Competition: General Court partially annuls Commission decision refusing access to documents in air cargo cartel

On 7 October 2014, the General Court (“GC”) handed down its judgement partially upholding the appeal brought by Schenker AG against the Commission’s decision refusing it access to documents in the air cargo cartel case. In November 2010, the Commission announced that it had imposed fines totalling EUR 799 million on 11 air cargo carriers for their involvement in a price-fixing cartel over a six year period from December 1999 until February 2006. In April 2011, Schenker AG (“Schenker”), a logistics company and customer of the cartel participants, requested full access to the entire case file under Article 2(1) of Regulation 1049/2001, alternatively to the full text of the Commission's cartel decision and in the further alternative, to the non-confidential version of the decision. According to Schenker, it had a particular interest in obtaining these documents as two of the addressees of the decision had brought an action against it in a Dutch court, seeking a declaration that they were not liable to pay damages to it on the basis of the cartel. However, the Commission rejected Schenker’s request for access to file as well as its confirmatory application under Article 7(2) of Regulation 1049/2001. In its judgement, the GC confirmed that the Commission was not required to carry out a concrete and individual examination of the documents that form part of the case file as, in principle, the disclosure of documents in the administrative file and the confidential version of the Commission’s decision undermines the protection of the objectives of competition investigation activities and the commercial interests of the undertakings involved in such proceedings. Schenker had also not shown that there was an overriding interest in public disclosure of either the case file or the full text of the Commission's decision. Furthermore, according to the GC, the Commission had not been negligent in its treatment of Schenker's confirmatory application for disclosure of the non-confidential version of the decision as regards those parts of the decision whose confidentiality continued to be invoked by the undertakings involved in the decision at the time when the Commission rejected the application. However, the GC noted that that there was nothing that prevented the Commission communicating the non-confidential part of the decision that was not the subject of any request for confidentiality given that there was no indication that such version would be incomprehensible. Accordingly, the GC concluded that the Commission should have provided Schenker with a non-confidential version of the decision without waiting for all requests for confidential treatment to have been finally settled, and annulled the Commission's decision to refuse access to such a non-confidential version of the final decision. Source:Case T-534/11 Schenker AG v European Commission

Competition: Gascogne Sack brings damages action against the EU for excessively long court proceedings

On 6 October 2014, details were published for an action brought by Gascogne Sack Deutschland (Wieda, Germany) GmbH and Gascogne (Saint-Paul-lès-Dax, France) (collectively “Gascogne Sack”) to claim damages for harm suffered as a result of delay by the European Courts in adjudicating Gascogne Sack’s appeal against the Commission’s industrial bags cartel decision. In November 2005, the Commission announced that it imposed fines totaling EUR 290.71 million on 16 companies, including Gascogne Sack, for operating an illegal cartel in the plastic industrial bags market for over 20 years. Gascogne Sack, along with other cartel participants, challenged the Commission’s decision before the General Court (“GC”) which dismissed Gascogne Sack’s appeal in its entirety in November 2011. Gascogne Sack further appealed the GC’s judgement to the Court of Justice of European Union (“CJEU”) which also rejected its appeal but concluded that the length of the proceedings before the GC, which amounted to approximately 5 years and 9 months, could not be justified by any of the circumstances in connection with the case. Gascogne Sack has now lodged an appeal with the GC on the basis of the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union according to which everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. In its appeal, Gascogne Sack claims that the GC should declare that the European Union is non-contractually liable for the proceedings before the GC which failed to have regard to the requirement that the case be dealt with within a reasonable time. Consequently, according to Gascogne Sack, the GC should order the European Union to pay full and sufficient compensation for the material and non-material damages which Gascogne Sack has suffered as a result of the European Union’s unlawful conduct. Source: Case T-577/14 Gascogne Sack Deutschland and Gascogne v Court of Justice OJ C 351/19, 06/10/2014,Commission Press Release 30/11/2005Case T-72/06 Groupe Gascogne v Commission and Court of Justice of European Union Press Release 26/11/2013

Competition: Commission publishes summary of Samsung Electronics UMTS standard essential patents commitments decision

On 4 October 2014, the Commission published a summary of its decision under Article 9 of Regulation 1/2003 to accept binding commitments offered by Samsung Electronics Co., Ltd, Samsung Electronics France, Samsung Electronics GmbH, Samsung Electronics Holding GmbH and Samsung Electronics Italia SpA (collectively “Samsung”). Samsung offered commitments in order to address the Commission’s concerns according to which Samsung’s judicial proceedings to seek injunctions against Apple Inc. (“Apple”) before the courts of several Member States on the basis of its UMTS standard essential patents (“SEPs”), which it had committed to license on fair, reasonable and non-discriminatory (“FRAND”) terms during the standard-setting process in the European Telecommunications Standards Institute (“ETSI”), may violate Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). Under the commitments, Samsung has committed for a period of five years not to seek injunctive relief in the European Economic Area (“EEA”) in relation to all its SEPs for technologies implemented in smart phones and tablets against any company which agrees to and complies with a particular licensing framework for the determination of FRAND terms and conditions. The licensing framework consists of a negotiation period of up to 12 months and a third party determination of FRAND terms in the event that no licensing agreement or alternative process for determining FRAND terms and conditions has been agreed upon at the end of the negotiation period. In the light of Samsung’s commitments, the Commission considered that there are no longer grounds for action and the proceedings were brought to an end. Source: Case AT.39939 Samsung OJ C-350/8, 04/10/2014

