EU Competition

Request for ECJ to provide preliminary ruling on online selective distribution systems for luxury goods. On 18 July 2016, details were published in the Official Journal of a request for a preliminary ruling from the European Court of Justice (ECJ) in connection with the matter ofCoty Germany GmbH v Parfümerie Akzente GmbH. The questions concern whether selective restrictions imposed by Coty on its authorised distributors, which effectively prohibit its products being sold on online platforms in order to preserve its “luxury image” are compatible with Article 101(1) Treaty on the Functioning of the European Union (TFEU).

Request for ECJ to provide preliminary ruling on EU Merger Regulation. On 18 July 2016, details were published in the Official Journal of a request for a preliminary ruling from the ECJ in connection with the matter of Austria Asphalt GmbH & Co OG v Bundeskartellanwalt. In particular, the German courts have requested clarification on whether the EU Merger Regulation should be interpreted to mean that a move from sole control to joint control of an existing undertaking, in circumstances where the undertaking previously having sole control becomes an undertaking exercising joint control, constitutes a concentration only where the controlled undertaking has on a lasting basis all the functions of an autonomous entity.

Commission imposes record fine in truck producers cartel settlement. On 19 July 2016, the European Commission (Commission) announced that it has fined MAN, Volvo/Renault, Daimler, Iveco, and DAF a total of EUR 2.93 billion for their participation in a cartel to  fix pricing and pass on the costs of compliance with stricter emission rules to customers. All of the companies were found to have participated in the cartel for a period of 14 years, from 1997 to 2011. MAN received full immunity under the Commission’s 2006 Leniency Notice, for revealing the existence of the cartel; Volvo/Renault, Daimler, and Iveco also received a reduction in fines on account of their cooperation with the Commission’s investigation; and together with DAF also received a 10% reduction for engaging in the Commission’s settlement process.

ECJ hands down judgment on pre-stressing steel cartel appeal. On 19 July 2016, the ECJ handed down its judgment dismissing the appeal of Westfälische Drahtindustrie GmbH (WDI), Westfälische Drahtindustrie Verwaltungsgesellschaft GmbH & Co. KG (WDV) and Pampus Industriebeteiligungen GmbH & Co. KG (Pampus) against the General Court’s decision to uphold the fines imposed by the Commission in respect of their participation in a pre-stressing steel cartel. In their appeal to the General Court, the parties challenged the Commission’s assessment of their ability to pay the fines imposed. In particular, the General Court had found that WDI, WDV, and Pampus had not demonstrated that paying the  fine would result in their assets losing all value. WDI, WDV, and Pampus appealed the General Court’s decision on the basis that the General Court had exceeded its jurisdiction; erred in its decision to impose the payment of the fine through installments over an excessive period rather than reducing the fine; and discriminated against them by assessing their ability to pay the fine at the time of the judgment under appeal, while allowing the other cartel participants to receive a reduction in fines, of which their ability to pay was assessed from the time the contested decision was adopted.

ASL acquisition of Arianespace receives conditional approval following Phase II investigation. On 20 July 2016, the Commission announced that it had conditionally approved the acquisition of Arianespace by Airbus Safran Launchers (ASL), a joint venture between Airbus and Safran following its Phase II investigation. The Commission, in particular, was concerned about the potential for sensitive information to be passed between Arianespace, ASL, and other satellite manufacturers or launch service providers, resulting in less competitive tenders and innovation in the satellite and launch services markets. In order to address the Commission’s concerns, the companies have offered to implement information firewalls and measures restricting the mobility of employees between the companies; and include an arbitration mechanism in all future non-disclosure agreements signed with third parties, to ensure the effective implementation of the firewalls.

ECJ hands down preliminary ruling on liability for contractor anti-competitive conduct.On 21 July 2016, the ECJ handed down a preliminary ruling  on reference from the Latvian courts in the matter of SIA VM Remonts v SIA Parikas, which concerned the submission of tenders of three companies through the same legal advisor, who was found to have benchmarked the prices in each tender. The ECJ found that a company should be held liable for the actions of a service provider, where (a) the service provider is not independent, or is independent but acting under the control of the company; (b) the company was aware of the anti-competitive conduct; or (c) the company should have reasonably foreseen the anti-competitive conduct and was willing to take the risk.

AG hands down opinion on General Court refusal to grant confidential treatment to bleaching chemicals cartel leniency information. On 21 July 2016, Advocate General Szpunar (AG Szpunar) handed down an opinion in respect of Evonik Degussa GmbH’s (Evonik) appeal against a General Court decision, which upheld the decision of the Commission rejecting a request for confidential treatment of information Evonik had submitted with a view to obtaining leniency in respect of its involvement in the bleaching chemicals cartel. Evonik argued that publication of the information was a breach of the Commission’s Leniency Notices. AG Szpunar noted however, that a distinction could be drawn between the leniency statement itself and factual information concerning the infringement contained in the statement. In particular, the absolute protection afforded to the former by Directive 2014/104 should not be extended to the latter, as public access to the information relating to the unlawful facts is a fundamental element of actions for damages. AG Szpunar therefore, concluded that information contained in the leniency statements “may be used in the public versions of Commission decisions, provided only that the link that would enable their source to be identified is removed”, thus, protecting the identity of the leniency applicant and the exact content of the statement.

