EU Antitrust

Summary of Samsung Electronics UMTS standard essential patents commitments decision published. On 4 October 2014, the European Commission published a summary of its April 2014 decision, under Article 9 of Regulation 1/2003, to accept binding commitments from Samsung Electronics Co., Ltd, Samsung Electronics France, Samsung Electronics GmbH, Samsung Electronics Holding GmbH and Samsung Electronics Italia SpA (Samsung).

Gascogne Sack brings damages action for excessively long court proceedings. On 4 October 2014, details were published in the Official Journal of an action brought by Gascogne Sack Deutschland and Gascogne (together Gascogne Sack) to claim damages for harm suffered as a result of delay by the European Courts in adjudicating its appeal against the industrial bags cartel. In a judgment in November 2013, dismissing Gascogne Sack’s appeal against the cartel decision, the European Court of Justice (ECJ) ruled that the General Court had failed to adjudicate within a reasonable time in this case. Gascogne Sack is seeking both material and non-material damages as a result of this failure.

Commission fines Slovak Telekom and its parent Deutsche Telekom for abusive conduct. On 15 October 2014, the European Commission announced that it has fined Slovak Telekom and its parent company Deutsche Telekom EUR 38,838,000 for pursuing a strategy for more than five years to keep competitors out of the Slovak market for broadband services. The Commission has found that Slovak Telekom refused to supply access to unbundled local loops in the Slovak Republic and engaged in margin squeeze. The Commission has concluded that both these types of behaviour constitute abuses of Slovak Telekom’s dominant position, and as such are prohibited by Article 102 of the TFEU. The Commission has held Deutsche Telekom jointly and severally liable for the infringement as parent company. The evidence showed it was able to exercise decisive influence over Slovak Telekom, and had actually had done so. The fines imposed on Deutsche Telekom were increased to take account of its recidivism and size, to ensure a sufficient deterrent effect. The overall fine for which Deutsche Telekom is liable is EUR 69,908,000.

EU Cartels

General Court partially annuls Commission decision refusing access to documents in air cargo cartel. On 7 October 2014, the General Court partially upheld the appeal brought by Schenker AG against a European Commission decision refusing it access to documents in the air cargo cartel case. Schenker requested access to the Commission’s case file, its full text decision on the case and the non-confidential version of the final decision. The General Court confirmed the existence of a general presumption that disclosure of documents in the administrative file and/or the confidential version of the decision, in principle, undermines protection of the objectives of competition investigation activities and the commercial interests of the undertakings involved in such proceedings. The Commission was, therefore, not required to carry out a concrete, individual examination of the documents that form part of the case file. Further, Schenker had 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. The General Court found that 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, at the time when the Commission rejected the application, continued to be invoked by the undertakings involved in the decision. However, the General Court considered that there was nothing to prevent 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. The General Court 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 (Case T-534/11 - Schenker AG v Commission, judgment of 7 October 2014 (not yet available in English).

Summary of polyurethane foam cartel decision published. On 8 October 2014, a summary of the European Commission’s January 2014 decision on the polyurethane foam cartel was published. The Opinion of the Advisory Committee and the Final Report of the Hearing Officer have also been published. The decision is addressed to 30 entities of four major producers of flexible polyurethane foam (Carpenter, Vita, Recticel and Greiner as well as Eurofoam, a 50/50 joint venture of Recticel and Greiner). The Commission found that, from 2005 to 2010, 28 of the addressees participated in a cartel in relation to polyurethane comfort foam and basic polyurethane technical foam supplied in the form of rolls and blocks. The overall aim of the European-wide cartel was to pass on raw material price increases to customers and avoid aggressive price competition. The cartel participants engaged in anti-competitive practices in direct and indirect price coordination (including coordination of price changes and price levels) and also at times refrained from poaching each other’s customers during periods of price increases. Price increases were discussed mainly in the margins of trade association meetings. The parties engaged in the settlement procedure. The Commission imposed fines totalling EUR 114 million, including the 10% settlement reduction. The Commission granted full immunity from the fine to Vita and a 50 % reduction of the fine for cooperation to Recticel, Greiner and Eurofoam.

ECJ dismisses ICF appeal against General Court judgment in aluminium fluoride cartel case. On 9 October 2014, the ECJ handed down its judgment in an appeal by Industries Chimiques du Fluor (ICF) against a General Court ruling that dismissed ICF’s appeal against the European Commission’s decision on the aluminium fluoride cartel. The General Court rejected ICF’s argument that the General Court erred in law and breached its rights of defence by holding that the fact that the Commission based its decision on documents not referred to in the statement of objections did not constitute an infringement of ICF’s rights of the defence. The ECJ also dismissed ICF’s claims that the General Court misinterpreted the 2006 Fining Guidelines. In addition, although the ECJ did conclude that the General Court failed to adjudicate within a reasonable time, this could not lead to the annulment of the General Court’s judgment. Rather, it gave ICF a right to bring an action for damages (Case C-467-13P - Industries Chimiques du Fluor v European Commission, judgment of 9 October 2014 (not yet available in English).

