Competition: Commission fines broker ICAP EUR 14.9 million for participation in several cartels in Yen interest rate derivatives sector

On 4 February 2015, the Commission imposed fines of EUR 14.9 million on the UK based broker ICAP for facilitating several cartels in the sector of Yen interest rate derivatives (“YIRD”) in breach of EU antitrust rules. Interest rate derivatives, such as forward rate agreements, swaps, futures and options, are financial products which are used by banks or companies for managing the risk of interest rate fluctuations. These products are traded worldwide and play a key role in the global economy. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate (“LIBOR”) which is used for various currencies including the Japanese Yen (“JPY”). This benchmark reflects an average of the quotes submitted daily by a number of banks who are members of a panel and it is intended to reflect the cost of interbank lending in JPY. It also serves as a basis for various financial derivatives. The Commission’s decision is part of a broader investigation in the YIRD sector as a result of which the Commission uncovered seven distinct bilateral infringements lasting between 1 and 10 months in the period from 2007 to 2010. In 2013, the Commission imposed fines on a number of major banks that decided to settle the case with the Commission. ICAP chose not to settle the case and proceedings against it therefore continued under the normal procedure. The Commission’s investigations revealed that ICAP facilitated six of the seven cartels in the YIRD sector through various actions that contributed to the anticompetitive objects pursued by the cartelist. According to the Commission, ICAP disseminated misleading information to certain JPY LIBOR panel banks, which were veiled as “predictions” or “expectations” of where the JPY LIBOR rates would be set. The misleading information was aimed at influencing certain panel banks, which did not participate in the infringement, to submit JPY LIBOR rates in line with the adjusted “predictions” or “expectations”. ICAP also used its contacts with such non-participating JPY and LIBOR panel banks, with the aim of influencing their JPY LIBOR submissions. Finally, according to the Commission, ICAP served as a communications channel between a trader of Citigroup and a trader of RBS and enabled the anticompetitive practices between them. Source: Commission Press Release 4/2/2015

Competition: General Court dismisses appeals against decisions refusing requests for confidential treatment of leniency information in cartel decision

On 28 January 2015, the General Court (“GC”) handed down two separate judgments on appeals brought by Akzo Nobel NV (“Akzo Nobel”) and Evonik Degussa GmbH (“Evonik Degussa”) against the Commission’s decisions that rejected requests for confidential treatment of certain information in the decision on the bleaching chemicals cartel. On 3 May 2006, the Commission decided that a number of companies, including Akzo Nobel and Evonik Degussa, had participated in cartels in the markets for bleaching chemicals (hydrogen peroxide and perborates) in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). Having published a non-confidential version of the cartel decision in 2007, the Commission decided, in the interests of transparency, to publish a more detailed non-confidential version of the decision, which included certain information provided by the companies in the context of their leniency applications. Both Akzo Nobel and Evonik Degussa objected to the Commission’s approach and brought the matter before the Hearing Officer, who considers objections to the disclosure of information proposed by the Commission, asking that all the information provided under the 2002 Leniency Notice would be excluded from the non-confidential version to be published. In May 2012, the Hearing Officer rejected the requests for confidential treatment after which both Akzo Nobel and Evonik Degussa brought actions before the GC to challenge the respective decisions of the Hearing Officer. In its rulings, the GC held that information, which was voluntarily submitted to the Commission by an undertaking seeking to benefit from the leniency programme, does not automatically enjoy protection from disclosure on the basis of the obligation of professional secrecy. The GC drew a distinction between disclosure to third parties of leniency documents and statements in the Commission's file and the publication of information provided in the context of the leniency programme in the Commission's infringement decision. Further, the GC held that, in deciding on publication, it is for the Commission to balance between the public interest in knowing as fully as possible the reasons for any Commission action, the interest of economic operators in knowing the sort of behavior for which they are liable to be penalized, and the interest of the Commission in safeguarding the effectiveness of its leniency programme. Finally, the GC also held that the Commission had not breached the legitimate expectations of the applicants in proceeding in the described manner. Accordingly, the GC dismissed both appeals in their entirety. Source: Case T-341/12 – Evonik Degussa GmbH v European Commission (in Finnish) and Case T-345/12 – Akzo Nobel NV and others v European Commission

Competition (Finland): Finnish Competition and Consumer Authority proposes abolition of regional monopoly system in chimney sweeping industry

On 2 February 2015, the Finnish Competition and Consumer Authority (“FCCA”) proposed to the Ministry of the Interior that a regional monopoly system applied in the chimney sweeping industry in Finland would be abolished and a contract-based system would be adopted. According to the FCCA, the transition to the contract-based system would benefit Finnish consumers and would also lower the barriers to entry in the market. Furthermore, opening the market for competition would remove a dual role of the Finnish rescue departments as a subscriber and supervisor of the services and would encourage the authorities and chimney sweeping entrepreneurs to develop working methods related to the services. Source: Finnish Competition and Consumer Authority Press Release 2/2/2015 (in Finnish)

