Competition: Teva appeals against Commission’s Servier “pay for delay” decision

On 17 November 2014, details were published of an appeal brought by Teva UK Ltd, Teva Pharmaceuticals Europe BV and Teva Pharmaceuticals Industries Lts (jointly “Teva”) against the Commission’s decision fining them and six other companies for entering into “pay for delay” settlement agreements. In July 2014, the Commission announced that it had fined a French pharmaceutical company Servier and five producers of generic medicines, including Teva, for practices delaying generic entry of the cardio-vascular drug perindopril in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). Perindopril is a blood pressure control medicine and used to be Servier's best-selling product. Teva UK Ltd, Teva Pharmaceuticals Europe BV and Teva Pharmaceuticals Industries Ltd were fined jointly and severally EUR 15.6 million. Teva has now brought an action before the General Court (“GC”) seeking that the Commission’s decision be set aside and the fine imposed to be cancelled. To support its action, Teva puts forward five pleas in law. Firstly, Teva claims that the Commission erred in law and in facts by characterizing the agreement entered into by Teva and Servier as a restriction by object. Secondly, Teva submits that that the Commission erred legally and factually by characterizing the agreement as a restriction by effect as the decision does not produce evidence to a requisite standard of a restriction of competition in comparison to the relevant counterfactual. As its third plea in law, Teva claims that the Commission did not adequately examine the arguments and evidence provided by Teva to support the existence of efficiencies and the fulfillment by the agreement of all the conditions of Article 101(3) TFEU. Fourthly, Teva claims that the substantial fine imposed should be annulled or significantly reduced as the Commission’s decision breached the principles of legal certainty, non-retroactivity and legitimate expectations and the Commission also erred in departing from its guidelines on the methodology of setting fines ,thereby violating the principles of legal certainty, legitimate expectation, proportionality and equal treatment. Finally, as its fifth plea in law, Teva submits, that the Commission committed significant procedural errors. Source:Case T-679/14 Teva UK a.o. v Commission, OJ C 409/54, 17 November 2014 and Commission Press Release 9/7/2014

Competition: Trioplast appeals against imposition of interest for late payment of fines

On 17 November 2014, details were published of an appeal brought by Trioplast Industrier AB (“Trioplast”) against the Commission’s decision to charge interest for the late payment of fines imposed in relation to the industrial bags cartel. On 30 November 2005, the Commission announced that it had fined 16 firms a total of EUR 290.7 million for operating an illegal cartel in the plastic industrial bags market for over 20 years. The competitors, with a view to increasing their profits, had agreed amongst themselves on prices and sales quotas by geographical area, shared the orders of large customers, organized collusive bidding for invitations to tender and exchanged information on their sales volumes, to the detriment of competition, their customers and consumers. The Commission imposed a fine of EUR 17.85 million on Trioplast Wittenheim for its participation in the cartel. Moreover, of that amount, the Commission held Trioplast jointly and severally liable for EUR 7.73 million and FLS Plast and its parent company FLSmidth jointly and severally liable for EUR 15.30 million. In September 2010, the General Court (“GC”) found, on appeal by Trioplast, that the Commission had erred in failing to specify the specific share of Trioplast’s joint and several liability for the infringement. It adjusted the starting point for the calculation of the fine for which Trioplast was liable. In July 2014, the Commission imposed late-payment interest of EUR 674 thousand on Trioplast. Trioplast claims, in particular, that, following the GC’s judgment, the Commission had no legal basis for seeking interest for late payment of the fine. On 15 September 2014, Trioplast brought an action before the General Court (“GC”) seeking primarily the cancellation of, or a reduction in the amount of, the late-payment interest. In the alternative, Trioplast seeks damages pursuant to Article 340(2) of the Treaty on the Functioning of the European Union (“TFEU”) as a result of the breaches of EU law set out in the application. In support of its action, Trioplast relies on six pleas in law. Firstly, Trioplast claims that the Commission’s letter concerning the late-payment interest lacks legal basis. Secondly, Trioplast submits that the Commission’s letter constitutes a decision unlawfully taken by a member of DG Budget who lacked competence to engage the Commission in the taking of such a decision. Thirdly, Trioplast claims that the Commission infringed the principle of legal certainty and the principle that penalties should be specific to the offender and to the offence. In addition, as its fourth plea in law, Trioplast claims that the Commission infringed Article 266 of the Treaty on the Functioning of the European Union (“TFEU”) by not acting in accordance with the GC’s judgment. Fifthly, Trioplast submits that the Commission did not respect the principle of proportionality. Finally, Trioplast claims that the Commission erred in law when it refused to release Trioplast’s bank guarantee subsequent to the 2010 judgment. Source: Case T-669/14 Trioplast Industrier v Commission, OJ C 409/50, 17 November 2014General Court Press Release 13/9/2010 and Commission Press Release 30/11/2005

Competition: EAEPC appeals against Commission’s decision rejecting its complaint about Glaxo Wellcome’s pricing system

