Competition: Commission publishes competition policy brief on market definition in a globalized world

On 17 March 2015, the Commission published a competition policy brief on market definition in a globalized world (“Competition Policy Brief”). The Competition Policy Brief explains how globalization and the integration of the EU have affected the Commission’s market definitions. The analysis is based on the Commission’s merger decisions since 2003, and it suggests that the Commission has increasingly focused on wider geographic markets. In the last two years, the Commission found geographic markets that were at least EEA-wide or wider in 61 percent of its merger decisions. Ten years ago that figure was 48 percent. The Commission explains in the Competition Policy Brief that it has revised its geographic market definitions over time, in order to adapt merger decisions to new developments on the markets. This has usually led to a widening of the geographic scope of the relevant market. Source: Competition policy brief, Market definition in a globalised world, Issue 2015-12

Competition: Commission publishes results of DG Competition 2014 stakeholder surveys 

On 16 March 2015, the Commission published the results of qualitative and quantitative surveys on the performance of DG Competition and perceptions of EU competition policy. This is the second time such a survey has been conducted. The survey has two parts: an in-depth qualitative survey targeting professional stakeholders and a survey of EU citizens' views on competition and competition policy.  The aim of the qualitative stakeholder survey was to obtain feedback from its most important professional stakeholders concerning their perceptions of the quality of DG Competition’s activities. The study covers DG Competition’s enforcement, policy and advocacy activities. Feedback was sought concerning the soundness of its legal and economic analyses, its transparency and procedural fairness, its economic effectiveness and, finally, its communication and international advocacy. The survey was carried out by conducting in-depth interviews with lawyers, companies, economic consultants, business and consumer associations, Member States’ ministries and national competition authorities. The feedback was mostly positive, but some areas for improvement were also identified. 

The quantitative survey aimed to measure EU citizens’ perceptions about EU competition policy and their views about a possible lack of competition in certain important sectors. The results showed that EU citizens generally have positive views about the effects of competition between companies. However, the survey revealed that most EU citizens have experienced a problem resulting from a lack of competition, most commonly in the energy sector. Source: Eurobarometer Qualitative Study, DG Competition Stakeholder Survey, Aggregate Report and Flash Eurobarometer 403, Citizens’ perception about competition policy, March 2015

Competition: Ombudsman criticizes Commission for statements made in interest rate derivatives investigation 

On 12 March 2014, the European Ombudsman (“Ombudsman”) issued a draft recommendation to the Commission that it should consider issuing guidelines on public statements by Commissioners about ongoing investigations. The recommendation results from statements made by the former Competition Commissioner Joaquín Almunia (“Commissioner”) about an ongoing cartel investigation involving Crédit Agricole SA and Crédit Agricole Corporate and Investment Bank (the “Complainant”). The Complainant is a financial institution based in France. The cartel investigation concerned the alleged infringement of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) in relation to interest rate derivatives denominated in Euro (“EIRD”).  On 2 June and 7 July 2014, after receiving the Statement of Objections for its alleged participation in the EIRD cartel, the Complainant lodged a complaint before the Ombudsman. The Complainant argued that a number of public statements made by the Commissioner seemed to imply that the Commission had already made up its mind about the existence of a cartel and the liability of those involved in it, including the Complainant.  In its recommendation, the Ombudsman stated that because of a number of statements made by the Commissioner, the Commission was perceived to have already reached a conclusion regarding the Complainants participation in the EIRD cartel before the investigation was completed. According to the Ombudsman, this was an instance of maladministration. Nevertheless, in view of the fact that proceedings are still pending, the Ombudsman considered that the instance of maladministration that occurred in this case will not affect further handling of the Complainant’s case by the Commission. However, in order to avoid similar situations in the future, the Ombudsman urges the Commission to issue guidelines on public statements by Commissioners about ongoing investigations. Source:Ombudsman Press Release 12/3/2015 and Ombudsman Recommendation

Merger control: Commission approves acquisition of automotive components manufacturer TRW by rival ZF, subject to conditions

On 12 March 2015, the Commission announced that it has approved the proposed acquisition of TRW by its rival ZF Friedrichshafen (“ZF”), subject to conditions. TRW, of the US, is a global supplier of automotive components focused on active and passive safety technologies. ZF, of Germany, is active in supplying products for automotive and industrial applications. Its automotive business concentrates on powertrain and chassis technology. Automotive chassis components are parts that make up the linkage and suspension for the chassis of a vehicle. Both ZF and TRW currently supply chassis components to car and truck manufacturers in the European Economic Area (“EEA”) as well as to the independent national aftermarkets.  The proposed transaction, as originally notified, would have combined the two largest suppliers of chassis components for car and truck manufacturers' in the EEA. The Commission's investigation showed that it is difficult for new players to enter the market due to the high technical requirements and the investments required. Moreover, most customers are not able to produce such components in-house and appear to have insufficient buyer power to counteract any potential price increases by the merged entity. Therefore, the Commission had initial concerns that the proposed transaction would have led to price increases for car and truck chassis components. 

