A merger in the telecoms sector not cleared [1]

The Commission has prohibited Hutchinson's acquisition of Telefonica UK. The reasons were strong concerns that as a result of the merger UK mobile customers would have had less choice, paid higher prices for services, and that the deal would have hampered innovation in the mobile sector. The remedies proposed by Hutchinson failed to adequately address the serious concerns raised by the Commission. This has been the fifth merger prohibited by the Commission since 2010.

As a result of merger of SABMiller and AB InBev, Pilsner Urquell is for sale [2]

The Commission has approved the acquisition of SABMiller, the world's second largest brewer, by AB InBev, the world's largest brewer. However, the clearance is conditional on AB InBev selling practically the entirety of SABMiller's beer business in Europe.

SABMiller's beer business in Europe to be sold has been divided into two "packages". Regarding the first package, which includes the whole of SABMiller's business in France, Italy, the Netherlands and the UK, AB InBev has already accepted an offer from the Japanese brewer Asahi. Regarding the second package, AB InBev has offered to divest SABMiller's business in the Czech Republic, Hungary, Poland, Romania and Slovakia namely the Czech Pilsner Urquell, the Polish brands Tyskie and Lech, the Slovak Topvar, the Hungarian Dreher, and the Romanian Ursus. As earlier estimated, the total value of the companies being divested ranges between EUR 5 and 7 billion (CZK 135 to 189 billion).

Based on the latest information AB InBev hase accepted an offer from the Japanese brewer Asahi also in relation to the second "package".

Making warranty conditional upon using authorised maintenance services [3]

The Antimonopoly Office of the Slovak Republic ("AMO") suspects that companies engaged in selling motor vehicles were concluding vertical agreements that conditioned warranties upon having repairs done and maintenance of vehicles carried out only in repairers that belong to authorised networks. Specifically problematic were the provisions in official documents issued by the manufacturer or importer of vehicles under the given brand (especially service books, etc.) allowing the refusal of warranty for a vehicle only on the basis of visiting an independent repairers, disregarding the quality of repair or maintenance performed by such an independent repairer. This should have disadvantaged independent (unauthorised) repairers.

In this matter, the AMO has issued several commitment decisions, consisting mainly in commitments to inform owners of given brands and the general public about ending such practices, and in amending the relevant documents.

A record fine for truck producers [4]

MAN, Volvo/Renault, Daimler, Iveco and DAF participated for 14 years in a cartel within which they colluded on truck pricing, the timing for the introduction of new emission technologies, and on the passing on to customers of the costs to comply with increasingly strict European emissions standards.

The total fine imposed by the Commission has reached a record amount of EUR 2.9 billion. Only MAN received full immunity for filing a leniency application. The remaining companies acknowledged their involvement in the cartel and their fines were reduced as part of the settlement procedure.

Proceedings have also been opened with regard to Scania, which has decided not to make use of the option to settle. Investigations will continue under the standard cartel procedure for this company.

The Commission takes further steps in investigating Google's alleged breach of antitrust rules [5]

Following the Statement of Objections issued in April 2015 and Google's response in August 2015, the Commission has carried out further investigative measures regarding Google. In the supplementary Statement of Objections, the Commission has submitted a broad range of additional evidence and data that reinforces the Commission's preliminary conclusion that Google is abusing its dominant position by systematically favouring its own comparison shopping service in its general search results. Google thus artificially diverts commerce from its competitors' websites.

Separately, the Commission has also informed Google in a Statement of Objections of its preliminary view that the company has abused its dominant position by artificially restricting the capacity for third party websites to display search advertisements from Google's competitors. Google places search ads not only directly on the Google search website, but also as an intermediary on third party websites through its "AdSense for Search" platform. The practices which the Commission wishes to address with Google in this respect include (i) exclusivity (requiring third parties not to source search ads from Google's competitors), (ii) premium placement of a minimum number of Google search ads (competing search ads cannot be placed above Google search ads) and (iii) Google's right to authorise competing ads.

The European Commission has concluded that Ireland granted undue tax benefits of up to EUR 13 billion to Apple [6]

The Commission has concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses. Ireland must now recover the illegal aid.

The European Commission has concluded that two tax rulings issued by Ireland to Apple have artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a method via which to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe). According to the Commission, that method did not, however, correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to their head offices which existed only "on paper", and could not have generated such profits. These profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law.

As a result of this allocation method, Apple only paid an effective corporate tax rate declining from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International. The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU market.

Ireland must now recover the unpaid taxes from Apple for the years 2003 to 2014 of up to EUR 13 billion, plus interest.

