EU Competition

General Court hands down judgments on Portugal Telecom and Telefónica non-compete agreement. On 28 June 2016, the General Court handed down its decision in respect of appeals made by Portugal Telecom and Telefónica against the European Commission’s (Commission) finding that they had breached Article 101 of the Treaty on the Functioning of the European Union (TFEU), by entering into a share purchase agreement which contained a non-compete clause in respect of the Iberian telecommunications market. The parties appealed the Commission’s finding that there was a restriction of competition by object, on the basis that the Commission had not, through a detailed analysis of the market, demonstrated that the companies were potential competitors, and that the clause was therefore capable of restricting competition. They also challenged the fine imposed, arguing that that it was necessary to exclude from the calculation any revenue achieved on markets or through services that were not subject to potential competition and, therefore, did not come within the scope of the non-compete clause. The General Court dismissed the first ground finding that a detailed analysis of the markets was not necessary, but agreed that the calculation of the fines should not include revenue from those markets where there was no possibility of competition.

Commission re-adopts amending heat stabilisers cartel decisions. On 29 June 2016, the Commission announced that it had re-adopted two amended decisions in which it found that plastic additives producers had participated in price fixing and market sharing cartels in respect of heat stabilisers. In respect of one such decision, the Commission had already amended its original decision due to a calculation error. This resulted in the fine imposed on one of the cartel participants exceeding the ceiling prescribed under EU law. The decision, however was annulled by the General Court, as it was found that the other cartel participant had not been provided with the opportunity to submit its views prior to the Commission adopting the amending decision. Similarly, in respect of the other re-adopted decision, which was originally amended following an European Court of Justice (ECJ) ruling, the General Court found that the companies had not been provided with adequate time to submit their views prior to the amending decision being adopted.

Commission opens investigation into suspected restraint on parallel trade by AB InBev.On 30 June 2016, the Commission announced that it had opened a  formal investigation into whether Anheuser-Busch InBev SA (AB InBev) had abused a dominant position in the Belgian beer market in breach of Article 102 TFEU, by hindering imports of its beer from neighbouring EU Member States. In particular, the Commission suspects that AB InBev may be attempting to restrict parallel trade of its beer from less expensive EU Member States by altering the packaging of beer cans/bottles making them harder to sell in other EU Member States; and by limiting foreign retailers’ access to rebates and key products, preventing them from bringing less expensive beer products to Belgium.

General Court hands down second judgment on Groupement des cartes bancaires’ anti-competitive pricing practices. On 30 June 2016, the General Court handed down a second judgment on an appeal made by Groupement des cartes bancaires (CB) against the Commission’s finding that CB had breached Article 101 TFEU by implementing tariffs, such as joining fees and “sleeping member” fees, which prevented certain banks (who were mainly new entrants to the banking market) from issuing bank cards at a price lower than that offered by the larger banks. On a previous appeal, the General Court upheld the Commission’s finding, but this decision was later rejected by the ECJ on the basis that the General Court had wrongly concluded that CB’s pricing measures had as their object, the restriction of competition. Following the ECJ’s referral of the matter back to the General Court, the General Court has dismissed all but one of CB’s grounds of appeal, further to which it has annulled the part of the Commission’s decision preventing CB from implementing future measures with an identical or similar object. This is on the basis that it infringes the principle of legal certainty following the ECJ’s finding that the object of the measures was not anti-competitive.

EU Mergers

Phase I Mergers

  • M.7854 AGRAVIS / WILMAR INTERNATIONAL / H BÖGEL (30 June 2016)
  • M.7902 MARRIOTT INTERNATIONAL / STARWOOD HOTELS & RESORTS WORLDWIDE (27 June 2016)
  • M.7965 WORLD FUEL SERVICES CORPORATION / CERTAIN AVIATION FUELS ASSETS BELONGING TO EXXON (28 June 2016)
  • M.8040 SILVER LAKE GROUP / CEGID GROUP (30 June 2016)
  • M.8053 AVIVA / GROUP CM-11 / OFFICE BUILDING (30 June 2016)
  • M.8054 3i GROUP / DEUTSCHE ALTERNATIVE ASSET MANAGEMENT / TCR CAPVEST (27 June 2016)

State Aid

Commission publishes amendments to regional aid guidelines 2014-2020. On 21 June 2016, the Commission published a Communication amending Annex I to the Guidelines on regional aid for 2014-2020. In particular, the Communication outlines its mid-term review to determine the eligibility of any areas that may benefit from regional aid under Article 107(3)(a) TFEU, or an increase in such aid, on account of a change in their gross domestic product. The amended regional aid maps will be in force from 1 January 2017 to 31 December 2020.

