EU Competition

Commission consults on commitments by ISDA and Markit on credit default swaps. On 28 April 2016, the European Commission (Commission) announced that it has invited comments on commitments offered by the International Swaps and Derivatives Association, Inc. (ISDA) and the information service provider Markit Ltd. to address competition concerns relating to the licensing of data and indices on credit default swaps (CDS) for the purpose of exchange trading. According to the Commission, its preliminary view is that ISDA and Markit both refused to license to exchange trading platforms certain data and indices used by the industry for the pricing of CDS, in breach of EU competition law. The Commission goes on to state that the conduct by ISDA and Markit may have blocked or delayed the emergence of an effective market for exchange traded credit derivatives. ISDA and Markit have separately offered commitments to address the Commission’s concerns. Interested parties have one month to provide their comments on the commitments offered by ISDA and Markit.

EU Mergers

Phase I Mergers

  • M.7904 BEKAERT / OTPP / BRIDON BEKAERT ROPES JV (22 April 2016)
  • M.7951 SHIRE / BAXALTA (26 April 2016)
  • M.7994 THE KINGDOM OF DENMARK / DONG (27 April 2016)

State Aid

Commission refers Greece to ECJ for failure to comply with illegal State aid decision. On 25 April 2016, the Commission announced that it had decided to refer Greece to the European Court of Justice (ECJ) for its failure to recover incompatible State aid from both LARCO S.A. (LARCO) and United Textiles within the requisite time frames, following the Commission’s decisions in 2014 and 2012, respectively, that the aid granted to the two companies was unlawful. Greece was subsequently required to recover €136 million from LARCO and €37 million from United Textiles.

Commission information request on availability of short-term export-credit insurance for exports to Greece. On 27 April 2016, the Commission issued a consultation on the availability of short-term export-credit insurance for exports to Greece. The Commission’s Communication on the application of Articles 107 and 108 of the TFEU to short-term export-credit insurance provides that State aid should not be granted to support export-credit insurance in “marketable risk” countries. Given the difficult economic circumstances in Greece and the resulting dearth of insurance or reinsurance capacity to cover exports to Greece, in December 2013 the Commission decided temporarily to remove Greece from the list of “marketable risk” countries (which includes all other EU Member States) until 31 December 2014. In 2015, the Commission decided that Greece should continue to be removed from the list of “marketable risk” countries until 30 June 2016. The Commission is now considering whether the current market situation justifies the expiry of Greece’s removal from the list of marketable risk countries as of 1 July 2016, or whether a prolongation is needed. The Commission is, therefore, asking Member States, credit insurers, and other interested parties to submit information on private credit insurance capacity; the activity of insurers acting on behalf or with State guarantee or the state itself in the provision of short-term credit insurance for exports to Greece during the period March 2015 to March 2016; changes in Greece’s credit ratings for the last six months; corporate sector performance in Greece; and any other relevant data and information. The deadline for responses is 24 May 2016.

Public Procurement

General Court judgment on appeal by Österreichische Post regarding exemption of postal services from Utilities Directive. On 27 April 2016, the General Court handed down a judgment (not yet available in English) on an appeal by Österreichische Post AG against a decision of the Commission (dated 2 April 2014) that held that Directive 2004/17 (the Utilities Directive) shall continue to apply to a range of postal delivery services provides by Österreichische Post on the grounds that they are not directly exposed to competition. The General Court has partially upheld Österreichische Post’s appeal, finding that the Commission made manifest errors of assessment in concluding that postal services for addressed international (outbound) letters between business customers (B2B) and between business customers and private customers (B2C) (together B2X) at the international level were not directly exposed to competition and, as a result, should not be exempted from application of the Utilities Directive. The Commission’s contested decision is, therefore, annulled insofar as it provides that the Utilities Directive applies to this market. However, the General Court rejected the rest of the appeal as unfounded, concluding that the Commission made no errors of assessment or failed to state reasons in finding that the other categories of postal services were not directly exposed to competition in Austria.

