Competition: Court of Justice of the European Union dismisses appeal by FLSmidth against industrial bags cartel judgment

On 30 April 2014, the Court of Justice of the European Union (“CJEU”) handed downs its judgment dismissing the appeal brought by FLSmidth & Co. A/S (“FLSmidth”) against the judgment of the General Court (“GC”) and the Commission’s decision holding FLSmidth and its subsidiary FLS Plast A/S (“FLS Plast”) jointly and severally liable for the cartel infringement of the former subsidiary of FLS Plast, Trioplast Wittenheim SA (“TW”). In November 2005, the Commission announced that it had fined 16 firms a total of EUR 290 million for operating an illegal cartel in the plastic industrial bags market for over 20 years. All the fined companies, including FLSmidth and FLS Plast, lodged appeals before the GC challenging the Commission’s decision. In its judgment, the GC held that the Commission had failed to establish that FLS Plast and FLSmidth had exercised decisive influence over TW during 1991 and thereby reduced the fine imposed jointly and severally on FLS Plast and FLSmidth from EUR 15.3 million to EUR 14.45 million. However, the GC dismissed all other pleas concerning the findings of infringement and calculation of the fines. FLSmidth lodged an appeal with the CJEU seeking the annulment of the GC’s judgment and the Commission’s decision by claiming, inter alia, that the GC had erred in law as it applied the wrong test for attributing liability to an ultimate parent company and misapplied the Leniency Notice and breached the principle of equal treatment by not granting FLSmidth a reduction for non-contestation of facts. In its judgment, the CJEU rejected all claims made by FLSmidth and held, inter alia, that the GC had been correct to consider that the Commission was right to impose liability jointly and severally on FLSmidth. By affirming the presumption that a company holding, directly or indirectly, all or almost all the shares in another company does in fact exercise decisive influence, the CJEU concluded that it could be presumed that FLSmidth had exercised, even if only indirectly, decisive influence over the conduct of TW at the relevant time, given the 100 percent stake that FLSmidth held in FLS Plast and the 100 percent that FLS Plast in turn held in TW. According to the CJEU, the GC was also right in accepting that FLSmidth could not obtain the requested reduction in the amount of fine but it did not accept the GC’s reasoning. As TW no longer formed an undertaking with FLSmidth at the time when TW cooperated with the Commission, the CJEU concluded that there is nothing to justify extending a fine reduction granted to an undertaking in respect of its cooperation with the Commission to an undertaking which, whilst having controlled, in the past, the area of activity involved in the infringement in question, did not itself contribute to detection of the infringement. Further, the CJEU agreed that the procedure in the GC infringed Article 47 of the Charter of the Fundamental Rights of the European Union (“Charter”) as the GC had failed to hand down its judgment within a reasonable time (taking more than six years) but noted that this delay did not give FLSmidth the right to reopen the assessment of the fine imposed on it as the sanction for a breach of Article 47 of the Charter by an EU Court must be an action for damages brought before the GC (sitting in a different composition than when hearing the original case). Source: Case C-238/12 FLSmidth & Co. A/S v European Commission

Competition: Commission’s Report on Competition Policy 2013 shows how competition policy contributes to boosting competitiveness

On 6 May 2014, the Commission published its Report on Competition Policy 2013 (“Report”). The Report provides an overview of the main competition policy developments and enforcement actions taken during 2013. The Commission discusses, in particular, how antitrust enforcement prevents dominant companies' from shutting out competitors from the market and creates the conditions for lower input prices for EU industry and how merger control keeps markets open and efficient. Furthermore, the Report discusses the role of state aid policy in maintaining a level playing field for companies in the Single Market in addition to helping to steer public resources towards growth-enhancing objectives. In 2013, the Commission carried forward or completed important policy initiatives, such as the directive to facilitate antitrust damages actions and the State Aid Modernisation initiative. Further, the Commission adapted its crisis rules for state aid banks and adopted new rules to simplify merger control. Moreover, the Report includes an account on certain important competition decisions, including in sectors of strategic importance for growth and competitiveness such as financial services, energy and the digital economy. Source: Commission Press Release 06/05/2014

The full text of the 2013 report on competition policy and the accompanying staff working document are available at: Report on Competition Policy 2013

Competition: New rules for the assessment of technology transfer agreements applicable from 1 May 2014

On 1 May 2014, the new competition rules for the assessment of technology transfer agreements, namely the Technology Transfer Block Exemption Regulation (“TTBER”) and the Technology Transfer Guidelines (“Guidelines”) replaced the existing TTBER and Guidelines. The purpose of technology transfer agreements is to enable companies to license the use of patents, know-how or software held by another company for the production of goods and services. The revised rules facilitate such sharing of intellectual property, including through patent pools, and provide clearer guidance on licensing agreements that stimulate competition. The main features of the new rules include reflections on the fact that licensing is in most cases pro-competitive. Further, new guidance on “patent pools” has been incorporated. Patent pools can give companies cheaper and easier access to necessary intellectual property rights, such as standard essential patents, by establishing a one-stop-shop. Furthermore, certain types of clauses are no longer automatically exempted from the competition rules but have to be assessed case-by-case. These are clauses which allow the licensor to terminate a non-exclusive agreement if the licensee challenges the validity of the intellectual property rights, and clauses that force a licensee to license any improvements it makes to the licensed technology to the licensor on an exclusive basis. Source: The new TTBER and Guidelines. Source: The new TTBER & Guidelines

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:

  • La Commission européenne autorise l'acquisition du contrôle conjoint de la SOFIAP par La Banque Postale et la SNCF
  • Commission approves acquisition of Olam by Temasek
  • Commission approves joint venture between Agrifirm and BayWa
  • Commission approves change from joint to sole control over Galderma by Nestlé
  • Commission approves acquisition of German shopping centre CentrO by Unibail–Rodamco and CPPIB
  • Commission approves Ineos' acquisition of Sasol's solvents business
  • Commission approves acquisition of a real estate portfolio in Milan by AXA and PSPIB