EU Trade

Philips loses EU appeal on light-bulb duties. On 8 September 2015, an appeal by Philips Lighting Poland SA and Philips Lighting BV against EU antidumping duties on light bulbs from China, Pakistan, the Philippines and Vietnam was dismissed. The lighting business of Royal Philips claimed in its appeal to the EU Court of Justice (ECJ) that the European Commission (Commission) erred in continuing its trade-defence investigation after EU producers stopped supporting the investigation. The Commission first imposed duties on the bulbs in 2001 to counter dumping. In 2006, the Commission extended the levies for an additional year at the request of companies in Europe, including Philips. This decision came after some EU manufacturers, including Philips Lighting, withdrew their backing for the Commission inquiry. To open an investigation, the Commission must gain support from at least half of the producers representing a particular EU market. The drop in support after the investigation began meant that only 48% of the producers backed this, forming the basis of the appeal. The court cited Community interest and the fact that 48% still supported the investigation as reasons to continue the investigation.

EU Cartels

General Court judgments on appeals against cathode ray tubes cartel decision. On 9 September 2015, the General Court handed down judgments on five appeals brought by the parties to challenge the Commission’s decision in relation to the cathode ray tubes cartel. Appeals brought by Samsung SDILG Electronics and Philips were dismissed in their entirety and the General Court held that the Commission had not erred in finding a single and continuous infringement; in establishing their participation in the cartel; in attaching liability for the actions of a joint venture to its parent companies; and in including EEA sales of transformed products in the relevant turnover for the purposes of calculating the fines. Toshiba’s appeal, however, was successful and the General Court annulled Toshiba’s EUR28 million fine. The General Court found that the Commission had not established the requisite legal standard that Toshiba had directly participated in the infringement (in the period prior to the creation of a joint venture with Panasonic). According to the General Court’s judgment, the Commission had not established that Toshiba was aware of or had actually been kept informed of the existence of the overall cartel; that it intended to contribute by its own conduct to the common objectives of the cartel; or, that it could have reasonably foreseen those objectives and was prepared to take the risk. As for Panasonic, the General Court reduced the fine of EUR157.5 million that was imposed on Panasonic to EUR129.9 million (and that imposed jointly and severally with Toshiba and their joint venture company, MT Picture Display (MTPD)). The Court found that the Commission had erred in not using certain, reliable data provided by Panasonic in relation to the value of sales – the Commission had therefore departed without justification from the Fining Guidelines. As a result, the General Court recalculated the fine payable by Panasonic on the basis of the more reliable data.

Commission publishes decision on blocktrains cartel. On 10 September 2015, the Commission published the full, non-confidential text of its decision on the blocktrains cartel. In July 2015, the Commission fined two cargo train operators, Express Interfracht and Schenker, a total of EUR49 million in a cartel settlement while a third company, Kuhne+Nagel, received full immunity under the Commission’s 2006 Leniency Notice. The parties had operated a cartel between 2004 and 2012 which consisted of the overall aim to allocate and protect certain customers or transport volumes and coordinate prices for the jointly operated rail cargo transport services in connection with the Balkantrain and Soptrainblocktrains. To achieve this aim the parties allocated existing and new customers; set up a consumer protection scheme; exchanged confidential information on specific customer requests; shared transport volumes between them and; coordinated prices directly by providing each other with cover bids and discussing prices for specific customers. The Commission found that the conduct constituted a single and continuous infringement of Article 101(1) of the Treaty on the Function of the European Union (TFEU) by object.

Advocate General’s Opinion on relationship between leniency applications made to the Commission and National Competition Authorities for the same cartel. On 10 September 2015, Advocate General Wathelet handed down his Opinion on a reference from an Italian court regarding the relationship between leniency applications made under the Commission’s leniency notice and summary applications made to national competition authorities (NCA) in relation to the same cartel. DHL Express (Italy) Srl and SHL Global Forwarding (Italy) Srl (DHL) were granted full immunity from fines by the Commission in respect of an international freight forwarding cartel. However, they also submitted a summary application to the Italian NCA which led to them receiving only a 50% fine reduction as the NCA considered that DHL’s summary application did not contain full information. Meanwhile, Deutsche Bahn AG (the parent company of Schenker) had submitted its leniency application to the NCA and was granted immunity from fines. On appeal, the Italian Council of State referred a number of questions to the ECJ relating to the relationship between leniency applications made to the Commission and the summary applications made to the NCA. The Advocate General considered, in particular, that the European Competition Network’s (ECN) Model Leniency Programme does not have binding legal effect on NCAs and that there is no legal link between a leniency application made to the Commission and a summary application made to an NCA for the same cartel (i.e. they are independent applications). Further, the NCA is under no obligation to assess the summary application in light of the main application or to contact the Commission or applicant to enquire whether, following submission of the summary application, the Commission has identified examples of conduct in the sector covered by the main application but not the summary one.

