Phase I Mergers
- M.8159 ARCELORMITTAL / CELLINO / JV (27 January 2017)
- M.8252 TPG CAPITAL / INTEL SECURITY (26 January 2017)
- M.8292 SUMITOMO RUBBER INDUSTRIES / MICHELDEVER GROUP (27 January 2017)
- M.8321 CENTERBRIDGE / ALPHA BANK / KAICAN (27 January 2017)
Kendrion wins damages against the General Court from cartel case. On 1 February 2017, the General Court awarded Netherlands based industrial bagmaker, Kendrion NV, €588,769.18 in damages against the General Court for the material harm suffered as a result of delay by the General Court in adjudicating its appeal against the industrial bags cartel. In November 2011, the General Court dismissed Kendrion’s initial appeal seeking the annulment of the European Commission’s (Commission) 2005 decision. Kendrion appealed to the European Court of Justice (ECJ) and the ECJ also dismissed the appeal in November 2013. In June 2014, Kendrion brought the current action for €13.08 million in damages, arguing that the General Court had violated the company’s right to a fair trial by taking an “unreasonable” amount of time to rule on its challenge to a €34 million penalty in the 2005 cartel case. The General Court found that during the unjustified period of inactivity of the General Court, Kendrion suffered material harm by incurring losses due to the costs that it had to pay in relation to the bank guarantee provided to the Commission. The General Court also awarded Kendrion damages of €6,000 for the non-material harm, including loss of reputation, that Kendrion suffered as a result of the excessive length of proceedings (five years and nine months) before the European Courts. In addition, the General Court also awarded Kendrion a portion of its legal costs. This decision follows an award of €57,000 last month to French industrial bagmaker, Gascogne, in a similar claim in which the right to adjudication within a reasonable period, as enshrined in the Charter of Fundamental Rights of the European Union, was also breached as a result of the excessive length of the proceedings.
Commission imposes tariffs on steel fittings from China and Taiwan. On 27 January 2017, the Commission imposed definitive anti-dumping duties on imports of stainless steel tube and pipe butt-welding fittings which originate from China and Taiwan. These products are used to join pipes and tubes of stainless steel, and are commonly used in various industries such as petro-chemical, food processing, and shipbuilding as well as energy generation and construction. The measures follow a complaint lodged in September 2015. The Commission’s investigation confirmed that Chinese and Taiwanese stainless steel tube and pipe butt-welding fittings had been sold in Europe at dumped prices. Chinese exports will now be taxed with anti-dumping duties ranging from 30.7% to 64.9%. Taiwanese exports will face anti-dumping duties ranging from 5.1% to 12.1%.
WTO rules Russian tariffs on European vehicles are illegal. On 27 January 2017, anti-dumping duties on light commercial vehicles (vans) imported from Italy and Germany, introduced by Russia in 2013, were declared illegal by World Trade Organisation (WTO) judges who found the duties hindered exports of the vehicles. In the investigation that was instigated by complaint filed with the WTO by the Commission, the WTO said that the Russian tariffs should be brought in line with global trade rules. The WTO judges found that the Department for Internal Market Defense of the Eurasian Economic Commission’s analysis of damage caused to the Russian domestic industry by the imports were based on unrealistic figures as it excluded certain domestic producers from their calculations. The WTO also found Russian authorities disregarded overcapacity in the Russian van market, which stood (at that time) at seven times what was actually sold on the Russian market. However, the WTO did not accept the Commission’s argument that Russia had miscalculated by mixing up data given in both USD and Russian Rubles. The duties apply on imports to Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia and apply to light commercial vehicles between 2.8 tonnes to 3.5 tonnes in weight, with van-type bodies and diesel engines with a cylinder capacity not exceeding 3.000 cm3, designed for the transport of cargo of up to two tonnes or for the combined transport of cargo and passengers. This is one of four WTO disputes that the Commission has brought against Russia since it acceded to the WTO. The other cases concern an import ban on pigs and pork products, excess tariffs on imports of paper and other products, and a recycling fee on cars. In the cases of excess tariffs and the pork ban, two WTO panels found in 2016 that Russian measures were violating the WTO rules.
Commission approves modifications to Banco CEISS restructuring plan. On 27 January 2017, the Commission announced that it has approved modifications to the Spanish Banco CEISS restructuring plan, which extends the plan to a confidential new deadline. In March 2014, the Commission approved the proposed merger between Banco CEISS with Unicaja in the framework of the bank’s existing restructuring plan. Spain had committed to list the combined entity, Unicaja Banco, by the end of 2016 to “strengthen the viability of the group”. However, due to a combination of circumstances including adverse market conditions and the political uncertainty in Spain, the listing did not take place as there was a risk that the listing of the bank could have failed. The Spanish authorities have therefore requested that the Commission extend the deadline, which is being kept confidential to “protect the effectiveness of the process”. To compensate for the delay in listing the bank, Spain submitted additional commitments including supplementary restructuring measures and an earlier repayment of the State aid. The Commission concluded that the proposed measures are in line with EU State aid rules and that it notes the plans will have “no negative impact on the viability of Banco CEISS and will preserve the balance in terms of burden-sharing and compensatory measures in the 2014 decision”.
