Competition: Biogaran appeals against Servier “pay for delay” decision

On 10 November 2014, details were published of an appeal brought by Biogaran against the Commission’s decision fining it for “pay for delay” agreements entered into by its parent company Les Laboratoires Servier (“Servier”) with several generic companies. In July 2014, the Commission announced that it had fined Servier and five generic companies for practices delaying generic entry of the cardio-vascular drug perindopril in breach of Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”). Perindopril is a blockbuster blood pressure control medicine and used to be Servier's best-selling product. The Commission also confirmed that Servier held significant market power in the market for the perindopril molecule and had abused its dominant position by inducing such settlement agreements and by acquiring scarce competing technologies, which made generic entry more difficult. Servier S.A.S was fined EUR 330,997,200 jointly and severally with Servier. Furthermore, liability was shared jointly and severally with Servier Laboratoires Limited for EUR 135,841,600 and with Biogaran for EUR 131,532,600. Biogaran has now brought an action with the General Court (“GC”) seeking the annulment of the Commission’s decision in so far as it relates to Biogaran, or a reduction of the fine imposed. Biogaran puts forward three pleas in law to support its action. Firstly, Biogaran submits that the Commission erred in law as it did not show that Biogaran participated in any infringement of competition rules. Secondly, according to Biogaran, the Commission distorted the facts by wrongly concluding that the licence and supply agreement which Biogaran had concluded with the company Niche constituted a further incentive for that company to conclude the amicable settlement agreement relating to patents with Biogaran's parent company. Thirdly, in the alternative, Biogaran claims that the Commission erred in law as it imposed a fine on Biogaran even though the infringement held to have occurred was novel in nature. Source: Case T-677/14 Biogaran v Commission, OJ C 395/59 and Commission Press Release 9/7/2014

Competition: Council adopts antitrust damages directive

On 10 November 2014, the EU Council of Ministers (“Council”) formally adopted the Commission’s proposal for a Directive on antitrust damages actions (“Directive”) which was submitted to the Council and the European Parliament (“EP”) in June 2013. After both co-legislators discussed the proposal and suggested amendments, informal meetings between the three institutions (so-called trilogues) were launched in February 2014 to achieve a political compromise. Representatives of the EP and of Member States' governments agreed on a final compromise text at the end of March and the EP approved the text in April. The Directive will help citizens and companies claim damages if they are victims of infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions. The Directive also aims to remove a number of practical difficulties which victims frequently face when they try to obtain compensation for the harm they have suffered. In particular, it will give victims easier access to evidence they need to prove the damage and more time to make their claims. At the same time it ensures that the effectiveness of the tools used by competition authorities to enforce antitrust rules, in particular leniency and settlement programmes, is preserved. The Directive is expected to be formally signed during the EP’s plenary session at the end of November. It will then be published in the EU Official Journal and enter into force 20 days after its publication. Member States will have two years to implement it. Source: Commission Press Release 10/11/2014

Merger control: Commission opens in-depth investigation into proposed acquisition of Greek gas transmission system operator DESFA by SOCAR

On 5 November 2014, the Commission announced that it has opened an in-depth investigation to assess whether the proposed acquisition of the Greek gas transmission system operator DESFA by the State Oil Company of Azerbaijan Republic (SOCAR) is in line with the EU Merger Regulation. The transaction was notified to the Commission on 1 October 2014. SOCAR's activities include the production of natural gas and the upstream wholesale sale of gas in Greece in the context of the Southern Gas Corridor. DESFA owns and operates Greek's sole high-pressure gas transmission and Greece's only LNG terminal and mainly transports gas through its network. The Commission's initial market investigation indicated that the merged entity may have the ability and the incentive to hinder competing upstream gas suppliers from accessing the Greek transmission system, in order to reduce competition on the upstream wholesale gas market in Greece. The merged entity could restrict its competitors' access to the Greek gas transmission network by strategically limiting investments in future expansions of the import capacity including an expansion of the LNG Terminal and an interconnection between TAP and DESFA's network. In addition, the merged entity could restrict inflows of gas into Greece by managing the gas transmission network in a discriminatory way favoring SOCAR's supplies over its competitors. The preliminary investigation also suggested that SOCAR may have the incentive to shut out competitors from access to the network, because it would be profitable for SOCAR. Moreover, the Greek regulatory framework would be unlikely to deter the merged entity from doing so. This could reduce the number of current and potential suppliers and the amount of natural gas in Greece and lead to higher gas prices for clients. The Commission will now investigate the proposed transaction in-depth in order to determine whether or not these initial concerns are confirmed. Source:Commission Press Release 5/11/2014

Merger control: Commission publishes first Competition Merger Brief

On 7 November 2014, the Commission published its first edition of a new Competition Merger Brief. Competition Merger Brief is a publication detailing the Commission’s recent merger cases and explaining the rationale behind the Commission’s decisions and policy measures in the competition field. The first edition of Competition Merger Brief covers important recent decisions in diverse sectors such as fisheries, steel and telecoms. Source: Competition Merger Brief, Issue 1/2014 - November

Public procurement (Sweden): The Supreme Administrative Court fines Falu municipality SEK 8 million for circumventing the public procurement rules

The Supreme Administrative Court has imposed SEK 8 million in fines on the municipality of Falun (the ‘’Municipality’’). On 15 December 2010, the Municipality entered into an agreement with PEAB Sverige AB (‘’PEAB’’) regarding the operation and maintenance of the Municipality’s roads and streets (the ‘’Agreement’’). The term of the Agreement was three years with a possibility to prolong the Agreement two years at a time. The Swedish Competition Authority (‘’SCA’’) held that Agreement constituted an illegal direct award of contract. The Municipality on the other hand held that there were several mitigating circumstances that needed to be taken into account such as the fact that the Agreement had not been signed by authorized representatives of the Municipality. Furthermore, on 1 December 2011, the Municipality and PEAB entered into an addendum agreement in which they agreed that the Agreement would cease to exist. The Supreme Administrative Court held that the conclusion of the Agreement constituted an illegal direct award of contract. Due to the value of the Agreement and the long term, the Supreme Administrative Court found in its overall assessment that an administrative fine of SEK 8 million was considered to be an effective sanction with regard to the seriousness of the breach of the public procurement rules. Source: Supreme Administrative Court Judgment 7021-13, 30/10/2014 

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 Firth Rixson by Alcoa
  • Commission approves acquisition of Lakeside 1 by TDR Capital
  • Commission approves acquisition of two Polish insurance companies by Aviva Group and BZ WBK
  • Commission approves acquisition of Linpac by SVP