EU Competition

Commission publishes commitments provided in Staples/Office Depot Merger following phase 2 investigation. On 11 April 2016, the European Commission (Commission) published an interim non-confidential version of the commitments provided in the acquisition of Office Depot, Inc. by Staples, Inc. The commitments include the divestiture of a certain part of the business (which consists of Office Depot's business-to-business distribution of office supplies through contract channels in the EEA, as well as Switzerland; and through all distribution channels in Sweden) as a going concern.

AG hands down Opinion on Gas Directive on reference from French court. On 12 April 2016, Advocate General Paolo Mengozzi handed down his Opinion on the Gas Directive 2009/73 (Gas Directive), from a French court. The Gas Directive forms part of the third energy reform package adopted in June 2009, and requires Member States to ensure that, without prejudice to any public service obligations imposed, natural gas undertakings are operated with a view to achieving a competitive, secure and environmentally sustainable market in natural gas. AG Mengozzi concluded that French State intervention imposing an obligation on gas suppliers to supply gas at a regulated price (but which does not preclude offers being made that are lower than that tariff), is an obstacle to the achievement of a competitive market for the purposes of Article 3(1) of the Gas Directive, unless the Member State meets all criteria under Article 3(2), which permits state intervention in order to ensure security of supply and territorial cohesion.

AG hands down Opinion on calculation of car glass cartel fine. On 14 April 2016, Advocate General Kokott handed down her Opinion on the appeal brought by Pilkington Group Limited (Pilkington) in respect of the fines imposed by the Commission for its participation in the car glass cartel. Pilkington argued that the General Court had erred in its assessment of its calculation of the fine by not excluding sales made pursuant to contracts pre-dating the period of infringement when assessing the turnover. AG Kokott considered that this was not in the spirit of the Commission 2006 Fining Guidelines and that the calculation should include all cartel sales in order to calculate the cartel’s economic importance and the relative weight of the participants. AG Kokott therefore, recommended that the European Court of Justice (ECJ) dismiss the appeal.

ECJ dismisses NMTA appeal against Spanish State aid for depreciating assets that are the subject of financial leasing. On 14 April 2016, the ECJ dismissed an appeal brought by the Netherlands Maritime Technology Association (NMTA) against the General Court’s decision to uphold the Commission’s approval of a new Spanish State aid scheme. The Commission had previously concluded that the Spanish scheme allowing for the early depreciation of assets being the subject of a finance leasing agreement (subject to the fulfilment of certain criteria) did not constitute State aid within the meaning of Article 107(1) of the TFEU and was therefore compatible with the internal market. The ECJ in particular, drew the parties attention to paragraph 23 of the notice, which stated, “The differential nature of some measures does not necessarily mean that they must be considered to be State aid. This is the case with measures whose economic rationale makes them necessary to the functioning and effectiveness of the tax system. However, it is up to the Member State to provide such justification”.

EU Mergers

Phase I Mergers

  • M.7853 CMA CGM / BOLLORE / KRIBI JV (12 April 2016)

State Aid

Commission publishes interim report of the Sector Inquiry on Capacity Mechanisms. On 13 April 2016, the Commission published a report following its sector inquiry into the financial support that EU Member States grant to electricity producers and consumers to safeguard security of electricity supply and whether these “capacity mechanisms” favour particular producers or technologies. Based on their assessment of the various types of capacity mechanisms, the Commission tentatively concluded, that capacity mechanisms can increase the security of electricity supply but many Member States must be more thorough assessing whether they are necessary and their design to ensure they are targeted and cost-effective. The final report will be published later this year.

AG hands down Opinion on State aid received in respect of Polish power purchase agreements. On 14 April 2016, Advocate General Sanchez-Bordona handed down his Opinion in respect of the interpretation of Article 107 of the TFEU and the Commission’s decision of 25 September 2007, when calculating the compensation amount owed for stranded costs, to Polish electricity producer, PGE Górnictwo i Energetyka Konwencjonalna SA (PGE). In particular, AG Sanchez-Bordona was asked to consider whether this amount should take into account the financial results of an affiliate company. AG Sanchez-Bordona concluded that the amount of stranded costs can be calculated with reference to group affiliates however, the maximum allowable amount of aid should not be exceeded.

AG hands down Opinion on Flemish law grant of free distribution of electricity produced in Flanders. On 14 April 2016, Advocate General Bot handed down his Opinion on the application of the free movement of goods under Articles 28 and 30 of the TFEU to Flemish laws granting free use of the distribution network to Flemish green electricity producers. The measures do not afford the same advantage to electricity produced by other Member States. AG Bot noted two recent judgments confirming measures of Member States limiting green energy support to producers within their territory as being compatible with TFEU. Similarly, with respect to this matter, AG Bot found that the measure was justified as, although it only benefitted Flemish producers of green electricity, it achieved its objective of increasing the production and demand for green electricity.

Public Procurement

High Court strikes out Newlyn PLC claim pursuant to the Public Contract Regulations 2015. On 6 April 2016, the High Court struck out a claim brought by Newlyn PLC (Newlyn) against London Borough of Waltham Forest (LBWF) pursuant to the Public Contract Regulations 2015 (SI 2015/102) (PCR). Following an unsuccessful bid for a contract tender, Newlyn brought its claim against LBWF for LBWF’s failure to comply with the PCR. LBWF argued that the PCR did not apply to its procurement exercise as the contract in question (for bailiff services) did not fall within the definition of a “services concession contract” under Regulation 2(1).

