On 23 June 2016, the UK held a referendum on European Union membership which has resulted in 52 % of the electorate voting for UK to withdraw from the European Union ("EU"). The referendum result is not legally binding and what happens next will be largely a political question rather than a legal one. The UK Parliament will now have to consider whether to invoke Article 50 of the Treaty on European Union ("TEU"). Article 50 TEU allows a Member State to decide to withdraw from the EU in accordance with its own constitutional requirements. The interpretation of "constitutional requirements" is still very unclear and it has been speculated, for example, that Scotland may have the constitutional power to block the UK's withdrawal from the EU. Although informal discussions can be held beforehand, only delivering the Article 50 TEU notice to the European Council will trigger the formal process to leave the EU. On delivery of the notice to the European Council a two year exit period will start upon the expiry of which the UK's EU membership will end.
Competition: General Court confirms that non-compete clause between Portugal Telecom and Telefónica were unlawful
On 28 June 2016, the General Court ("GC") ruled on the appeals by Portugal Telecom SGPS, SA ("Portugal Telecom"), and Telefónica, SA ("Telefónica"), against a Commission decision, in which the Commission found that Portugal Telecom had agreed not to compete with Telefónica on the market for electronic telecommunications services and television services in Spain and in Portugal ("Iberian market"), in breach of Article 101 of the Treaty on the Functioning of the European Union ("TFEU").
In January 2013, the Commission fined Portugal Telecom EUR 12 million and Telefónica EUR 66.8 million for having entered into a market sharing agreement with the object of restricting competition in the internal market. The Commission found that in 2010, when Telefónica acquired Portugal Telecom’s shares in Brazil-based operator Vivo, the parties agreed, to "the extent permitted by law", to refrain from participating or investing in any project falling within the telecommunications sector that is liable to compete with the other company on the Iberian market. According to the Commission, the non-compete clause constituted a hard-core restriction of competition. In April 2013, Portugal Telecom and Telefónica appealed the Commission decision to the GC. They requested that the GC annul the Commission decision and reduce the amount of the fines.
Concerning Portugal Telecom's appeal, the GC found that Portugal Telecom failed to demonstrate that the restriction in question was incidental to the option of purchasing the shares held by Telefónica. Portugal Telecom also failed to show that the restriction was incidental to the resignation of some of its Management Board members appointed by the Spanish company. Concerning Telefónica's appeal, the GC found in particular that Telefónica had failed to show that the clause was objectively essential for a transaction concerning the takeover of shares in a Brazilian operator. Further, the GC ruled that the Commission was not obliged, as Portugal Telecom and Telefónica claimed, to conduct a detailed analysis of the market structures in question or of potential competition between companies on those markets in order to conclude that the clause constituted a restriction of competition by object. However, the GC found that the Commission should have excluded services not covered by the non-compete clause for the purposes of calculating the fines. Therefore, the Commission must now review the amount of the fines and make a new decision. Source: General Court Press Release 28/6/2016
On 23 June 2016, the Commission announced that the Commissioner for Competition, Margrethe Vestager, and the head of the South African Competition Commission, Commissioner Tembinkosi Bonakele, have signed a Memorandum of Understanding between the Commission's Directorate-General for Competition and the South African Competition Commission. The Memorandum of Understanding creates a dedicated framework for dialog between the authorities on competition policy matters and for sharing views and non-confidential information on ongoing investigations. Source: Commission Press Release 23/6/2016
On 23 June 2016, the Finnish Competition and Consumer Authority ("FCCA") announced that the Government Proposal on a new Public Procurement Act, published on 22 June 2016, proposes that he FCCA would supervise adherence to all provisions of the new Public Procurement Act. However, the FCCA's supervision should primarily focus on illegal direct procurement and other corresponding procurements conducted in a clearly erroneous or discriminatory manner. Further, it is proposed that the FCCA could issue reminders to contracting authorities in case it identifies unlawful conduct. With regard to illegal direct procurement, the FCCA would have the power to prohibit the implementation of a procurement decision or propose that the Market Court impose penalties. The FCCA's supervisory role would be effective as of the beginning of 2017. In autumn 2016, the FCCA will hear its stakeholder's opinions on the new tasks now proposed for the FCCA. Source: Finnish Competition and Consumer Authority Press Release 23/6/2016 (in English)
In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:
- Commission approves joint acquisition of TCR by 3i Group and DAAM
- Commission approves acquisition of Starwood Hotels & Resorts by Marriott
- Commission approves joint acquisition of PHS by Anchorage and M&G
- Commission approves joint acquisition of five shopping centres and retail parks in Italy and Spain by TPG Capital and Partners Group
- Commission approves acquisition of Vibracoustic by Freudenberg