On 17 November 2014, details were published of an appeal by the European Association of Euro Pharmaceutical Companies (“EAEPC”) against the decision of the Commission to reject its complaint asking the Commission to further investigate alleged infringement of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) relating to Glaxo Wellcome SA’s (“Glaxo Wellcome”) dual pricing system. In 1998, Glaxo Wellcome's Spanish subsidiary (“GW”) notified to the Commission new conditions for the sale of all its products to wholesalers in Spain. These wholesalers would have to pay markedly higher prices for products which they would export than for products which they would resell for consumption on the domestic market. The large majority of wholesalers signed the new sales conditions. Following the notification, the Commission received four complaints from wholesalers and associations of wholesalers involved in parallel trade of pharmaceutical products. In May 2001, the Commission adopted a decision finding that GW (now GlaxoSmithKline, “GSK”) had infringed Article 101 TFEU by entering into an agreement with Spanish wholesalers which operated a distinction between the prices charged for medicines sold to pharmacies and hospitals in Spain and the higher prices charged in the case of exports to Member States. Following the Commission’s decision, GSK brought an action before the General Court (“GC”) which upheld the Commission’s decision although it noted that the Commission had erred in concluding that the conditions had the object of restricting competition. GSK, the Commission, and two trade associations, EAEPC and Asociación de exportadores españoles de productos farmacéuticos (“Aseprofa”) further appealed against the GC’s decision to the Court of Justice of the European Union (“CJEU”) which overturned the GC’s reasoning and upheld the Commission’s finding that the agreement was a restriction by object. However, the CJEU dismissed the appeals as it found that the Commission had failed to conduct a full examination of the arguments put forward by GSK in relation to the exemption under Article 101(3) TFEU. As a result of all these judgements, GSK formally withdrew its application for an individual exemption in January 2010. The Commission also held a series of meetings with EAEPC and other stakeholders to carefully review the submissions made by EAEPC in relation to its complaint submitted in 1999 after which EAEPC formally requested the Commission to adopt a new decision in relation to its complaint following the CJEU’s judgment in April 2013. However, the Commission informed EAEPC of its intention to reject the complaint without conducting any further investigation and issued a rejection decision on 27 May 2014. EAEPC has now brought an action with the GC seeking the annulment of the Commission’s rejection decision. To support its action, EAEPC relies on three pleas in law. Firstly, EAEPC submits that the Commission committed a manifest error of assessment in breach of Articles 101, 105 and 266 TFEU and Article 7 of Regulation No 1/2003 in holding that the effect of the judgment of the CJEU is that the initial decision of 2001 was considered null and void and that the situation was to be regarded as if the Commission had never adopted the 2001 decision. Secondly, according to EAEPC, the contested decision infringed Article 101 TFEU or that the Commission failed to comply with its duty to state reasons under Article 296 TFEU when assessing the existence of an EU interest in the case. Also EAEPC’s fundamental right to be heard was infringed. Finally, as its third plea in law, EAEPC claims that all matter of fact and law are not analyzed in the Commission’s decision. Source: Case T-574/14 EAEPC v Commission, OJ C 409/47, 17 November 2014Commission’s Press Release 8/5/2001Case T-168/01 GlaxoSmithKline Services Unlimited v Commission, judgement of Court of First Instance 27 September 2006Cases C-501/06P, C-513/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services Unlimited v Commission, judgment of European Court of Justice 6 October 2009 and Commission’s decision in Case AT.36957- Glaxo Wellcome 

Competition: Court of Justice of European Union overrules General Court’s judgement in part and reduces fines imposed on Guardian for its participation in flat glass cartel

On 12 November 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgment setting aside the ruling of the General Court (“GC”) in part and reducing the fine imposed on Guardian Industries Corporation and Guardian Europe Sárl (jointly “Guardian”) for their participation in the flat glass cartel, from EUR 148 million to EUR 103.6 million. In 2007, the Commission found that Guardian, Asahi Glass, Pilkington and Saint-Gobain had unlawfully fixed prices in the flat-glass sector in the European Economic Area and imposed a fine of EUR 148 million on Guardian. The decision and the fine were later upheld by the GC after which Guardian brought an action before the CJEU, arguing that the GC had failed to have regard to the principle of equal treatment in refusing to accept that when calculating the fine, sales between entities belonging to the same undertaking (internal sales) must be taken into account on the same basis as sales to independent third parties (external sales). In its judgment delivered on 12 November 2014, the CJEU set aside the judgment of the GC in part and noted that in order to determine the amount of a fine imposed on an undertaking, the proportion of the overall turnover deriving from the sale of products in respect of which the infringement was committed is able to reflect the economic importance of the infringement and the relative weight of that undertaking in it. According to the CJEU, as regards those sales, a distinction must therefore not be drawn between internal and external sales as excluding a company’s internal sales would effectively favour vertically integrated companies by reducing their relative weight in the infringement to the detriment of the other companies, on the basis of a criterion which has no connection with the objective pursued. Accordingly, the CJEU concluded that the exclusion of internal sales led to the relative weight of Saint-Gobain (a vertically integrated company) in the infringement in being reduced and that of Guardian (a non-vertically integrated company) being increased commensurately. Therefore, the CJEU decided to reduce the amount of the fine imposed on Guardian by 30%, thereby setting that fine at EUR 103.6 million. Source: Court of Justice of the European Union Press Release, 12 November 2014

