Appeal by Biogaran against Servier “pay for delay” decision. On 10 November 2014, details were published of an appeal by Biogaran against the European Commission’s decision fining it for “pay for delay” agreements entered into by its parent company Servier with several generic companies. Biogaran claims that it did not commit in person any anti-competitive acts and could not be held liable for an amicable settlement agreement relating to patents concluded by its parent company, to which it was not party and of the content of which it was unaware. Further, the Commission erred in concluding that the licence and supply agreement which Biogaran had concluded with one of the generic companies constituted an incentive for that company to conclude the amicable settlement agreement with Biogran’s parent company. Biogaran also submits that the Commission was wrong to impose a fine on it given the novel nature of the alleged infringement (Case T-677/14 – Biogaran v Commission).
ECJ judgment reducing fines imposed on Guardian for its participation in the flat glass cartel. On 12 November 2014, the European Court of Justice (ECJ) handed down its judgment on the appeal brought by Guardian Europe Sarl and its parent company Guardian Industries Corp (Guardian) against the General Court’s judgment that dismissed their appeal against the European Commission’s decision fining them for participation in the flat glass cartel. The ECJ commented that the long duration of the General Court proceedings could not be justified. However, a claim for compensation must be brought before the General Court, not the ECJ. The ECJ also concluded that Guardian had not established that the General Court had infringed its rights of defence by ruling as admissible a letter lodged by the Commission shortly before the hearing. However, the ECJ upheld Guardian’s appeal alleging unequal treatment. The ECJ ruled that no distinction can be drawn between internal sales and sales to third parties when assessing the turnover that derives from the sale of products that are the subject of the infringement. Excluding internal sales from the relevant turnover would effectively favour vertically-integrated undertakings. Therefore, the ECJ set aside the General Court’s judgment on this point and reduced the amount of the fine imposed on Guardian to EUR 103.6 million (Case C-580/12P, Guardian Industries Corporation and Guardian Europe Sarl v Commission, judgment of 12 November 2014).
Commission publishes first Competition Merger Brief. On 7 November 2014, the European Commission published the first edition of a new “Competition Merger Brief”. This provides analysis of important recent merger cases, written by staff of DG Competition.
Phase I Mergers
M.7186 – APG Strategic Real Estate Pool / Hammerson PLC / Meyer Bergman Group / S.D. Malkin Properties, Inc. (Joint Venture) (04.11.2014)
M.7342 – Alcoa Inc. / Firth Rixson (12.11.2014)
M.7409 – Apollo Management L.P. / Companhia de Seguros Tranquilidade S.A (03.11.2014)
M.7411 – TDR Capital LLP / Lakeside 1 Limited (11.11.2014)
M.7412 – Strategic Value Partners LLC / Linpac Packaging Limited (06.11.2014)
M.7426 – Indomobil Multi Jasa TBK / Hino Motors Ltd / Sumitomo Corporation (Joint Venture) (04.11.2014)
M.7428 – Iridium Concesiones de Infraestructures / Dutch Infrastructure Fund (Joint Venture) (04.11.2014)
Phase II Mergers
Commission opens Phase II investigation into acquisition of DESFA by SOCAR. On 5 November 2014, the European Commission announced that it has decided under Article 6(1)(c) of the EU Merger Regulation to open a Phase II investigation into the acquisition of Greek gas transmission system operator DESFA by SOCAR. The Commission is concerned that the transaction may reduce competition on the upstream wholesale supply market for natural gas in Greece as the merged entity may have the ability and incentive to hinder SOCAR’s competitors from accessing the Greek gas transmission network and to restrict inflows of gas into Greece, so favouring SOCAR’s gas suppliers over those of its competitors.
General Court dismisses appeal against approval of broadband aid in Cornwall and Isles of Scilly. On 5 November 2014, the General Court handed down its judgment dismissing an appeal brought by Vtesse Networks Ltd (Vtesse) against a Commission decision approving the award of state aid to support the deployment of next generation broadband networks in Cornwall and the Isles of Scilly. The General Court concluded that Vtesse had standing to bring proceedings against the contested decision to safeguard its procedural rights but not to challenge the merits of that decision. This was because Vtesse had not shown that its market position had been substantially affected or it was concerned in a manner that distinguished it individually from two other telecoms companies. Vtesse’s pleas did not prove the existence of doubts that justified initiating the formal investigation procedure. Observations Vtesse had submitted later could not reformulate its original pleas as procedural pleas. Moreover, Vtesse had failed to prove the existence of doubts by reference to the contents of the contested decision. The General Court also concluded that there had been no breach of Vtesse’s rights of defence. Vtesse only had the right to be involved in the administrative procedure to the extent appropriate in the circumstances of the case. It was not open to the General Court to extend this by reference to general principles of EU law (Case T-362/10 Vtesse Networks Ltd v Commission, General Court judgment of 5 November 2014).
CMA decides not to progress interchange fee investigations at this time. On 4 November 2014, the Competition and Markets Authority (CMA) announced that it has decided that at this time it will not progress its investigations into Visa and MasterCard interchange fees towards deciding whether or not to issue statements of objections. The CMA has reached this decision due to the European Commission’s proposed interchange fees regulation, which is expected to cap MasterCard’s and Visa’s fees and ensure they are fair and transparent and remove the consumer harm which may result from the current levels of interchange fees. The CMA emphasises that its investigations into whether the Visa and MasterCard UK interchange fees may breach the Chapter I prohibition of the Competition Act 1998 and/or Article 101 of the TFEU remain open. If the CMA were to consider that the EU interchange fees regulation will not address the suspected harm as expected, it would look again at continuing pro-actively with these investigations.
