EU Competition

General Court decision in respect of freight forwarders’ cartel to be challenged. On 4 July 2016, details were published in the Official Journal of appeals made by Schenker Ltd, Deutsche Bahn AG, Schenker AG, Schenker China Ltd, Schenker International (H.K.) Ltd, Panalpina World Transport (Holding) Ltd, Panalpina Management AG, and Panalpina China Ltd against the General Court’s decision to uphold the European Commission’s (Commission) findings with respect to their participation in an air freight forwarding services cartel. In particular, the companies were found to have introduced surcharges and other charging mechanisms on trading lanes between Europe/USA and China/Hong Kong/Europe. Among their grounds of appeal, the parties argue that the Commission should not have been entitled to rely on the immunity application of one of the participants.

Commission publishes full text decision on acquisition by CMA CGM of Neptune Oriental Lines. On 1 July 2016, the Commission published the full non-confidential version of its decision to conditionally approve the merger of CMA CGM and Neptune Oriental Lines (NOL), two competitors in the container liner shipping business. As is common in the sector, both CMA CGM and NOL had entered into cooperation agreements with other shipping companies operating across the same trade routes (i.e. consortia), whereby members decide on capacity settings, scheduling and the list of ports of call. The Commission had concerns that through their respective consortia, CMA CGM and NOL might be able to influence their consortium members (which were previously unlinked) with respect to capacity and prices to the detriment of shippers and consumers. The Commission, therefore, provided its approval on the condition that NOL leaves the G6 liner shipping alliance (G6), severing the link that would have been created post-merger between G6 and CMA CGM's O3 Alliance.

Commission publishes full text decision on acquisition by Pfizer of Hospira. On 1 July 2016, the Commission published the full non-confidential version of its decision to conditionally approve Pfizer, Inc.’s (Pfizer) acquisition of Hospira, Inc. (Hospira). The Commission found that both pharmaceutical companies competed in the biosimilar drugs and sterile injectable drugs markets. In order to address the Commission’s competition concerns, Pfizer offered to divest of the development, manufacturing, and marketing rights of its infliximab drug (while retaining marketing rights outside the EEA); and the marketing authorisations and associated rights of Pfizer or Hospira in respect of sterile injectables, so far as they relate to problematic molecules in the relevant countries.

Commission conducts unannounced inspections in rail passenger transport sector. On 6 July 2016, the Commission announced that it had conducted a number of “dawn raids” in the rail passenger transport sector across several Member States, due to concerns that anti-competitive agreements have been entered into in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU), which are aimed at excluding certain rail passenger transport operators from the market.

Commission accepts undertakings from 14 container liner shipping companies following sector investigation. On 7 July 2016, the Commission announced that it had accepted commitments offered by 14 container liner shipping companies, following its investigation into the sector’s practice of publishing intended future price increases, which the Commission considers to have the effect of reducing the level of uncertainty in respect of future pricing. Among other things, the companies have committed to stop publishing general rate increase announcements and instead will ensure that any future price announcements include at least the five main elements of the total price (i.e. base rate, bunker charges, security charges, terminal handling charges and peak season charges if applicable), in order to be useful to customers. The Commission believes that these commitments will address any concerns that the practice may have raised prices on the market for container liner shipping services on routes to and from Europe.

ECJ hands down judgment on licence fees payable on retroactively revoked patents. On 7 July 2016, the European Court of Justice (ECJ) handed down its judgment pursuant to a request for a preliminary ruling on the application of Article 101 TFEU to licence fees payable on retroactively revoked patents. The matter in question, on reference from the Paris Court of Appeal, concerned an appeal made by Genentech, Inc. (Genentech), a licensee of certain technology patents from Behringwerke AG, against an arbitral tribunal’s finding that it had acquired the technology licence in order to avoid any litigation. Genentech had argued that as no other companies were paying for the licence, paying royalties for a revoked patent had put the company at a competitive disadvantage. The ECJ held that, so long as the licensee was able to terminate the licence agreement by giving reasonable notice, the imposition of licence fees for the patented technology for the period in which the agreement was in force, would not be precluded by Article 101 TFEU, irrespective of revocation or non-infringement of the patent.

