EU Competition

French competition authority drops investigation into anti-competitive practices by Nintendo. On 1 December 2015, the French competition Authority, Authorite de la concurrence,published its decision to drop a six-year long investigation into Nintendo over alleged anti-competitive pricing in relation to the Wii games console. The competition authority confirmed that there were no grounds to find that Nintendo breached antitrust laws over the way it priced its console. In conflict with what was claimed by distributors such as Toys“R”Us and Auchan, Nintendo stated that it did not recommend resale prices to distributors. Furthermore, there was no evidence that Nintendo retaliated against retailers selling the console at lower prices.

European Commission confirms unannounced inspections in rail passenger transport sector. On 2 December 2015, the European Commission (Commission) confirmed that on 24 November 2015, its own officials and those from the Austrian Competition Authority carried out unannounced inspections in the sector of rail passenger transport and related services in Austria. The Commission has concerns that the companies concerned may have violated EU Articles 101 and 102 of the TFEU). In particular, the Commission’s investigation relates to alleged anti-competitive practices aimed at excluding competing rail passenger transport operators from the market.

Advocate General’s opinion on need for officer of undertaking’s personal engagement in breach of Article 101. On 3 December 2015, Advocate General Melchior Wathelet handed down his Opinion on a request for a preliminary ruling from the Latvian Supreme Court. The Opinion concerned whether Article 101(1) of the Treaty of the Functioning of the European Union (TFEU) must be interpreted as meaning that, to establish that an undertaking has participated in an agreement restricting competition, it must be shown that an officer of the undertaking personally engaged in (or was aware of, or consented to) conduct by persons providing an external service to the undertaking and at the same time acting on behalf of other parties to a possible prohibited practice. The issue was whether an undertaking could be held liable for participation in a concerted practice prohibited by Article 101, consisting of bid-rigging, on the sole evidence of the unlawful conduct of an independent business service provider responsible for the preparation of the tender, and where there was no evidence that the directors of the undertaking were themselves aware of this conduct or provided any authorisation for same. The Advocate General considers that a finding of a breach of Article 101 does not require evidence of personal conduct of an officer of the undertaking, or knowledge, or authorisation by that officer of the infringing conduct of the third party. He proposes that a rebuttable presumption be established imputing liability to an undertaking for competition infringements carried out by a third party services provider. Such a presumption would apply even if the actions of the third party involve separate functions entrusted to it and even if there is no evidence that the undertaking that used its services had knowledge of the infringing actions or consented to them. The Advocate General stated that the undertaking may rebut the presumption if it can prove that the third party acted outside its assigned tasks; that it took all the necessary precautions when appointing that third party and monitoring its execution of the tasks; and that (once it became aware of prohibited conduct) it publicly distanced itself from that conduct and denounced it to the relevant competition authorities.

EU Mergers

Phase I Mergers

  • M.7749 BMW / BMW INTEC / VIESSMANN / DES (1 December 2015)
  • M.7610 DANISH CROWN / WESTFLEISCH / WESTCROWN JV (3 December 2015)
  • M.7840 LETTERONE HOLDINGS / E.ON E&P NORGE (3 December 2015)
  • M.7791 AVIVA / PSP / PROPERTY PORTFOLIO JV (3 December 2015)
  • M.7817 OBI / BAUMAX STANDORT STEYR (3 December 2015)
  • M.7825 KKR / SELECTA (3 December 2015)

State Aid

Commission announces adoption of new State aid Implementing Regulation. On 30 November 2015, the Commission announced that it has adopted a new State aid Implementing Regulation. In the context of the State Aid Modernisation (SAM) initiative, State aid guidelines and frameworks have been modified. Consequently, the Commission has updated certain procedural rules set out in the Implementation Regulation in order to align notifications of planned State aid measures submitted by Member States with the new rules. Revised notification forms and information sheets to be completed by Member States are annexed to the Implementing Regulation. The Commission also states that the new Implementing Regulation provides further guidance for Member States on how to comply with enhanced transparency requirements introduced by State aid Modernisation. This will improve the transparency of public funding, reduce uncertainties and enable companies to check aid granted to competitors. The new Implementing Regulation, which has not yet been published by the Commission, will enter into force 20 days after it is published in the Official Journal.