In order to address the Commission's concerns, ZF committed to divest TRW's chassis components businesses in the EEA. The divestment business covers both TRW's manufacturing and research and development capabilities in this field, which enable TRW to produce and supply these components. According to the Commission, the commitments offered by ZF will remove the entire overlap between the companies in the manufacture and supply of chassis components for cars and trucks. Furthermore, the divestments would allow the entry of an additional manufacturer and supplier of these products. Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. Source: Commission Press Release 12/3/2015

Merger control (Sweden): Swedish Competition Authority approves acquisition of Falbygdens Ost by Arla Foods AB

On 11 March 2015, the Swedish Competition Authority (“SCA”) announced that it has approved the proposed acquisition of Falbygdens Ost from Atria Plc by Arla Foods AB (“Arla Foods”). After having conducted an in-depth investigation, the SCA concluded the proposed acquisition would not significantly impede effective competition on the Swedish market or in a substantial part thereof mainly due to the countervailing buyer power of grocery retailers which is seen to be sufficient to prevent the merged entity from increasing prices post transaction. Source: Swedish Competition Authority Press Release 11/3/2015 (in Swedish) and Swedish Competition Authority Decision 11/3/2015 (in Swedish)

Merger control (Sweden): Swedish Competition Authority welcomes the decision of Swedbank Franchise to cancel the acquisition of Svensk Fastighetsförmedling

On 12 March 2015, the Swedish Competition Authority (“SCA”) welcomed the decision of Swedbank Franchise AB (“Swedbank”) to cancel the acquisition of Svensk Fastighetsförmedling AB (“SFS”).  In December 2013, Swedbank, already the owner of Swedbank Fastighetsbyrå AB, acquired all the shares in SFS from DNB Bank ASA. After an in-depth investigation of the proposed acquisition the SCA proposed to the Stockholm City Court (the Court”) that the transaction be prohibited. In December 2014, the Court followed the SCA’s proposal. Subsequently, Swedbank appealed the Court’s prohibition decision to the Swedish Market Court which was scheduled to rule in the case on 7 April 2015. However, Swedbank has now announced that they will be cancelling the transaction and the matter has thus been withdrawn from the Swedish Market Court, leaving the Court’s prohibition decision in force.Source: Swedish Competition Authority Press Release 12/3/2015

Public procurement: Court of Justice of the European Union rules on the effect of bias on the award of a procurement contract and the right to bring a challenge out of time 

On 12 March 2015, the Court of Justice of the European Union (“CJEU”) handed down its preliminary ruling on a reference from a Lithuanian court on the interpretation of Directive 89/665 and Directive 2004/18, namely the effect of bias on the award of a procurement contract and the right to bring a challenge out of time against that award. Directive 2004/18 governs the procedures for the award of public works, supply and service contracts. For contracts that fall within its scope, member states are required under Directive 89/665 to ensure that decisions by contracting authorities can be reviewed effectively and as rapidly as possible on the grounds that such decisions have infringed EU public procurement law or national rules transposing that law.  The cases in the main proceedings stemmed from an open invitation to tender to provide a system for warning and informing the public, using mobile telephone network infrastructure. The invitation to tender was published in January 2010 and it fell within the scope of Directive 2004/18 and Directive 89/665. In November 2010, tenderer eVigilo Ltd. (“eVigilo”) challenged the lawfulness of the procurement procedures. It argued that the conditions of the call for tenders lacked clarity. eVigilo also claimed that there had been failings in the experts’ evaluation and that the results of that evaluation were groundless. It alleged bias by the experts who had evaluated the tenders, based on a professional relationship between the experts and the specialists named in the winner’s tender. The Lithuanian court stayed the proceedings and referred certain questions to the CJEU. In particular, it asked the CJEU to rule on whether the evaluation of tenders is unlawful solely because the tenderer has had significant connections with experts appointed by the contracting authority who evaluated the tenders, without the need to examine other evidence in the proceedings being examined. It also asked the CJEU to rule on whether the right to challenge the lawfulness of the tender procedure must be open after the expiry of the period prescribed by national law, where the tenderer needs information relating to the reasons for the decision.

In its preliminary ruling, the CJEU stated that EU law does not preclude a finding that the evaluation of the tenders is unlawful on the sole ground that the tenderer has had significant connections with experts who evaluated the tenders. The CJEU ruled that the contracting authority is responsible for determining the existence of possible conflicts of interest under national law and for taking measures to prevent, detect and remedy them. Further, the CJEU stated that Directive 89/665 and Directive 2004/18 require that the right to challenge a decision must remain open after the national law deadline, where a reasonably well-informed and normally diligent tenderer would only have understood the tender conditions after the contracting authority had explained its decision. Lastly, the CJEU noted that the assessment of which tender is most economically advantageous is to be based on various criteria. As the list provided in the Article 53(1) (a) of Directive 2004/18 is not exhaustive, the contracting authority is allowed to use the degree to which tenders are consistent with the requirements set out in the tender documentation as an evaluation criterion. Source: Case C 538/13 - eVigilo Ltd v Priešgaisrinės apsaugos ir gelbėjimo departamentas prie Vidaus reikalų ministerijos, 12 March 2015

 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 joint control over Ficosa International by Panasonic and Ficosa Inversion
  • Commission approves acquisition of Joris Ide by Kingspan
  • Commission approves acquisition of healthcare company Allergan by Actavis
  • Commission approves acquisition of Friends Life and Tenet by Aviva
  • Commission approves acquisition of Constantia Flexibles by investment company Wendel
  • Commission approves acquisition of ESSO's French fuel distribution business by Irish DCC Energy