2010 was a year of significant changes in the EU with several new pieces of legislation and guidelines introduced by the Commission in order to renew and/or modify block exemption regulations applicable to vertical and horizontal agreements. The fight against cartels has been a top priority of the Commission as demonstrated by the huge amount of fines imposed on cartel members.

Legislative Changes

New Block Exemption Regulation Applicable to Vertical Restraints

As a consequence of the expiry of the previous block exemption on vertical restraints (Regulation 2790/1999), the European Commission released on 20 April 2010 a new Regulation 310/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union (the “Treaty”) to vertical restraints, with guidelines following in May 2010. According to this new Regulation, the maximum 30% market share threshold set for the exemption to apply, which used to only apply to the supplier, has been extended to both the purchaser and the supplier. Restrictions relating to internet sales in distribution networks are generally considered as hardcore restrictions prohibited by EU competition rules, subject however to certain limitative exceptions explained in the Guidelines. The Guidelines also include certain exceptions to the prohibition of so-called “hardcore restrictions” (e.g., resale price maintenance, restrictions on passive sales and restrictions on active sales in selective distribution networks). The Regulation and Guidelines therefore appear to be more flexible than the previous ones in terms of assessment of vertical restraints, although the extension of the market share test makes it harder to fall within the protection of the block exemption. In any event, the approach of the Commission is not expected to change dramatically and any restrictions will still need to be reviewed carefully in order to determine their compatibility with the new rules.

New Block Exemption Regulation Applicable to the Motor Sector

On May 27, 2010, the Commission also adopted new competition rules (Regulation 461/2010) for agreements between vehicle manufacturers and their authorised dealers, repairers and spare parts distributors. The new rules are intended to increase competition in the market for repair and maintenance by improving access to technical information needed for the repairs and by making it easier to use alternative spare parts. They should also allow the Commission to tackle manufacturers' abuse of warranties when they request that cars are serviced only in authorised garages. The new rules are also intended to reduce distribution costs for new cars by eliminating overly restrictive rules. The new rules came into force on June 1, 2010 as concerns the repair and maintenance markets, and will come into force on June 1, 2013 with regard to the vehicle sales markets (pending this date, the former Regulation 1400/2002 will still be applicable).

New Block Exemption Regulation Applicable to the Insurance Sector

The Commission adopted on March 24, 2010 a new Regulation 267/2010 that block exempts certain types of agreements in the insurance sector from the general prohibition of practices restrictive of competition. The new Regulation renews two of the four categories of agreements exempted under the former Regulation, namely joint compilations, tables and studies, and co(re)insurance pools, with some amendments. Certain information exchange can be justified in order to allow insurers to accurately assess risks. Pooling is also important in order to ensure that all risks can be covered. These two types of agreements justify a block exemption. Other types of cooperation may also be legal but it is for insurers to self-assess that they comply with the general competition rules.

New Rules Applicable to Horizontal Cooperation Agreements

As the applicable rules were to expire on December 31, 2010, the Commission released on December 14, 2010 a new package of Regulations and Guidelines governing cooperation agreements in Europe. The modifications to the former rules concern mainly the areas of standardisation, information exchange and research and development ("R&D"). Two new block exemption Regulations relate to the application of Article 101(3) of the Treaty to R&D agreements (Regulation 1217/2010) and to specialisation agreements (Regulation 1218/2010). These new Regulations entered into force on January 1, 2011, with a transitional period of two years, during which the previous Regulations remain in force for agreements that fulfill the conditions of the old Regulations but do not fulfill those of the new Regulations. It should be noted in particular that the Commission has extended the scope of the R&D Block Exemption Regulation, which now not only covers R&D activities carried out jointly but also research agreements where one party finances the R&D activities carried out by the other party. The parties also have more latitude to jointly exploit the R&D results. The new Guidelines provide a framework for the analysis of the most common forms of horizontal agreements (R&D, production, purchasing, commercialisation, standardization, and information exchange). Information exchange is new to the Commission Guidelines and builds on EU case law to give comprehensive guidance on how to assess the compatibility of information exchanges with EU competition rules. It should also be noted that the Guidelines promote a standard-setting system that is open and transparent and improves the transparency of licensing costs for intellectual property rights used in standards.

Merger Control

In 2010, merger control activity at EU level remained relatively stable, at about two-thirds the level of 2007, which was the Commission's busiest ever year. In 2010 it received around 260 notifications, broadly the same as in 2009.

Prohibitions in merger cases at EU level remain rare. There have only been two in the last eight years and only 20 in total since 1990, when the Merger Regulation came into force.