EU Mergers

Phase I Mergers

  • M.7975 MYLAN / MEDA (20 July 2016)
  • M.8051 CVC / TIPICO GROUP (18 July 2016)
  • M.8076 WARBURG PINCUS / WENDEL / JV (15 July 2016)
  • M.8100  IK / FIVE ARROWS / I@D (15 July 2016)
  • M.8113 THOMA BRAVO / QLIK TECHNOLOGIES (18 July 2016)

State Aid

New State aid interest and reference rates published. On 16 July 2016, the Commission published a notice setting out the current State aid recovery interest rates and reference/discount rates for 28 Member States applicable from 1 August 2016. The rates have been reduced for Denmark and the 19 Eurozone Member States, but otherwise remain unchanged.

Commission opens in-depth investigation into French State aid received by Areva. On 19 July 2016, the Commission announced that it had opened an in-depth investigation into French aid used to finance Areva group’s restructuring. Areva group, which is active in the nuclear sector, received French State aid, following a five year period of financial instability. In consultation with the EU Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty, the Commission will consider whether (a) the restructuring plan will have a realistic prospect of allowing Areva to operate without constant injections of public funds; (b) the group will be making “a sufficient, real contribution to the costs of its restructuring”; and (c) any measures adopted by France to “to limit distortions of competition are proportionate to the distortions created by the aid”.

UK Competition

CMA publishes full text decision on Beijer Ref acquisition of HRP Holdings. On 18 July 2016, the Competition and Markets Authority (CMA) published its full text decision to approve an increase by Beijer Ref AB (publ) (Beijer) of its shareholding in HRP Holdings Limited (HRP). In particular, Beijer, who owns 44% of the issued share capital in HRP wants to acquire the remaining issued share capital. Beijer and HRP overlap in the wholesale supply of refrigeration and air conditioning systems and components, as well as spare parts and air source heat pumps in Great Britain. The CMA, however, found that  (a) the parties had a low turnover and share of supply in the sale of heat pumps; (b) the parties were not each other’s closest competitors; (c) there would remain several strong competitors in the same market; and (d) customers had multiple accounts with different wholesalers and often switch between them.

CMA accepts Ladbrokes/Gala Coral interim undertakings. On 18 July 2016, the CMA published its notice of acceptance of interim undertakings pursuant to section 80 of the Enterprise Act 2002 in respect of Ladbrokes plc’s (Ladbrokes) acquisition of Gala Coral Group Limited (Gala Coral). The notice follows the CMA’s reference of the acquisition to a Phase II investigation further to its initial findings that the merger would result in a loss of competition in certain local markets in Great Britain for the supply of gambling products in licensed betting offices and in the national market for the supply of gambling products. Ladbrokes and Gala Coral have agreed not to take pre-emptive action pending the outcome of the CMA’s investigation.

CMA amends administrative timetable for private healthcare market investigation report remittal. On 18 July 2016, the CMA published an updated administrative timetable for considering those parts of the final report on the private healthcare market investigation that were annulled by the CAT and remitted to it for reconsideration. The CMA now anticipates that its final report will be published between May and August 2016.

CAT publishes order in Pride Mobility class action. On 18 July 2016, the Competition Appeal Tribunal (CAT) published an order setting out the timetable in connection with an application made pursuant to section 47B of the Competition Act 1998, for collective follow-on damages claims to be brought against Pride Mobility Products Limited arising from the Office of Fair Trading's 2014 mobility scooters decision.

Iiayama submits application for permission to appeal UK court’s ruling in follow-on damages claim. Iiyama has made an application to the Court of Appeal to challenge the decision of the High Court to dismiss its follow-on damages claim against LG Electronics, Samsung SDI and others, in respect of their participation in a cathode ray tubes cartel. The High Court dismissed iiyama’s claim for damages in respect of the Commission’s “TV-tube cartel decision”, on the grounds that it lacked “sufficient territorial connection with the EU”. In particular, it found that Iiyama had not bought any of the cartelised products from the defendants and the illegal conduct was found to have taken place outside of Europe, and as such, was not deemed to be a “follow-on case” from the Commission’s infringement decision.

CMA agrees settlement with Trod following its participation in a cartel to fix online prices through the use of automated repricing software. On 21 July 2016, the CMA announced that it had agreed a settlement with Trod Limited (Trod) for £163,371 (reflecting a 20% discount as a result of its cooperation) following Trod’s admission that it had agreed with GB eye Limited (GB), its competitor in the licensed sport and entertainment merchandise market, not to undercut each other’s prices for posters and frames sold on Amazon’s UK website. In order to implement the cartel the parties each configured  automatic repricing software. GB will not receive a fine, as it reported the cartel to the CMA and, as a result, benefited from the CMA’s leniency policy.