CAT withdraws Deutsche Bahn damages action. On 12 November 2014, the Competition Appeal Tribunal (CAT) published an order withdrawing the damages claim brought by Deutsche Bahn and others against Schunk, SGL Carbon, Mersen and Morgan Advanced Materials Plc. The claimants were seeking damages resulting from the carbon and graphite cartel. The main hearing in the action had been adjourned whilst the parties negotiated a settlement. The CAT states that agreement has been reached and it has granted the claimants’ request to withdraw their action. The CAT has ordered Schunk to pay one-third of the claimants’ costs in an amount to be assessed if not agreed on a standard basis pursuant to Rule 44.3 of the UK’s Civil Procedure Rules.
CMA makes initial enforcement order to Marlowe Holdings, Marlowe Holdings Investments, Edmundson Electrical and Lockwell Electrical Distributors. On 3 November 2014, the CMA announced that it has made an initial enforcement order under section 72 of the Enterprise Act 2002 addressed to Marlowe Holdings Limited, Marlowe Holdings Investments Limited, Edmundson Electrical Limited and Lockwell Electrical Distributors Limited in relation to the completed acquisition by Marlowe Holdings Investments Limited (parent of Edmundson Electrical Limited) of Lockwell Electrical Distributors Limited. Section 72 of the Enterprise Act, as amended by the Enterprise and Regulatory Reform Act 2013, allows the CMA to make initial enforcement orders to prevent pre-emptive action in completed (and anticipated) mergers. The order is without prejudice to the CMA’s ongoing investigation into this completed merger.
CMA makes initial enforcement order to WD-40 Company Limited. On 5 November 2014, the CMA announced that it has made an initial enforcement order under section 72 of the Enterprise Act 2002 addressed to WD-40 Company Limited in relation to its completed acquisition of the business and assets of GT 85 Limited. The order is without prejudice to the CMA’s ongoing investigation into this completed merger.
National Express Group / Essex Thameside (Clearance) (04.11.2014)
Continental AG / Veyance Technologies Inc (Clearance) (05.11.2014)
Cirrus Logic Inc / Wolfson Microelectronics Plc (Clearance) (07.11.2014)
London Stock Exchange Plc / Frank Russell Company (Clearance)
(07.11.2014) Vitec Investments Limited / Autocue Group Limited (Clearance)
(10.11.2014) AECOM Technology Corporation / URS Corporation (Clearance)
(12.11.2014) Barclays Plc / The Logic Group (Clearance) (13.11.2014)
Speeches & Publications
House of Lords Committee considers competition private actions provisions of Consumer Rights Bill. On 3 November 2014, the House of Lords’ Grand Committee considered proposed amendments to the provisions of the Consumer Rights Bill relating to private actions in competition law. The Committee debated, in particular, a proposed amendment to remove the possibility of opt-out collective proceedings. This amendment was raised due to concerns about the operation of the proposed new regime and its impact on business. However, this amendment was withdrawn. Other issues discussed related to whether the new regime should be subject to review and the ability for representatives, acting on a pro bono basis, to claim costs.
CMA publishes speech on cartel offence. On 5 November 2014, the CMA published a speech by Sonya Branch, the CMA’s Executive Director of Enforcement, on the cartel offence. Ms Branch discussed the role of the CMA, providing an overview of its enforcement priorities. She also summarised the main features of the criminal cartel offence, noting reforms introduced by the Enterprise and Regulatory Reform Act 2013. Ms Branch then explained the importance attached by the CMA to building strong relationships with other national and international enforcement agencies. Finally, she explained how the CMA has been working to develop its intelligence and investigative capabilities, noting also the CMA’s initiatives to encourage compliance.
Statement by Margrethe Vestager on tax state aid investigations. On 6 November 2014, the Competition Commissioner Margrethe Vestager made a statement on tax state aid investigations. This statement appears to be in response to articles in the press regarding the leak of documents concerning tax agreements, returns and other sensitive papers relating to a number of major companies in Luxembourg. Commissioner Vestager notes that if in a tax ruling, the tax authorities of a member state accept that a tax base of a specific company is calculated in a favourable way which does not correspond to market conditions, it may give the company more favourable treatment than other companies, and this could constitute state aid. The Commission is already looking at member states’ tax rulings practice that could favour some companies. It has recently opened formal investigation procedures in Ireland, the Netherlands and Luxembourg and has sent information requests to other member states.
CMA launches a short guide to competition law risk. On 11 November 2014, the CMA launched a short guide to competition law risk in conjunction with the Institute of Risk Management (IRM). The guide is intended to help risk professionals understand and identify business behaviours that could put them at risk of breaking competition law. The guide provides a basic overview of competition law, explains why compliance is good for business, and the sanctions for non-compliance. It then expands on three areas in which particular vigilance is needed: cartel activity; other potentially anti-competitive agreements; and abuse of a dominant position, providing high level case studies and the lessons to be learnt from them. The guide sets out the CMA’s four-step process for competition law compliance and explains what businesses should do if they think competition law is being broken.
Speech by David Currie on maintaining open and competitive markets. On 11 November 2014, the CMA published a speech given by David Currie, the CMA Chairman, to the (IRM). He spoke about maintaining open and competitive markets and what boards need to do to keep on the right side of the law. He explained the four stages of the CMA’s risk based approach to identifying and managing competition law risk. He emphasised that it is important for businesses to have a culture of openness and highlighted the key role for the board in this, particularly non- executive directors. Lord Currie also said that the CMA is seeking to raise awareness through effective enforcement and advocacy of compliance.