Legal Privilege

In September, the European Court of Justice (the "CJEU") released a landmark decision in Akzo Nobel Chemicals and Akcros Chemicals v Commission and Others, confirming that communications between in-house counsel and their internal clients are not protected under EU competition law by legal professional privilege. For details, please refer to the Fasken article or the conference notes available on www.fasken.com.


In 2010 there were seven European Commission decisions against hard core cartel activity, with total fines in 2010 of slightly over €3 billion against the infringers.

LCD Cartel Case

The European Commission fined six manufacturers of Liquid Crystal Display (LCD) panels (used in televisions, computer monitors, and computer notebook screens) a total of nearly €649 million for operating a cartel between October 2001 and February 2006. This case was notable because all the companies involved (Samsung Electronics, LG, AU Optronics, Chimei InnoLux, Chunghwa Picture Tubes and HannStar Display Corporation) are all based outside the European Economic Area (EEA), and the key meetings referred to in Commission findings took place outside the EEA.

The Commission found evidence that the companies met around 60 times, for the purpose of agreeing prices, including price ranges and minimum prices, and including prices applying in the EEA. According to Commission findings, they exchanged information on future production planning, capacity utilisation, and trading conditions.

The cartel was discovered after one of the participants, Samsung, approached the Commission under the leniency programme and received full immunity from fines as a result.


In 2010 the European Commission adopted its first settlement decision in a cartel case under the settlement procedure introduced in 2008. The settlement procedure involves a simplified and quicker procedure, requiring the parties concerned to engage in discussions and provide formal settlement submissions in which they clearly and unequivocally acknowledge their respective liability for an infringement. In return, the parties receive a ten percent reduction in fines.

The cartel involved 10 producers of memory chips (or DRAMS) used in computers and servers. The fine totaling € 331,273,800 included a reduction of 10% for the companies' acknowledgement of the facts. Cartel settlements allow the Commission to speed up investigations, free up resources to deal with other cases and generally improve the efficiency of its antitrust enforcement.

The settlement procedure is based on Articles 7 and 23 of Regulation 1/2003 (the antitrust modernisation Regulation).

First Fining of an Association of Undertakings in a Cartel Case

On December 8, 2010, the Commission fined the Ordre national des pharmaciens (ONP) and its governing bodies €5 millions for imposing minimum prices on the French market for clinical laboratory tests and hindering the development of groups of laboratories in this market, in violation of EU antitrust rules and provisions on restrictive business practices (Article 101 of the Treaty). The ONP is a professional body whose remit is to ensure that pharmacists in France comply with their professional duties. The Commission imposed a fine for the first time on an association of undertakings, raising the possibility of the undertakings of members of the governing bodies being subject to damages claims from the cartel's victims, as provided for by Article 23.4 of Regulation No 1/2003.

Pharmaceutical Sector Inquiry - Update

Following the Pharmaceutical Sector Enquiry report in July 2009, the European Commission continued its investigations into the practices of companies identified in the report. The report identified a "tool box" used by originators (first to market pharmaceutical companies with patents covering their products) to delay or block entry of generic companies launching their versions of those medicines. These practices included the entering into of settlement agreements between originators and the generic companies in relation to the originators' patents. In July 2010, a Commission report clarified that its main focus was on three types of settlement agreement: "pay for delay" settlements, where the originator pays the generic company to delay or stay off the market; out of scope settlements, where the settlement agreement covers a wider scope than the patents in dispute (i.e. more products or a wider territory); and settlements covering patents which the parties know to be invalid.

A second round of the monitoring exercise was started in early 2011 to assess whether an identified "positive trend" towards a decrease in "potentially problematic agreements" has continued. This trend was identified in the course of the Commission's first round of monitoring as part of the report. To launch the second round of monitoring, the Commission has asked selected originator and generic pharmaceutical companies to submit a copy of all patent settlement agreements relating to the EU/EEA markets concluded in 2010. The Commission has stated that if a specific settlement which comes to light in this second round of monitoring raises additional questions, a more targeted request for information could follow. The Commission will report in the first half of 2011.

In November 2010, Commission officials carried out unannounced inspections (dawn raids) at the premises of a number of companies active in the pharmaceutical sector in several Member States, on the basis that the Commission believes that they may have acted to delay generic entry for a particular medicine.

Separately, a number of investigations in relation to specific products are on-going.

Abuse of Dominance

AstraZeneca Case

In July, the General Court (formerly the CFI) confirmed the Commission's controversial decision that AstraZeneca's misuse of the patent system and regulatory systems amounted to an abuse of dominance under Article 102. AstraZeneca was found to have made submission of misleading representation to patent authorities and courts to obtain Supplementary Protection Certificates to protect their monopoly in relation to its product Losec. The General Court held that it was an abuse to conduct a practice "to lead public authorities wrongly to create regulatory obstacles to competition". The scope of this test is arguably very wide indeed, and may create an on-going obligation.

