Summary of Motorola Article 102 infringement decision published. On 2 October 2014, a summary of the European Commission’s April 2014 decision finding that Motorola Mobility LLC had breached Article 102 of the Treaty on the Functioning of the European Union (TFEU) was published in the Official Journal, along with the Opinion of the Advisory Committee and Final Report of the Hearing Officer. The Commission found that Motorola had abused its dominant position in the market for licensing certain technologies, constituting a standard essential patent (SEP), by seeking an injunction to prevent Apple from using the SEP, despite Apple having offered to license the SEP on fair, reasonable and non-discriminatory (FRAND) terms. Although the seeking and enforcement of an injunction by a patent-holder is generally a legitimate course of action, the context is different with regard to the seeking and enforcement of injunctions on the basis of SEPs for which a voluntary commitment to license on FRAND terms has been made during the standard-setting process. In these exceptional circumstances and in the absence of a valid objective justification, Motorola’s conduct constituted an abuse which was capable of having anti-competitive effects. However, in the absence of any prior case law, the Commission decided not to impose a fine on Motorola. The summary decision notes that a SEP holder which has given a commitment to license on FRAND terms and conditions is entitled to take reasonable steps to protect its interests by seeking and enforcing an injunction where the potential licensee is in financial distress and unable to pay its debts; the potential licensee’s assets are located in jurisdictions that do not provide for adequate means of enforcement of damages; or the potential licensee is unwilling to enter into a licence agreement on FRAND terms and conditions such that the SEP holder will not be appropriately remunerated for the use of its SEPs.
Phase I Clearance
M.7011 – SNCF / SNCB / Thalys JV (22/09/2014)
M.7304 – Danone / ID Logistics JV (24/09/2014)
M.7341 – MVD / PostCon / ADVO (22/09/2014)
M.7351 – Henkel AG & Co KGaA / Spotless Group SA (26/09/2014)
M.7363 – Areva Energies Renouvelables / Gamesa Energia JV (30/09/2014)
M.7364 – Blackstone / Lombard (29/09/2014)
M.7373 – Ortner / Strauss / UBM (30/09/2014)
M.7384 – Helvetia AG / Schweizerische National-Versicherungs-Gesellschaft AG (Nationale Suisse) (26/09/2014)
M.7391 – Huaya Automotive Systems / KSPG / KS Alutech JV (25/09/2014)
Phase II Mergers
Commission opens Phase II investigation into acquisition of controlling stake in De Vijver Media by Liberty Global. On 22 September 2014, the European Commission announced that it has decided, under Article 6(1)(c) of the EU Merger Regulation, to initiate an in-depth Phase II investigation into the proposed acquisition of joint control over De Vijver Media by Liberty Global, Corelio and Waterman & Waterman. The proposed transaction will create a close relationship between the largest TV retailer in Flanders, Liberty, which is controlled by Telenet, and two of the region’s most popular free-to-air TV channels, Vier and Vijf. The Commission, therefore, has concerns that Telenet’s actual or potential competitors for selling TV services to consumers in Flanders could be foreclosed from accessing these channels. In addition, the Commission is concerned that, following the acquisition, competing TV channels may find it more difficult to obtain access to Telenet’s cable platform and/or that access conditions for these channels might significantly worsen.
Advocate General’s opinion on preliminary reference relating to London bus lane policy. On 24 September 2014, Advocate General Wahl handed down his opinion on a preliminary reference from the Court of Appeal (England and Wales) on whether a contested London bus lane policy adopted by Transport for London comes within the concept of state aid under Article 107(1) of the TFEU.
The Advocate General considered that if access to public infrastructure, such as a bus lane, is granted on equal terms to all comparable undertakings, this will not involve the transfer of state resources. Nor will it amount to favouring certain undertakings within the meaning of Article 107(1), if the authority shows that taxis and private hire vehicles are not comparable, owing to objective considerations relating to the safety and efficiency of the transport system. The measure must also be proportionate for the purpose of achieving that objective. These are matters for the referring court to determine.
General Court rules inadmissible appeals against Commission decision on Danish online gaming duties. On 26 September 2014, the General Court handed down its judgments on an appeal by Dansk Automat Brancheforening, a trade association representing slot machine operators, and Royal Scandinavian Casino Arhus, a land-based casino, against a European Commission decision approving under EU state aid rules the proposed Danish Law on gaming duties. Although the Danish law imposed a lower tax on online gaming compared to offline gaming, the Commission found that it served an objective of common interest and authorised it under Article 107(3)(c) of the TFEU. The General Court dismissed the actions by both Dansk Automat Brancheforening and Royal Scandinavian Casino Arhus inadmissible on the ground that they lacked the necessary legal interest in bringing proceedings.
