1. EU Advocate General upholds regional taxes on large retail establishments
On 9 November 2017, the Advocate General of the Court of Justice of the EU, Juliane Kokott, issued three opinions upholding the levies imposed by the regions of Catalonia, Aragón and Asturias which tax retail establishments on the basis of their area. In Kokott’s opinion, these taxes would be justified on the grounds of environmental protection and for the purposes of attaining objectives relating to town and country planning.
The issue tackled by the Advocate General stems from the claim filed by the Spanish National Association of Large Distribution Companies (ANGED in Spanish) -whose pretension has been supported by the European Commission- which considered these taxes on large retail establishments to constitute a restriction of the freedom of establishment and an unlawful aid for small retail establishments. The issue has been brought before the Court of Justice of the EU through a referral for a preliminary ruling issued by the Spanish Supreme Court (C‑233/16, C‑234/16 y C‑235/16, C‑236/16 y C‑237/16).
The levies enable those regions to tax retail establishments exceeding a certain size under the rationale of town and country planning and environmental protection. For these purposes, this sort of tax is aimed at discouraging the opening of those establishments that, because of their size, are able to generate a large displacement of clients and wholesalers. Some large establishments (such as those dedicated to the sale of machinery, vehicles etc.) are exempt from those taxes since, according to the legislator, their size is due to the products they offer and they do not attract such a massive number of clients.
Firstly, the main argument of the ANGED’s claim is that a levy taxing only large retail establishments constitutes a restriction of the freedom of establishment, as it would predominantly affect foreign companies. According to the claimant, such foreign undertakings preferably open this sort of establishment to exploit the benefits from scale economies in order to compensate the high investments required to operate in another member state.
Advocate General Kokott does not deny that foreign companies can be predominantly affected by the tax. However, she argues that it cannot be sufficient to have regard solely to whether alien undertakings are affected in the majority of cases in order to be able to accept that national companies are benefited. Kokott sustains that the levy will equally tax all large retail establishments exceeding a predefined number of square metres, regardless of their nationality.
Nevertheless, even in the event that the EU Court of Justice might come to the conclusion that the levy constitutes a covert discrimination, the Advocate General considers that this would be justified. Kokott makes reference to settled case-law of the Tribunal establishing that objectives relating to town and country planning and environmental protection might justify certain restrictions on economic freedoms. In this sense, this tax would be aimed at discouraging the opening of large retail establishments as these generate a higher volume of customer traffic, thus causing higher noise and air emissions. Besides, Kokott does not consider the tax to be disproportionate to the objectives pursued, in so far as it is not so high that the economic activity would no longer be possible (“choking effect”).
Secondly, the possibility of this burden constituting an illegal state aid in favour of the undertakings not subject to the levy is addressed. These non-taxed undertakings are smaller businesses that do not exceed the size threshold as well as large establishments that, although exceeding the size that would trigger the application of the levy, are engaged in exempted activities. In her analysis, Kokott carries out a thorough examination on the possibility of this levy implying a selective advantage, benefiting only certain undertakings.
On this concept of advantage, Kokott’s argument is based on the premise that establishments not exceeding this size threshold have never been burdened by the levy. In other words, these businesses are not relieved from any burden as a result of their size, but are not subject to the levy since they do not fulfil the requirements that justify the taxation.
Although Kokott does not consider the tax to be an “advantage”, she analyses whether such a measure might be deemed selective, benefiting certain undertakings to the detriment of other companies. In this respect, the Spanish Supreme Court would not subscribe the thesis proposed by Kokott, considering that such a measure directly benefits smaller businesses and big establishments whose activities are exempted to the detriment of large commercial areas. However, the Advocate General refutes this argument by stating that in order for that “selectivity” to operate, the economic agents who are differently treated must be in a comparable factual and legal situation in light of the objective pursued by the norm in question.
Thus, as for Kokott, the exemption applicable to those large establishments commercialising big sized goods as well as the non-taxation of small retail businesses would be justified in light of the objective pursued by law.
Opinions issued by the Advocate General, although nonbinding for the EU Court of Justice, are followed by the Tribunal in a great number of cases. Thus, in the upcoming months, we will see whether the Court’s decision is in line with what has been put forward by Kokott.
2. Restrictive practices
Non-university books (Press release)
10/10/2017. The Spanish National Markets and Competition Commission (CNMC in Spanish) has opened an investigation into a series of book publishing and marketing companies due to their alleged involvement in anti-competitive practices such as price-fixing, market allocation arrangements, the exchange of sensitive information and fixing of commercial terms.
