Court of Justice of the European Union partially upholds appeal by Deutsche Bahn against Commission dawn raid decisions

On 18 June 2015, the Court of Justice of the European Union (“CJEU”) handed down its judgment on an appeal by Deutsche Bahn AG and several of its subsidiaries (together "Deutsche Bahn") against a General Court ("GC") judgment that upheld three Commission decisions authorizing unannounced inspections (so-called "dawn raids") at Deutsche Bahn’s premises in 2011. The first inspection took place from 29 to 31 March 2011 and concerned potentially unjustified preferential treatment given by DB Energie GmbH to other subsidiaries within the group in the form of a rebate system for the supply of electric traction energy. The information gathered during the first inspection triggered two further inspections in March and July 2011, which concerned other suspected anti-competitive practices. Subsequently, Deutsche Bahn brought three separate actions with the GC seeking to challenge all three Commission decisions authorizing the inspections and all subsequent measures based on said inspections.

In September 2013, the GC joined Deutsche Bahn's three appeals and dismissed them in their entirety. In particular, the GC rejected Deutsche Bahn's arguments that the Commission's decisions infringed its fundamental rights to inviolability of premises due to the lack of prior judicial authorization and to an effective legal remedy due to the lack of opportunity for prior judicial review of the inspection decision. Deutsche Bahn brought an action with the CJEU seeking to set aside the GC's judgment and annul the Commission's decisions.

In its judgement, the CJEU partially upheld Deutsche Bahn's appeal and set aside the GC's judgment and the Commission's second and the third inspection decisions. First, the CJEU dismissed Deutsche Bahn's arguments that the Commission's failure to obtain judicial authorization for its inspection decisions was in breach of its fundamental rights to effective judicial protection and right to inviolability of the home. According to the CJEU, the lack of prior authorization does not in itself render the inspection decisions unlawful. Further, the EU Court's judicial review of the Commission's inspection decisions ensures effective judicial protection. However, the CJEU held that the GC had erred in finding that the Commission had not breached Deutsche Bahn's rights of defense by telling its agents prior to the first inspection about a second complaint, which was not covered by the decision authorizing the first inspection. According to the CJEU, the lack of reference to that separate complaint in the description of the subject-matter of the first inspection decision infringed both Deutsche Bahn's rights of defense and the Commission's obligation to state reasons. Therefore, the CJEU concluded that the first inspection was manifested by procedural errors because the Commission's agents, who were in possession of information unrelated to the subject-matter of that inspection, proceeded to seize documents falling outside the scope of the first inspection decision. Accordingly, the CJEU concluded that the legality of the second and third inspection decisions was affected and set aside these decisions and the GC's judgment on the grounds that the Commission infringed Deutsche Bahn's rights of defense. Source: Case C-583/13 Deutsche Bahn and Others v Commission, judgment of the Court of Justice of European Union, 18/6/2015

Competition: Commission fines parking heater producer in cartel settlement

On 17 June 2015, the Commission found that two German producers of automotive parts, namely Eberspächer and Webasto, have breached EU antitrust rules by coordinating prices and allocating customers on the market for fuel-operated parking heaters. The Commission's investigation into the suspected cartel started in July 2013 with an unannounced inspection at Eberspächer's premises. The investigation revealed that when receiving requests for price quotations, the companies discussed various price elements, agreed which of the two would submit the winning lower bid, and exchanged other commercially sensitive information. According to the Commission, the two companies also colluded when selling to dealers in Germany and Austria, for example by harmonizing their annual price lists and the discounts they would give to these dealers. The cartel operated over a period of 10 years, from September 2001 until September 2011, and covered the entire European Economic Area ("EEA").

The Commission imposed a fine of EUR 68 175 000 on Eberspächer. Webasto received full immunity under the Commission's 2006 Leniency Notice for revealing the existence of the cartel to the Commission. Also Eberspächer benefited from reductions of its fine for its cooperation during the investigation and because it agreed to settle the case with the Commission. Source: Commission Press Release 17/6/2015

Competition: Commission fines producers and distributors for operating retail food packaging cartels

On 24 June 2015, the Commission has fined eight manufacturers and two distributors of retail food packaging trays a total of EUR 115 million for having participated in at least one of five separate cartels. The concerned manufacturers are Huhtamäki of Finland, Nespak and Vitembal of France, Silver Plastics of Germany, Coopbox, Magic Pack and Sirap-Gema of Italy and Linpac of the UK. The two distributors are Ovarpack of Portugal and Propack of the UK.

