Competition: Commission sends Statement of Objections to Crédit Agricole, HSBC and JPMorgan for suspected participation in euro interest rate derivates cartel

The Commission has informed Crédit Agricole, HSBC and JPMorgan of its preliminary view that they may have breached EU competition rules by colluding to influence the pricing of interest rate derivatives denominated in the euro currency. Interest rate derivatives (e.g. forward rate agreements, swaps, futures, options) are financial products which are used by banks or companies for managing the risk of interest rate fluctuations. These products are traded worldwide and play a key role in the global economy. The Commission has concerns that the three banks may have taken part in a collusive scheme which aimed at distorting the normal course of pricing components for euro interest rate derivatives in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). If, after the parties have exercised their rights of defense, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover. The sending of a statement of objections does not prejudge the final outcome of the investigation. Source: Commission Press Release 21/05/2014

Competition: Court of Justice of the European Union dismisses 1. garantovana’s appeal in the calcium and magnesium reagents cartel case

On 15 May 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgment dismissing the appeal by 1. garantovaná a.s. (“1G”) against the judgment of the General Court (“GC”) in which the GC dismissed 1G’s appeal in its entirety against the Commission’s decision. In July 2009, the Commission imposed fines totaling approximately EUR 62 million on nine companies for breaching EU competition rules by participating in a price-fixing and market-sharing cartel in the markets for calcium carbide powder, calcium carbide granulates and magnesium granulates in a substantial part of the European Economic Area (“EEA”). 1G lodged an appeal before the CJEU claiming, inter alia, that the GC’s judgment should be set aside as regards its finding in relation to the use of 1G’s 2007 turnover instead of its 2008 turnover to establish the 10 % ceiling of the fine imposed and that the CJEU should reduce the amount of the fine to EUR 2.1 million, representing 10 % of 1G’s turnover in 2008. 1G claimed that the Commission’s use of the 2007 turnover was contrary to the clear wording and purpose of Article 23(2) of Regulation 1/2003. Article 23(2) of the said regulation provides that the fine shall not exceed 10% of an undertaking’s turnover in the preceding business year. The preceding business year  is the last full business year immediately preceding the date of the adoption of the Commission’s decision finding that there has been an infringement of EU competition rules and imposing a fine. In its judgment, the CJEU dismissed 1G’s argument that Article 23(2) is mandatory and that the Commission must not derogate from it where it has data establishing total turnover of the business year preceding the decision. The CJEU reaffirmed that the Commission was entitled to use turnover from a year other than the business year preceding its decision when establishing the 10 % ceiling for fines for the infringements of, inter alia, Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”). According to the CJEU, the Commission must assess in each specific case, in light of the factual circumstances of the case and the objectives of the scheme of penalties created by Regulation 1/2003, the intended impact on the undertaking in question. In doing so, it should take into account, in particular, a turnover which reflects the undertaking's real economic situation during the period in which the infringement was committed. Source: Judgment of the Court of Justice of the European Union C- 90/13 P – 1. garantovaná a.s. v Commission, 15/05/2014

Competition: General Court partially upholds Donau Chemie’s appeal in calcium and magnesiumreagents cartel decision

On 14 May 2014, the General Court (“GC”) handed down its judgment on the appeal brought by Donau Chemie AG (“Donau Chemie”) against the Commission’s decision imposing fines totaling EUR 62 million on it and nine other companies for participating in a price-fixing and market-sharing cartel in the markets for calcium carbide powder, calcium carbide granulates and magnesium granulates. In July 2009, the Commission found that Donau Chemie AG, an Austrian chemical company active in the production of calcium carbide, had participated in the infringement together with nine other companies and fined it EUR 5 million. In determining the percentage reduction of the fine under the Leniency Notice, the Commission had noted that Donau Chemie’s reduction would affect the fine for calcium carbide granulates and calcium carbide powder whereas Donau Chemie had provided significant added value only for calcium granulates. This affected the rate of reduction and the Commission concluded that Donau Chemie was entitled to a 35 % reduction of the fine. Donau Chemie lodged an appeal before the GC claiming, inter alia, that a reduction closer to 50 % would have been more appropriate. In its judgment, the GC partially upheld Donau Chemie’s claims and found that the Commission had erred in applying the Leniency Notice by granting an inadequate reduction with regard to the evidence provided by Donau Chemie. The GC stated that for the purposes of determining the appropriate rate of reduction to be applied to reward a leniency of Donau Chemie, it is not appropriate to take into account the fact that the fine sanctioned Donau Chemie’s participation not only in a part of the infringement for which it had provided evidence of significant added value, but also in another part of the same infringement for which it had not provided such evidence. According to the GC, the turnover figures of cartel participants in relation to each of three products concerned by the infringement should also be taken into account. As Donau Chemie had provided necessary evidence representing between 30 % and 35 % of total turnover affected by the infringement and moreover, drew attention to the existence of a third element of the infringement, the GC increased the reduction granted in the basic amount of the fine from 35 % to