Competition: Commission closes investigation into internet connectivity services but will continue to monitor the sector

On 3 October 2014, the Commission announced that it has closed an investigation into practices by European telecoms operators in the internet connectivity markets due to lack of evidence of anti-competitive conduct. However, the Commission noted that it will continue to monitor the sector closely. The European telecoms operators, which were investigated, all provide internet access services to end users and often have an in-house internet transit division. This allows them to charge for interconnection capacity and, in the absence of commercial agreement with certain third party transit operators, may also have the effect that traffic from certain routes becomes congested at the point of entry into domestic  networks, causing deterioration in service quality. Following a review of the evidence obtained during the investigations carried out in July 2013, the Commission came to the provisional view that the observed practices do not appear to breach EU competition law prohibiting the abuse of a dominant market position with a view to shutting out competitors from either the internet transit market or internet content markets or to providing an unfair advantage to the telecoms operators' own proprietary content services. However, according to the Commission, it is important that users are aware of the interconnection policies pursued by their internet access providers and the impact that this may have on the quality of service obtained from certain content providers, whose content requires a high bandwidth (e.g. video streaming). Therefore, the Commission will continue to monitor the sector closely. Source: Commission Press Release 03/10/2014

Competition: Commission publishes results of retail food study

On 2 October 2014, the Commission published the results of a comprehensive study about the evolution of choice and innovation in food products in Europe during the last decade. In December 2012, following the complaints received from operators in the food supply chain as well as requests from the European Parliament to investigate the impact of concentration in the chain, the Commission launched a comprehensive study on the modern retail sector to measure how choice and innovation evolved over the last decade for consumers on shop shelves. The results show that the entry of new competitors always increases choice and innovation. In many Member States, retail markets are not overly concentrated, and the retailers' bargaining power does not seem to have a negative impact on choice and innovation. While choice for European citizens has continuously increased in shops since 2004, the number of innovations reaching the consumer each year has, however, decreased since 2008 largely due to the economic crisis. The study shows that the main drivers for both choice and innovation have been the size and types of shops as well as the economic environment. The study is one of the first of its kind in its scope and focus on empirical evidence, measuring choice and innovation available to consumers in more than 300 shops in a large sample of EU Member States (9), over a long time period (2004–2012), and for a wide variety of product categories (23). Source: Commission Press Release 12/4/2013

Competition: Competition Commissioner-designate Margrethe Vestager attends confirmation hearing before Parliament

On 2 October 2014, the Competition Commissioner-designate Margrethe Vestager attended a hearing held by the European Parliament’s Economic and Monetary Affairs Committee. The Parliament scrutinizes all Commissioners-designates before voting on whether or not to approve the new Commission. Prior to attending the hearing, the Competition Commissioner-designate completed a questionnaire from the Parliament in which she answered various questions on issues such as management of the competition portfolio, competition policy and SMEs, state aid to the banking sector and the role of the Parliament. According to the Competition Commissioner-designate, if confirmed as Commissioner, she would enforce a fair and neutral competition policy and, as a top priority during her mandate, would pursue effective enforcement against cartels. In response to a specific question on how the Competition Commissioner-designate would ensure that competition policy delivers both global competitiveness for European companies and a level-playing field in the internal market for SMEs, the Competition Commissioner-designate noted that she considers SMEs to be the backbone of economy. Therefore she will, inter alia, ensure that the new state aid framework which gives Member States the right tools to facilitate SMEs’ access to finance, is used to the best effect and the EU antitrust rules are enforced to prevent dominant companies from excluding competitors from the market. Further, when asked about the use of stronger settlement mechanisms, the Competition Commissioner-designate responded that she considers the commitment procedure to be a very useful tool to speed up the Commission’s decisions and a more efficient use of resources and thereby she would continue to apply this option where appropriate. As for state aids and the banking sector, the Competition Commissioner-designate noted that there should be a return to the usual application of state aid control as soon as market conditions permit. Finally, in response to a question on the role of the Parliament in competition policy, the Competition Commissioner-designate responded that EU competition policy proposals will be based on market realities but she is committed to inform the Parliament of any new policy initiatives in the competition field including any new legislative proposals and is looking forward to an active dialogue. Source: Answers to the European Parliament Questionnaire by Margrethe Vestager and Parliament Press Release on Hearing Process 03/10/2014

Competition (Sweden): Research report shows that financial incentives and personality traits affect the formation and duration of cartel activity

A recently published research report examines the importance of both economic incentives and individual personality traits for the formation and duration of cartels. The study is the first to examine personality traits in the application of competition-economics. The preliminary results of the study indicate that both financial incentives and individual personality traits actually affect the formation and duration of price cartels. Source: KKV Press Release 07/10/2014 and The study (in English) 

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of Styrolution by INEOS
  • Commission approves acquisition of Novartis Animal Health division by Eli Lilly
  • Commission approves acquisition of WhatsApp by Facebook
  • Commission approves merger between banana companies Chiquita and Fyffes, subject to conditions