The new Competition Council has been appointed
On 2 February, the Federal Government approved a Royal Decree appointing the six permanent and six non-permanent members of the Competition Council for the next six years. The current President of the Competition Council, Stefaan Raes, has been reappointed. It is understood that, after three years, he will switch positions with Vice-President Christian Huveneers. The selection process of the new members of the Competition Council had been launched by the publication of the Royal Decree of 31 October 2006, which laid down the exam program for the recruitment of the new members of the Competition Council.
The other permanent members of the new Competition Council are: Kris Boeykens; Laura Parret; Jeroen Capiau and Dominique Smeets. The non-permanent members are: Jacques Steenbergen; Elisabeth Van Hecke - de Ghellynck; Olivier Gutt; David Szafran; Eric Bodson and Pierre Battard.
Application for interim relief against InBev rejected
On 24 January, the Auditor rejected an application for interim relief brought by a number of pub owners against InBev. The pub owners had initiated proceedings against InBev last September, on the ground that the company would have abused its dominant position on the Belgian beer market by replacing its standard 25-centiliter Jupiler glasses by new ones that are 10 percent larger. However, the Auditor rejected the application, on the ground that the conditions for interim relief were not met. This decision may be appealed to the President of the Competition Council within thirty days.
The Competition Council has conditionally cleared the acquisition of Carestel by Autogrill The Competition Council conditionally cleared the acquisition by Autogrill of a 61.5 per cent stake in Carestel, despite the high market shares of the notifying parties, in October 2006. Autogrill is active in Belgium through its subsidiary AC Restaurants & Hotels, a chain of restaurants and hotels mainly located along motorways and at railway stations. Carestel is active in the commercial catering sector through Carestel Motorway Services, which runs catering establishments along motorways in Belgium and Luxembourg, and through Restair, which manages Carestel’s airport activities in Belgium and abroad.
The Competition Council distinguished a principal upstream market in concessions for motorway petrol station services and an ancillary upstream market in sub-concessions for motorway restaurant services. It found that penetration of the former was difficult due to technical barriers to entry such as the unlikelihood of construction of new motorways and the limited scope for development of existing petrol station services. A new player could obtain a concession only when it was up for renewal i.e. every 20 to 30 years. The level of investment needed and the time taken to reap the benefits could also discourage small and medium sized players.
Downstream, the Competition Council distinguished a market for motorway restaurant services with competition geographically limited to each motorway service station and to restaurants nearby but off the motorway. It agreed with the parties’ argument that products offered by convenience and petrol station shops and those proposed by traditional restaurants located near motorway exits were substitutes, relying on non-competition clauses concluded in this respect between highway restaurants and petrol shops. Geographically, the Competition Council did not follow the ‘axis’ approach of the European Commission and the French Competition Council, according to which the length of the motorway determines the geographic market, as the Belgian motorway network does not have toll motorways and has a high number of motorways exits; this facilitates drivers’ access to restaurants located near motorway exits.
However, the Competition Council expressed concerns regarding the effects of the merger on independent restaurants located between two AC/Carestel entities and on coach companies having contracted with Autogrill. The latter benefit from price discounts related to the volumes of restaurant services they use. These agreements also include fidelity programmes open to bus drivers and guides that Carestel has put in place, thus potentially leading to exclusion of competitors from the market. To obtain clearance for the transaction, the notifying parties agreed: (i) to renounce their participation in bids for the concessions of certain restaurant services to allow independent service stations to compete; and (ii) not to renew automatically concessions for the exploitation of motorway restaurants currently exploited by Carestel and Autogrill to allow other restaurant owners to increase their market share. The parties also agreed:
- to divest certain motorway restaurant concessions where the strategic location of the restaurants would eliminate all competition following the merger;
- that their restaurants would no longer conclude exclusive agreements with motorway petrol stations located in the same service stations
- to allow these outlets to compete with Carestel or Autogrill restaurants established in the same locations; and
- to abandon exclusivity agreements with bus companies so as not to discourage them from stopping at motorway restaurants other than Carestel’s or Autogrill’s.
On this basis, the Competition Council concluded that Autogrill would not have to divest a substantial proportion of Carestel motorway restaurants considering the pressure exercised on the latter by petrol shops.
The Competition Council’s decision is interesting in that it took into account all effects of the merger and not solely the (large) market shares of the notifying parties. Furthermore, it contrasts with precedents set by the European Commission and other competition authorities in this sector, adopting a solution specific to the Belgian market.