The companies under the CNMC’s scrutiny are Anele, SM Group, Anaya Group, Santillana Group, Oxford University Press, Edelvives, Edebé, McGraw Hill, McMillan, Pearson and Teide.
Food supply chain and unfair trade practices (Press release)
10/10/2017. The Competition Authority of Poland has initiated 12 investigation procedures since the entry into force of the Act on unfair trade practices in the food supply chain.
Like the Spanish Act on the food supply chain, the new regulation in Poland is aimed at correcting the unfair practices that result from the exploitation of the contractual advantages enjoyed by powerful companies in their relationship with other participants in the food supply chain –for example, the existing inequality between farmers and large commercial undertakings.
According to the Polish authority, investigation procedures do not target specific companies, but are intended to clarify undesirable phenomena from a competition perspective. To date, the sectors under scrutiny are the butter, apple, milk and sugar beets industries.
AB InBev (Press release)
30/11/2017. The European Commission is investigating AB InBev for hindering cheaper imports of its Jupiler and Leffe beers from the Netherlands and France into Belgium.
According to the statement of objections sent to AB InBeV, the Belgian beer brewer has apparently implemented the following measures in order to impede parallel trade: eliminating the French text from the cans sold in Holland and eliminating the Dutch text from the cans sold in France in order to avoid imports into the Francophone and Dutch-speaking regions of Belgium, respectively; and limiting the product offer for Dutch wholesalers both in terms of quantity and promotions in order to hinder imports into Belgium.
Cosmetics (Press release)
04/10/2017. The Hellenic Competition Commission has fined six undertakings active in the wholesale trade of luxury cosmetics for entering anti-competitive agreements aimed at the indirect fixing of reselling prices by offering retailers a uniform level of discount.
Notos Com, Estee Lauder, P.N. Gerolymatos, L’ Oreal, GR. Sarantis and Christian Dior have been fined approximately €18 million in total.
Wedding dresses (Press release)
31/10/2017. The Lithuanian Competition Council has sanctioned 12 occasion wear shops operating in Vilnius with fines ranging from €1 to €1,960. Shop representatives established the try-on fee during the 2016 wedding fair. Seven out of 12 cartel members admitted the infringement.
Marine Harvest (Press release)
26/10/2017. The General Court maintains the EU Commission’s fine imposed on the Norwegian seafood company Marine Harvest for failing to notify the acquisition of the salmon producer Morpol.
The General Gourt, in line with the thesis put forward by the European Commission, understands that Marine Harvest breached the provisions of the European Merger Control Regulations by executing the takeover of its competitor Morpol without prior authorisation from the Commission. The company, whose €20 million fine has been maintained, is studying the possibility of appealing the judgment before the Court of Justice of the EU.
Luxury watches (Judgement)
23/10/2017. The General Court upholds the selective distribution practices carried out by Louis Vuitton, Rolex, Swatch, Patek Philippe, Piguet and Richemont in their relationship with watch repairers outside their official network.
The dispute is traced back to 2004 when the Confédération européenne des associations d’horlogers-réparateurs sued these luxury watches producers for abusing their dominant position by refusing to supply replacement parts to repairers outside their official network.
The case has been opened and closed several times. The judgement analysed here decides on the appeal of the Confédération des associations d’horlogers-réparateurs against the Commission’s decision that rejected the complaint filed by that association.
In its judgment, the General Court argues that the producers’ concerns regarding the quality control of their luxury watches justifies the permanence of closed selective distribution networks for authorised repairers. According to the Court, the preservation of brand image, the quality of products and the prevention of counterfeiting constitute a sufficient objective justification for refusing to supply replacement parts to independent repairers.
Associations of agricultural producers (Press release)
14/11/2017. The General Court upholds the fact that a concentration on price and quantities between several organisations of agricultural producers (POs) and associations of such organisations (APOs) may constitute collusive practice. In a preliminary ruling addres sing the questions raised by the French Cour de Cassation, the Court of Justice stated that exemptions to EU competition law only apply to POs or APOs duly recognised by a Member State. Moreover, the Court establishes that in order to gain from the benefit of said exemptions, such arrangements must remain solely within that PO or APO and have to be proportionate to the objectives assigned to the POs/APOs concerned.
