Competition: Gascogne Sack brings damages action against Commission for excessively long cartel proceedings

On 16 February 2015, details were published of an action brought by Gascogne Sack Deutschland GmbH and Gascogne (together “Gascogne Sack”) to claim damages from the Commission for harm suffered as a result of delay by the European Courts in adjudicating its appeal against the Commission’s industrial bags cartel decision. In November 2005, the Commission fined 16 companies, including Gascogne Sack, a total of EUR 290.71 million for operating an illegal cartel in the plastic industrial bags market for over 20 years. Gascogne Sack, along with other cartel participants, challenged this decision before the General Court (“GC”), which dismissed the appeal in its entirety. Gascogne Sack appealed further to the Court of Justice of the European Union (“CJEU”), which also dismissed the appeal. However, the CJEU stated that, in this case, the length of the proceedings before the GC breached the right of the parties to have their cases heard within a reasonable time. The length of the proceedings was close to six years. According to the CJEU, the breach of the right to a hearing within a reasonable time was sufficiently serious and may, therefore, give rise to liability on the part of the European Union for the damage arising from it. Consequently, Gascogne Sack has now brought an action with the GC seeking compensation for the material and non-material damage suffered as a result of the European Union’s unlawful conduct. To support its action, Gascogne Sack relies on a single plea in law, alleging infringement of the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union owing to the excessive duration of the proceedings before the GC. In August 2014, details had already been published of an action brought by Gascogne Sack on the same grounds. However, that action initially named the CJEU as the defendant, whereas this one names the Commission. The CJEU claimed that this previous action was inadmissible on grounds of failure to identify the correct party against whom the action had been brought. Accordingly, the application was rejected by order of 2 February 2015. Now the action has been amended so that it is stated to have been brought against the Commission. Source: Case T-843/14 – Gascogne Sack Deutschland and Gascogne v European Commission, OJ C56/27, 16/2/2015 and Case T-577/14 - Gascogne Sack Deutschland and Gascogne v European Union. Order of the General Court 2/2/2015 (in French)

Competition: Advocate General Wahl delivers opinion on Deutsche Bahn’s appeal against unannounced inspections 

On 12 February 2015, Advocate General (“AG”) Wahl gave an opinion on an appeal brought by Deutsche Bahn AG (“Deutsche Bahn”) against a General Court (“GC”) judgment that upheld the decisions of the Commission authorizing unannounced inspections. According to AG Wahl, Article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“ECHR”) does not require prior judicial authorization of inspections of business premises by the Commission. However, AG Wahl stated that the GC had erred in designating certain documents discovered during the first investigation as "found by chance" documents, in the meaning of EU case law. This had breached Deutsche Bahn's rights of defense and its right to the inviolability of private premises. According to AG Wahl the GC erred in law in placing the burden of proving that the documents had not been “found by chance” on Deutsche Bahn, instead it was for the Commission to prove otherwise. Thus, AG Wahl came to the conclusion that the first inspection was an illegal search to the extent that the Commission’s staff was expressly or implicitly solicited to look out for documents falling outside the scope of the first inspection decision. Therefore, AG Wahl concluded that the second and third inspection decisions should be annulled, as documents obtained during the first inspection, in breach of Regulation 1/2003, had been used by the Commission as a basis for their adoption. Source: Case C-585/13 P – Deutsche Bahn and others v European Commission, Opinion of Advocate General Wahl 12/2/2015

Competition: Commission rejects complaint about alleged refusal to supply Irish whiskey 

On 10 February 2015, the Commission published its decision to reject a complaint by Protégé International Ltd. (“Protégé International”) alleging a breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) in connection with the refusal to supply Irish whiskey. In January 2013, Protégé International asked the Commission to launch an investigation into the behavior of Irish Distillers Limited, the Old Bushmills Distillery Co. Limited and Beam Inc. (“the three companies”) claiming that they had breached Article 101 of the TFEU. Protégé International claimed that the three companies had either concluded an agreement or entered into concerted practices not to supply it with whiskey, in order to exclude it from the market. However, in exercise of its discretion to set priorities, the Commission found that there were insufficient grounds to conduct any further investigation into the matter. First of all, the Commission considered that the likelihood of establishing the existence of an infringement of Article 101 of the TFEU in this case appeared limited. Secondly, the Commission noted that the complaint appeared to have limited impact on the functioning of the internal market. Finally, the Commission found that the Irish courts and authorities would be well-placed to handle the matters complained of. Accordingly, in exercise of its discretion to set priorities, the Commission concluded that there were insufficient grounds for conducting a further investigation into the alleged infringement and therefore rejected the complaint pursuant to Article 7(2) of Regulation 773/2004. Source: Case AT.40083 – Irish Distillers 

Competition (Sweden): Swedish Market Court rules on online pizza provider’s dominant market position

On 10 February 2015, the Swedish Market Court handed down its judgment in an action brought by Pizza 24 Nordic AB (“Pizza24”), against OnlinePizza AB (“OnlinePizza”), claiming that OnlinePizza had abused its dominant market position on the Swedish market for distribution of online order platforms for pizza restaurants with home delivery. In an agreement that OnlinePizza applies in relation to its customers, entitled “Partnership Agreement – Restaurant Network”, the following provision is included: “It is not forbidden to collaborate with competitors to OnlinePizza. If you engage in collaboration with competing business, OnlinePizza reserves the right to terminate the collaboration with you, with reference to the risk of increased costs and misunderstandings that this could mean for us.” In its action, Pizza24 claimed that the Swedish Market Court should, under penalty of a fine, order OnlinePizza to cease applying the provision or substantially similar provisions. Pizza24 also claimed that OnlinePizza must cease to exert such pressure and/or sanctions that are aimed and/or has the effect that the restaurants affiliated to OnlinePizza are unable to cooperate with OnlinePizza’s competitors, such as Pizza24. Pizza24 claimed that OnlinePizza held a dominant market position and that the company abused this position by applying such a provision. In its ruling, the Market Court dismissed Pizza24’s action on the grounds that there was no clear information concerning the delimitation of the relevant market and thus it could not be established whether Pizza24 had a dominant market position. Source:Swedish Market Court Judgment 10/02/2015 (in Swedish) 