EU Mergers

Phase I Mergers

  • M.7663 - DTZ / CUSHMAN & WAKEFIELD (11 September 2015)
  • M.7707 - CINVEN / SYNLAB (10 September 2015)
  • M.7723 - KKR / REGGEBORGH / DEUTSCHE GLASFASER (10 September 2015)
  • M.7716 - PFIZER / GSK MENACWY BUSINESS (9 September 2015)
  • M.7733 - TOKIO MARINE / HCC (9 September 2015)
  • M.7731 - BPIFRANCE / SPRINGWATER / DELION FRANCE (9 September 2015)
  • M.7625 - ADM / AOR (7 September 2015)

State Aid

Commission publishes Member State reports on compliance with services of general economic interest rules between 2012 and 2014. On 8 September 2015, the Commission published the reports of each of the Member States on their compliance with State aid rules for the provision of services of general economic interest (SGEI) between 2012 and 2014. The reports will enable citizens to see which sectors have received State support to compensate for the cost of carrying out public services and the conditions on which it has been received, according to Member States. The publication of the reports is part of the Commission’s efforts to implement its State Aid Modernisation initiative and to ensure transparency as to where public money goes.

Public Procurement

Advocate General Opinion on tenderer’s reliance on experience of third party. On 8 September 2015, Advocate General Jääskinen gave his Opinion on a range of questions relating to procurement referred from a Polish court. In relation to a procurement procedure, in which the contracting authority excluded a tenderer who sought to rely on the technical capacity of a third party to demonstrate its compliance with minimum technological specifications, the Advocate General stated that under Article 48(3) of Directive 2004/18, in his view, there are no substantive limitations on the circumstances in which a tenderer may rely on third parties, provided it can show that it has the third parties’ resources at its disposal. He further stated that the contracting authority must specify any condition regarding the prohibition of the use of third parties in the contract notice or tendering specifications. The Advocate General also expressed the view that an electronic auction must be annulled and repeated if a tenderer is found to have been unlawfully excluded from participation.

UK Competition

FirstGroup plc – invitation to comment on a request to release merger undertakings. On 7 September 2015, the Competition and Markets Authority (CMA) invited views pursuant to an application dated 31 August 2015 by FirstGroup plc (FirstGroup) to the CMA seeking the release of undertakings given originally by the company to remedy competition and public interest concerns arising from the acquisition of SB Holdings Limited by FirstGroup. In 2008, the Competition Commission varied the undertakings. The company has a cited a change of circumstances in the market as a reason for a release from the undertakings. According to FirstGroup, the effects of such changes have been material and far-reaching, rendering the undertakings unnecessary. The undertakings included a cap on fares of FirstGroup’s operations in Edinburgh and Glasgow and established a mileage floor in relation to its Edinburgh operations. Further according to FirstGroup, since 2008, there has been increased actual competition; the undertakings distort market conditions; and the pricing mechanism does not reflect the costs of operating bus services in Scotland. The CMA is seeking views on whether it should carry out a review; whether the case should be prioritised; and whether there has been a change in circumstances in the market.

Modifications to electricity distribution licence: new “Competition in Connections Code of Practice” licence condition is introduced by Ofgem. On 4 September 2015, Ofgem announced modifications to all electricity distribution licences, including the introduction of a new “Competition in Connections Code of Practice” licence condition (SLC 52). Ofgem had previously consulted on the new licence condition. Under SLC 52, in order to facilitate competition, the licensee is required to minimise, to the fullest extent reasonably practicable, the number and scope of input services which are only available from it; provide such input services on an equivalent basis to all parties operating in that local connections market; and remove, to the extent that it is within its power to do so, any barrier associated with managing and operating its distribution business, which would prevent entry to, or continued participation in the local connections market. The modifications will take effect from 30 October 2015.

Legislative reform: The Section 16 Enterprise Act 2002 Regulations 2015 published. On 7 September 2015, The Section 16 Enterprise Act 2002 Regulations 2015 (SI 2015/1643) (Regulations) were published. These Regulations, made in exercise of powers conferred by section 16(1)(a) of the Enterprise Act 2002(1) (Enterprise Act), allow the High Court of England and Wales, the Court of Session or sheriff court in Scotland, or the High Court or the county court in Northern Ireland to transfer to the Competition Appeal Tribunal (CAT) an infringement issue listed under section 16(6) of the Enterprise Act for determination. An infringement issue is a question relating to whether the Chapter I/II prohibition of the Competition Act 1998 or Article 101/102 of the TFEU has been or is being committed. The Regulations will come into force on 1 October 2015.

Government response to consultation on review and new CAT Rules of Procedure published. On 8 September 2015, the Department for Business, Innovation and Skills (BIS) published the government’s response to its February 2015 consultation on revisions to the CAT Rules of Procedure (CAT Rules). The government has decided to implement most of the recommendations of the independent review of the CAT Rules and will make various amendments which will facilitate robust case management (including new general principles, new rules governing admission of new evidence and new rules on disclosure and settlement offers in private actions). The government has also introduced provisions relating to the striking out of claims, interim injunctions, fast-track claims and collective actions. The CAT Rules will come into force on 1 October 2015.

Speeches & Publications

Declaring an orphan drug offers a “significant benefit”: workshop. On 7 December 2015, the European Medicines Agency (EMA) has organised a workshop aimed at medicine developers, regulators, academics and health-technology-assessment bodies) to explain what is meant by “significant benefit” in respect of orphan drugs (i.e. drugs which are used to diagnose, prevent or treat rare conditions). Demonstrating a significant benefit is one of the criteria medicines that treat rare diseases must fulfill to benefit from a number of incentives in the EU, including ten years of market exclusivity once the drugs have been authorised. The EMA wishes to clarify the concept of significant benefit as well as the methodology and type of evidence required to support it. Interested parties should register for the workshop by 31 October 2015. The workshop will also be broadcast live.