Commission publishes notice of request of exemption from Poczta Polska in respect of Directive on procurement by entities operating in the water, energy, transport and postal services sectors. On 9 April 2016, the Commission published a notice in the Official Journal concerning a request for exemption made by the President of the Office of Electronic Communications on behalf of Poczta Polska S.A., under Article 35 of Directive 2014/25/EU, which concerns the disapplication of procurement procedures for entities operating in the water, energy, transport and postal services sectors, where the relevant activity is directly exposed to competition in markets to which access is not restricted.

UK Competition

CMA sets out concerns over Hutchinson/Telefonica merger in letter to Commission. On 11 April 2016, the Competition and Markets Authority (CMA) published a copy of its letter to Commissioner Margrethe Vestager setting out its “serious concerns” as to how the proposed merger between Hutchison 3G UK and Telefonica UK might impede effective competition in the UK retail and wholesale mobile telecoms markets. In its letter the CMA argues that the only appropriate remedy is the divestment of the Three or O2 mobile network businesses, in their entirety, or possibly allowing for limited ‘carve-outs’ from the divested business, but that the divestment “would need to include the mobile network infrastructure and sufficient spectrum to ensure a commercially viable fourth MNO in the UK”.

CMA amends timetable for review of PRS undertakings. On 11 April 2016, the CMA announced that it had amended its administrative timetable for reviewing the undertakings given by Performing Rights Society Limited (PRS) in February 1997. The PRS undertook to among other things, ensure that no steps were taken to amend its Memorandum and Articles of Association in order to prevent or inhibit members from self-administering their own live performing rights or other categories of performing rights, or prevent writers from sending representatives that were not members of the PRS to speak or vote for them at general meetings of the PRS. A final decision is expected to be published in May 2016.

CMA publishes penalty notice under Section 40A of the Competition Act 1998 addressed to Pfizer Limited. On 12 April 2016, the CMA  published a penalty notice addressed to Pfizer Limited, for its failure to comply, without reasonable excuse, with a requirement imposed under a notice under section 26 of the Competition Act 1998 (CA) in respect of the CMA’s investigation into unfair pricing for phenytoin sodium capsules in the United Kingdom.

CMA opens investigation into anticompetitive arrangements in the pharmaceutical sector. On 12 April 2016, the CMA announced that it had opened an investigation into suspected anticompetitive conduct in the pharmaceutical sector under Chapter I of the CA and Article 101 of the TFEU. The initial investigation is to take place through April to July 2016.

CMA opens investigation into anticompetitive arrangements in the medical equipment sector. On 12 April 2016, the CMA announced that it had opened an investigation into suspected anti-competitive conduct in the medical equipment sector pursuant to Chapter II of the CA and Article 102 of the TFEU. The initial investigation is to take place through April to October 2016.

CAT publishes notice of claim for damages brought by Socrates Training against the Law Society. On 12 April 2016, the Competition Appeals Tribunal (CAT) published notice of a claim for damages brought by Socrates Training Limited (Socrates) against The Law Society of England and Wales (Law Society) under section 47A of the CA. Socrates is seeking an injunction against the Law Society on the basis that it has abused its dominant market position in the provision of quality certification/accreditation services by its insistence on law firms buying, among other things, its anti-money laundering and mortgage fraud materials in order for firms to retain their Conveyancing Quality Scheme accreditation.

CMA consent to Iron Mountain acquisition of Recall Shares subject to undertakings in respect of UK business. On 12 April 2016, the CMA published its notice of consent in respect of the acquisition by Iron Mountain Incorporated (Iron Mountain) of shares in Recall Holdings Limited (Recall) pursuant to section 78(2) of the Enterprise Act 2002. The consent is subject to Iron Mountain providing two sets of undertakings, the first being the appointment of a monitoring trustee (accepted by the CMA on 21 March 2016), and the second, which included the remainder of the proposed hold separate arrangements (accepted by the CMA on 30 March 2016).

CMA publishes final order and undertakings following investigation into the supply or acquisition of aggregates, cement and ready-mix concrete. On 14 April 2016, the CMA published the Cement Market Data Order 2016 and final undertakings from the Mineral Products Association (MPA). The order will restrict the disclosure and publication of production and sales volume data by cement producers in Great Britain; and the final undertakings concern the use of an independent third party for the collection and disclosure of production and sales volume data which MPA receives from British cement producers.

Speeches / Publications / Consultations / Communications

Commission publishes competition policy brief in respect of merger control investigations. On 11 April 2016, the Commission published a competition policy brief in respect of EU merger control and innovation. The briefing sets out the benefits of competition for innovation, the EU’s framework for analysing innovation effects in mergers; and discusses recent case law assessing the effect that mergers have had on innovation, particularly in the pharmaceutical and medical sectors as well as the GE/Alstom and Deutsche Börse cases.

FCA publishes interim report on investment and corporate banking. On 13 April 2016, the Financial Conduct Authority (FCA) published its interim report in respect of its investment and corporate banking market study. The FCA notes that it did not “identify compelling evidence that any particular sector or category of clients faces a lack of available suppliers for corporate and investment banking services” and specifically, in relation to syndicated lending, found that it was clients who determined the size and composition of the lending group and that the level of the fees were not correlated to the size of the syndicate. The final report is expected to be published in Summer 2016.