EU Competition

Summary of Air France / KLM / Alitalia / Delta commitments decision published. On 27 June 2015, the European Commission (the Commission) published a summary of its decision to make commitments offered by Air France/KLM, Alitalia and Delta, all members of the SkyTeam airline alliance, legally binding under Article 9 of Regulation 1/2003. The commitments address the Commission’s concerns that the parties’ agreements to establish a profit/loss­sharing joint venture, covering all their passenger air transport services on routes between Europe and North America, might breach Article 101 of the Treaty on the Functioning of the European Union (TFEU).

EU Mergers

Phase I Mergers

  • M.7571 – DAWN MEATS / TERRENA / ELIVIA (3 July 2015)
  • M.7648 – / HUGENDUBEL / JV (1 July 2015)

State Aid

General Court annuls Commission decision ordering recovery of state aid granted to Schouten­de Jong Bouwfonds. On 30 June 2015, the General Court handed down its judgment on appeals by the Netherlands, the Municipality of Leidschendam­Voorburg, Bouwfonds Ontwikkeling BV and Schouten & De Jong Projectontwikkeling BV against a Commission decision finding that the Municipality of Leidschendam­Voorburg had sold land below market price to the partnership, Schouten­de Jong Bouwfonds (SJB). The Commission found that, following a renegotiation, SJB had paid a lower price for land than originally agreed and was no longer required to pay ground exploitation and quality fees and that this decrease in price and fees waiver conferred an advantage on SJB. The General Court annulled the Commission’s decision, finding that the Commission had failed to take into account all of the relevant circumstances and context of the case in reaching the conclusion that the contested measures conferred an advantage on SJB and were not in line with the market economy investor principle.

Advocate General Opinion on appeals against General Court ruling on state aid in Hungarian power purchase agreements. On 1 July 2015, Advocate General Wathelet handed down his Opinion on appeals brought by Electrabel SA (Electrabel) and Dunamenti Erőmű Zrt (DEZ) against the General Court’s ruling upholding a Commission decision that found that state aid granted by Hungary through power purchase agreements constituted unlawful state aid in favour of power generators. The Advocate General considered the appeal brought by Electrabel to be inadmissible, as it had not been a party to the proceedings before the General Court. As to DEZ’s appeal, he did not consider that the General Court had erred in law either by concluding, without proving the existence of a structural risk, that the electricity network operator’s minimum off­take obligation conferred an advantage, or by confirming the methodology used by the Commission in calculating the amount of aid.

Public Procurement

European Ombudsman finds maladministration in Commission’s evaluation of tender  and rejection of recommendation. On 1 July 2015, the European Ombudsman published a decision on a complaint in relation to the evaluation of a tender by the Commission. The European Ombudsman upheld the complainant’s submission that the Commission awarded the contract to a tenderer who offered a solution for the recovery of data in the event of a disaster that was inferior to what was required by the contract. The Ombudsman found that, by considering that the winning tender was in conformity with the tendering specifications, the Commission committed maladministration. The Ombudsman recommended to the Commission that it acknowledge its maladministration, and address the complainant’s claim for  compensation. The Commission, however, rejected the Ombudsman’s recommendations, failing to provide convincing reasons for its refusal. The European Ombudsman stated that this also constituted maladministration. Therefore, the European Ombudsman closed the case by addressing two critical remarks to the Commission.

High Court rejects action challenging operation of framework agreement for supply of locum doctors. On 29 June 2015, the High Court dismissed an action that challenged the operation of a framework agreement for the supply of locum doctors. Medicure Ltd (Medicure), an unsuccessful bidder for the relevant framework agreement, claimed that the framework agreement was being operated in a way that was materially different from what had been stated in the tender documents or the terms of the agreement. The High Court rejected Medicure’s main submission that the original contractual documents prohibited direct supply and ruled that direct supply was always envisaged in those documents. The High Court also dismissed Medicure’s claim that its tender had been unfairly rejected. The High Court held that there were no breaches of the principles of transparency and fairness in the Public Contracts Regulations 2006.

