and Irish TV’s magazine had a circulation of 10,000 copies in the State in 2016. Furthermore, there are a large number of competing newspapers and magazines currently selling advertising space to customers in the State that will act as a competitive constraint post-transaction.

There was also a minor horizontal overlap with respect to the supply of online advertising space in the State. However, The Irish Post made no sales of online advertising space to customers located in the State in 2016 and Irish TV currently generates no turnover from the sale of online advertising space since it does not charge customers for advertising on www.irishtv.ie.

The CCPC therefore considered that the proposed transaction would not substantially lessen competition in any market for goods or services in the State.