Commission confirms further dawn raids in biofuel sectors. On 9 October 2014, the European Commission announced that, on 7 October 2014, Commission officials carried out unannounced inspections at the premises, in two member states, of companies active in the production, distribution and trading of the biofuel ethanol. These inspections follow on from those undertaken in May 2013 at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors. The Commission is investigating possible breaches of Articles 101 and/or 102 of the Treaty on the Functioning of the European Union (TFEU). The Commission is concerned that price benchmarks may have been distorted, including through possible collusion when submitting price information to a Price Reporting Agency. It notes that the prices assessed and published by Price Reporting Agencies serve as benchmarks for trade in the physical markets and in the financial derivative markets for a number of commodity products in Europe and globally. The importance of these benchmarks and the absence of regulation may leave scope for anti-competitive behaviour leading to price distortions. Even small distortions may have a significant impact on prices, potentially harming consumers.

General Court annuls fine imposed on Soliver for car glass cartel. On 10 October 2014, the General Court handed down its judgment on an appeal by Soliver NV against the European Commission’s decision on the car glass cartel. The General Court concluded that the Commission had not established that Soliver had participated in the single and continuous infringement of Article 101 involving the three largest car glass producers. Although there was evidence of anti-competitive bilateral contacts between Soliver and two of its competitors, the Commission erred in concluding that Soliver knew, or ought to have known, that these collusive contacts formed part of a wider cartel covering the entire market for the supply of car glass in the EEA. The General Court, therefore, annulled the Commission’s decision, in so far as it found that Soliver had participated in an unlawful cartel on the car glass market in the EEA, and the fine of EUR 4,396,000 that was imposed on Soliver (Case T-68/09 - Soliver NV v European Commission, judgment of 10 October 2014).

Summary of steel abrasives cartel decision published. On 14 October 2014, a summary was published in the Official Journal of the European Commission’s April 2014 decision finding that four producers of steel abrasives participated in an illegal price-fixing cartel. The Opinion of the Advisory Committee and the Final Report of the Hearing Officer have also been published. The Commission found that, from March 2003 until June 2010, the producers participated in an EEA- wide cartel, the ultimate aim of which was to co-ordinate prices of steel abrasives and to restrict price competition. The parties engaged in frequent anticompetitive contacts on bilateral, as well as multilateral, bases. Those contacts were used by the parties to discuss the key price components applicable to all their EEA steel abrasives sales. The Commission imposed total fines of EUR30.7 million, including a 10% reduction to reflect the fact that the companies engaged in the cartel settlement procedure. One cartel participant, Ervin, received complete immunity from fines under the 2006 Leniency Notice.

EU Mergers

Phase I Clearance

  • M.7358 – Dnata / Stella (09/10/2014)
  • M.7360 – 21st Century Fox / Apollo (Joint Venture) (09/10/2014)
  • M.7370 – INEOS / Styrolution (07/10/2014)
  • M.7372 – AXA / Hammerson / The Real Estate Portfolio (15/10/2014)
  • M.7380 – EQT Infrastructure / Immomutua / Acvil (Joint Venture) (08/10/2014)
  • M.7392 – Advent International / Coralis (15/10/2014)

State Aid

Commission opens in-depth state aid investigation into transfer pricing arrangements for corporate taxation of Amazon in Luxembourg. On 7 October 2014, the European Commission announced that it has opened an in-depth state aid investigation into transfer pricing arrangements for corporate taxation of Amazon in Luxembourg. The Commission is concerned that the tax ruling provides a selective economic advantage to Amazon by allowing the group to pay less tax than other companies. It, therefore, intends to examine these concerns further.

General Court annuls Commission decision ordering Greece to recover aid from aluminium producer. On 8 October 2014, the General Court handed down its judgment on an appeal by Alouminion A.E. against a European Commission decision finding that preferential electricity tariffs granted by the Greek state-owned Public Power Corporation to Alouminion constituted unlawful state aid and must be recovered. The General Court ruled that the Commission had erred in characterising the measures in question as new aid, and annulled its decision.

Commission approves UK revised plans to support Hinkley Point nuclear power plant. On 8 October 2014, the European Commission announced that it has decided, under the EU state aid rules, to approve revised UK plans to subsidise the construction and operation of the new Hinkley Point nuclear power plant. The Commission was satisfied that the public support for the project will address a genuine market failure. During the in-depth investigation, the UK agreed to significantly modify the terms of the project financing (including by increasing the guarantee fee and introducing a revised gain sharing mechanism). On this basis the Commission has concluded that the state aid provided will remain proportionate to the objective pursued and that any undue distortions of competition will be avoided. The modifications also reduce the financial contribution to the project by UK taxpayers.

General Court rejects requests for interim measures in Polish airport case. The General Court has published two orders in appeals by Gmina Kosakowo and jointly by Gmina Miasto Gdynia and Port Lotniczy Gdynia Kosakowo against a European Commission decision ordering recovery of unlawful state aid given to Gdynia-Kosakowo airport. The applicants sought interim measures to suspend the operation of the Commission decision pending the outcome of their appeals. The General Court determined that the applicants had failed to meet the requirement of urgency in both cases.

