EU Competition

Commission publishes non-confidential decision in Liberty Global and BASE merger. On 18 April 2016, the European Commission (Commission) published the non-confidential version of its decision to conditionally approve Liberty Global’s (Liberty) acquisition of BASE, a Belgian mobile network operator. The Commission was concerned with the anticompetitive effects of the acquisition, as Liberty already owns Telenet Group Holding NV, the largest mobile virtual network operator in Belgium, which competes with BASE in the region. To address these concerns, Liberty offered to divest a number of assets, including BASE’s 50% share in Mobile Vikings and part of BASE’s customer base.

Commission sends Google Statement of Objections in respect of infringements under Article 102 of the TFEU arising from Android mobile operating systems and applications. On 20 April 2016, the Commission issued a press release confirming that it had sent a statement of objections to Google and its parent company (Alphabet, Inc.), pursuant to which it has informed Google of its preliminary view that the company has, in breach of EU antitrust rules, abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators. The Commission notes, among other things, that manufacturers are required to pre-install Google Search and Google’s Chrome browser and must also set Google Search as their default search service on their devices, as a condition to licensing certain Google proprietary apps.

AG Saugmandsgaard Øe hands down Opinion on Flemish laws requiring cross-border invoices to be drawn up exclusively in Dutch. On 21 April 2016, Advocate General Henrik Saugmandsgaard Øe, handed down his Opinion, in which he has set out his view that the obligation laid down by a decree of the Flemish Community requiring cross-border invoices to be drawn up exclusively in Dutch, failing which they are to be declared null and void, infringes EU law. The question arose in a dispute between New Valmar, a company established in the Dutch-speaking region of Belgium, and Global Pharmacies Partner Health, a company established in Italy, in relation to unpaid invoices. AG Saugmandsgaard Øe concluded that such a language regime, goes beyond what is strictly necessary to promote the use of Dutch and to enable the competent authorities to verify the appropriate terms.

AG hands down Opinion on Belgian provisions prohibiting price promotions and stipulating a minimum retail price on manufactured tobacco. On 21 April 2016, Advocate General Wahl handed down his Opinion on whether EU law prohibits national legislation requiring retailers to respect minimum prices by preventing prices being offered for tobacco products that are lower than the price that the manufacturer/importer has affixed to the revenue stamp. Article 34 of the Treaty on the Functioning of the European Union (TFEU) prohibits quantitative restrictions on imports or measures having equivalent effect, but Advocate General Wahl considered this price issue did not fall within the concept of a "selling arrangement" under relevant case law and therefore, the Article 34 prohibition was not applicable. In addition, Article 4(3) of the Treaty on European Union and Article 101 of the TFEU are only infringed where a Member State requires or encourages the adoption of agreements, decisions or concerted practices contrary to Article 101 or reinforces their effects, or where it divests its own rules of the character of legislation by delegating to private economic operators responsibility for taking decisions affecting the economic sphere, which was not applicable to this particular matter.

Commission invites comments on commitments offered by Paramount Pictures in respect of exclusivity conferred by licensing agreements. On 22 April 2016, the Commission issued a press release announcing that it is inviting comments from interested parties in respect of the commitments provided by Paramount Pictures in order to address the Commission’s concerns surrounding potential anticompetitive effects of certain bilateral agreements under which the studios license their output of films over a certain period of time for pay-TV to Sky UK. Certain clauses within these bilateral agreements appear to prevent Sky UK from allowing EU consumers located elsewhere to access, via satellite or online, pay-TV services available in the UK and Ireland. The Commission therefore, considers that the agreements create “absolute territorial exclusivity” and also “eliminate cross-border competition between pay-TV broadcasters and partition the Single Market across national borders”.

EU Mergers

Phase I Mergers

  • M.7873 WORLDLINE / EQUENS / PAYSQUARE (20 April 2016)
  • M.7943 DOW / DCC (20 Aril 2016)
  • M.7950 EGB / GP (19 April 2016)
  • M.7976 DEUTSCHE ALTERNATIVE ASSET MANAGEMENT (GLOBAL) LIMITED / ERMEWA / AKIEM (18 April 2016)
  • M.7980 SUMITOMO / COSAN / BIOMASSA (20 April 2016)
  • M.7988 RHONE CAPITAL / AP / GARDA WORLD SECURITY (20 April 2016)

State Aid

New State aid recovery interest and reference rates to come into effect on 1 May 2016.The new State aid recovery interest reference/discount rates, originally published in the Commission’s notice on 16 April 2016, will come into effect on 1 May 2016. All 19 Eurozone members, together with Bulgaria and Sweden, will benefit from reduced rates. Rates for all other EU Member States remain unchanged.

AG hands down Opinion on incompatibility of Belgian State Aid with EU law. On 21 April 2016, Advocate General Bobek handed down his Opinion in respect of an appeal brought by the Kingdom of Belgium, in relation to measures introduced in May 2001, in the wake of the bovine spongiform encephalopathy (BSE) crisis, which required Member States to carry out compulsory screening tests on certain animals at risk of being infected. Belgium’s, partial or full, financing of these screening tests through state resources was considered by the Commission and the General Court to be State aid for farmers, slaughterhouses and other such relevant entities. The Kingdom of Belgium therefore challenged this decision on the basis that one of the four criteria for State aid, namely the selective nature of the measure, was not fulfilled because the reference framework used to establish selectivity was defined too broadly. The State financing of the tests was therefore not State aid because it did not confer a selective advantage on undertakings. AG Bobek advised the European Court of Justice  to dismiss the appeal on the basis that there were a number of approaches for the assessment of selective disadvantage and that the General Court had not erred in finding that the scheme provided an unjustified selective disadvantage in accordance with any one particular reference framework.

