Competition: Commission sends Statement of Objections to Brussels Airlines and TAP Portugal for code-sharing on Brussels-Lisbon route
On 27 October 2016, the Commission announced that it has sent a Statement of Objections to Brussels Airlines and TAP Portugal stating that in its preliminary view the companies have restricted competition in breach of EU antitrust rules.
The Statement of Objections concerns a code-sharing agreement on passenger services between Brussels Airlines and TAP Portugal in 2009. The Commission's objections concern the first three years of the agreement. Before Brussels Airlines and TAP Portugal entered into the agreement, they were the only two competitors flying this route.
The Commission believes that the companies have pursued an anti-competitive strategy by:
• Discussing a capacity reduction (number of seats) and an alignment of their pricing policy on the route.
• Granting each other unlimited rights to sell seats on each other's flights on the route.
• Implementing these arrangements by actually reducing capacity and completely aligning their fare structures and ticket prices on the route.
According to the Commission, the companies' practices eliminated competition on prices and capacity between them on the Brussels-Lisbon route. This led to higher prices and less choice for consumers. The Commission's preliminary view is therefore that the companies has breached Article 101 of the Treaty on the Functioning of the EU ("TFEU").
The Commission opened proceedings against the companies in February 2011. Source: Commission Press Release 27/10/2016
Merger control: Commission opens in-depth investigation into proposed acquisition of Syngenta by ChemChina
On 28 October 2016, the Commission announced that it has opened an in-depth investigation to assess whether the proposed acquisition of Syngenta by ChemChina complies with the EU Merger Regulation. The proposed concentration would combine Syngenta of Switzerland, one of the main global seeds and crop protection companies, and ChemChina of China, which controls Adama, the largest supplier of generic crop protection products in Europe. The industry in question is already relatively concentrated. The Commission will now assess whether the proposed concentration reduces competition in crop protection products and the supply of certain input chemicals.
In its initial investigation, the Commission's identified preliminary concerns in a number of crop protection markets and suggests that:
• the parties have relatively high combined market shares in many of these markets, and that at least some of each party's products may compete directly with those of the other;
• Adama may be an important generic competitor of Syngenta in many of these markets;
• for a company that focuses on generic crop protection products, Adama has a broad portfolio of products, wide geographic coverage and good access to downstream distributors.
The Commission therefore has preliminary concerns that the proposed concentration would reduce competition on these markets and that this in turn could have an impact on price and choices for farmers.
As well as looking into crop protection markets, the in-depth investigation will also verify whether the proposed concentration may negatively affect Syngenta's and ChemChina's supply of active ingredients. These are the key chemical input for other manufacturers to make crop protection products. Source: Commission Press Release 28/10/2016
Merger control: Commission conditionally approves acquisition of Alteo ARC and Alufin by Imerys
On 28 October 2016, the Commission conditionally approved the proposed acquisition of Alteo ARC and Alufin by Imerys. The parties are all active in the production and supply of various specialty aluminas in the European Economic Area ("EEA"). Specialty aluminas are synthetic products with various forms and an even wider range of uses. For instance, white fused alumina can be distinguished from other types of specialty alumina due to differences in product characteristics, end uses and price. Bubble alumina is a sub-segment of white fused alumina that has a lower density and commands a higher price.
The Commission had preliminary concerns that the proposed transaction would have created significant overlaps between the companies' activities in certain types of specialty aluminas –especially relating to the market for white fused alumina for refractory and for abrasive applications, including its sub-segment bubble alumina. The Commission was also concerned that Motim, the only major EEA-based competitor, and suppliers from outside the EEA would be unable to exercise sufficient competitive constraint on the merged entity to avoid price increases for white fused alumina. In addition, the customers also raised concerns about the risk of price increases following the loss of one of the main suppliers in a concentrated market. The Commission did not identify other competition concerns regarding other products.
To address the Commission's concerns relating to the white fused alumina, Imerys offered to divest Alteo ARC's entire white fused alumina business and related businesses located in Alteo's plant in La Bâthie, France. The divestment entirely removes the overlap between the activities of the two companies relating to white fused alumina and bubble alumina, both in the EEA and at the global level. Therefore, the Commission approved the transaction, as modified by the commitments.
Source: Commission's Press Release 28/10/2016
Merger control: Commission conditionally approves acquisition of lasers supplier Rofin-Sinar by Coherent
On 26 October 2016, the Commission conditionally approved the proposed acquisition of Rofin-Sinar by Coherent. Rofin-Sinar is a US-German supplier of lasers and laser-based system solutions worldwide for industrial processing applications, while Coherent is a US-based public company that supplies lasers and related accessories for a diverse group of customers worldwide. Rofin-Sinar and Coherent are also the two largest suppliers of CO2 lasers, which are generally differentiated as low-power (less than 1 kilowatt) and high-power (above 1 kilowatt) CO2 lasers. Low-power CO2 lasers are commonly used to cut, treat, mark or engrave materials such as paper, plastic, wood, glass and textiles.
The Commission had preliminary concerns that the proposed transaction would lead to high combined market shares (exceeding 50%) in low-power CO2 lasers. They were also concerned that the remaining considerably smaller alternative suppliers, including Asian manufacturers, would have been unable to maintain sufficient competition to avoid price increases and reduced product choice. The Commission did not identify competition concerns in any other markets where the activities of the parties overlap due to the presence of strong alternative suppliers.
To address the Commission's competition concerns relating to low-power CO2 lasers, Coherent offered to sell Rofin-Sinar's Hull (UK) business manufacturing low-power CO2 lasers. The divestment entirely removes the overlap between the activities of the parties in low-power CO2 lasers at the global level. According to the Commission, the commitments fully address the identified competition concerns. Therefore, the Commission approved the transaction, as modified by the commitments.
Source: Commission Press Release 26/10/2016
Public procurement (Sweden): Swedish Competition Authority publishes research report concerning potential for detecting collusion in Swedish public procurement
On 1 November 2016, the Swedish Competition Authority ("SCA") published a research report concerning the potential for detecting collusion in Swedish public procurement. On behalf of the SCA, Mihály Fazekas and Bence Tóth at the University of Cambridge have analyzed the system for gathering data about public procurement in Sweden. In the report, three main topics are discussed. First, the Swedish data system is compared to data collection within the EU-funded project DIGIWHIST. Second, the report assesses the public procurement database available in Sweden and recommends improvements in order to more easily detect collusive behavior. Third, the report develops and validates a set of collusion risk indicators.
The report identifies a number of key strengths in the Swedish procurement data system. One strength is that organizational IDs are used. The possibility of identifying participating companies is a fundamental precondition for detecting collusion. Another strength is that it records bid prices even for losing bidders.
However, the report also identifies a number of weaknesses in the Swedish data system. Most notably, there is no central platform that publishes all tender announcements. Also, there is little public control over the data capture process and data quality compared to usual practices in the rest of the EU. The report concludes that often important information for identifying collusion risks is lacking, for example, the name of the winning bidder.
The report concludes with policy recommendations on how to reform the data system and how to make best use of the current system. Source: Swedish Competition Authority Press Release 01/11/2016 (in Swedish) and Research Report "Assessing the potential for detecting collusion in Swedish public procurement"