CMA approves acquisition by Martin McColl of 298 Cooperative Group grocery stores. On 26 January 2017, the Competition and Markets Authority (CMA) published the full text of its decision to approve the acquisition by Martin McColl Ltd. of 298 groceries stores from the Cooperative Group Ltd. The CMA previously announced its decision not to refer the merger for a Phase II investigation on 20 December 2016. The CMA found that the parties overlapped in the retail supply of groceries through convenience stores in 181 UK local areas, and identified 27 local areas of particular competitive concern where the parties had stores within five minutes and/or one mile of one another and where there would be fewer than three competitors present. However, during their assessment, the CMA decided that the merger would not result in a realistic prospect of a substantial lessening of competition, as sufficient alternative grocery store fascia remained. The CMA therefore concluded that the merger will therefore not be referred for a Phase II investigation under section 33(1) of the Enterprise Act 2002.
CMA publishes full text decision and decision to potentially accept undertakings in MasterCard/Vocalink merger. On 30 January 2017, the CMA published the full text of its decision and decision to potentially accept undertakings in lieu in relation to the proposed acquisition of VocaLink Holdings Ltd. (VocaLink), by MasterCard UK Holdco Ltd., a subsidiary of MasterCard International Inc. (MasterCard). During its Phase I investigation, the CMA found that the merger may lead to a substantial lessening of competition in the supply of payment infrastructure services to the LINK ATM network in the UK, noting that the parties are two of the three most credible providers of such infrastructure services. The CMA also noted there is a related ongoing market review into the ownership and competitiveness of infrastructure provision by the UK Payments Systems Regulator (PSR), which includes a potential remedy for the current shareholders of Vocalink to divest their interest. Mastercard and Vocalink have proposed divestments under which Vocalink would make its LINK connectivity infrastructure available to a new supplier, and Vocalink would transfer or licence to LINK the intellectual property rights relating to the LINK LIS5 messaging standards, a programme used by network members to communicate when customers use cash machines. Vocalink also pledged to contribute to LINK members’ switching costs. The CMA’s provisional view is that these undertakings are appropriate as they tackle the underlying causes of incumbency and cost advantages arising from Mastercard and Vocalink connectivity, and overcome high switching costs. The CMA also considers that the PSR’s oversight will supplement the CMA’s power to ensure compliance, and that any potential long term distortions would be mitigated by the PSR remedies. The CMA therefore considers there are reasonable grounds for believing the proposed undertakings might be accepted, and will consult on the undertakings in due course.
CMA publishes advice to Secretary of State on release of undertakings in two merger cases. On 31 January 2017, the CMA published advice to the Secretary of State for Business, Energy, and Industrial Strategy recommending the release of undertakings given in two merger cases carried out under the Fair Trading Act 1973. The first case concerns undertakings given in 1982 by Charter Consolidated plc at the time of its acquisition of Anderson Strathclyde plc. The undertakings require Charter Consolidated plc to ensure that, should Anderson Strathclyde plc become its subsidiary, that it would remain a Scottish company with its registered Office in Scotland. In this case, the CMA advised that due to the very substantial changes in the supply and demand for coal in the UK, taken together with the change in relevant legislation covering merger control (the move from a public interest to a competition test), the undertakings are no longer appropriate. The second merger case involves undertakings given in 2001 by Serco Group plc in relation to its proposed acquisition of a 46% share in National Air Traffic Services Ltd. (NATS). The undertakings require Serco Group plc, for as long as it controls NATS and provides air traffic control training services, to provide such services on fair and reasonable terms to other air traffic control operators. The Serco Group however, did not succeed in acquiring the 46% shareholding in NATS. Therefore, the CMA have advised that the undertakings are no longer relevant to the current operation and ownership of NATS and have no effect.
MasterCard wins High Court victory over card-fee levels. On 30 January 2017, the High Court handed down its judgment on an action brought by retailers Asda, Arcadia, Next, B&Q, Comet, New Look, Iceland, Argos, WM Morrisons, and Debenhams to claim damages from MasterCard pursuant to the 2007 Commission decision which found MasterCard’s cross-border charges on the use of debit and credit cards (known as multilateral interchange fees (MIF)), breached Article 101 of the TFEU because the MIF restricted competition between retailers’ banks and inflated the cost of card acceptance by retailers. MasterCard failed in its appeal of the decision, and in September 2014 the ECJ confirmed that MasterCard’s MIF restricted competition. In the present case, the claimants alleged that MasterCard’s EEA, UK, and IrishMIFs breached Article 101(1) and the equivalent UK competition provisions. The High Court however, took a different approach to the counterfactual adopted by the Competition Appeal Tribunal in its recent judgment on a damages action brought by Sainsbury’s against MasterCard. The High Court concluded that the historic rates charged by the card issuer were necessary for MasterCard to function as the Judge assessed the interchange rates that the company could have lawfully charged; noting that if MasterCard had dropped its fees to zero, while rival Visa maintained its fees, the “scheme would not have survived in the UK in a materially and recognisably similar form”. The Judge further noted that the current proceedings concerned a different period of time to that examined by the Commission which had looked at the period between 1992 and 2007 and there was “only a small period of overlap”. The High Court concluded that that the MIF, as set by MasterCard, were below the exempt and exemptible level, except for the EEA debit card MIF for the earliest part of the claim period (beginning in 2006) prior to June 2008. Therefore, the High Court ruled the MIFs in UK and Ireland were “not restrictive of competition” and were “objectively necessary”.