New Zealand: Korean Air & Emirates settle NZ air cargo probe
Korean Air Lines and Emirates are the fifth and sixth airlines to settle in the NZ Competition Commission’s investigation into price fixing for fuel and security surcharges on cargo. Korean Air Lines has accepted liability for routes from New Zealand to Hong Kong, Japan and Malaysia; and Emirates for flights between New Zealand and Indonesia. The NZ High Court imposed fines of NZ$3.5 million on Korean Air and NZ$1.5 million on Emirates, bringing the total amount obtained to date to NZ$21.4 million. The penalties were recommended to the court by the Commission as part of pre-trial settlements agreed with the airlines, and include fine reductions of 33 per cent and 25 per cent respectively. The airlines also agreed to help with the Commission’s continuing investigation.
South Korea: Hyundai fined
Korea’s Fair Trade Commission (KFTC) has fined Hyundai Mobis, which makes vehicle parts for manufacturers Hyundai Motors and Kia Motors, US$2 million for abusing its superior bargaining position and allegedly forcing its subcontractors to accept unfairly low prices. Hyundai Mobis also agreed to refund its 12 subcontractors US$1.4 million for price cuts between 2008 and 2011 deemed unlawful by the KFTC.
EU: Heavy divestments ordered in Universal/EMI
The EU regulator has cleared Universal’s offer to sell some of EMI’s highest-selling music catalogues but has requested that two-thirds of the catalogues be sold to a single buyer.
EU: Director General of Competition announces MoU with Chinese agencies
The EU DG Comp released a statement confirming a cooperation agreement with China’s National Development and Reform Commission and State Administration of Industry and Commerce. The memorandum seeks to increase the authorities’ cooperation on antitrust enforcement, including cartels and abuse of dominance cases. The agencies will also discuss competition legislation and share non-confidential information regarding global antitrust investigations.
EU: Apple and publishers look to settle EU e-books probe
Apple and Macmillan have agreed to offer commitments to the EC but will admit no liability. The proposed EU commitments involve the five parties (Apple, Macmillan and three other publishers who earlier settled) to cancel all existing agency agreements and refrain from adopting most favoured customer clauses for five years. The companies will be able to enter new agency agreements, but retailers will be free to offer discounts on e-books for two years if these rebates do not exceed the commission they receive from publishers. The US trial against Apple, Macmillan and Penguin continues.
EU: DG Comp opens car part proceedings
The EC opened proceedings against several companies that manufacture car parts accused of participating in a price-fixing cartel. The EC has not named the companies, which are being investigated under both EU and European Economic Area competition rules.
UK: New OFT penalty guidelines
The UK Office of Fair Trading (OFT) released new penalty guidelines which increase the maximum starting point for competition infringement penalties from 10 percent of relevant turnover to 30 percent, and clarify “relevant turnover” as that of the last business year before the competition violation ended. The new guidelines outline a more formal process for leniency reductions, and will also require the OFT to consider issues of proportionality when calculating fines. The OFT is of the view that the reforms are in line with the approach of the EC and many other European competition authorities.
UK: Preliminary investigation into petrol market
Following continued public concern about the petrol industry, the OFT commenced a preliminary study into whether competition problems have contributed to high petrol prices in the UK. The agency has called for information from market participants and plans to publish its findings in January next year. The OFT’s investigation will focus on whether reductions in the price of crude oil are reflected in similarly falling prices at the pump, whether there is a lack of retail competition in some remote areas of the UK, and whether the practices of major oil companies and supermarkets make it difficult for independent retailers to compete.
UK: Investigation into “big four” auditing companies
The UK Competition Commission (CC) released a working paper in regards to its ongoing investigation of the country’s auditing market. The CC says it has thus far found no evidence of "tacit collusion”, despite indications that the market appeared to be facilitating this behaviour. The working paper is one of 16 in the CC’s investigation of whether the UK's “Big Four” auditing companies – PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young – represent an oligopoly in the UK's large company auditing market.
The case was referred to the CC by the UK’s Office of Fair Trading in October 2011, following concerns that the auditing market was highly concentrated with high barriers to entry for new and smaller competitors. The firms account for 99 per cent of the total auditing fees paid by FTSE 100 companies. All four companies have denied allegations of anti-competitive activity and have submitted evidence to the CC to support claims that the audit market offers scant opportunity for collusion. The CC's investigation continues and preliminary findings are due in November 2012.
UK: OFT investigates online hotel booking market
The OFT sent a statement of objections to the online travel agents Booking.com and Expedia, alleging that their agreements with the hotel chain InterContinental Hotels Group infringed competition law. The OFT is of the view that the arrangements limited the ability of online travel agents to offer discounts for accommodation, reduced price competition, and increased barriers to entry and expansion by creating obstacles for travel agents seeking to increase their market share through offering larger discounts.
InterContinental is the world’s largest hotels company by room numbers, with 2011 revenues of US$1.8 billion last year. Expedia and Booking.com, two of the largest online travel agents in the UK, recorded a worldwide turnover in 2011 of US$3.5 billion and US$4.4 billion respectively. The OFT says that while it limited its investigation to a small number of large companies, the probe “is likely to have wider implications” as the practices under examination are “potentially widespread” among online travel agents.
USA: DoJ adds another guilty plea to auto parts probe
Japanese auto parts maker Nippon Seiki is the eighth company to plead guilty in the US Department of Justice’s (DoJ's) antitrust division’s wide-ranging cartel investigation of the auto parts industry. Nippon Seiki admitted to its role in a conspiracy to fix the price of the meters and gauges installed in cars that were sold into the United States, agreed to pay a US$1 million criminal fine and pledged to cooperate with the division’s ongoing investigation. The total amount of criminal fines as a result of the prosecution now stands at US$785 million.
USA: DoJ gives Verizon’s spectrum purchase conditional approval
The US Department of Justice is requiring Verizon and four of the nation’s largest cable companies to amend their joint venture agreements before Verizon can proceed with its US$3.6 billion wireless spectrum buy-out. Verizon, Comcast, Time Warner Cable, Bright House Networks and Cox Communications must limit the scope and duration of agreements relating to the sale of bundled wireless and fixed-line services and the formation of a technology research joint venture. If approved, the settlement will allow Verizon to buy 122 spectrum licenses owned by a group of US cable operators.
USA: DoJ seeks record fines and sentences in liquid crystal display panel cartel
The US government has asked a judge to impose a US$1 billion fine on AU Optronics after a jury found the Taiwanese company guilty of conspiring to fix the price of liquid crystal display panels earlier this year. The DoJ also requested 10 year prison sentences for two of of AU Optronics’ top executives who were “central figures in the most serious price-fixing cartel ever prosecuted by the United States”. The DoJ’s sentencing memorandum alleges that the company and the two executives refused to cooperate with the investigation or accept responsibility once the government discovered the cartel. Sentencing is set for 20 September 2012 and if the Judge imposes these fines and prison terms they will constitute the highest and longest ever for an antitrust crime.
Global car shipping investigation
Several of the world’s competition enforcement agencies have launched targeted investigations of international car shipping companies suspected of colluding to fix prices and allocate customers. The investigation included coordinated dawn raids by Japan’s Fair Trade Commission, the US DoJ and the European Commission that targeted multiple maritime shipping companies who transport cars, construction and agricultural vehicles internationally.