Commission approves additional State aid to support restructuring of Piraeus Bank. On 29 November 2015, the Commission announced that it has decided to approve the grant of additional State aid of €2.72 billion to support Greece’s Piraeus Bank on the basis of an amended restructuring plan. As a result of a capital shortfall identified as part of the third economic adjustment programme, the bank will receive additional State aid injected by the Hellenic Financial Stability Fund (provided by the European Stability Mechanism). This is in addition to efforts made by the bank to cover a significant part of its capital needs from private investors. The Commission is satisfied that the revisions to the restructuring plan (originally approved in July 2014) should enable Piraeus Bank to return to long-term viability and continue supporting the recovery of the Greek economy.

Commission approves UK support for Lynemouth power plant. On 1 December 2015, the Commission announced that it has decided under EU State aid rules to approve support in the form of a premium paid by the UK government  on top of the market price of electricity generated (a “Contract for Difference) to support the conversion of the Lynemouth coal power plant to operate on biomass (in the form of wood pellets). Following an in-depth investigation, the Commission is satisfied that there is no risk of overcompensation as a result of the State support. The Commission found that the project will further EU environmental and energy goals without unduly distorting competition. The Commission’s investigation also did not find any evidence of market distortion in the global wood pellets market.

Commission opens in-depth investigation into Luxembourg’s tax treatment of McDonald’s. On 3 December 2015, the Commission announced its decision to open an in-depth investigation into whether McDonald’s Europe Franchising has benefitted from illegal subsidies from the Luxembourg government. The Commission has concerns that two tax rulings may have granted McDonald’s an advantageous tax treatment on income earned from its intellectual property, in breach of EU State aid rules. It will examine whether Luxembourg authorities selectively derogated from the provisions of their national tax law and the Luxembourg-US Double Taxation Treaty, thereby giving McDonald’s an advantage not available to other companies in a comparable factual and legal situation.

UK Competition

Government plan for boosting competition to bring down bills. On 30 November 2015, HM Treasury and the Department for Business, Innovation and Skills (BIS) published a policy paper which sets out the steps the government will take in key markets to increase competition in the UK economy and to reduce bills for families and firms. Areas where the government intends to take action to open up competition include legal services, pharmacies, dentistry and school uniforms. In relation to water, the government will ask Ofwat to assess the costs and benefits of extending retail competition to household water customers. The Competition and Markets Authority (CMA) has also agreed to analyse price comparison websites in 2016. Further, the government has asked the CMA to examine how the actions of local authorities can support competition, and to report on this in 2017.

CMA accepts undertakings in lieu from The Original Bowling Company. On 1 December 2015, the CMA announced that it has accepted undertakings from The Original Bowling Company Ltd (TOBC) in lieu of referring its anticipated acquisition of Bowlplex Ltd to a Phase 2 merger investigation under the Enterprise Act 2002. TOBC offered to divest six ten-pin bowling centres where the CMA identified competition concerns to Essenden Limited (Essenden). The CMA has now approved Essenden as the purchaser. The CMA is satisfied that the undertakings given by TOBC will resolve the competition concerns identified and that Essenden as the agreed purchaser will operate the six ten-pin bowling centres in competition with TOBC’s retained ten-pin bowling centres.

CMA launches campaign informing private medical practitioners how to comply with competition law. On 3 December 2015, the CMA launched a campaign informing private medical practitioners how to comply with competition law. The campaign consists of an open letter to all private medical practitioners, and short guidance notes on how competition law applies to their work. This campaign follows the CMA’s August 2015 decision to fine Consultant Eye Surgeons Partnership (CESP) for anti-competitive practices (including recommending coordination on minimum fees, negotiating collective price agreements with insurers, circulating price lists, and sharing future pricing and intentions). The open letter outlines the reasons for the CESP infringement decision, and explains why it is important for private medical practitioners to make independent commercial decisions.

CMA opens investigation into pharmaceutical product discounts. On 2 December 2015, the CMA  announced that it has opened a new investigation under Chapter II of the Competition Act 1998 and Article 102 of the TFEU into a suspected breach of competition law related to discounts offered for a pharmaceutical product. The CMA is currently conducting its initial investigation and estimates that it will take a decision on whether or not to proceed with the investigation in May 2016. No further details of the case have been made publicly available.