Merger control: Commission approves acquisition of Abbott Laboratories' Non-U.S. Developed Markets Specialty and Branded Generics Business by Mylan, subject to conditions

On 28 January 2015, the Commission announced that it has approved the proposed acquisition of Abbott Laboratories' Non-U.S. Developed Markets Specialty and Branded Generics Business ("Abbott EPD-DM"), by Mylan, Inc ("Mylan"), subject to conditions. Abbott EPD-DM is a Swiss-based manufacturer focused on distributing branded ex-originator products with expired patents and with internal production capabilities in Europe, Canada and Japan. Mylan is a US-based producer of generic pharmaceuticals. The Commission had concerns that the transaction, as initially notified, would have reduced competition on the market for several medicines. The Commission examined the effects of the proposed transaction on competition in particular in five therapeutic areas, namely cardio-metabolic, gastro, anti-infective/ respiratory, central nervous system/pain and women's and men's health. To address the Commission’s concerns, Mylan offered to divest its local businesses in the concerned markets, including the relevant marketing authorizations, customer information and supply contracts. The Commission therefore concluded that, in light of the proposed commitments, the transaction would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments. Source: Commission Press Release 28/1/2015

Merger control: Commission approves two mergers regarding GlaxoSmithKline and Novartis, subject to conditions

On 28 January 2015, the Commission approved two separate transactions regarding GlaxoSmithKline (“GSK”), of the United Kingdom, and Novartis, of Switzerland, both subject to conditions. GSK and Novartis are active globally in the development, distribution and marketing of pharmaceutical products. The transactions are part of a 3-part inter-conditional deal whereby GSK acquires Novartis’ global human vaccines business, except for the influenza vaccines business, and the parties create a new entity combining the consumer health activities and consumer health businesses of GSK and Novartis. The new entity will be controlled by GSK. Furthermore, as part of the deal, Novartis acquires GSK’s oncology business in a separately notified transaction. The Commission’s investigations into the proposed transactions revealed that, firstly, the acquisition of Novartis’ vaccines business by GSK and the creation of the joint venture would have detrimental effects on competition in a significant number of markets in the European Economic Area (“EEA”), namely the markets for meningitis and diphteria tetanus vaccines and consumer health products to stop smoking and to treat cold sores, cold and flu, and pain. As GSK and Novartis are the only suppliers of vaccines for bacterial meningitis of certain serogroups in the EEA, the transaction would therefore have led to a monopoly. Furthermore, GSK and Novartis are also competing suppliers of bivalent vaccines for diphtheria and tetanus in Germany and Italy, where the remaining players would have been unable to sufficiently constrain the merged entity. Finally, in the areas of consumer health products, the merged entity would have combined key branded products which might have led to price increases for consumers. To address the Commission’s concerns, GSK committed to grant a worldwide, exclusive and perpetual licence of GSK's Nimenrix vaccine for bacterial meningitis and to divest GSK's Mencevax vaccine for bacterial meningitis. GSK also committed to enter into an exclusive distribution agreement for Germany and Italy and transfer marketing authorisations in the relevant countries for Novartis' TD-Pur and Dif-Tet-All vaccines for diphtheria and tetanus. Finally, GSK committed to divest several assets in the areas of consumer health products to stop smoking and to treat cold sores, cold and flu and pain. Secondly, as for the acquisition of GSK’s oncology business by Novartis, the Commission’s investigations indicated that the transaction, as originally notified, would have reduced from three to two the number of companies developing and marketing treatments for skin cancer, namely a B-Raf inhibitor (“LGX818”) and a MEK inhibitor (“MEK162”). Moreover, according to the Commission, the transaction could have reduced innovation, with the likely abandonment of Novartis' broad clinical trial program for these treatments. These treatments are currently being trialled for a number of other cancers. To address the Commission’s concerns, Novartis committed to return its rights over MEK162 to its owner and licensor Array BioPharma Inc. ("Array") and to divest LGX818 to Array. These post-closing commitments are conditional upon the Commission's approval of a binding partnership agreement between Array and a suitable healthcare company. In the light of the above commitments, the Commission concluded that the proposed transactions, as modified by the commitments, would not raise competition concerns and approved both transactions by separate decisions. Source: Commission Press Release 28/1/2015 and Commission Press Release 28/1/2015

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 Abbott Laboratories' Non-U.S. Developed Markets Specialty and Branded Generics Business by Mylan, subject to conditions
  • Commission approves acquisition of GSK's oncology business by Novartis, subject to conditions
  • Commission approves both GSK's acquisition of Novartis' vaccines business and a consumer healthcare joint venture between GSK and Novartis, subject to conditions
  • Commission approves acquisition of Total's adhesives and sealants business by Arkema
  • Commission approves acquisition of ANOV Expansion by Ingram Micro in logistics sector
  • Commission approves acquisition of sole control over Grohe Group by LIXIL