UK Competition

CMA fines Ultra Finishing for engaging in resale price maintenance (RPM) in respect of online sales. On 26 April 2016, the Competition and Markets Authority (CMA) announced that it had fined Ultra Finishing Limited (Ultra Finishing) £826,000 after Ultra Finishing admitted that it had breached the Chapter I prohibition of the Competition Act 1998 and Article 101 of the TFEU. In particular, Ultra Finishing admitted that between 2012 and 2014 it engaged in RPM in relation to online sales of its Hudson Reed and Ultra Finishing branded products. Whilst Ultra Finishing issued so-called recommended retail prices to its retailers for online sales, Ultra Finishing threatened retailers with penalties for not pricing at or above the ’recommended’ price, including charging the relevant retailers higher prices for products, withdrawing the retailers’ rights to use Ultra Finishing’s images online, or ceasing supply entirely. According to the CMA, the actions undertaken by Ultra Finishing limited the retailers’ ability to offer discounts to potential buyers and, as a result, the practices adopted by Ultra Finishing during 2012 and 2014 amounted to a RPM. The fine imposed by the CMA includes a settlement discount of 20 per cent reflecting Ultra Finishing’s admission and cooperation during the CMA’s investigation.

CMA to review undertakings offered by Breedon Aggregates in lieu of Phase 2 investigation. On 26 April 2016, the CMA announced that it has decided to consider in detail whether to accept undertakings offered by Breedon Aggregates Limited (Breedon) in lieu of referring to a Phase 2 investigation its anticipated acquisition of Hope Construction Materials Limited (Hope). Breedon and Hope produce and supply aggregates and ready-mixed concrete (RMX). As a result of its on-going investigation, CMA has found that the transaction gives rise to competition concerns in relation to 27 RMX sites, meaning that customers might face higher prices as a result of the merger in the local areas surrounding these sites. Breedon has offered to divest 14 RMX sites to an up-front buyer approved by the CMA. The CMA has decided that there are reasonable grounds for believing that the undertakings offered by Breedon, or a modified version of them, might be accepted by the CMA in lieu of a reference to a Phase 2 investigation. The CMA has until 23 June 2016 to consider whether to accept the undertakings, or a modified version of them (extendable by a further 40 working days for special reasons). The CMA will consult in due course with industry participants and other third parties on the proposed undertakings.

CMA to refer acquisition by Intercontinental Exchange of Trayport unless undertakings in lieu offered. On 27 April 2016, the CMA announced that it has decided that the completed acquisition by Intercontinental Exchange, Inc. (ICE) of Trayport will be referred for a Phase 2 merger investigation unless acceptable undertakings in lieu of reference are offered. The CMA is concerned that ICE could use its ownership of Trayport’s software (which facilitates the trading of energy commodity and utility derivatives) to raise prices and/or reduce the quality of its service to rival exchanges, brokers, and clearinghouses in order to divert its rivals’ trades to ICE’s exchange and clearinghouse and/or to protect ICE’s market position from increased competition. ICE has until 5 May 2016 to offer undertakings in lieu that might be acceptable to the CMA.

Action by Breasley Pillows for damages resulting from polyurethane foam cartel lodged in CAT

On 28 April 2016, the Competition Appeal Tribunal (CAT) published a notice of a claim for damages under section 47A of the Competition Act 1998 brought by Breasley Pillows Limited and Others against Vita Cellular Foams (UK) Limited and Vita Industrial (UK) Ltd (together Vita). This is a follow-on damages action based on the Commission’s 2014 decision concerning the polyurethane foam cartel. The claimants allege that the infringement established by the Commission had the effect of raising the prices that Vita and others charged for the foam polyurethane products they sold to the claimants causing the claimants loss and damage. As a result, the claimants are pursuing an action for damages, interest, costs, and such other consequential orders as the CAT thinks fit. The claimants have applied for fast-track designation of the proceedings.