According to the Commission, the companies breached EU antitrust rules by price fixing and allocating customers of polystyrene foam or polypropylene rigid trays. Polystyrene foam and polypropylene rigid trays are used for packaging food sold in shops or supermarkets, for products such as cheese, meat, fish or cake.

Only Linpac benefited from full immunity under the Commission's 2006 Leniency Guidelines as it revealed the existence of the cartels to the Commission. In addition several other companies received fine reductions due to their cooperation in the investigation and due to their inability to pay the fines.

Source: Commission Press Release 24/6/2015

Competition: Commission sends Statement of Objections to suspected participants in car battery recycling cartel

On 24 June 2015, the Commission announced that is has sent a Statement of Objections to five recycling companies that it suspects have participated in a purchasing cartel for scrap lead-acid batteries. The sending of a Statement of Objections does not prejudge the outcome of the Commission's investigation.

The Commission's investigation began with unannounced inspections (so-called dawn raids) in September 2012. The Commission has concerns that, from 2009 to 2012, five lead recycling companies participated in a cartel aimed at fixing the purchase prices for scrap lead-acid batteries in Belgium, France, Germany and the Netherlands. The Commission alleges in its statement of objections that these companies agreed or coordinated their behavior only in order to maintain higher profit margins. As a result, they may have lowered the prices paid to scrap dealers, many of which are small and medium-sized companies. Since such behavior would likely reduce the value of used batteries sold for scrap, this could ultimately be to the detriment of sellers. If established, such behavior would violate EU rules that prohibit anticompetitive business practices such as collusion on prices and market sharing (Article 101 of the Treaty on the Functioning of the European Union).

A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them and the companies can examine the documents in the Commission's investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.

Source: Commission Press Release 24/6/2015

Competition: Commission market tests commitments by Bulgarian Energy Holding concerning Bulgarian wholesale electricity market 

On 19 June 2015, the Commission announced that it invites comments from interested parties on commitments offered by the State-owned Bulgarian Energy Holding EAD ("BEH)" to address competition concerns relating to BEH's conduct on the non-regulated wholesale electricity market in Bulgaria. In December 2012, the Commission opened antitrust proceedings into BEH's conduct on the wholesale electricity markets in Bulgaria and issued a Statement of Objections to BEH in August 2014. The Commission had concerns that BEH, a vertically-integrated energy company, may have prevented traders from freely deciding where to sell electricity purchased from BEH in particular by including territorial restrictions in its subsidiaries' electricity supply contracts.

To address the Commission's concerns, BEH has offered to set up an independent power exchange in Bulgaria and to ensure the liquidity of the day-ahead market on that exchange. In addition, BEH has committed to offer predetermined volumes of electricity on the day-ahead market on the new exchange for a period of five years. The commitments offered by BEH aim to ensure that the predetermined volumes of electricity are sold on an anonymous basis and to create liquidity on the exchange. They also improve transparency on the unregulated wholesale electricity market in Bulgaria and promote the integration of the Bulgarian wholesale electricity market with those of neighboring markets. If the market  test confirms that the commitments are suitable to address the Commission's competition concerns, the Commission may make the commitments legally binding on BEH. Interested parties may submit their comments to the Commission by 18 July 2015.

Source: Commission Press Release 19/6/2015

Competition: Court of Justice of the European Union appeals General Court order in Aalberts Industries damages action for excessively long court proceedings 

On 22 June 2015, details were published about an action brought by the Court of Justice of the European Union ("CJEU") against a General Court ("GC") order that dismissed an application by the CJEU seeking a declaration of inadmissibility in respect of Aalberts Industries NV's ("Aalberts") action for damages. Aalberts claimed damages based on Articles 268 and Article 340 of the Treaty on the Functioning of the European Union ("TFEU") for harm suffered as a result of delay by the European Courts in adjudicating its appeal against the copper fittings cartel. In February 2015 the GC issued an order to dismiss claims made by the Commission and the CJEU regarding Aalberts action against them. The GC rejected CJEU's claims that the EU should be represented by the Commission on several grounds, including that there is no general principle of representation of the EU by the Commission and that there is no breach of the principle of sound administration of justice because the CJEU have access to file documents in order to defend the EU. Instead, the GC found that as institutions accused of liability should represent themselves before the Court and as Article 13 of the Treaty on the European Union (TEU) provides that the CJEU is an institution of the EU and Article 19 of the TEU provides that that institution includes the General Court, it is clear that CJEU should represent the EU in the proceedings.