Supreme Court dismisses appeal against government decision not to tender for administration of new scheme. On 1 July 2015, the Supreme Court dismissed an appeal by Edenred (UK Group) Limited against HM Treasury’s decision (upheld by the High Court and Court of Appeal) that the government’s new tax free childcare (TFC) scheme will be  administered by National Savings and Investments (NS&I) via its existing outsourced services contract with Atos IT Services Ltd (Atos). This will require amendment of NS&I’s existing contract with Atos to include services to enable NS&I to run the TFC scheme. Edenred’s main argument was that this constituted such a material variation to the contract that there should have been a new procurement. The Supreme Court applied Regulation 72 of the Public Contracts Regulations 2015 which provides the circumstances in which a public contract can be modified without a new procurement. The Supreme Court concluded that the proposed amendments to the contract with Atos would not considerably extend the scope of that contract such as to involve substantial modifications.

UK Competition

The Competition and Markets Authority (CMA) closes Competition Act investigation into alleged abusive conduct in the pharmaceutical sector. On 26 June 2015, the CMA  published a statement on its decision to close an investigation under Chapter II of the Competition Act 1998 and Article 102 of the TFEU into a suspected breach of competition law in the pharmaceutical sector on the grounds of administrative priority. The CMA has, nevertheless, sent a warning letter to the unnamed party to the investigation identifying potential concerns that may arise in the context of discounts and rebates.

The Competition Appeal Tribunal (CAT) rules on case management issues (including designation of specified price control matters). On 29 June 2015, the CAT handed down a ruling on various case management issues, including the designation of specified price control matters, in appeals brought by BT and TalkTalk under section 192 of the Communications Act 2003. The appellants are both challenging Ofcom’s decision to impose a condition on BT to regulate the margin between its wholesale prices for virtual unbundled local access (VULA) and its retail charges for superfast broadband (the VULA margin). The CAT has ruled that TalkTalk and Sky should be granted permission to intervene in BT’s appeal, given that TalkTalk and Sky are participants in the superfast broadband market and so they would be directly affected by the outcome of that appeal. The CAT also ruled on confidentiality arrangements. In addition, the  CAT ruled on those aspects of BT’s appeal which are specified price control matters that must  be referred to the CMA for determination and those which are not and so will be determined by the CAT.

CMA publishes further update on hotel online booking investigation. On 1 July 2015, the CMA announced an update on its investigation into suspected breaches of the Chapter I prohibition of the Competition Act 1998 and Article 101 of the TFEU in the hotel online booking sector. The CMA re­opened its investigation after the CAT, in September 2014, quashed the decision to accept binding commitments from B.V., Expedia Inc. and InterContinental Hotels Group plc. In the update, the CMA stated that Expedia, Inc. has announced that from 1 August 2015 it will waive its rate, conditions and availability parity clauses with its hotel partners for a period of five years in line with Clauses 1.1, 1.2 and 2.1 of the formal commitments offered by and accepted by the national competition authorities in France, Italy and Sweden in April 2015.

CMA updates timetable for investigation into settlement agreements in the pharmaceutical sector. On 2 July 2015, the CMA announced that it has updated its timetable  in its investigation into certain patent litigation settlement agreements relating to paroxetine, a medicine used in the treatment of disorders such as depression and anxiety. On 19 April 2013, the Office of Fair Trading sent a Statement of Objections to GlaxoSmithKline and three other pharmaceutical companies and, on 21 October 2014, the CMA sent a supplementary statement of objections to pharmaceutical companies in relation to alleged breaches of Articles 101 of the TFEU and the Chapter I and Chapter II prohibitions of the Competition Act 1998. On 2 July 2015, the CMA announced that additional time is needed to consider parties’ responses to the Statement of Objections and Supplementary Statement of Objections.