Public Procurement

Commission publishes article on new EU procurement rules effective as of 18 April 2016.On 18 April 2016, the Commission published an article setting out the improvements made under the new EU public procurement rules. In particular, the new rules limit turnover thresholds and provide the option of dividing tenders into lots, enabling small and medium-sized enterprises to bid on public contracts. In addition, the digitalisation of public procurement is expected to reduce public spending, bureaucracy and corruption.

UK Competition

CMA opens investigation into anticompetitive arrangements in the supply of products to the construction industry. On 18 April 2016, the Competition and Markets Authority (CMA)announced that it had opened an investigation into suspected anticompetitive arrangements in the supply of products to the construction industry under Chapter I of the Competition Act 1998 (CA) and/or Article 101 of the TFEU. The CMA is also conducting a related criminal investigation into whether individuals have committed an offence under section 188 of the Enterprise Act 2002.

CMA announces it will continue investigation into suspected competition law infringement in the sports equipment sector. On 20 April 2016, the CMA announced that it had amended its timetable for review of suspected breaches of competition law in the sports equipment sector under Chapter I of the CA and Article 101 of the TFEU. The CMA notes that it has not yet reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections to any of the parties under investigation, but is expected to make a further update on its investigation by the end of July 2016.

CMA publishes final report following review of FirstGroup undertakings. On 20 April 2016, the CMA published its final report following its review of the undertakings provided by FirstGroup plc in 2002 in respect of the acquisition of SB Holdings Limited by FirstBus plc. The undertakings specifically apply to services operated by FirstGroup across the “First Edinburgh” and “First Glasgow” areas, where FirstGroup operates approximately 255 tendered and commercial routes. Following its review, the CMA has concluded that the undertakings are no longer appropriate due to a change in circumstances, including the increased strength of rival operators.

Appeals brought against CMA’s decision to fine pharmaceutical companies for entering into restrictive agreements with GlaxoSmithKline. On 18 April 2016, the Competition and Appeal Tribunal (CAT) published five notices of appeal lodged by Generics UK, GlaxoSmithKline plc, Xellia Pharmaceuticals ApS and Alpharma LLC, Actavis UK Limited and Merck KGAA, challenging the fines imposed by the CMA following its decision that settlement agreements entered by the parties in 2002 (to end ongoing patent litigation) with pharmaceutical originator company GlaxoSmithKline PLC, and further to which, generic manufacturers agreed to cease efforts to enter the UK paroxetine market, breached UK and EU competition law. Among other things, the parties are arguing that their rights of legal certainty and defence were prejudiced by the length of time between the infringement and the CMA’s investigation.

CMA publishes open letter to estate agents regarding potential competition law infringements arising through use of web portals. On 21 April 2016, the CMA published an open letter to estate agents reminding them of their obligations under competition law when choosing online property portals to advertise their properties. The letter explains that the selection of a portal to list or delist a property is an important aspect of competition between estate agents and should be made by each agent independently. The CMA states that it is “aware that estate agents in some local areas may have made a collective decision to join the OnTheMarket portal and, at the same time, to remove their business from other portals that compete with OnTheMarket” and that such collusion may be considered a competition law infringement.

CMA publishes final decision in its review of Centrica undertakings. On 22 April 2016, the CMA published its final decision in respect of its review of the undertakings given by Centrica following its acquisition of the Rough gas storage facility in the North Sea. The CMA has concluded that there has been a change of circumstances due to the age of the facility and its declining performance and has, therefore, decided to amend the existing undertakings requiring Centrica Storage Limited (CSL) to offer for sale a specific amount of capacity before the start of each storage year and limit the amount that can be supplied to its parent company, Centrica, to include an adjustment mechanism to take into account circumstances where CSL can demonstrate that there has been a substantial impact on the Rough facility’s capacity and where alternative actions available to it will not suffice.

Speeches & Publications

UK Regulators’ Network publishes strategy for 2016-2017. On 18 April 2016, the UK Regulators’ Network (UKRN) published its “Strategy and Work Programme for 2016/2017”. The UKRN is made up of 13 UK regulators, including Ofcom, Ofwat and the Financial Conduct Authority. The strategy and work programme sets out the areas of focus where members of the network can work together, and in particular has confirmed “tools for measuring future trends in the cost of capital” “sharing data on customer vulnerability” “consumer engagement and challenge” and  “alternative dispute resolution”, as being their new projects for 2016/2017.

Competition Commissioner gives speech on innovation and competition. On 18 April 2016, the Commission published a speech given by Margrethe Vestager, Competition Commissioner. In her speech she noted that one of the Commission’s jobs, as competition enforcers, is “to make sure that companies don’t abuse their power to hold back innovation” and used the Commission’s investigations into Amazon and Google as such examples. She also indicated that the Commission was considering lowering the thresholds for notification, so that transactions involving large companies acquiring smaller innovative competitors, which do not yet have large sales volumes, would be reviewed.

Commission issues press release on its strategy to create a Digital Single Market. On 19 April 2016, the Commission issued a press release setting out its strategy for delivering a Digital Single Market, in order to help European industry, SMEs, researchers and public authorities make the most of new technologies. As part of this process, the Commission plans to invest €500 million in a pan-EU network of digital innovation hubs (centres of excellence in technology) where businesses can obtain advice and test digital innovations. It also intends to focus on five key areas: “5G, cloud computing, internet of things, data technologies and cybersecurity”.

Council extends restrictive measures against Myanmar/Burma. On 21 April 2016, the Council of the European Union published its decision to extend restrictive measures currently in place against Myanmar/Burma. These restrictions are now due to expire on 30 April 2017.