EU Antitrust

Appeal against Commission decision rejecting complaint about Glaxo Wellcome pricing system. On 17 November 2014, details were published in the Official Journal of an appeal by the European Association of Euro Pharmaceutical Companies (EAEPC) against a decision of the European Commission rejecting its complaint asking it to further investigate alleged infringements of Article 101 of the TFEU relating to Glaxo Wellcome’s dual pricing system. The Commission concluded that there was no EU interest in it conducting a further investigation into the dual pricing system, following judgments of the General Court and European Court of Justice annulling a 2001 Commission decision. The Commission based its rejection decision on the fact that the conduct at issue had taken place in 1998 and had ceased, without producing persistent effects. Further, national authorities and national courts are well placed to handle the issues raised by the complaint. EAEPC claims that the Commission has erred in law in rejecting its complaint. It also alleges that the Commission failed to state reasons for its decision, breached its right to be heard and failed to analyse all relevant matters of fact and law.

Appeal by Teva against “pay for delay” decision. On 17 November 2014, details were published of an appeal by Teva against the European Commission’s decision fining it for entering into a “pay for delay” patent settlement agreement with Servier that breached Article 101 of the TFEU. Teva claims that the Commission erred in characterising the agreement as a restriction by object. It also failed to establish that the agreement had restrictive effects and failed adequately to consider the application of Article 101(3) of the TFEU. In addition, Teva claims that the Commission erred in its calculation of the fine and committed significant procedural errors.

General Court dismisses appeal against fine for obstruction of Commission inspection.

On 26 November 2014, the General Court dismissed an appeal by two Czech energy companies against a fine imposed by the European Commission for their obstruction of a Commission inspection. The General Court held that the Commission had been entitled to find that the companies refused to submit to an inspection by negligently allowing access to an email account that the Commission had asked to be blocked and intentionally diverting emails from one of these accounts. The General Court held, in particular, that the infringements could not be attributed to any failure by the Commission inspectors. It held that once the inspection decision was notified to an authorised person at the beginning of the inspection, it was for the companies to take all the necessary measures to implement the inspectors’ instructions and to ensure that the persons authorised to act on their behalf did not impede the implementation of those instructions. Further, the fact that the relevant information may have still be available elsewhere in the companies’ IT systems was not relevant. The inspectors should have been able to obtain the evidence in the places where such evidence is normally found, without being prevented from doing so or being obliged to search elsewhere. The General Court also held that the Commission had not breached the companies’ rights of defence nor breached the presumption of innocence. Further, the fine of EUR 2.5 million imposed was proportionate given the serious nature of the procedural infringements (Case T-272/12 – Energetický a průmyslový holding a.s.,and EP Investment Advisors s.r.o., v European Commission, judgment of 26 November 2014).

EU Cartels

Trioplast appeals against imposition of interest for late payment of fines. On 17 November 2014, details were published in the Official Journal of an appeal by Trioplast Industrier AB (TI) against a decision of the European Commission to charge it interest for the late payment of a fine imposed in relation to the industrial bags cartel. The General Court had, on appeal by TI, found that the Commission had erred in failing to specify the specific share of TI’s joint and several liability for the infringement. It adjusted the starting point for the calculation of the fine for which TI was liable. TI claims, in particular, that, following this judgment, the Commission had no legal basis for seeking interest for late payment of the fine. In the alternative, TI is seeking damages for the amount of the late payment interest and expenses incurred, and in relation to the Commission’s failure, following the General Court’s judgment, to release or reduce the bank guarantee given by TI in relation to the fine.

Ombudsman criticises Commission for delay in providing access to documents in cartel investigation. On 19 November 2014, the European Ombudsman published a decision on a complaint relating to the alleged delay by the European Commission in providing Infineon access to key evidence against it in the Commission’s investigation into the smart card chips cartel. The Commission had sent Infineon a “Letter of Facts” in July 2014, providing access to an electronic version of an incriminating internal email of another company (the content of which had already been made available). Infineon was only given five days to respond and complained that this was insufficient time to examine the authenticity of the email. The Commission issued its cartel decision, fining Infineon, on 3 September 2014. The Ombudsman found that the Commission had received the electronic version of the email in January 2014. There was no good reason for the Commission to delay providing this evidence to Infineon until July. It knew the importance and relevance of the evidence, due to concerns already raised about its authenticity. Without reaching a view on whether five days was a sufficient time for Infineon to respond, the Ombudsman criticised the Commission for not sending the Letter of Facts to Infineon at any earlier stage in its investigation.