Further, the General Court found that it can be abusive to deregister marketing authorisations for medicinal products with the intention of preventing the entry of generic versions of those medicines.

Both the Commission and AstraZeneca has appealed. For a similar case in relation to abuse of regulatory procedures, see the Reckitt Benckiser case under the UK summary below.

Application of the Principle of Proportionality in Commitment Procedures

On June 29, 2010, the CJEU set aside the judgment of the General Court and upheld the Commission's decision making binding the commitments offered by De Beers to cease all purchases of rough diamonds from Alrosa. The CJEU ruled that the principle of proportionality requires the Commission only to ascertain that the commitments given by undertakings address the problems that it has identified and expressed to the undertakings. The Commission does not have to compare the commitments offered with the measures it would itself have imposed and to regard as disproportionate any commitment which goes beyond those measures. Undertakings offering commitments thereby consciously accept that the concessions they make may go beyond what the Commission could itself impose on them in a decision adopted by it.


Merger Control - Referral by the EU Commission Regarding the Acquisition in the Transportation Market Involving CDPQ

On October 29, 2009, the European Commission deferred to the French Competition Authority for the examination of the takeover of Keolis and Effia by the SNCF and the Caisse de dépôt et de Placement du Québec (CDPQ) in the French market. The Competition Authority thoroughly examined this transaction that involved the public transportation of passengers, as well as related activities. Eventually, in its Decision 10-DCC-02 of January 13, 2010, the Competition Authority authorized the transaction subject to commitments intended to remedy the identified competition concerns. Such commitments will be monitored by a trustee independent of the SNCF group and of CDPQ, approved by the Competition Authority.

Cartels - French Banks Practice Under Scrutiny

In its Decision 10-D-28 of September 20, 2010, the French Competition Authority fined 11 French banks 384.9 million euros for having colluded and charging unjustified interbank fees during the transition towards a new digital system for processing checks. The Competition Authority implemented national but also EU competition law, taking into account that the practices may have had an impact on the freedom of establishment of foreign banks in France. Another decision of the Competition Authority is expected by 2011 following its ongoing investigation concerning credit card interbank fees.

Abuse of Dominance - Google Subject to Several Investigations

The French Competition Authority issued two decisions and one opinion this year relating to the on-line advertising market, all of which involved Google. On June 30, 2010 (Decision 10-MC-01), it ordered Google to implement in an objective, transparent and non-discriminatory manner the content policy of its AdWords service. The Competition Authority received a complaint against Google from Navx, which markets online databases for GPS navigation devices. These databases include in particular the localisation of fixed and mobile speed cameras. Navx alleged that Google was implementing anticompetitive practices on the online advertising market. In its decision, the Competition Authority considered that Google holds a dominant position on the advertising market related to online searches. Pending a full investigation and a decision on the merits, the Competition Authority was also of the view that Google implemented the content policy of its AdWords service in a way which lacks objectivity and transparency, resulting in a discriminatory treatment of speed camera database suppliers. For instance, the discrimination was evidenced by the differences in the treatment applied to radar database suppliers: GPS manufacturers (Tom Tom and Garmin) could promote the supply of these databases on their website without being excluded from the Adwords service whereas speed camera warning system and speed camera database manufacturers (SCDB, Coyote, Navx, AlerteGPS) could not. It therefore decided to grant interim measures. Pursuant to a preliminary assessment carried out on the merits, Google proposed commitments aimed at bringing a lasting solution to the competition concerns concerning devices aimed at evading traffic speed cameras expressed by the Competition Authority. In its Decision 10-D-30 of October 28, 2010, the Competition Authority accepted the commitments proposed by Google for a duration of three years and made them binding upon the latter. In addition to these commitments, Google indicated to the Competition Authority that it will implement, for all the advertisers using the AdWords services and in all the countries concerned, the principles of improvement and clarification which inspired the commitments as accepted by the Competition Authority. Finally, in its Opinion 10-A-29 of December 14, 2010 following a referral made in February by the Minister for the Economy, Finance and Employment, the Competition Authority confirmed that Google holds a dominant position in the advertising market linked to search engines and considered that competition law can apply limits to Google's actions and provide a response to the competitive stakes brought to light by the operators in the market, without the need to implement sector-wide regulations. It proposed a series of targeted responses to identified concerns.