EU Mergers

Phase I Mergers

  • M.7815 GROUPE BOUYGUES / ADP / MERIDIAM / RAVINALA AIRPORTS (1 July 2016)
  • M.8034 VERIZON / HEARST / DREAMWORKS / AWESOMENESS TV (4 July 2016)
  • M.8065 VERIZON COMMUNICATIONS / HEARST CORPORATION / COMPLEX MEDIA HOLDINGS (4 July 2016)
  • M.8070 BANCOPOPULAR-E / ASSETS OF BARCLAYS BANK (4 July 2016)
  • M.8079 RPC GROUP / BRITISH POLYTHENE INDUSTRIES (1 July 2016)

State Aid

Commission finds public support measures provided to Spanish football clubs to be in breach of State aid rules. On 4 July 2016, the Commission announced, following its investigations, that it had found FC Barcelona, Real Madrid, Valencia, Athletic Bilbao, Atlético Osasuna, Elche, and Hercules to be in receipt of illegal State aid. In particular, Real Madrid, FC Barcelona, Athletic Bilbao and Atlético Osasuna were found to have benefitted from preferential tax treatment; land transferred between Real Madrid and the City of Madrid was found to have been overvalued; and guarantees given by the State-owned Valencia Institute of Finance to Valencia, Hercules and Elche, were found to have allowed the clubs to obtain loans on more favourable terms, giving them an economic advantage over other clubs (not in receipt of state guarantees).

AG hands down opinion on appeals made by AerLingus and Ryanair. On 5 July 2016, Advocate General Mengozzi (AG Mengozzi) handed down an opinion in respect of appeals made by AerLingus and Ryanair against the General Court’s decision to partially overturn a decision of the Commission in which it found that an Irish excise duty referred to as the air travel tax (ATT) applied to passengers departing from Irish airports, did not constitute State aid. The Commission, however, did find the application of a lower national rate in the period between 30 March 2009 and 1 March 2011 to constitute State aid, and ordered the recovery by the Irish tax authorities of the difference between the lower and standard tax rates. On appeal, the General Court annulled the Commission’s decision insofar as it related to the calculation of the recovered tax being the difference between the standard and lower rate, as is did not consider this addressed the overall economic advantage that resulted from lower rates being passed on to passengers. AerLingus and Ryanair made subsequent appeals to the ECJ, further to which AG Mengozzi concluded that: (i) the Commission did not err in ordering the recovery of the direct monetary benefit obtained, as it was not obliged to consider all advantages that stemmed from the aid in order to alleviate any competitive advantage; and that (ii) the General Court had erred in annulling the Commission’s decision ordering the recovery of the difference between the standard and lower tax rate. Accordingly, the ECJ has been advised to either dismiss the appeals or refer both cases back to the General Court in order to examine any matters not already addressed.

UK Competition

CMA to continue investigation into the leisure sector. On 5 July 2016, the Competition and Markets Authority (CMA) announced its decision to continue its investigation into suspected anti-competitive conduct in the leisure sector in breach of Chapter I of the Competition Act 1998. The CMA estimates that it will be in a position to make a decision on the next phase of the investigation by December 2016.

CMA publishes full text decision on acquisition of Budgens stores by Co-operative. On 5 July 2016, the CMA published its full text decision on Co-operative Foodstores Limited’s acquisition of 15 Budgens grocery stores from Booker Retail Partners (GB) Limited. The parties were found to both be active in the retail supply of groceries in a number of local areas, including Central Bedfordshire, the Chilterns, South Northamptonshire, Reigate and Bansted. The CMA found that post-merger there would remain sufficient competitive restraint from alternative stores and so has decided not to refer the transaction to a Phase II investigation.

CMA publishes Initial Enforcement Order following DX Network Services’ acquisition of Legal Post (Scotland) and First Post. On 5 July 2016, the CMA published an Initial Enforcement Order (IEO) addressed to DX (Group) plc and DX Network Services Limited (DX Network Services), following DX Network Services’  acquisition of the businesses and assets comprising the Legal Post (Scotland) Limited and First Post Limited. The IEO prevents integration of the businesses until the CMA has concluded its review.

CMA publishes full text decision in respect of Permira Holdings’ acquisition of TL JerseyCo Finance. On 7 July 2016, the CMA published the full non-confidential version of its decision to approve the acquisition of TL JerseyCo Finance Limited (Towry) by Permira Holdings Limited (Permira). The CMA found that Permira and Towry overlapped in the supply of investment management services, financial planning and execution services in the UK (the overlap in the latter of which was deemed to be negligible and, therefore, not considered in the review). The CMA found that: (i) the markets were highly fragmented; (ii) both parties had a small market share (based on both revenue and number of advisers); and (iii) there would be significant competitive constraint from larger firms post-merger.