Commission sends statement of objections to suspected participants in trucks cartel. On 20 November 2014, the European Commission announced that it has sent a statement of objections to companies suspected of participating in an illegal cartel in the trucks sector. In January 2011, the Commission announced that it had conducted unannounced inspections in several members states at the premises of companies active in the truck industry. The statement of objections has been sent to a number of heavy and medium duty truck producers. It sets out the Commission’s suspicions that these companies may have agreed or coordinated their pricing behaviour in the EEA, in breach of Article 101 of the TFEU. The addressees of the statement of objections now have the right to examine the documents in the Commission’s investigation file, reply in writing and request an oral hearing.

General Court dismisses Orange’s appeal against Commission dawn raid decision. On 25 November 2014, the General Court dismissed an appeal by Orange against decisions of the European

Commission to conduct inspections at the premises of Orange and its subsidiaries, as part of its investigation into suspected breaches of Article 102 of the TFEU in the internet connectivity sector. The General Court held that the Commission’s inspection decisions were not disproportionate despite the fact that the French competition authority had investigated the same alleged practices by Orange, without finding evidence of infringement. It confirmed that the Commission is not, in principle, bound by decisions taken by a national court or authority pursuant to Articles 101 and 102 of the TFEU and that the Commission may take decisions, even if they conflict with a national decision. The General Court also held that the Commission’s inspections were necessary, even though it had access to information in the French authority’s case file. Further, it concluded that the Commission’s inspection decisions provided sufficiently precise and detailed information about the nature of the suspected infringements  for the General Court to conclude that the inspections were not arbitrary. The General Court did not, therefore, need to examine the information in the Commission’s possession to support its suspicions at the date of the inspection decisions (Case T-402/13 – Orange v European Commission judgment of 25 November 2014 (not yet available in English).

General Court judgments in Alstom and Areva appeals against power transformers cartel decision. On 27 November 2014, the General Court handed down its judgments in the appeals by Alstom and its former subsidiary Areva T&D SA (now Alstom Grid SAS) against the European Commission’s decision on the power transformers cartel. The General Court has annulled the Commission’s decision in so far as it relates to Alstom finding that the Commission failed to give sufficient reasons why arguments advanced by Alstom were not capable of rebutting the presumption that a parent company of a wholly-owned subsidiary exercises decisive influence over the subsidiary’s conduct. The General Court, has, however, dismissed the appeal by Alstom Grid, rejecting claims that the Commission erred and breached the principles of legitimate expectations and legal certainty by refusing Areva T&D immunity from fines under the 2002 Leniency Notice (Case T-517/09 – Alstom v Commission and Case T-521/09 – Alstom Grid v Commission, judgments of 27 November 2014 (not yet available in English).

EU Mergers

Phase I Mergers

  • M.7319 – KKR & Co. L.P. / Allianz SE / Selecta AG (17/11/2014)
  • M.7389 – Aegon Spain Holding B.V / Santander Totta Seguros / Aegon Santander Portugal Vida

                - Companhia de Seguros de Vida, S.A / Aegon Santander Portugal Não Vida - Companhia de Seguros de Vida, S.A. (20/11/2014)

