Competition: Court of Justice of the European Union finds that MasterCard’s multilateral interchange fees infringe competition rules

On 11 September 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgment dismissing the appeal by MasterCard against the General Court’s (“GC”) judgment in which the GC confirmed the Commission’s finding that the multilateral interchange fees (“MIF”) applied under the MasterCard payment system are contrary to competition law. MIF is an interbank payment made for each transaction carried out with a payment card. In 2007, the Commission found that the MIF had the effect of setting a floor under the costs charged to merchants and thus constituted a restriction of price competition. The Commission ordered MasterCard and the companies representing it (MasterCard Inc. and its subsidiaries MasterCard Europe and MasterCard International Inc.) to bring the infringement to an end by formally repealing the MIF within six months. MasterCard lodged an appeal before the GC which dismissed the appeal and confirmed the Commission’s decision. In its judgment, the CJEU held, inter alia, that the adverse consequences that could affect the functioning of the MasterCard system in the absence of the MIF do not, in themselves, mean that the MIF must be regarded as being objectively necessary, since the GC duly found that the system was still capable of functioning without those fees. Although the CJEU found that the GC had erred in assessing the counterfactual hypothesis used for the purposes of analyzing the restrictive effects of the MIF, this did not affect the operative part of the judgment under appeal, since the GC was in any event justified in relying on the Commission’s hypothesis. Furthermore, the CJEU found that in the absence of any proof of the existence of appreciable objective advantages attributable to the MIF in the acquiring market and enjoyed by merchants, the GC did not need to examine the advantages flowing from the MIF for cardholders, since such advantages cannot, by themselves, be of such a character as to compensate for the disadvantages resulting from those fees. Source: Court of Justice of the European Union Press Release 11/09/2014

Competition: Court of Justice of the European Union sets aside General Court judgment on object restrictions in the appeal by Groupement des Cartes Bancaires 

On 11 September 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgment finding that the General Court (“GC”) did not correctly assess whether there was a restriction of competition “by object” in the pricing measures adopted by French Groupement des Cartes Bancaires (the “Grouping”) in relation to its payments card system. EU competition law prohibits agreements, decisions by associations of undertakings or concerted practices which have as their ‘object’ or ‘effect’ the prevention, restriction or distortion of competition within the internal market. Such measures constitute a restriction of competition ‘by object’ if they reveal in themselves a sufficient degree of harm to competition, such as horizontal price-fixing by cartels for example. In October 2007, the Commission found that the pricing measures adopted by the Grouping were contrary to EU competition law because of both their object and their anti-competitive effects, ordering the Grouping to immediately end the infringement and refrain from adopting similar measures in the future. The Grouping brought an appeal before the GC for the annulment of the Commission’s decision. The GC dismissed the action and held that the Commission could properly conclude that the pricing measures at issue restricted competition because of their anti-competitive object and constituted an unlawful decision of an association of undertakings. In those circumstances, the GC found that it had no need to examine the effects of the measures on the market. In its judgment, the CJEU held that the GC failed to assess whether there was a restriction of competition “by object “ and in no way explained in what respect that restriction of competition reveals a sufficient degree of harm in order to be characterized as a restriction “by object”. Therefore, the CJEU annulled the judgment of the GC referring the case back to it so that it may examine whether the measures at issue could be prohibited on account of their anti-competitive “effects”. Source: Court of Justice of the European Union Press Release 11/09/2014

Merger control: Commission conditionally approves merger between Hapag Lloyd and CSAV in container liner shipping sector

On 11 September 2014, the Commission conditionally approved the proposed merger between Hapag Lloyd, a German shipping company with worldwide activities, and rival Compañia Sud Americana de Vapores S.A. ("CSAV") of Chile. The activities of Hapag Lloyd and CSAV overlap in the container liner shipping business and have limited vertical links. As many other carriers, the two companies offer container liner shipping services mainly through cooperation agreements with other shipping companies known as "consortia". The merger would create the fourth largest container liner shipping company worldwide, after Maersk, MSC and CMA CGM. According to the Commission, the proposed acquisition, as originally notified, would have created new links between previously unconnected consortia. The Commission had concerns that these new links would have resulted in anti-competitive effects on two trade routes: the route between Northern Europe and the Caribbean, and the route between Northern Europe and South America's West Coast. On these routes, the merged entity, through the consortia that the two companies belong to, may have influenced capacity and therefore prices to the detriment of shippers and consumers. To address the Commission’s concerns, the companies offered to terminate the two consortia in which CSAV currently participates on these two trade routes eliminating the additional links between previously unrelated consortia that the merger would have created on the two routes. Therefore, the Commission concluded that the proposed merger would not significantly impede effective competition in the EEA or in any substantial part thereof. Source: Commission Press Release 11/09/2014

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 hazelnut company Oltan by Ferrero
  • Commission approves acquisition of CTE by Kaindl and DB Mobility
  • Commission approves acquisition of Sky Deutschland and Sky Italia by BSkyB
  • Commission approves acquisition of Noble Agri by COFCO Corporation of China
  • Commission approves acquisition of APCOA by Centerbridge Partners
  • Commission approves acquisition of joint control over Diacine France by Montagu funds and Astorg funds
  • Commission approves acquisition of joint control over UK production company All3Media by Liberty Global and Discovery
  • Commission approves joint venture between Metal one and Mitsui & Co. Steel