EU Competition

ECJ judgment on reference from Latvian court on application of Article 101 TFEU to non-compete clause in commercial property leases. On 26 November 2015, the European Court of Justice (ECJ) handed down its judgment on the application of Article 101 of the Treaty of the Functioning of the European Union (TFEU) to non-compete provisions in a commercial property lease. The judgment responded to preliminary questions referred by the Latvian Supreme Court as to whether rental agreements, which included a lessee’s right to oppose the letting of property to competing tenants in shopping centres, should be considered a restriction of competition by object under Article 101(1) of the TFEU. The national court also asked what factors should be taken into account when analysing the actual or potential effect on competition if the non-compete agreement was considered a restriction by effect. The ECJ held that the mere fact that such a provision is included in a rental agreement does not mean that the entire agreement was set up to restrict competition. To find a restriction by effect, the ECJ held that there needs to be an assessment of all legal and economic factors relevant to the agreement, and a determination as to whether competitors are closed-off from competition in the relevant catchment market.

Advocate General’s opinion on five appeals in bathroom fittings cartel case. On 26 November 2015, Advocate General Wathelet gave an opinion on five appeals against General Court’s judgments on actions to challenge the bathroom fixtures and fittings cartel decision. The first plea considered by the Advocate General related to alleged contradictory findings appearing in the General Court’s judgments in certain of the parallel appeals. The Advocate General found that in one judgment (on the appeal by Keramg Keramische), the General Court reached a different conclusion about the relevance of a leniency statement as corroborating evidence than it did in three other judgments, and failed to explain the reason for this. The Advocate General, therefore, concluded that the ECJ should set aside the Keramag judgment and ruled (in accordance with the findings in the other judgments) that the infringement had been sufficiently established on the basis of corroborating evidence in two leniency statements. The second plea related to whether the General Court exercised its unlimited jurisdiction properly in relation to fines. The General Court acknowledged the lesser gravity of the conduct adopted by Roca Sanitario compared to that of other undertakings. However, the European Commission (Commission) had calculated the fines in the same way for all cartel participants. The Advocate General considered that the General Court erred in not addressing this and that it should have adjusted downwards the multipliers for the “gravity of the infringement” and the “additional amount” that were applied in Roca Sanitario’s case to ensure the observance of the principle of equal treatment and the principle that penalties must be tailored to the individual.

EU Mergers

Phase I Mergers

  • M.7686 AVAGO / BROADCOM (23 November 2015)
  • M.7745 FORTUM / LIETUVOS ENERGIJA / JV (24 November 2015)
  • M.7790 CARREFOUR GROUP / RUE DU COMMERCE (24 November 2015)
  • M.7821 ARDIAN FRANCE / SOLINA M.7821 (25 November 2015)
  • M.7828 INEOS / DEA UK E&P HOLDINGS (27 November 2015)
  • M.7542 GRIFFIN / SKANSKA / STARWOOD / HOTEL ATRIUM (27 November 2015)

State Aid

Commission approves resolution plans for four Italian banks. On 22 November 2015, the Commission announced that the resolution plans of Banca delle Marche, Banca Popolare dell’Etruria e del Lazio, Cassa di Risparmio di Ferrara and Cassa di Risparmio della Provincia di Chieti, four small Italian banks, were in line with EU State aid rules. In particular, the Commission found that Italy’s plans to use the national resolution fund minimise the need for State aid and limits distortions of competition, while preserving financial stability.

Commission approves financing of Polish Post’s universal service obligation via a compensation fund. On 26 November 2015, the Commission published its decision that compensation granted by Poland to Polish Post for delivering universal postal services from 2013 to 2015 is in line with EU State aid rules. In particular, the Commission approved the measure because the compensation paid is limited to the additional costs it faces to fulfil its public service mission, the “universal service obligation” – Polish Post was designated the universal postal service provider for the entire national territory of Poland from 2013 to 2015. Under EU State aid rules on public service compensation, adopted in 2011, companies can be compensated for the extra cost of providing a public service subject to certain criteria. This enables Member States to grant State aid for the provision of public services whilst at the same time making sure that companies entrusted with such services do not get overcompensated, minimising distortions of competition.