  • M.7398 – Macquarie Infrastructure and Real Assets (Europe) Limited (Mireal) / Ferrovial Aeropuertos SAU / Airport Holdings NDH1 Limited (21/11/2014)
  • M.7401 – Blackstone Group / Alliance Industries of Luxembourg / Alliance Automotive Group of France (27/11/2014)
  • M.7407 – Lear Corporation / Everett Smith Group (21/11/2014)
  • M.7416 – RREEF Spezial Invest GmbH / ECE Projektmanagement GmbH & Co. KG / PalaisQuartier  (19/11/2014)
  • M.7430 – Fosun / Club Méditerranée (20/11/2014)
  • M.7431 – MAPFRE S.A / Direct Line Versicherung Aktiengesellschaft / Direct Line Insurance S.p.A. (19/11/2014)
  • M.7433 – Ontario Teachers’ Pension Plan Board (OTPP) / Pamplona Capital Partners III, L.P. / CSC ServiceWorks Holdings, Inc. (CSC) (20/11/2014)
  • M.7436 – Vista Equity Partners, LLC / TIBCO Software, Inc. (26/11/2014)
  • M.7440 – Eastman Chemical Company / Taminco Corporation (26/11/2014)

State Aid

General Court upholds Ryanair’s appeal against Commission decision that non-application of Irish air travel tax was not state aid. On 25 November 2014, the General Court allowed an appeal by Ryanair against a European Commission decision that found that the non-application of Irish air travel tax to transit and transfer passengers did not constitute state aid. The Commission had concluded, without opening an in-depth state aid investigation, that this disputed measure was not selective. The General Court concluded, however, that the Commission’s preliminary investigation and analysis of the issue of selectivity was incomplete and insufficient. Further, the duration of the preliminary investigation phase was longer than most such investigations. The General Court held that these factors indicated that the Commission should have initiated a formal, in-depth investigation to verify that the disputed measure was not selective. This would have allowed Ryanair, and others to submit observations in this regard. Therefore, the General Court annulled the Commission’s decision, in so far as it related to the exemption for transit and transfer passengers, on the basis that the decision was adopted in breach of Ryanair’s procedural rights (Case T-512/11 – Ryanair Ltd v European Commission, judgment of 25 November 2014).

Commission approves 2012 German Renewable Energy Act but orders partial recovery. On 25 November 2014, the European Commission announced that it has decided, under the state aid rules, to approve a German aid scheme for renewable energy in the German Renewable Energy Act of 2012. The Commission has concluded that most reductions granted to energy-intensive companies on a surcharge to finance the support for renewables was in line with 2014 guidelines on environmental and energy state aid. However, it has ordered recovery of a limited proportion of the reductions granted to some energy intensive users that exceeded the levels permitted under the state aid rules.

Commission approves German renewable energy law for railway sector. On 25 November 2014, the European Commission announced that it has decided to approve, under the state aid rules, a German scheme that promotes electricity production from renewable energy sources and benefits railway companies. The Commission concluded that the state aid is in line with the 2008 Guidelines on state aid to railway undertakings. It is limited to compensating railway companies for the opportunity costs that arise from using rail transport rather than a more polluting mode of transport. It, therefore, furthers common transport objectives without unduly distorting competition.

Commission approves state aid to support Bulgarian First Investment Bank. On 25 November 2014, the European Commission announced that it has decided to approve liquidity measures granted by Bulgaria to support First Investment Bank. The Commission has concluded that the measures are necessary to preserve the financial stability of the Bulgarian economy and financial system and are in line with its 2013 Banking Communication. FIB has adopted a restructuring plan that the Commission is satisfied will ensure that the bank continues to be viable in the long-term without unduly distorting competition.

UK Antitrust

Ofcom opens Competition Act investigation into sale of live UK audio-visual media rights to Premier League matches. On 18 November 2014, the Office of Communications (Ofcom) announced that it has opened an investigation into whether the object or effect (actual or potential) of the joint selling arrangements of the Football Association Premier League Limited (FAPL) for live UK audio- visual media rights to Premier League (PL) matches is Association Premier League Limited (FAPL) for live UK audio-visual media rights to Premier League (PL) matches is the restriction or distortion of competition in the UK and/or the EU in breach of the Chapter I prohibition of the Competition Act 1998 and/or Article 101(1) of the TFEU. The investigation follows a complaint from Virgin Media alleging that the arrangements for the “collective” selling of live UK television rights by the FAPL breaches competition law. Under the FAPL membership rules (an agreement between each of the PL clubs and the FAPL), the FAPL has authority to enter into contracts for the sale of rights to PL matches. Virgin Media is concerned about the number of PL matches for which live broadcasting rights are made available, arguing that the proportion under the current FAPL rights deals (41%) is lower than for some other leading European leagues. It alleges that this contributes to higher prices for consumers of pay  TV packages that include premium sport channels and for the pay TV retailers of such channels. Ofcom states that it now expects to gather further information using its powers under the Competition Act to help inform its view on whether and how to proceed further with the investigation. It states that it is mindful of the likely timing of the next auction of live UK audio-visual media rights, and is open to discussion with the FAPL about its plans. In addition, given that the scheduling of football games is important to many football fans, Ofcom intends to approach the Football Supporters’ Federation and certain other supporters’ groups to understand their views.