Thus, and although the Court of Justice begins its judgment by recalling the idea that the Common Agricultural Policy prevails over competition objectives and that, consequently, some practices can be excluded from the prohibitions laid down in article 101 TFEU, the Court establishes significantly strict conditions for POs or APOs to benefit from such exemption.
Nike (Press release)
04/10/2017. The Dutch court Rechtbank Amsterdam applies Advocate General Wahl’s opinion on the Coty case –see June-July edition–, and argues that Nike’s commercial policy prohibiting sales through the online platform Amazon does not breach Competition Law.
In this case, Nike did permit the online distribution of its products through authorised websites such as La Redoute, Zalando and Otto, but not via Amazon. It was precisely the breach of this prohibition by an Italian supplier that triggered the dispute which has now been ruled in favour of Nike.
ABP Food Group / Fane Valley / Linden Foods (Press release)
29/09/2017. The European Commission has approved the acquisition of joint control over Linden Foods by ABP Food Group and Fane Valley. All companies involved are active in the purchase and slaughter of live cattle, sheep and lambs, as well as the processing of their meat.
After a thorough analysis of the market for the purchasing of live animals, the markets relating to the sale of fresh and processed meat and the collection of animal by-products in Ireland and the United Kingdom, the Commission has concluded that the transaction does not raise significant competition concerns.
Nestlé / Beverage Partners Worldwide (Press release)
16/10/2017. The European Commission has cleared the acquisition by Nestlé of the Nestea branded ready-to-drink tea business.
The transaction will affect the entire European Economic Area except for Spain, Portugal and Andorra –see August-September edition–. The Commission has concluded that the proposed acquisition would raise no competition concerns because Nestlé already had joint control of the business and there are very limited overlaps between the companies’ activities.
Cargill / Faccenda (Case file)
18/10/2017. The British Competition and Markets Authority is investigating the possible anti-competitive effects of the proposed integration of Cargill and Faccenda’s poultry businesses.
The deadline for a phase 1 decision ends on 22 December.
Refresco / Cott (Case file)
27/10/2017. The British Authority has opened an investigation procedure on the anticipated acquisition by the Dutch company Refresco of the non-alcoholic beverage business of Canadian Cott Corporation.
According to Refresco, the transaction will create the largest independent bottler for retailers and consumer companies in Europe and North America.
The initially envisaged deadline for a phase 1 decision ends on 22 December.
Tesco / Booker (Press release)
14/11/2017. The British Competition Authority has provisionally cleared the merger between the supermarket chain Tesco and wholesaler Booker.
A number of supermarket chains (including Spar and Bestway) expressly opposed the proposed transaction, concerned about an eventual price rise by Booker at the wholesale level to the detriment of Tesco’s competitors.
The CMA considers that the existing competition pressure at the retail and wholesale level is sufficient in order to prevent the transaction from leading to price rises or to a reduction of the services provided to supermarkets and convenience stores.
The CMA’s ultimate report is expected by the end of December.
JDE / Maison Lyovel (Decision)
19/10/2017. The Autorité de la Concurrence has cleared the acquisition of sole control by JDE over Maison Lyovel.
JDE markets hot beverages, particularly coffee and chocolate powder. Maison Lyovel, meanwhile, provides automatic fodd distribution services for companies and public authorities.
The concerns of the French Authority focus on the vertical implications the transaction might have. However, the Autorité has concluded that the limited strength of the affected companies in the relevant markets suggests that the transaction will not have any anti-competitive effects.
Gibert Jeune / Gibert Joseph (Press release)
La Autorité de la Concurrence clears the acquisition of Gibert Jeune's activity by Gibert Joseph, both active in the retailing of second-hand and new books along with stationery products.
Although the market shares resulting from the merger were high, especially in Paris, the Autorité has dismissed any competitive threat as a consequence of the completed transaction.
MCFI / Ribatejana / Germen (Decision)
26/10/2017. The Autoridade da Concorrência has unconditionally authorised the acquisition of joint control by MCFI and Ribatejana over Germen S.A., previously under the sole control of Ribatejana.
MCFI and Ribatejana operate through investee companies in the cereal milling sector for flour production.
Delta Foods / Familia Hatzakos / Mevgal (Press release)
23/10/2017. The Greek Competition Authority has approved the proposed acquisition of joint control by dairy producer Delta Foods over Megval, subject to conditions.
The main concerns of the Hellenic Authority focused on the market of chocolate milk and the market for the procurement of raw cow’s milk.