Competition (Sweden): Swedish Competition Authority closes the investigation into possible anti-competitive cooperation in the Swedish forestry sector

On 13 February 2015, the Swedish Competition Authority (“SCA”) announced that it has closed the investigation into possible anti-competitive cooperation in the Swedish forestry sector. In 2013, after receiving information indicating suspected anti-competitive cooperation in the Swedish forestry sector, the SCA initiated an investigation targeting Moelven Industrier AB, Moelven Component AB, Moelven Wood AB, Setra Group AB, Vida AB, Vida Wood AB and Martinsons Såg Aktiebolag. The aim of the investigation was to inspect whether the companies concerned had agreed upon or coordinated prices and market behavior by, inter alia, exchanging confidential information regarding prices and expected market development. According to the SCA, the investigation did provide evidence that information exchange has occurred on several occasions. However, as regards most of the exchanged information, the SCA found evidence that the information was of a historical and/or aggregated nature. Although the exchange of such information may pose a risk of restricting competition, the SCA decided that there were not sufficient grounds to continue the investigation in the present case. Source: Swedish Competition Authority Press Release 13/02/2015 (in Swedish)

Merger: Commission opens in-depth investigation into proposed acquisition by Siemens of rotating equipment manufacturer Dresser-Rand

On 13 February 2015, the Commission announced that it has opened an in-depth investigation to assess whether the proposed acquisition of rotating equipment manufacturer Dresser-Rand of the US by Siemens of Germany is in line with the EU Merger Regulation. Both companies supply turbo compressors as well as the engines which drive these compressors ("drivers"), such as aero-derivative gas turbines ("ADGT"), industrial gas turbines ("IGT"), steam turbines ("ST") and electric motors. The Commission's initial market investigation indicated competition concerns in the markets for the supply of ADGTdrivers, turbo compressors and turbo-compressor trains driven by ADGTs in several oil and gas applications. In particular, the investigation revealed that the main suppliers of these products are Siemens/Rolls-Royce, General Electric and Dresser-Rand. Therefore, the transaction would reduce the number of competitors from 3 main players to 2 main players in all of these markets. In addition, the Commission’s preliminary investigation indicated that the parties' competitors for the supply of small steam turbines of less than 5 MW have a limited presence and do not pose a significant competitive constraint on the parties. According to the Commission, this may lead to less product variety and ultimately higher prices. The Commission will now investigate the proposed acquisition in-depth to determine whether these initial concerns are confirmed. Source: Commission Press Release 13/2/2015

State aid: Court of Justice of the European Union rules that France failed to recover state aid granted illegally to French fruit and vegetable producers  

On 12 February 2015, the Court of Justice of the European Union (“CJEU”) ruled that France had failed to take the necessary measures to recover from the beneficiaries the state aid granted illegally in the context of “contingency plans” in the fruit and vegetable sector between 1991 and 2002. The aim of the contingency plan measures was to prevent or, in the event of a crisis, to mitigate the effects of supply temporarily exceeding demand. Following a complaint, the Commission found that the measures taken in the context of the contingency plans constituted state aid. According to the Commission, those measures were intended to facilitate the sale of French produce by making it possible for producers to benefit from a sales price higher than the actual cost paid by the buyer of the goods. In 2009, having concluded that the aid was illegal, the Commission ordered France to recover that aid from the producers. As recovery of the aid had not taken place within the prescribed time limit, the Commission decided to bring an action before the CJEU against France for failure to fulfill its obligations. In its ruling, the CJEU first recalled that it is settled case law that a member state must take all measures necessary to ensure implementation of a state aid recovery decision. The CJEU noted that no measure was adopted by France in order to recover that aid within the four months period prescribed by the Commission in 2009. In addition, the CJEU found that France had failed to demonstrate that it was absolutely impossible for it to implement the decision ordering the recovery. Furthermore, France failed to provide precise and specific data  establishing, for each of the beneficiaries concerned, whether the conditions for applying grounds for non-recovery were met. With respects to the claim that the disappearance of certain producer organizations, due to merger-takeovers or liquidations, had rendered recovery of the aid impossible, the CJEU pointed out, that the fact that the beneficiary companies are in difficulty or bankrupt or are the object of a buy-out or a merger-take-over does not affect the obligation to recover the aid, as the member state concerned is obliged to take every measure to facilitate the reimbursement of the aid. Accordingly, the CJEU ruled that by failing to adopt, within the period prescribed, the measures necessary to comply with the Commission’s decision, France had failed to fulfill its obligations under that decision. Source: Court of Justice of the European Union Press Release 12/02/2015

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 acquisition of SIG group companies by Onex Corporation
  • Commission approves acquisition of DBRS by TCGFS II and Warburg Pincus in financial services sector
  • Commission approves acquisition of IT services provider EVRY by Apax
  • Commission approves acquisition of remaining shares in Italian DIY retailer Brico Business Cooperation by OBI of Germany
  • Commission approves acquisition of Paroc by CVC
  • Commission approves acquisition of telecom infrastructure operator TDF by Brookfield
  • Commission approves proposed fleet management joint venture between BFM and Sixt Leasing