EU Cartels

Commission fines ICAP for facilitating Yen interest rate derivatives cartels. On 4 February 2015, the European Commission announced that it has imposed a total fine of EUR 14,960,000 on the broker, ICAP, for facilitating cartels in relation to Yen interest rate derivatives (YIRD). This follows the fines imposed in December 2013 on a number of major banks that decided to settle the case with the Commission. The Commission’s investigation discovered seven distinct  bilateral infringements in the YIRD sector, lasting between one and ten months, during the  period 2007 to 2010. Traders of the participating banks discussed certain JPY LIBOR submissions and also exchanged, on occasions, commercially sensitive information relating either to trading positions or to future JPY LIBOR submissions. The Commission found that ICAP had facilitated six of these seven cartels and, in doing so, contributed to the anti­competitive objectives pursued by the cartelists.

EU Mergers

Phase I Mergers

  • M.7491 – LIXIL Group Corporation of Japan / Grohe Group of Luxembourg (03/02/2015)

Commission publishes commitments in Liberty Global / Ziggo merger. On 2 February  2015, the European Commission published an interim text of the non­confidential version of the commitments given Liberty Global plc as a condition for the clearance, under Article 8(2) of the EU Merger Regulation, of its acquisition of sole control of Ziggo N.V (M.7000). The commitments address the Commission’s concerns that the merger would have removed two close competitors and important competitive forces in the Dutch market for the wholesale of premium pay TV film channels and that the merger would increase Liberty Global’s buyer power in relation to TV channel broadcasters.

State Aid

Commission opens in­depth state aid investigation into Belgian excess profit ruling system. On 3 February 2015, the European Commission announced that it has opened an in­ depth state aid investigation into the Belgian “excess profit” tax ruling system. This system allows multinational companies in Belgium to reduce their corporate tax liability by the “excess profits” that allegedly result from the advantage of being part of a multinational group. The Commission is concerned that this provides multinational companies with selective advantages that might distort competition in the EU, contrary to the state aid rules.

Advocate General’s opinion on application of state aid rules to German tax on the use of nuclear fuels for electricity production. On 3 February 2015, Advocate General Maciej Szpunar handed down his Opinion on a preliminary reference from the Hamburg Finance Court on whether a duty imposed by a member state to raise revenue on the use of nuclear fuels for the commercial production of electricity constitutes state aid contrary to Article 107 of the Treaty on the Functioning of the European Union (TFEU). The Advocate General, first, did not consider that the tax was a specific tax on electricity production (which would be contrary to Directives 2003/96 and 2008/118). Further, the fact of not imposing prior taxation on the production of electricity generated by means other than nuclear energy was not, in his view, an advantage in the light of an overall tax system, because such a system cannot exist given the different production processes applicable to the generation of electricity (Case C­5/14 – Kernkraftwerke Lippe­Ems GmbH v Hauptzollamt Osnabrück, Advocate General’s Opinion, 3 February 2015  (not yet available in English)).

Commission accepts commitments from France on fiscal exemptions for certain maritime chartering services in France. On 4 February 2015, the European Commission announced  that it has decided, following an in depth state aid investigation, to accept commitments from France on fiscal exemptions for certain maritime chartering services in France. The Commission was concerned that a French tonnage tax scheme provided fiscal benefits to certain vessels sailing under non­EU flags, which would run counter the objectives of EU maritime transport policy. To address these concerns, France has committed to ensure that French tonnage tax payers flag at least 25% of their tonnage in the EEA.

Commission approves further prolongation of Portuguese guarantee scheme. On 4 February 2015, the European Commission announced that it has decided to approve a prolongation until 30 June 2015 of a Portuguese scheme that allows state guarantees for credit institutions in Portugal. The scheme was initially approved in October 2008 and had been prolonged several times. The Commission found the extension of the measures to be in line with its guidelines on state aid to banks during the crisis. In particular, the extended measure is well targeted, proportionate and limited in time and scope. During the application of the extraordinary crisis rules for state aid to banks, the Commission is authorising guarantee schemes on banks’ liabilities for periods of six months. Each prolongation is based on a review of the developments in financial markets and the scheme’s effectiveness.

General Court partially annuls Commission decision on recovery of state aid resulting from air travel tax. On 5 February 2015, the General Court handed down judgments on appeals by Aer Lingus Ltd and Ryanair Ltd against a European Commission decision that found that Irish air travel tax constituted incompatible state aid that must be recovered. The General Court upheld the Commission’s decision in so far as it found that the application of different tax rates for short, mainly domestic, flights and other flights granted those airlines whose flights were subject to the lower rate a selective advantage and so constituted state aid. The Commission did not err in using the higher rate of the tax as the reference rate for these purposes. However, the General Court annulled the Commission’s decision in so far as it ordered recovery of state aid in the amount of EUR 8 per passenger from the beneficiary airlines (Case T­473/12 – Aer Lingus v European Commission (ECLI:EU:T:2015:78) and Case T­500/12 Ryanair v European Commission (ECLI:EU:T:2015:73), judgments of 5 February 2015).

UK Mergers

CMA decision on acquisition by Enviva Holdings of Green Circle Bio Energy. On 3 February 2015, the Competition and Markets Authority (CMA) published the full text of its decision on the anticipated acquisition by Enviva Holdings LP of Green Circle Bio Energy Inc. The CMA announced its decision not to refer this merger to a Phase 2 investigation on 22 December 2014. The CMA found that there will remain a large number of suppliers in the UK that will constrain the merged entity for the supply of utility­grade wood pellets to industrial customers in the UK to use in power generation.

UK Competition

Ofcom refuses interim measures to suspend Premier League auction of live audio­visual media rights. On 4 February 2015, Ofcom announced that it has refused a request by Virgin Media for interim measures, under section 35 of the Competition Act 1998, to suspend the auction for the sale of live UK audio­visual media rights to Premier League matches. Virgin Media asked that the auction, scheduled to commence on 6 February 2015, be suspending pending an announcement by Ofcom in March 2015 as to how it intends to proceed with its investigation into whether the joint selling arrangements for the live rights breach the Chapter I prohibition of the Competition Act 1998 and/or Article 101 of the TFEU. Ofcom has concluded that it is not necessary for it to act urgently to prevent significant harm or to protect the public interest. In particular, the auction relates to rights to broadcast football matches from August 2016 and any harm will, therefore, arise in relation to the sale of premium sports channels with that content from around August 2016. The FA Premier League has also confirmed to Ofcom that it will put in place arrangements in contracts with purchasers to address the consequences of a potential infringement decision.

Speeches & Publications

CMA publishes speech on benefit of specialist cartel enforcement authorities. On 3 February 2015, the CMA published a speech by Stephen Blake, Senior Director, Cartels and Criminal Group, which considers the benefit of specialist cartel enforcement authorities. Mr Blake explains the criminal and civil cartel regimes and the relationship between them. He highlights the benefits of the fact that the enforcement of these regimes (both investigation and prosecution) is embedded within an independent specialist competition authority.

OECD publishes paper on remedies in cross­border merger cases. The Organisation for Economic Co­operation and Development (OECD) has published a paper containing details of a policy roundtable discussion on remedies in cross­border merger cases. The discussion focused, in particular, on the challenges for competition agencies when designing, enforcing and monitoring cross­border remedies, and on issues arising when such remedies may need to be revised.