General Court upholds Commission decision on Spanish aid schemes for digitisation and extension of terrestrial TV network. On 26 November 2015, the General Court handed down six judgments on appeals from Spain relating to a Commission decision of June 2013 in which Spain was ordered to recover aid granted to terrestrial digital platform operators. The General Court upheld the Commission’s decision, rejecting all of the appeals in their entirety. The General Court found, firstly, that the Commission did not err in holding that, in the absence of a clear definition of the operation of a terrestrial network as a public service, the measures should be qualified as State aid. Secondly, the General Court found that the Commission was correct in holding that the measures at issue could not be considered as State aid compatible with the internal market, in particular, since they did not respect the principle of technological neutrality as they favoured digital terrestrial technology over other possible technologies (e.g. cable, satellite, fibre).

Commission approves amended restructuring plans for Alpha Bank and Eurobank. On 26 November 2015, the Commission found amended restructuring plans of Alpha Bank and Eurobank to be in line with EU State aid rules. Further, the European Central Bank’s Single Supervisory Mechanism (SSM) support programme agreed for Greece identified a capital shortfall of EUR2.74 billion for Alpha Bank and EUR2.12 billion for Eurobank in October 2015. The Commission noted that the shortfalls have been fully addressed by funding from private investors and that as a result no State capital injections will be necessary. The Greek authorities did however make minor changes to the two banks’ restructuring plans, including a deepening of their operational restructuring and some amendments of deadlines in response to the changes in their economic situations. The Commission concluded that the measures already implemented as part of the banks’ existing restructuring plans, in addition to those envisaged in the amended plans are in line with EU State aid rules.

Public Procurement

ECJ ruling on time limit for bringing procurement action. On 26 November 2015, the ECJ handed down judgment in relation to a reference from an Austrian court on the time limits for bringing an action under Directive 89/665 (the Remedies Directive) which sets out requirements for the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public contracts. Under Austrian law, an action for damages for harm caused as a result of the direct award of a contract (without prior notice or a prior competition) could only be brought if a court had first declared the contract to be ineffective due to its illegality. An application for such a declaration was subject to a six-month limitation period (from the date of contract award), irrespective of whether or not the person harmed was in a position to know about the unlawfulness of the contract award decision. The ECJ has ruled that the combined provisions of the Austrian rules breach EU law, particularly the principle of effectiveness, as they were likely to make it impossible or difficult to exercise the right to bring an action for damages for breach of the EU procurement rules.

UK Competition

FCA call for inputs on use of big data in retail general insurance sector. On 24 November 2015, the Financial Conduct Authority (FCA) published a call for inputs on the use of big data in the retail general insurance sector. The purpose of the call is to help the FCA understand the impact of big data in retail general insurance in relation to three key topics: whether the use of big data affects consumer outcomes; whether the use of big data fosters or constrains competition; and whether the FCA’s regulatory framework affect developments in big data in retail general insurance. The FCA explains that, when it refers to the use of big data, it broadly means the use of new or expanded datasets; new technologies to generate, collect and store data; and sophisticated analytical techniques. The use of big data is developing across financial services, but the FCA chose to examine the impact of big data on the insurance sector due to its importance in the sector and because big data may alter the way insurance is assessed. Comments are invited by 8 January 2016.

Speeches & Publications

Speech by Commissioner Vestager on the European Competition Network. On 20 November 2015, the Commission published a speech by Margrethe Vestager, Competition Commissioner, on the success of the European Competition Network (ECN), and also the challenges it faces. The Commissioner noted, in particular, differences in national competition authorities’ powers to gather evidence and impose fines, and also in their independence. The Commission is currently seeking views on the difficulties encountered by national competition authorities due to divergences in investigation and enforcement of Articles 101 and 102 of the TFEU. The Commissioner stated that the next step will be to consider whether EU legislation is needed to address such divergences. The Commissioner also discussed the role of “big fines” in ensuring that forming a cartel is never a risk worth taking and the importance of ensuring that the level of fine imposed against a company addresses the entire period of the infringement.

2015 Autumn Statement and Spending Review: key competition and regulatory announcements. On 25 November 2015, the Chancellor of the Exchequer, George Osborne,delivered his Autumn Statement where he set out the government’s view that “Open, competitive markets are crucial to a dynamic economy. The UK has a world-leading competition regime, but many markets could work better for households and businesses. Strong competition encourages innovation and efficiency and a better deal for customers. Overly restrictive regulation can also put the brakes on the competitive process and favour incumbent firms and established business models”. It is expected that the government will announce “important steps” to improve competition which follow on from its productivity plan published in July 2015.