Commission approves aid to manager of German airport but orders recovery from Ryanair. On 15 October 2014, the European Commission announced that it has decided under Article 6(1)(b) of the EU Merger Regulation to approve state aid granted to the manager of Altenburg-Nobitz Airport in Germany. It found that the investment and operating aid granted improved the interconnectivity of the region without distorting competition, and was in line with the applicable guidelines on state aid to airports. However, the Commission found that certain service and marketing agreements between the airport manager and Ryanair gave the airline an undue advantage and constituted incompatible state aid. Germany must recover this aid from Ryanair and its marketing subsidiary AMS.

Commission orders Spain to recover additional aid granted through tax benefits for acquisitions of indirect shareholdings in foreign companies. On 15 October 2014, the European Commission announced that it has ordered Spain to recover additional aid granted through tax benefits for acquisitions of indirect shareholdings in foreign companies. The Commission has decided that a new administrative interpretation of a Spanish tax scheme to allow deductions of “financial goodwill” in connection with the acquisition of indirect shareholdings in non-Spanish companies (as opposed to just direct shareholdings) does not comply with EU state aid rules. Spain had not notified the Commission of its new interpretation, which extended the scope of the existing scheme.

UK Antitrust

Ministry of Defence withdraws damages action against British Airways. On 10 October 2014, the Competition Appeal Tribunal (CAT) published an order consenting to the withdrawal of the damages action brought by the Ministry of Defence against British Airways under section 47A of the Competition Act 1998. The action had been stayed since July 2014. It has now been withdrawn as the parties have agreed terms of settlement. The MoD’s action was a follow-on damages action arising from the Office of Fair Trading’s 2012 decision finding that British Airways and Virgin Atlantic Airways had colluded and exchanged commercially sensitive information as to the level of passenger fuel surcharges imposed on long-haul flights. The MoD had claimed damages allegedly resulting from the higher prices it paid when purchasing long- haul flights from British Airways.

Commission approves creation of British Business Bank. On 15 October 2014, the European Commission announced that it has decided under the state aid rules to approve the creation by the UK of a British Business Bank (BBB), which will manage programmes to improve SME access to finance. The Commission has found that some of the BBB’s activities will not involve state aid at all (where it grants funding on commercial terms). Overall, it considers that the BBB will address market failures in an appropriate and proportionate way, without unduly distorting competition.

UK Mergers

Phase I Clearance

  • Clearance: Associated British Foods / Dorset Cereals Limited (06/10/2014)
  • Clearance: Ballyclare Limited / LHD Group (UK) Limited (14/10/2014)
  • Clearance: Aecom / URS Corporation (14/10/2014)
  • Clearance: Japan Tobacco International / Zandera Limited (15/10/2014)

Speeches & Publications

Commission policy brief on EU Merger Control and the acquisition of minority shareholdings. The European Commission has published a new “competition policy brief” newsletter on its White Paper proposals to extend the EU Merger Regulation to cover certain acquisitions of minority interests. The Commission is proposing to introduce a light-touch system for reviewing the acquisition of minority shareholdings. This will focus on transactions that may be prima facie problematic from a competition point of view. The consultation on the Commission’s proposals ended on 3 October 2014. The policy brief summarises the background to the Commission’s proposals and explains its views as to the types of anti-competitive harm that can result from minority shareholdings, with particular reference to the practices of certain national competition authorities. It then summarises the Commission’s proposed “targeted” transparency system, which would apply to minority acquisitions that give rise to a "competitively significant link". Finally, the note summarises the Commission’s proposed procedure for dealing with such transactions.

Speech by Alex Chisholm on preparing for the digital economy. On 7 October 2014, the Competition and Markets Authority (CMA) published a speech by Alex Chisholm, CMA Chief Executive, on a competition regulator’s perspective of the impact of the growing digital economy. Mr Chisholm recognises that the internet brings benefits in terms of lower entry barriers, greater price competition and increased ability for consumers to search and switch. However, he explains that there are drawbacks and risks associated with this (for example, privacy concerns, vulnerability to cyber-crimes, disruption of traditional markets and the exploitation of market power by some digital players), which the CMA must be aware of in its work.

Speech by Joaquin Almunia on trends and milestones in competition policy since 2010. On 14 October 2014, the European Commission published a speech by Joaquin Almunia, Vice President of the European Commission responsible for Competition Policy, on significant trends and milestones in competition policy since 2010. Commissioner Almunia highlighted the globalisation of enforcement practice as one such trend. He provided examples of where this is evidenced in mergers and acquisitions, the Commission’s fight against illegal collusions and abuses of dominant position, and cartel enforcement. He also outlined the ways in which the Commission co-operates with other agencies, including through formal co-operation agreements. Commissioner Almunia then gave examples of how competition policy has affected the banking and finance sector in particular. He also touched on state aid reform, and the use of state aid regulation to avoid selective treatment using tax regimes.