Commission publishes decision on State aid provided to Starbucks. On 27 June 2016, the Commission published the non-confidential version of its decision of 21 October 2015, in which it found that an advance pricing agreement (APA) entered into by Starbucks Coffee EMEA BV, Starbucks Manufacturing EMEA BV (together, Starbucks) and the Dutch tax authority, was illegal State aid. In particular, the APA, which sets out the tax law regime for future transactions, was found to have conferred a selective tax advantage on Starbucks in breach of Article 108(3) TFEU, by artificially creating royalty payments in order to transfer those taxable profits to a group company that was not liable to pay corporation tax.

Commission approves Cypriot support for repayment of loans by private households and micro companies. On 28 June 2016, the Commission announced that it had approved a Cypriot scheme to provide non-reimbursable loans of up to EUR 10,000 per year (for a maximum period of three consecutive years) to borrowers with loans secured against their principal residence. As the loans are in respect of private households and micro companies, and are provided for the purpose of preventing these borrowers from losing their principal residence, the Commission deems the grants to be “either of a social character or too small to have an effect on trade”.

UK Competition

CMA publishes its response to the government's consultation on refining the UK competition regime. On 27 June 2016, the CMA published its response to the Department for Business, Innovation & Skills’ consultation on the potential areas for refinement in UK competition law. In its  response, the CMA states that it supports reducing the overall size of the current panel, while maintaining the structure and also supports clarifying the length of appointments of panel members. It also recognises that Phase II investigations must be carried out expeditiously, but notes that any applicable time limits should take into account the complexities of the particular case. The CMA also supports an increase in the maximum administrative penalties that can be imposed for breach of undertakings, and supports the introduction of a civil sanction for the provision of false or misleading information.

CAT publishes transcript of hearing in UKRS / NSAR application for an interim injunction.The Competition Appeal Tribunal (CAT) has published a transcript of the hearing of 28 June 2016 in which the President, upon receipt of certain undertakings by the Applicant and the Respondent, made an order giving directions for the hearing of the application for an interim injunction. The application submitted by UKRS Training Limited, a training provider for those working on Network Rail’s infrastructure, is to restrain NSAR Limited from suspending its Rail Training Accreditation Scheme accreditation, which it submits is an infringement of Chapter II of the Competition Act 1998.

CMA to proceed with investigation into alleged discounts offered on a pharmaceutical product in breach of competition law. On 30 June 2015, the CMA announced that it has decided to continue its investigation into a suspected breach of competition law related to discounts offered on a pharmaceutical product, under Chapter II Competition Act 1998 and Article 102 TFEU. The CMA estimates, based on any evidence received, that it may be in a position to make a further decision on the next phase of the investigation by September 2016.

CMA publishes full-text decision on Breedon Aggregates’ acquisition of Hope Construction Materials. On 30 June 2016, the CMA published its full text decision to refer the acquisition by Breedon Aggregates Limited’s (Breedon) of Hope Construction Materials Limited (Hope) to a Phase II investigation unless acceptable undertakings are offered. In particular, the CMA found that, post-merger, there will only be two competing suppliers of ready mixed concrete operating within the vicinity of Boston, Lincolnshire. The CMA has also announced that it is currently considering undertakings offered by Breedon to divest of 14 aggregates and ready mix concrete plants in lieu of reference.

Speeches & Publications

Commission announces that EU-Georgia Association Agreement is now effective. On 1 July 2016, the Commission announced that an association agreement entered into between the EU and Georgia is now fully in force. The agreement seeks to facilitate Georgia’s integration with the EU single market and “aims to deepen political and economic relations between the EU and Georgia”.

Commission announces that EU-Republic of Moldova Association Agreement is now effective. On 1 July 2016, the Commission announced that an association agreement entered into between the EU and the Republic of Moldova is now fully in force. The agreement seeks to offer Moldova “a framework for boosting trade and economic growth through improved access to the EU market for its products and services and by comprehensively approximating its trade-related laws and regulations to Union standards”.