Inquiries in the Food Sector

On December 7, 2010, the Competition Authority issued an Opinion (10-A-25) on the competitive impact of a new practice: category management between suppliers and retailers in the mass retail distribution for food products sector. Category management is a partnership between a retailer and a supplier aiming at stimulating a product category. The Competition Authority identified numerous potential risks for competition linked to these partnerships (including shelf space eviction risks for the competitors and collusion risks notably between retailers). It therefore warned the economic operators about the risks for competition entailed by the implementation details of these practices and suggested the drafting of a best practices code. In addition and on the same day, the Competition Authority issued another Opinion (10-A-26) which expressed concerns about the concentration level in certain customer catchment areas and noticed that opening new stores remains very difficult today in France. To revamp competition, it considered that behavioural barriers to entry on the one hand (for example, practices aimed at freezing commercial estate) and obstacles to the mobility of independent stores across retail groups on the other hand (in the form of agreements that are too long and too rigid) have to be prevented. The Competition Authority also said a law facilitating these changes may be necessary.


Institutional Reform

In 2010, as part of the new coalition government's wide range shake up of public bodies, it proposed that the two distinct and independent UK competition bodies, the Office of Fair Trading (OFT) and Competition Commission, should merge. The current procedure provides that mergers are initially investigated by the OFT or specific sector regulators which, if those mergers raise competition issues, refer them to the Competition Commission for detailed assessment. Full details of how the two bodies will be integrated is not yet clear, with a consultation to be launched this year.

Separately, a new body, the Economic Crime Agency, is proposed to be created to handle all types of white collar crime. Its exact scope remains unclear, and one proposal would see it take over the OFT's powers in relation to the prosecution of criminal cartel cases. This follows the withdrawal by the OFT of proceedings against four BA executives (see below).

Abuse of Dominance

In October 2010, the OFT fined Reckitt Benckiser £10.2m for its abuse of dominance in delisting an old version of its Gaviscon product from the British National Formulary in 2005. The formulary is a software tool used by doctors to search for medicines, and it includes lists of generic versions of branded medicines when the brand name is entered. The removal from the list was timed to take place before the entry onto the list of generic versions of Gaviscon, resulting in a search for "Gaviscon" returning only results for RB's new version of the product, which is patent protected until 2016.

This case has clear similarities with the AstraZeneca decision reported above and raises similar question marks as to the extent to which manipulations of regulatory procedures can and should amount to findings of abuse of dominance. It is also notable as it is the first time the OFT has fined an undertaking for an abuse of dominance since 2003.

Criminal Enforcement

Unlike the European Commission, the OFT has the power to bring criminal proceedings in respect of certain cartel activity. After successful convictions in 2008, the OFT faced embarrassment this year when it dropped a high profile, and first ever contested, case against four British Airways executives two weeks into the trial. The prosecutions followed an investigation into the surcharges applied to passenger tickets by Virgin and BA. BA was fined in 2007 by the OFT; Virgin obtained immunity under the leniency procedure, which also shielded Virgin executives from prosecution.

The prosecution against the BA executives was dropped after it identified a large number of emails with a former Virgin employee, which had not disclosed as part of its leniency application, and not reviewed by the OFT nor the defence. On that basis, the OFT considered it unfair to continue with the case.

This does not appear to dimmed the OFT's enthusiasm for such cases, however, as it has commenced two new criminal investigations this year into suspected cartel activity in the automotive and agricultural industries.


The number of mergers in the UK referred to the UK authorities remained around the same levels as last year, in line with the experience at EU level. The OFT and the Competition Commission issued a joint guidance in 2010 which set out how each body would approach the assessment of mergers. As well as providing valuable up to date guidance, the joint statement confirmed a different approach by each body to certain substantive assessment issues.

OFT Guidance on Competition Act Investigation Procedures

The OFT has published guidance on its procedures when carrying out investigations into suspected anti-competitive behaviour under the Competition Act 1998. This updates and expands on previous guidance in light of a consultation process that completed in November 2010.

The guidance takes into account feedback from the consultation and runs through the current procedures from receipt of a complaint through to the final decision and rights of appeal, providing a comprehensive description of the processes. In addition to this, the guidance introduces the following new procedures:

  1. an opportunity for complainants to have informal discussions with the OFT before deciding whether to submit a formal complaint, as a way of facilitating the complaints process; and
  2. informing complainants within four months of receipt of their formal complaint (subject to their cooperation and information provision) whether the OFT intends to open a formal investigation.

Furthermore, the OFT has opted to trial for a period of one year the role of a Procedural Adjudicator in the hope that it will assist in quick resolution of procedural disputes between parties and the OFT.

The OFT will apply the guidance flexibly such that they will have regard to it but may adopt a different approach where circumstances warrant.