Competition: Commission confirms dawn raids in kraft paper and industrial paper sacks sector

On 7 March 2017, the Commission confirmed that it has carried out dawn raids at the premises of several companies active in producing kraft paper and industrial paper sacks. The dawn raids took place in several member states and were carried out together with the relevant national competition authorities.

The inspections were made because the Commission has concerns that the companies in question may have violated the prohibition on anti-competitive practices, such as price fixing and customer allocation, in article 101 TFEU. The dawn raids were part of the same investigation that led the Commission to carry out dawn raids in March 2016 in the same sectors.

Source: Commission Press Release 07/03/2017

Competition: Commission fines six car air conditioning and engine cooling suppliers in cartel settlements

On 8 March 2017, the Commission announced that it has fined Behr, Calsonic, Denso, Panasonic, Sanden and Valeo a total of EUR 155 million for taking part in one or more of four cartels concerning supplies of air conditioning and engine cooling components to car manufacturers in the European Economic Area ("EEA"). All companies involved in the cartels agreed to settle the cases. Denso received full immunity for its involvement in three of the cartels since it revealed the cartel's existence to the Commission. For the same reason, Panasonic received immunity for its involvement in one of the cartels.

The cartels involved coordination of prices or markets and exchange of sensitive information for the supply of climate control components an engine cooling components to certain car manufacturers in the EEA. The cartelists attended trilateral and bilateral meetings, and had other collusive contacts over e-mail and phone.

The decision is part of a series of investigations into the automotive parts sector. The Commission has previously fined suppliers of e.g. bearings and wire harnesses in cars. Investigations are still ongoing concerning e.g. occupant safety systems.

Source: Commission Press Release 08/03/2017 

Merger Control: Fastweb appeals the Commission's decision to approve the Hutchinson/VimpelCom joint venture in Italy

On 6 March 2017, the Official Journal published Fastweb's appeal of a Commission decision to clear the joint venture ("JV") between Hutchinson Europe Telecommunication's ("Hutchinson") subsidiary H3G and and VimpelCom Luxembourg Holding's ("VimpelCom") subsidiary WIND. By creating the JV, the parties transferred their respective activities in the telecommunications sector in Italy to the JV. Considering that the proposed JV would reduce the number of mobile network operators in Italy from four to three, the Commission initially had concerns and opened an in-depth investigation of the proposed acquisition. However, after the parties offered to divest assets facilitating the market entry of a French telecommunications operator, Iliad, into the Italian retail market as a fourth mobile network operator, the JV was conditionally approved.

Fastweb, a virtual mobile telephony operator active in the Italian mobile telephony retail market, has now appealed the Commission's decision to approve the JV. As a virtual mobile telephony operator, Fastweb does not own the networks it uses to provide mobile telephony services to Italian customers, but uses mobile network operators' networks for this purpose.

In its appeal, Fastweb makes several arguments, e.g. (i) that the Commission wrongfully concluded that the entry of a new mobile network operator was in itself sufficient to resolve the merger's horizontal effects, (ii) that the Commission based its analysis of the merger and the commitments on the incorrect assumption that the price is the only significant competitive factor within the relevant market, (iii) that the Commission incorrectly assessed the suitability of the commitments for resolving concerns of coordinated effects on the retail market, and (iv) that the commitments were unsuitable for responding to the competition concerns on the wholesale access market.

Source: Case T-19/17 Fastweb v Commission, Official Journal C 070/36, 6 March 2017

Merger Control: General Court annuls the Commission's decision to prohibit the merger between UPS and TNT on procedural grounds

On 7 March 2017, the General Court ("GC") annulled the Commission's decision to prohibit the merger between United Parcel Service ("UPS") and TNT Express ("TNT"). The companies are active in specialist transport and logistics services.

In 2012, UPS notified the Commission of the proposed merger. However, the Commission prohibited the merger, stating in essence that it would have restricted competition in 15 member states concerning the express delivery of small packages to other European countries. The number of significant players in the market would have been reduced to three, or sometimes even two, leaving DHL as the only alternative. UPS appealed the decision.The GC has now delivered its judgment, ruling in favor of UPS.

The GC concludes that the Commission breached UPS' rights of defense by basing its decision on an econometric model different from that contemplated during the administrative procedure. The changes to the analysis were non-negligible and should thus have been communicated to UPS before the adoption of the decision. UPS might have been better able to defend itself if it had access to the final version of the model before the decision was adopted. Therefore, the GC annulled the Commission's decision.

Source: General Court Press Release 07/03/2017 

Competition (Sweden): Swedish Competition Authority discontinues investigation of suspected cooperation between building material retailers

On 3 March 2017, the Swedish Competition Authority ("SCA") announced that it has discontinued its investigation of potential illegal cooperation between the two building material retailers Bauhaus & Co KB and K-Rauta AB.

The investigation of the two retailers, which began in November 2016, focused on whether the companies had agreed on, or coordinated, customer campaigns concerning rebates and prices. In the course of its investigation, the SCA carried out dawn raids and heard company representatives. In the course of its initial investigation, the SCA found indications of cooperation in the form of potentially unlawful price coordination on the market for sanitary ware.

The SCA's investigation revealed that the companies were in contact concerning a small number of marketing actions (local displays). However, the SCA found no evidence that these contacts constituted anti-competitive conduct. Therefore, the investigation has been discontinued.

Source: Swedish Competition Authority Press Release 03/03/2017 (in Swedish) and Swedish Competition Authority Decision 02/03/2017 (in Swedish) 

Competition (Sweden): Swedish Competition Authority publishes research report concerning competition and growth in digital markets

On 6 March 2017, the Swedish Competition Authority ("SCA") published a report concerning competition and growth in digital markets. The report, which was ordered by the Swedish government, deals with two topics: e-commerce and sharing services. According to another report produced by PostNord, HUI Research and Svensk Digital Handel (E-barometerns årsrapport 2016), e-commerce of goods in Sweden generated sales worth SEK 56 billion, with strong growth projected to continue. Further, sharing services that use digital platforms to connect customers and suppliers (often referred to as "sharing economy"), such as Uber (car-sharing) and Airbnb (short-term lodging), has entered the Swedish market, albeit still in moderate volumes.

In its report, the SCA concludes that even though the competition law framework was not created for these services, it can be applied to these new economies as well. The SCA highlighted particularly, that there may be challenges in assessing a company's market power on the basis of turnover alone in these new markets. As regards merger control, the SCA suggests that, for the purposes of avoiding a possible enforcement gap, it should be considered whether assessing the notifiability of a merger should take place on the basis of the deal price paid for the target rather than on the basis of the turnover generated by that target.

Moreover, the SCA concludes that while e-commerce as such has positive effects on competition, these positive effects may be lost if retailers and manufacturers use software to coordinate prices. Such coordination may result in companies breaching competition rules, and suggests that new sector-specific regulation and reinforced control mechanisms may be needed to remove obstacles relating to entry on various markets and avoid any effects of unfair competition.

Source: Swedish Competition Authority Press Release 06/03/2017 (in Swedish) and Report "Konkurrens och tillväxt på digitala marknader – Ett reggeringsuppdrag om e-handel och delningsekonomi" (in Swedish)