Among other commitments, the involved companies have agreed on a minimum guaranteed purchase price for raw cow’s milk and on the fully independent and autonomous operation of the companies as regards the chocolate milk market.
The UK and Germany launch consumer law investigations into booking and comparison websites (UK and Germany press releases)
27/10/2017. The Competition and Markets Authority has launched an investigation into hotel booking and comparison sites for eventual consumer law breaches.
The main concerns of the British Authority point at the following issues: (i) to what extent search results respond to customer’s requirements and not to the amount of commission a hotel pays the site; (ii) whether claims about how many people are looking at the same room create a false impression of room availability or rush customers into making a booking decision; (iii) whether the discount claims made on sites offer a fair comparison for customers; and (iv) whether there are hidden charges that are later added in form of taxes or booking fees.
So far, since this investigation is still in a preliminary phase, the CMA has notified the potentially affected companies in writing. However, if the authority finds that sites’ practices are false or misleading and are breaking consumer law, the CMA could take enforcement action.
In turn, the German Bundeskartellamt has launched an inquiry into comparison websites with a focus on sites active in the area of travel, insurance, financial services, telecommunications and energy. This investigation takes place under the powers conferred to the Bundeskartellamt in the field of Consumer Law as a result of the June 2017 Amendment to the German Competition Act.
On the basis of its recently conferred competences, the Bundeskartellamt seeks to guarantee the “reliability, objectivity and transparency” of these comparison websites.
Commission Delegated Regulation on total diet replacement products for weight control published in the Official Journal (Regulation)
07/10/2017. The Regulation (EU) 2017/1798 on specific compositional and information requirements for total diet replacement products has been published in the EU Official Journal.
Total diet replacement products are currently regulated under Regulation (EU) No 609/2013, along with food intended for infants and young children, and food for special medical purposes. Total diet replacement products are special in so far as they constitute specially formulated foods for overweight or obese adults seeking to achieve weight reduction.
The new Regulation –which will apply as of October 2022– supplements former Regulation No 609/2013 and provides for significant amendments such as: new compositional requirements; the prohibition of nutrition and health claims; the obligation to include specific statements on the fact the product is only intended for healthy overweight or obese adults who intend to achieve weight reduction; and an absolute prohibition of references to the amount of weight reduction which may result from the use of the total diet replacement product.
Romanian Competition Council redefines relevant geographic market in the retail food sector (CMS newsletter)
13/11/2017. The Romanian Authority has redefined the geographic market in the retail food sector as a result of new trends in consumers’ behaviour.
Under the new definition, which will affect decisions concerning mergers and acquisitions in the retail food sector, when analysing the relevant market stores over 400 sqm, the Council will consider all other stores –irrespective of size– within a 10-minute drive. When analysing the relevant market of a proximity store (i.e. less than 400 sqm in area), the Competition Council will take into account all similar stores within a 10-minute walk, as well as any larger stores operating within a 10-minute drive of the analysed store.
To date, in its analysis of economic concentrations concerning retail food establishments, the Romanian Competition Council had determined the relevant geographic market by applying a 10-30-minute drive radius around the relevant store, in line with the definition applied by the European Commission and the Spanish CNMC. The new definition tightens the conditions to authorise transactions involving stores within less than a 10-minute (walk/drive, as the case may be) radius.
In Spain, E-commerce grows by 25% in the first quarter of 2017 over the previous year (Press release) 06/10/2017. The CNMC has published a report on e-commerce in Spain which confirms a significant rise in online economic transactions.
According to the CNMC’s report, the turnover of e-commerce transactions has risen almost 25% year-on-year in the first quarter of 2017 and has reached €6,756.9 billion. Besides, over 115 million online transactions have been executed in the same period of time, which represents 31% more than in 2016. Travel agencies and tourist operators (13.2% of total turnover), air transport (11%) and purchases of clothing (6.2%) rank top of e-commerce turnover.
Spanish olives hit by US import duties (Press article)
22/11/2017. After several months of inquiries, the US Commerce Department has decided to impose import duties on ripe Spanish olives as these are allegedly imported below market price as a result of EU subsidies.
The decision –encouraged by a number of Californian olive producers and which is made in the framework of President Trump’s protectionist agenda– introduces a duty of between 2.31 per cent and 7.24 per cent and is preliminary in nature.
The Spanish agricultural sector has reacted by defending the legality of EU subsidies in accordance with the World Trade Organisation (WTO) regime and has urged both Spain and the EU to file a complaint before the WTO against the measures taken by the US.