Commission publishes decisions to open in-depth state aid investigations into transfer pricing arrangements on corporate taxation of Apple and Fiat Finance. On 30 September 2014, the European Commission announced that it has published the non-confidential versions of its decisions to open in-depth state aid investigations, under Article 108(3) of the TFEU, into the transfer pricing arrangements on corporate taxation of Apple in Ireland (SA.38378) and Fiat Finance and Trade (SA.38375, in French only) in Luxembourg. The Commission opened these in-depth investigations in June 2014.
Commission extends in-depth state aid investigation into Gibraltar corporate tax regime. On 1 October 2014, the European Commission announced that it has extended the scope of an on-going in-depth state aid investigation into the new Gibraltar corporate tax regime. In October 2013, the Commission opened an in-depth investigation into aspects of the 2010 Gibraltar income tax act. It has now identified concerns about the way in which the Gibraltar tax authorities issue tax rulings, which do not appear to be made on the basis of sufficient information or a proper evaluation. The Commission intends to examine whether the tax rulings practice may selectively favour certain companies and so give rise to state aid.
Commission opens in-depth state aid investigation into support for Volkswagen in Portugal. On 1 October 2014, the European Commission announced that it has decided to open an in-depth state aid investigation to examine public financing granted by Portugal to Volkswagen Autoeuropa to support an investment project. The Commission will examine the compatibility of the aid (particularly the aid intensity) with the Regional Aid Guidelines for 2007 to 2013.
Commission orders recovery of state aid from Spanish terrestrial digital platform operators. On 1 October 2014, the European Commission announced that it has ordered the recovery of incompatible aid from certain terrestrial digital platform operators in the Castilla-La Mancha region of Spain. The Commission has concluded that the subsidies, worth EUR 46 million, are incompatible with the EU state aid rules because they only benefited terrestrial digital technology, in breach of the principle of technological neutrality. They also discriminated between different terrestrial operators by giving a selective advantage to two pre-selected operators. These operators must now repay the subsidies to the region of Castilla-La Mancha.
CAT quashes OFT’s decision to accept binding commitments in hotel online booking case. On 26 September 2014, the Competition Appeal Tribunal (CAT) handed down its judgment on an appeal by Skyscanner Limited to challenge a decision of the Office of Fair Trading (OFT), under section 31A of the Competition Act 1998, to accept binding commitments. The commitments were intended to address competition concerns relating to online offering of room- only hotel accommodation bookings by online travel agents. Skyscanner, which runs a price comparison (meta-search) website, argued that the commitments, in so far as they restrict the disclosure of information about discounts, damage its business and competition. The CAT dismissed claims that the OFT acted ultra vires in accepting commitments that had an effect on third parties. It also found that the OFT had not acted illegally or contrary to the policy and objects of the Competition Act in accepting the commitments. Assessing whether a particular restriction on conduct restricts competition is a matter of expert appreciation and, in the context of an application for judicial review, the CAT should not substitute another assessment for that of the OFT. However, the CAT found that the OFT had failed properly to consider or conscientiously to take into account Skyscanner’s objections to the proposed commitments. It failed properly to investigate a plausible point and instead insisted on more evidence or supporting material from Skyscanner. In doing so, the OFT acted unfairly and the process by which it subsequently reached its decision was procedurally improper. Further, by failing to inform itself about the possible impact of the points raised by Skyscanner, the OFT failed to take account of a matter of which it ought to have taken account and so acted unreasonably. The OFT’s decision was, therefore, irrational. The CAT, therefore, annulled the OFT’s decision and remitted the case back to the Competition and Markets Authority (CMA) to be reconsidered.
CAT adjourns hearing in Deutsche Bahn damages action pending settlement. On 1 October 2014, the Competition Appeal Tribunal (CAT) published an order by which it adjourned a hearing in the damages action brought by Deutsche Bahn and others against Schunk, SGL Carbon and Mersen (see Deutsche Bahn and others v Morgan Crucible and others). A hearing of certain issues relating to disclosure and contribution, as well as a case management conference, had been scheduled for 29 and 30 September 2014. However, at this hearing, the representatives of the parties informed the CAT that an agreement had been reached in principle on settlement (both in relation to liability and costs). The parties, therefore, asked the CAT to adjourn the hearing for a month to give them time to formally document the in principle settlement agreement and to obtain the necessary approvals of the boards of the companies involved. The CAT expressed some concern about the length of this delay, but noted the parties’ high level of confidence that a settlement would be formalised. It warned, however, that if a fully documented settlement does not emerge then there will not be a further adjournment and the case will move ahead. While the CAT does not want to stand in the way of settlement, it wants to resolve matters without them sitting on its books indefinitely. The hearing has, therefore been adjourned until 3 and 5 November 2014, when the parties will report back to the CAT as to whether or not the action has been settled.