The Commission has published initial findings of its e-commerce sector inquiry [7]

On 15 September 2016, the Commission published a preliminary report on its e-commerce sector inquiry. The objective of the sector inquiry was to identify possible competition concerns within European e-commerce markets.

As for online sale of consumer goods, the Commission has found out that the agreements between manufactures and retailers often contain provisions that may limit competition, such as price restrictions on retailers, restrictions on retailers from selling on online marketplaces, on cross-border sales, or from using retail price comparison web sites.

The Commission expects to publish the Final Report in the first quarter of 2017.

Use of secret recordings of telephone conversations as evidence in the case of cartels [8]

The General Court has resolved that the Commission did not violate the procedural rights of a party to the proceedings when it used as evidence of existence of a cartel agreement certain audio recordings of telephone conversations secretly made by a private person, which the Commission obtained during an on-site inspection from one of the parties to the cartel agreement.

The recordings were made neither by the Commission, nor another public authority, but rather, by a private person who directly participated in such conversations. The Commission has obtained such evidence and, moreover, it was not the only evidence the Commission had available against the parties to the cartel. The General Court has concluded that by using the recordings as an evidence item, the Commission did not violate the procedural rights of the parties to the proceedings.

The General Court's first judgment relating to pay-for-delay [9]

The Danish pharmaceutical company Lundbeck paid incentives to four producers of generic medicinal products in return for not entering the market in Lunbeck's successful antidepressant citalopram. Thanks to this, Lundbeck could artificially maintain high prices.

After the validity of a basic patent for the basic citalopram molecule expired, Lundbeck only held several patents affording a more limited protection to it. The producers of Cheaper generic versions of citalopram could thus have considered an entry to the market.

In 2002, Lundbeck therefore concluded six agreements with four undertakings active in the production or sale of generic medicinal products, when as consideration for their commitment not to enter the citalopram market, Lundbeck provided to them significant payments and other incentives. Those agreements gave Lundbeck certainty that those undertakings would remain out of the market while the agreements were valid.

The Commission has concluded that the conduct of the undertakings constituted a target prohibited agreement (on market sharing and production limitation). The General Court has upheld the Commission's conclusions. This judgment is the first ever judgment of European courts relating to this practice. We provide more detail on this ruling here.

An amendment to the Act on Protection of Competition comes into force [10]

On 19 October 2016, an amendment [11] to the Act on Protection of Competition came into force.[12] In addition to formulation modifications, the amendment entails several major changes, including, for example, the possibility of filing a petition against a dawn raid or the introduction of the discretion power of the Office for the Protection of Competition (the "Office") when making decisions on prohibition of participation in public procurement procedures (so-called "blacklisting").

In the area of supervision over public administration authorities, there have been clarified the cases wherein a public administration authority, which is subject to this amendment, will be regarded as distorting competition. The amendment also clarifies which procedures taken by public administration authorities will not be subject to the Competition Act. These are situations in which there is another remedy is available: an administrative decision or other acts under the administration procedure or tax procedure codes and state aid provision.

You can find more detailed information in Competition Flash 10-2016.

The Slovak President has appointed a new chairman of the Slovak Antimonopoly Office [13]

On 9 November 2016, Slovak President Andrej Kiska appointed JUDr. Tibor Menyhart the chairman of the Slovak Antimonopoly Office for another five-year term.

Commission conducts investigation into mobile telephone network sharing in the Czech Republic [14]

The Commission has opened an investigation into a network sharing agreement between two Czech operators of mobile telephony, O2 Czech Republic ("O2") and T-Mobile Czech Republic ("T-Mobile").

The network sharing cooperation between O2 and T-Mobile started in 2011. Currently, it covers all mobile technologies (i.e. 2G, 3G and 4G) and the entire territory of the Czech Republic with the exception of Prague and Brno. The Commission has received a complaint under which the cooperation in the network sharing is alleged to be in breach of EU antitrust rules.

The Commission will now investigate in particular whether the cooperation could have slowed down quality improvements in existing infrastructure, and delayed or hindered the deployment of new technologies and services based on them, in particular in densely populated areas. The Commission will also investigate the impact of potential efficiencies that could be brought about by the network sharing.

Commission investigates practices of Cesk drhy [15]

The Commission is assessing whether Cesk drhy ("CD") charged prices below costs in order to exclude competitors from the market of rail passenger transport services.

Until 2011, CD was the only rail company active on the Prague Ostrava route. After the market entries of competing rail passenger companies RegioJet in 2011 and LEO Express in 2012 on the Prague Ostrava route, CD significantly decreased the prices it charged to passengers on the route. The Commission has concerns that CD may have charged prices that are so low that it could not cover the costs of the service.