43.5 %, resulting in a reduction of the total fine to be imposed on Donau Chemie from EUR 5 million to EUR 4.35 million. Further, the GC rejected Donau Chemie’s arguments that the basic amount of the fine was excessive and that the Commission had erred in the fixing of the additional amount of deterrence. The GC also dismissed the claims that the Commission erred in its assessment on the mitigating circumstances and failed to take account of Donau Chemie’s inability to pay and the peculiarities of the case. Finally, the GC rejected Donau Chemie’s claims that the Commission infringed the principles of equal treatment by failing to differentiate between undertakings on the basis of their size and turnover when setting the fine. Source: Case T-406/09 Donau Chemie v Commission

Competition (Finland): Kemira settles with CDC on private damages

On 19 May 2014, Kemira announced that it had signed an agreement with CDC Cartel Damage Claims Hydrogen Peroxide SA and CDC Holding SA (together "CDC") to settle a lawsuit in Helsinki, Finland. The settlement concerns claims assigned to CDC based on which CDC claimed compensation for alleged damages relating to the alleged old infringement of competition law in the hydrogen peroxide business during 1994-2000. CDC has agreed to withdraw the damage claims and Kemira has agreed to pay to CDC a compensation of EUR 18.5 million and will compensate CDC for its legal costs. Source: Kemira press release 19/5/2014

Competition (Sweden): Swedish Competition Authority dismisses abuse of dominance claim against SJ

On 8 April 2014, the Swedish Competition Authority (‘’SCA’’) received a formal complaint from MTR Express AB (‘’MTR’’) regarding SJ AB’s (‘’SJ’’) refusal to grant MTR access to SJ’s ticket sales website (“SJ-Online”) on non-discriminatory terms. MTR argued that SJ’s refusal constituted an abuse of SJ’s dominant position. MTR is responsible for the subway in Stockholm and is planning to launch train traffic between Stockholm and Gothenburg in 2015. SJ is the largest train operator in Sweden and has a dominant position on the market for online train ticket sales. The SCA based its assessment of SJ’s behavior on the Bonner criteria according to which for it to be abusive a refusal to supply must eliminate all competition in the downstream market on part of the person requesting the service, the refusal must be incapable of being objectively justified and the service in itself must be indispensible to carrying on that persons business, inasmuch as there is no actual or potential substitute in existence for that service. The SCA held that it had not been shown that access to SJ-Online was an essential facility for MTR since there are no barriers to entry or economic difficulties for MTR to invest and build up its own ticket sales system. In summary, the SCA held that SJ’s refusal to grant MTR access to SJ-Online did not hinder MTR from obtaining access to the market for train traffic. Source: The Swedish Competition Authority Press Release 19/05/2014 & the Swedish Competition Authority’s decision Dnr 178/2014, 14/05/2014

Merger control (Sweden): Swedish Competition Authority approves TeliaSonera’s acquisition of Zitius and Quadracom As earlier reported, the Swedish Competition Authority (“SCA”) opened an in-depth investigation into the acquisition by TeliaSonera AB (“TeliaSonera”) of Zitius Service Delivery AB (“Zitius”) and Quadracom Networks AB (“Quadracom”). The in-depth investigation was opened due to competition concerns regarding the potential elimination of a significant competitive pressure on the market for fiber-networks and wholesale bit-stream. The concerns raised also revolved around the market for communications operations (“ComOp”) and the potential elimination of competition and potential market entry barriers for service providers on that market. Following its in-depth review that SCA has, however, decided to approve the transaction. The SCA concluded that although the parties had overlaps on the markets for fiber-networks and wholesale bit-stream, the concentration would not significantly impede competition on these markets. Moreover, the SCA concluded that TeliaSonera, after the transaction, would become the largest company on the ComOp market with a market share of around 30 percent. However, the SCA further held that the ComOp market is characterized by a high level of competition, low margins, contracting through tendering and by price sensitive customers. Furthermore, the SCA held that TeliaSonera would face competition from vertically integrated competitors and from municipalities who run their own ComOp services. Finally, the SCA furthermore found that TeliaSonera would have no incentives to set up or maintain market entry barriers for services providers on the ComOp market. Source: The Swedish Competition Authority Press Release 14/05/2014 & the Swedish Competition Authority’s decision Dnr 89/2014, 14/05/2014

Public Procurement (Sweden): The Swedish Competition Authority will not take action against Försvarets materialverk regarding the procurement of trucks

Between years 2011 and 2013, Forsvarets logistikkorganisasjon (the Norwegian Defense Logistics Organization, “NDLO”) in cooperation with Försvarets materialverk (the Swedish Defense Material Administration, “SDMA”) carried out a procurement of trucks. In November 2013, NDLO decided to award the contract to Rheinmetall MAN Military Vehicles. In the beginning of 2014, the Swedish Competition Authority (“SCA”) decided, ex officio, to initiate a review of the legality of the cross border truck procurement conducted by the NDLO and the SDMA. The SCA has now concluded its review and decided that the procurement was conducted in line with the applicable rules. According to the decision, the cooperation between the SDMA and the NDLO was transparent in pointing out the procuring will therefore not take any action against the SDMA. Source: The Swedish Competition Authority Press Release 16/05/2014 the Swedish Competition Authority’s decision 761/2013

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 venture between Agroenergi and Neova Pellets in Swedish wood pellets sector
  • The Commission approves acquisition of the Warranty Group Inc. by TPG Advisors VI-AIV, Inc.
  • Commission approves acquisition of Johnson Control's automotive electronics business by Visteon
  • Commission approves acquisition of Estro by KKR and HIG