The Competition Council has cleared Belgacom’s acquisition of Vodafone’s 25% participation in Belgacom Mobile
On 30 October 2006, the Competition Council cleared Belgacom’s acquisition of Vodafone Belgium’s minority share in NV Belgacom Mobile in a Phase I decision. Belgacom Mobile supplies a number of mobile communication services to residential and professional clients in Belgium under the “Proximus” and “Pay&Go” brands and is owned by Belgacom (75%) and Vodafone Belgium (25%). While the transaction did not raise any competition concerns, the Competition Council’s decision is noteworthy, as the Competition Council clarified when a transaction qualifies as a concentration under the Competition Act and should, as a result, be notified to the Belgian Competition Authority.
Under the Competition Act, a concentration is deemed to arise where a change of control on a lasting basis results from, inter alia, the acquisition by an undertaking of direct or indirect control in another undertaking. In casu, the question arose whether the notified operation would lead to a change in Belgacom Mobile’s control structure. The Competition Council mentioned that if Belgacom would always have held exclusive control over Belgacom Mobile, as argued by the notifying parties, the acquisition of Vodafone’s 25% participation in Belgacom Mobile would not lead to any change in control and would not need to be subjected to merger control. However, if Vodafone Belgium and Belgacom held joint control over Belgacom Mobile, the notified transaction would result in a change from joint control to sole control and would constitute a concentration in the sense of the Belgian Competition Act. Contrary to the findings of the Auditor, the Competition Council found, drawing on the European Commission’s notice on the concept of concentration under the EC Merger Regulation, that the operation would indeed result in a change of control on a lasting basis. In line with the approach under EU law, the Competition Council observed that joint control may exist even where there is no equality between the two parent companies in voting rights or in representation in decision-making bodies. This is the case where minority shareholders have additional rights allowing them to veto decisions that are essential for the strategic commercial behaviour of the joint venture.
The Competition Council found that Vodafone had such rights and that, as a result, Belgacom and Vodafone jointly controlled Belgacom Mobile prior to the transaction, and that the acquisition of Vodafone’s stake by Belgacom amounted to a notifiable concentration.
The Royal Decrees implementing the Belgian Competition Act have entered into force
The Royal Decrees implementing the new Belgian Competition Act have been published in the Official Gazette of 22 November 2006 and entered into force retroactively on 1 October 2006. They were adopted on 31 October 2006.
The publication and entry into force of these measures constitute the final step of the reform and modernisation of Belgian competition law enforcement, aligning Belgian law further with EC law. With regard to restrictive practices, the Royal Decree of 31 October 2006 on the submission of complaints and demands for interim relief introduces a standard form for the submission of complaints (“form PK/VMP”), which is largely inspired by the form C annexed to the European Commission's Notice on the handling of complaints under Articles 81 and 82 of the EC Treaty. The Royal Decree of 31 October 2006 replaces the Royal Decree of 22 January 1998, which did not provide for a standard form for the submission of complaints.
With regard to merger control, the new Royal Decree on the notification of concentrations replaces the Royal Decree of 23 March 1993. The new Royal Decree itself is no more than a technical update of the Royal Decree of 23 March, by taking into account the new wording of the Competition Act. It does not introduce major changes: notifications of concentrations (including annexes) must now be sent to the Auditors (instead of the Council) in eight copies (formerly ten) by registered letter or delivered by hand during the opening hours of the registry. At the same time, an electronic version of the notification must be sent to the Auditors. However, the notification form (“form CONC C/C”) itself has been amended significantly, in order to align the Belgian form with the form CO for the notification of a concentration pursuant to Regulation (EC) No 139/2004.
The first clearance decisions under the new simplified merger control procedure have been adopted
The Auditors have recently adopted their first clearance decisions under the new simplified procedure for merger control (Decision n° 2006-C/C-26-AUD of 14 December 2006 Besix Group/Socogetra-Cobelba; Decision n° 2006-C/C-27-AUD of 14 December 2006 SPE/Intermosane and Decision n° 2006-C/C-1-AUD of 3 January 2007 Spano invest NV/Spanogroup NV). Under the new Competition Act, which entered into force on 1 October 2006, an Auditor can decide that a notified concentration does not need further investigation and should be cleared under a simplified procedure, without a formal decision of the Competition Council. Where the conditions for the application of the simplified procedure are met and the concentration does not raise any competition concerns, the Auditor will conclude so in a letter to the notifying parties, within a time limit of 20 working days from notification. This letter has the legal value of a decision of the Competition Council. Where the conditions for the application of the simplified procedure are not met or where the Auditor finds that the operation raises competition concerns, the Auditor will affirm this in a letter addressed to the notifying parties, which is not subject to appeal and ends the simplified procedure. In such a case, the normal rules regarding the investigation and initiation of merger proceedings apply.