The CJEU lodged an appeal against the GC's order, claiming that the rules on representation of the EU before its judicial bodies have not been observed. The CJEU claims that because there is no express rule governing representation of the EU before its judicial bodies in actions brought under Article 268 of the TFEU with a view to engaging the non-contractual liability of the EU, the rules governing such representation must be derived from general principles applicable to the exercise of judicial functions, in particular the principle of the sound administration of justice and principles relating to judicial independence and impartiality.

In the CJEU's view, the requirements of judicial independence and impartiality are compromised. This is because the entity that will decide the case (the GC) belongs to the same judicial body as the entity that is potentially liable in this case (the CJEU). Additionally, the decision-making entity is an integral part of the defendant party, and the judges of that entity are professionally affiliated. Further, the damages being claimed must come from the CJEU's budget. Further the CJEU argues that in the contested order, the obligation to state reasons has not been met because the order contains no specific rebuttal of the CJEU's arguments in two similar cases.

Source: Official Journal of the European Union C 205/13, 22/6/2015

Merger control: Commission approves joint venture for cross-border licensing of online music between PRSfM, STIM and GEMA, subject to conditions

On 16 June 2015, the Commission conditionally approved the proposed creation of a joint venture for multi-territorial online music licensing and copyright administration services by three music collecting societies, PRS for Music Limited ("PRSfM") of the UK, Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a. ("STIM") of Sweden and Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte ("GEMA") of Germany. Collecting societies manage the copyrights of authors, performers and writers of musical works. They also grant licenses on their behalf to users of musical works, monitor and detect these licenses' unauthorized use, and collect and distribute to right holders the revenue derived from the exploitation of their musical works. The joint venture will provide copyright holders with a number of services including licensing music to online platforms and providing copyright administration services to collecting societies and the so-called "Option 3 music publishers". "Option 3 publishers" are large music publishers that have withdrawn the mechanical rights related to their Anglo-American repertoire from the collecting societies and have started to license these rights, directly relying on the collecting societies solely for administrative services. The copyright administration services that the joint venture will offer to other collecting societies are a new product because they relate to multi-territorial licenses.

The Commission had concerns that the creation of the joint venture would make it more difficult for other collecting societies to offer copyright administration services by raising the barriers to entry and growth. Furthermore, according to the Commission, the creation of the joint venture would prevent some of the existing cooperation initiatives from succeeding or new cooperation initiatives from emerging.

To address the Commission’s concerns, PRSfN committed not use its control over the performing rights that it manages to force "Option 3 publishers" or their service providers to purchase copyright administration services from the joint venture. The joint venture will also offer key services to other collecting societies on fair and non-discriminatory terms and will facilitate the switching of collecting societies relying on the joint venture's copyright database to another provider of database services. Finally, the joint venture will not enter into exclusive contracts with its customers for copyright administration services other than for database services. The Commission concluded that these commitments will allow other collecting societies to enter the market by ensuring that the joint venture's customers will remain free to switch to competing providers. Accordingly, the Commission approved the proposed transaction, as modified by the commitments.

Source: Commission Press Release 16/6/2015

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 joint venture by and Hugendubel for online sale of books and e-books
  • Commission approves acquisition of Delphi's Thermal Systems Business by Mahle
  • Commission approves acquisition of DLG's Danish energy business by DCC
  • Commission approves acquisition of TE Connectivity's Broadband Network Solutions business by CommScope
  • Commission approves acquisition of joint control of Informatica by Permira and CPPIB
  • Commission approves acquisition of Aviation Fuelling Services Norway AS by SEPH and St1
  • Commission approves acquisition of Banca FarmaFactoring by Centerbridge Partners in the financial sector
  • Commission approves acquisition of ABP by CPPIB, Borealis and GICSI
  • Commission approves acquisition of IKKS by LBO France
  • Commission approves acquisition of Coppenrath & Wiese by Dr. Oetker's
  • Commission approves acquisition of Tonopah Solar Energy by PSP, OTTP and TSI