EU ANTITRUST

European Commission extends CDS information market investigation to ISDA. On 26 March 2012, the European Commission (Commission) announced that it has extended the scope of an investigation into credit default swaps (CDS) to include the International Swaps and Derivatives Association (ISDA), a professional organization of financial institutions involved in the over-the-counter (OTC) trading of derivatives. The Commission’s ongoing inquiry into the CDS information market was initiated in April 2011 (COMP/39745 – CDS Information market). The Commission is examining whether the investment banks may have used Markit to foreclose the development of certain CDS trading platforms (IP/11/509). The Commission is now investigating whether ISDA may have been involved in a coordinated effort of investment banks to delay or prevent platforms from entering the credit derivatives business (IP/13/286, 26/03/2013).

EU MERGERS

Phase I Clearance

  • M.6701Ferrovial / Enterprise (25.03.2013) (simplified review).
  • M.6837Goldman Sachs / TPG Lundy / Exception Group (25.03.2013).
  • M.6782HIG Capital / Petrochem Carless Holdings (27.03.2013) (IP/13/292).

Phase II Clearance

Commission opens Phase II investigation into the proposed acquisition of Shell’s Harburg refinery assets by Nynas. The Commission has opened an in-depth investigation under the EC Merger Regulation into the planned acquisition by Nynas AB of refinery assets located in Hamburg/Harburg owned by Shell Deutschland Oil GmbH (M.6360). The Commission’s initial investigation indicated possible competition concerns in the markets for naphthenic base oils, naphthenic process oils, and transformer oils. The Commission now has 90 working days, until 8 August 2013, to issue a final decision (IP/13/290, 26/03/2013).

UK ANTITRUST

CAT judgment on Albion Water follow-on damages action. On 28 March 2013, the Competition Appeal Tribunal (CAT) handed down its judgment on a follow-on damages action by Albion Water Limited (Albion) against Dwr Cymru under section 47A of the Competition Act 1998 (CA 1998). The action followed judgments handed down by the CAT, that found that the price at which Dwr Cymru was prepared to offer Albion a common carriage service to carry water through its pipes (referred to as the First Access Price) was contrary to the Chapter II prohibition in that it imposed on Albion a margin squeeze, and was both excessive and unfair in itself. Albion contended that, but for the abuse, Albion would have been able to supply a customer more profitably, and that it had lost the chance to win a potentially lucrative contract to supply another business, together with a claim for exemplary damages. The CAT awarded Albion damages in the amount of GBP 1.85 million, though dismissed Albion’s claim for exemplary damages (Albion Water Limited v Dwr Cymru Cyfyngedig [2013] CAT 6).

CAT extends deadline for Gallaher and Somerfield appeals against OFT tobacco decision. On 27 March 2013, the CAT retroactively extended the deadline for Somerfield and Gallaher to appeal the Office of Fair Trading’s (OFT) 2010 tobacco decision (the Decision). The OFT Decision was successfully appealed by certain of the addresses (not including Gallaher and Somerfield) after the OFT conceded during the course of the appeal proceedings that the theory of harm that it had articulated in the Decision could not be maintained. The CAT granted permission to Gallaher and Somerfield to bring appeals out of time having concluded that the particular facts of this case gave rise to exceptional circumstances. In particular, the CAT held that Gallaher and Somerfield had a legitimate expectation that the OFT would be able to defend (even if not necessarily successfully) its Decision on the merits. The OFT’s subsequent concession that the evidence could not support its theory of harm fundamentally undermined the basis on which Somerfield and Gallaher had entered into early resolution agreements, which provided for a significant discount in fines in the event that Gallaher and Somerfield elected not to appeal the Decision (Somerfield Stores Limited and Co-operative Group Food Limited v Office of Fair Trading and Gallaher Group Limited and Gallaher Limited v Office of Fair Trading, Ruling of 27 March 2013, [2013] CAT 5).

OFT opens cartel investigation into the supply of products to the construction industry. The OFT has confirmed that in February 2013 it opened a criminal cartel investigation into the supply of products to the construction industry. As part of the investigation, the OFT has carried out searches at a number of locations across the UK leading to the arrest of seven individuals (Case CE/9705/12).

OFT closes investigation into the provision of training services to the construction industry sector. On 26 March 2013, the OFT announced that it has closed its investigation into an arrangement whereby the UK Asbestos Training Association (UKATA), a trade association for companies providing asbestos training services to the construction industry, appeared to recommend prices at which its members provide training services (CE/9726/12). The UKATA has confirmed to the OFT that it has ended the arrangement and has also given assurances that it will not enter into similar arrangements in the future (OFT Press Release 29/13).

OFT concludes investigation into the distribution of Mercedes-Benz commercial vehicles. On 27 March 2013, the OFT issued five decisions finding that Mercedes-Benz and certain of its commercial vehicle dealers infringed the Chapter I prohibition of the Competition Act 1998 through market sharing, price co-ordination and the exchange of commercially sensitive information (OFT Press Release 30/13). The decisions follow settlements with three of the dealers announced in February 2010 (see Volume 1, Issue 16).

UK MERGERS

OFT refers London indoor arena merger to the Competition Commission. On 22 March 2013, the Office of Fair Trading (OFT) announced the referral of the completed acquisition by AEG Facilities UK Limited of the contract to manage Wembley Arena to the Competition Commission (CC). As a result of this merger, AEG operates the two largest London indoor venues: The O2 Arena and Wembley Arena. The OFT is concerned that the merger would reduce competition in the live entertainment venue sector (OFT Press Release 26/13).

Competition Commission publishes Issues Statement in Barr / Britvic merger. The CC has published an Issues Statement following the referral of the transaction by the OFT in February 2013 (see Volume 1, Issue 15). Barr and Britvic are two of the three main players in the UK that offer a wide range of soft drink brands. The CC will examine three theories of harm, including: unilateral horizontal effects leading to loss of competition between products; the foreclosure of smaller producers; and coordinated effects (AG Barr / Britvic merger inquiry).

SPEECHES/CONSULTATION

Commission consultation on proposal to update the Notice on the ECMR simplified procedure. The Commission has published for consultation proposals to expand the scope of the simplified merger procedure, and certain procedural amendments (IP/13/288, 27/03/2013). The consultation closes on 19 June 2013 (HT. 3495).

Commission publishes Rio Tinto Alcan commitments. A summary of the Commission Decision accepting commitments from Rio Tinto Alcan (COMP/39230) has been published in the Official Journal (OJ C 89/5, 27.3.2013) (see Volume 1, Edition 9).

OFT publishes FAQs on its role in reviewing NHS mergers. The paper is intended to provide greater clarity to NHS foundation trusts, NHS trusts, their advisors, and other interested parties about how the OFT will review mergers between NHS foundation trusts and NHS trusts under the Enterprise Act 2002 (OFT Press Release 27/13, OFT FAQs).

SANCTIONS

Al-Qaeda

Commission Implementing Regulation (EU) No 290/2013 (OJ L 87/2, 27.03.2013) amending Council Regulation (EC) No 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the Al-Qaeda network. The Implementing Regulation removes a designated person from Annex I.

Liberia

Commission Implementing Regulation (EU) No 291/2013 (OJ L 87/4, 27.03.2013) amending Council Regulation (EC) No 872/2004 concerning further restrictive measures in relation to Liberia. The Implementing Regulation amends a designated person entry within Annex I.