CAT rules that CMA should pay Skyscanner’s costs of successful appeal. On 26 November 2014, the Competition Appeal Tribunal (CAT) handed down a ruling on the award of costs following Skyscanner’s successful appeal against the Office of Fair Trading (OFT) decision to accept binding commitments in the hotel online booking case. The CAT concluded that Skyscanner was substantially successful in its appeal. It found that the Competition and Markets Authority (CMA) should pay 95% of Skyscanner’s solicitors’, counsel’s and economists’ costs and disbursements. However, the CAT disallowed costs relating to the production by economists of a report on the effect of the OFT’s decision as this had limited use in the appeal. The 5% reduction reflects the fact that Skyscanner was unsuccessful in one of its grounds of appeal, although this took up little time before the CAT (Skyscanner Limited v Competition and Markets Authority [2014] CAT 19, costs ruling, 26 November 2014).

UK Mergers

Completed  Mergers

Werner Access Products UK Holdings Ltd / Youngman Group Limited (Clearance Decision)(19/11/2014)

Marston (Holdings) Limited / Collectica Limited (Clearance Decision) (26/11/2014)

Speeches & Publications

FCA speech on its new competition powers. On 21 November 2014, the Financial Conduct Authority (FCA) published a speech by Deb Jones, Director of Competition, on what the FCA’s new competition powers mean for the financial services industry. Ms Jones gave an insight into the substance and practical operation of the new concurrent competition functions that the FCA will have from 1 April  2015.

CAT publishes speech by CAT President on the European influence on English law. On 17 November 2014, the CAT published a speech by Sir Peter Roth, CAT President, in which he discussed

the European influence on English law. He noted that British judges and lawmakers are regularly and increasingly exposed to the concepts and principles of EU law as a matter of obligation. However, the influence is wider, such that domestic legal developments over the past four decades have as a result drawn inspiration from the influence of legal principles and patterns applied through EU law. He, therefore, discussed the various ways in which EU law has influenced, without any obligation or requirement, purely domestic English law. Sir Peter Roth discussed, in particular, the influence of EU principles on the development of the UK competition legislation and a modernised UK competition law that follows the European model. He also considered the impact of EU law on remedies (such as the development of the law about injunctive relief against the Crown and restitution of overcharges). Sir Peter Roth then examined how the principle of proportionality has been developed in English law, with regard to EU jurisprudence. In this regard, he noted that the role that proportionality has played in review by the CAT of market investigation decisions and also as a key concept in antitrust analysis. Finally, he considered whether proportionality can be used as a ground for judicial review in English law, outside the sphere of EU law or the Human Rights Act. He noted that the position is not yet clear and that this can give rise to some uncertainty and potential complications.

Smith Commission report on further Scottish devolution: competition and regulatory issues. On 27 November 2014, the final report of the Smith Commission on further devolution of powers to the Scottish Parliament was published. This update reports on the agreed recommendations on issues relating to competition policy and regulation. In particular, the cross-party Heads of Agreement provide that Scottish Ministers will have same power as UK Ministers to ask the Competition and Markets Authority (CMA) to conduct a Phase 2 market investigation in relation to particular competition issues arising in Scotland. In addition, the Heads of Agreement recommend that the Scottish Government and the Scottish Parliament will have a formal consultative role in setting the strategic priorities for Ofcom and the Office of Gas and Electricity Markets (Ofgem).