Merger control: Marine Harvest appeals against fine for breach of notification requirements

On 17 November 2014, details were published of an appeal brought by Marine Harvest ASA (“Marine Harvest”) against the Commission’s decision fining it for breach of the notification and non-implementation obligations in the EU Merger Regulation in respect of its acquisition of Morpol ASA (“Morpol”). On 23 July 2014, the Commission announced that it had imposed a fine of EUR 20 million on Marine Harvest for acquiring Morpol without having received prior authorization under the EU Merger Regulation. The transaction was notified to the Commission in August 2013 and it approved the proposed acquisition, subject to conditions, on 30 September 2013. However, the Commission considered that Marine Harvest had acquired de facto sole control over Morpol by acquiring a 48.5 per cent stake in Morpol on 18 December 2012. Marine Harvest had implemented the acquisition eight months before the formal notification to the Commission took place, and over nine months before the Commission authorized it, in breach of Articles 4(1) and 7(1) of the EU Merger Regulation. Accordingly, the Commission imposed a fine of EUR 20 million on Marine Harvest. The Commission’s fining decision only relates to the breach of the standstill obligation and has no impact on the Commission's authorization of the transaction in September 2013 subject to conditions. On 3 October 2014, Marine Harvest brought an action before the General Court (“GC”) seeking the annulment of the Commission’s decision and the fine or, alternatively, a reduction of the fine. Marine Harvest relies on five pleas in law to support its action. Firstly, Marine Harvest claims that the Commission erred in law and fact in finding that Marine Harvest should have notified its acquisition of a 48.5% stake in Morpol in December 2012 under the EU Merger Regulation and refrained from acquiring title to that shareholding before receiving clearance of that element of the overall transaction. Secondly, Marine Harvest claims that the Commission erred in law and fact in finding that Marine Harvest was negligent in not notifying the December 2012 acquisition and 

 refraining from acquiring title to the 48.5 % shareholding in Morpol. Thirdly, Marine Harvest submits that the Commission’s decision violates the principle that no-one should be punished twice for the same offence. Fourthly, Marine Harvest submits that the Commission’s decision violates the principles of legal certainty, ‘nullum crimen, nulla poena sine lege’, and equal treatment. Finally, Marine Harvest claims that the Commission’s decision contains manifest errors of law and fact and lacks reasoning in setting the fine level in this case. Source: Case T-704/14 Marine Harvest ASA v Commission, OJ C 409/61, 17 November 2014 and Commission Press Release 23/7/2014

Merger control: Commission approves Etihad's acquisition of joint control over Alitalia, subject to conditions

On 14 November 2014 the Commission announced that it has cleared the proposed acquisition of joint control over New Alitalia of Italy by Alitalia Compagnia Aerea S.p.A. (“Alitalia CAI”) of Italy and Etihad Airways PJSC (“Etihad”) of the United Arab Emirates, subject to conditions. The transaction consists of the creation of a new joint venture, new Alitalia, receiving Alitalia CAI’s aviation business as a going concern. Moreover, Etihad will also acquire sole control over the Alitalia CAI subsidiary Alitalia Loyalty S.p.A that manages Alitalia’s frequent flyer programme. Following the investigation on the competitive effects of the proposed acquisition, the Commission concluded that on all affected routes, with the exception of the route Rome-Belgrade, the transaction did not raise any serious competition concerns. In its investigation, the Commission also took into account the interests held by Etihad in Airberlin, Darwin Airline and Jet Airways. However, the Commission's investigation also indicated that the transaction would lead to a monopoly on the Rome–Belgrade route, where Alitalia CAI and Air Serbia are the only carriers offering direct flights. To address these concerns, Alitalia CAI and Etihad submitted commitments to release up to two daily slot pairs at Rome-Fiumicino and Belgrade airports to one or more interested new entrants. Alitalia CAI and Etihad also committed to provide further incentives, such as the possibility for a new entrant to acquire grandfathering rights after a fixed period of time. Furthermore, Alitalia CAI and Etihad committed to offering a special prorate agreement, a fare combinability agreement, an interline agreement and access to their frequent flyer programme to new entrants, to make entry more likely. According to the Commission, these commitments adequately address the competition concerns and should facilitate new entry on the Rome–Belgrade route. Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would not raise serious competition concerns. Source: European Commission Press Release, 14 November 2014

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 DL Germany and DL Italy by MAPFRE
  • Commission approves acquisition of PalaisQuartier by RREEF and of MyZeil by RREEF and ECE
  • Commission approves acquisition of joint control over Selecta by KKR and Allianz
  • Commission approves extension of LVE joint-venture between Lotte Chemical and Versalis
  • Commission approves acquisition of Rockwood by Albemarle in chemical sector
  • Commission approves acquisition of Vestolit by Mexichem