Investigations

European Commission investigates alleged anti-competitive practices in e-commerce

Three separate investigations have been launched to assess if certain online sales practices prevent consumers from enjoying cross-border choice and being able to buy consumer electronics, video games and hotel accommodation at competitive prices.

The European Commission is investigating whether Asus, Denon & Marantz, Philips and Pioneer have restricted the ability of online retailers to set their own prices for widely used consumer electronics products such as household appliances, notebooks and hi-fi products. The effect of these suspected price restrictions may be aggravated due to the use by many online retailers of pricing software that automatically adapts retail prices to those of leading competitors.

The Commission is also investigating bilateral agreements concluded between Valve Corporation, owner of the Steam game distribution platform, and five PC video game publishers, Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax. This investigation concerns geo-blocking practices, where companies prevent consumers from purchasing digital content because of the consumer’s location or country of residence.

The third investigation relates to agreements concluded between the largest European tour operators (Kuoni, REWE, Thomas Cook, TUI) and hotels (Meliá Hotels). The agreements in question may contain clauses that discriminate between customers, based on their nationality or country of residence - as a result customers would not be able to see the full hotel availability or book hotel rooms at the best prices.

Decisions

Car battery recycling cartel

The European Commission has fined three recycling companies a total of €68 million for their participation in a cartel. For further information, please see the news bulletin on our website dated 10 February 2017.

EU ordered to pay more than €50,000 in damages for excessive length of proceedings

Gascogne Sack Deutschland and Gascogne brought actions before the General Court in 2006, seeking the annulment of a decision adopted by the European Commission in a case concerning a cartel in the industrial plastic bags sector. The General Court dismissed those actions by judgments in 2011.

The General Court noted that the EU may incur non-contractual liability when three cumulative conditions are fulfilled:

1. the institutions’ conduct must be unlawful;

The right to adjudication within a reasonable period, enshrined in the Charter of Fundamental Rights of the European Union was breached. The proceedings lasted for more than 5 years and nine months and this could not be justified by the circumstances. The General Court noted that in the field of competition law, a period of 15 months between the end of the written part of the procedure and the opening of the oral part of the procedure generally constitutes an appropriate period. The General Court considered that the parallel treatment of related cases may justify an increase in the length of the proceedings, by a period of one month per additional related case. In these cases, while 26 months between the two procedures was deemed appropriate, there was an unjustified period of inactivity of 20 months.

2. actual damage must have been suffered;

Gascogne suffered actual and certain material harm as a result of the fact that, during the unjustified period of inactivity of the General Court, it suffered losses due to the costs that it had to pay in relation to the bank guarantee provided to the European Commission.

3. there must be a causal link between the conduct and the damage pleaded.

If the proceedings had not exceeded the reasonable period for adjudication, Gascogne would not have had to pay bank guarantee costs during the period corresponding to that excess.

The General Court therefore awarded Gascogne damages amounting to €47,064.33 as compensation for the material harm it suffered. The General Court also recognised that the two companies suffered non-material harm by being placed in a situation of uncertainty which went beyond the degree of uncertainty usually caused by litigation. The Court deemed it appropriate to award each of the two companies damages of €5,000 as compensation for the non-material harm.

News (Ireland)

CCPC investigates suspected anti-competitive conduct in the ticketing sector

The CCPC has commenced an investigation in relation to the provision of tickets and the operation of ticketing services for live events. The investigation will focus primarily on potentially anti-competitive conduct by operators including those involved in providing tickets and ticketing services, promoters and venues. Witness summons and requirements for information have been issued by the CCPC to a number of parties involved in the sector.

CCPC investigating potential bid rigging in the procurement of publicly-funded transport services

The CCPC opened this investigation in 2016. As part of the investigation, the CCPC carried out 20 dawn raids in July 2016 in locations in Tipperary, Waterford and Kilkenny. Authorised officers from the CCPC and several members of An Garda Síochána carried out the searches. The CCPC encourages anybody who has evidence to contact them.

Isolde Goggin, Chairperson of the CCPC, recently commented that in 2017 the CCPC is continuing to prioritise cartel detection, particularly bid rigging in procurement. Also, in 2017, along with the Office of Government Procurement, the CCPC will be exploring systematic screening tools for procurement processes. This will assist in the detection and deterrence of bid rigging on public tenders.

Public consultation on mortgage market

The CCPC has opened a public consultation in relation to the Irish mortgage market. The public consultation is a key input into a body of work being undertaken by the CCPC, and was requested by the government as part of the “Programme for a Partnership Government”. The CCPC is examining the market structure, legislation and regulation of the mortgage market and will outline options on how Ireland can develop a better-functioning, more sustainable mortgage market. The study commenced in December 2016 and the CCPC has undertaken interviews and discussions with a wide range of stakeholders. Interested parties are invited to respond to the consultation by 20 March 2017.

Damages Directive transposed

The European Union (Actions for Damages for Infringements of Competition Law) Regulations 2017 give effect to Directive 2014/104. The Directive sets out certain rules necessary to ensure that anyone who has suffered harm caused by an infringement of competition law can effectively exercise the right to claim full compensation for that harm from the infringer.

Practice Note

Merger Control Test

The test used by the CCPC to decide whether a merger should be allowed or not is whether it will “substantially lessen competition” (“SLC”) in the markets for goods or services in the State. The SLC test is interpreted in terms of consumer welfare which includes a wide range of variables such as price, output, quality and variety. In most cases, the effect on consumer welfare is measured by whether the price of goods in the market will rise or whether output will fall as a result of the merger. When considering the SLC test, the CCPC also has regard to the benefits flowing to consumers from the proposed merger.

Merger Determination

BoyleSports / Bambury

This involved the proposed acquisition by BoyleSports Unlimited Company of certain assets of Finbam Leisure Limited, including nine licensed betting offices (“LBOs”)operating under the “Bambury Bookmakers” brand located in counties Dublin, Kildare and Meath (the “Target Businesses”).

While there was a horizontal overlap between the parties’ activities with respect to the provision of betting services in LBOs in the State, the CCPC did not need to come to a definitive view on the precise relevant product market.

The CCPC’s conclusion would be unaffected whether the precise relevant product market was either narrow (eg the provision of betting services in LBOs) or broader (eg to include the provision of betting services online or over the telephone or some other combination of betting services channels). The narrowest potential product market affected by this proposed transaction was the provision of betting services to LBOs.

The CCPC did not need to come to a definitive view on the precise relevant geographic market either. The CCPC analysed the narrowest possible relevant geographic market (being the potential market for the provision of betting services in LBOs in each of the geographic areas in which the Target Businesses are located). Customers use LBOs located within a given travel time from their point of origin and therefore, from a consumer’s perspective, the degree of competition between LBOs depends on the distance that customers are prepared to travel to alternative LBOs. The CCPC assessed the following catchment areas of the Target Businesses: (i) within a radius of 400m; and (ii) within a radius of 3km.

In conclusion, the CCPC considered that the proposed transaction would not substantially lessen competition in any market for goods or services in the State.