CMA update on criminal cartel charges in relation to supply of galvanised steel tanks for water storage. On 30 September 2014, the CMA provided an update on the status of the criminal charges brought against three individuals, under section 188 of the Enterprise Act 2002, in relation to suspected cartel activity in the supply of galvanised steel tanks for water storage. The CMA has announced that, at a hearing at Southwark Crown Court, on 26 September 2014, the case against Peter Nigel Snee was adjourned to 26 January 2015. It was previously announced that Mr Snee had pleaded guilty to the charges against him. The case against Mr Snee will be heard at the same time as the case management hearing already listed for Mr Dean and Mr Stringer, who have also been charged under the criminal cartel offence. The three individuals have all been bailed on the same conditions.
CMA makes initial enforcement order to Vodafone. On 26 September 2014, the CMA announced that it has made an initial enforcement order under section 72 of the Enterprise Act 2002 addressed to Vodafone Group plc and Vodafone Limited in relation to the completed acquisition by Vodafone Limited of some assets formerly owned by Phones4U Limited, Policy Administration Services Limited and the joint Administrators of Phones4U and Policy Administration Services 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 on-going investigation into this completed merger.
CMA consults on variation of Cineworld / City Screen final undertakings. On 30 September
2014, the CMA issued a notice of its intention to accept undertakings to vary the final undertakings accepted in relation to the completed acquisition by Cineworld Group plc of City Screen Limited. The Competition Commission concluded, in October 2013, that the merger has resulted, or may be expected to result, in a substantial lessening of competition in the market for cinema exhibition services in the Aberdeen, Bury St Edmunds and Cambridge areas. Under the final undertakings, accepted in January 2014, the parties agree to divest either a Cineworld or City Screen cinema in each of these areas (the divestment package) to a purchaser(s) approved by the Competition Commission. The CMA considers that a variation of the final undertakings is needed to enable effective disposal of the divestiture package. It intends to accept further undertakings that insert a prohibition on Cineworld from reacquiring (without the CMA’s consent) any asset or part of the divestment package for a period of ten years from their effective disposal. If Cineworld does regain possession or control of any part of the divestment package it must inform the CMA and provide all relevant facts and information within its knowledge and, except with the written consent of the CMA, take steps to find a purchaser and to make effective disposal in accordance with the terms of the final undertakings. The CMA invites comments on the proposed further undertakings by 14 October 2014.
CMA makes initial enforcement order to Xchanging. On 1 October 2014, the CMA announced that it has made an initial enforcement order under section 72 of the Enterprise Act 2002 addressed to Xchanging plc, Xchanging Holdings Limited and Xchanging, Inc. in relation to the completed acquisition by Xchanging Holdings Limited and Xchanging, Inc. of certain companies comprising all of the European operations of Agencyport Software Group. 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 on-going investigation into this completed merger.
Speeches & Publications
CAT Practice Direction on commencing damages actions against foreign defendants. On 29 September 2014, the CAT published a Practice Direction relating to Commencement of Damages Claims. This Practice Direction sets out the information that must be provided in a claim form in relation to a damages action under section 47A or 47B of the Competition Act 1998 that names as defendants one or more persons who are based outside the jurisdiction of the UK. The Practice Direction came into force on 1 October 2014.
CMA publishes speech on competition enforcement in online markets. On 2 October 2014, the CMA published a speech by Philip Marsden, CMA Inquiry Chair, on competition enforcement in online markets. Mr Marsden discussed the main types of online restraints that have appeared so far (resale price maintenance, internet minimum advertised pricing, online sales bans and price parity obligations). He does not consider that the analytical framework for examining such restrictions should change just because they have moved into the online environment. Mr Marsden also explained his view that greater emphasis should be placed on assessing the impact of restrictions on how choice is exercised by consumers. If there are significant and artificial restrictions on consumers’ ability to choose effectively, then these must be analysed closely and quickly.