Competition: Commission confirms unannounced inspections in natural gas sector
On 7 June 2016, the Commission confirmed that on 6 June 2016 its officials carried out unannounced inspections at the premises of several companies active in the supply and transport of natural gas in Romania. Commission officials were accompanied by their counterparts from the Romanian competition authority. The Commission has concerns that these companies may have violated Article 101 and 102 of the Treaty on the Functioning of the European Union ("TFEU"). The Commission is investigating potential anticompetitive practices in the transmission and supply of natural gas in Romania, in particular relating to suspected anticompetitive behavior aimed at hindering natural gas exports from Romania to other Member States.
Unannounced inspections are a preliminary step when anticompetitive practices are suspected. However, the fact that the Commission carries out inspections does not mean that the companies are guilty of anti-competitive behavior, nor does it prejudge the outcome of the investigation.
Source: Commission Statement 7/6/2016
Competition: General Court dismisses Spanish companies' actions in pre-stressing steel cartel case
On 2 June 2016, the General Court ("GC") handed down a joint judgment dismissing the appeals by Moreda-Riviere Trefilerías ("MRT"), Trefilerías Quijano ("TQ"), Trenzas y Cables de Acero PSC ("Tysca PSC") and Global Steel Wire ("GSW"). The companies had appealed the Commission's decision to impose fines on them for participating in a cartel on the European pre-stressing steel market. MRT, TQ, Tysca PSC and GSW belong to the Spanish steel group Celsa. Pre-stressing steel is used for building bridges, balconies, foundation piles or pipes and is mainly used in structural and underground engineering.
On 30 June 2010, the Commission fined 18 pre-stressing steel suppliers, including MRT, TQ, Tysca PSC and GSW, a total of EUR 518.5 million for participation in a long-running price-fixing and market-sharing cartel. The Commission found that the cartel consisted of activities involving quota-fixing, customer-sharing, price-fixing and the exchange of sensitive commercial information relating to price, volume and customers at the European level and at regional and national levels. The Commission considered that the 18 undertakings had committed a single and continuous infringement of EU law. Further, the Commission held that MRT, TQ, Tysca PSC and GSW constituted a single economic unit and imposed a fine totaling EUR 54.4 million. Between 2010 and 2014, 28 cases were brought before the GC in connection with the cartel. In essence, the companies sought a reduction in their fines. In order to correct calculation errors, the Commission amended its decision in September 2010 and again in April 2011. In October 2012, MRT, TQ, Tysca PSC and GSW appealed the Commission decision to the GC. They disputed, in particular, whether they comprised a single economic unit, whether they were liable and their ability to pay the fines imposed.
The GC found that the companies failed to substantiate the argument that they acted independently on the market and that there were several indications of their economic integration, including stable and close structural links, common staff and allocation of tasks intended to optimize resources for the production and sale of pre-stressing steel. The GC also noted that the companies were perceived as a single competitor by other cartel members. Similarly, the GC confirmed the Commission's assessment of the unitary and continuous nature of the infringement, which consisted of cartel meetings with alternating member compositions. Furthermore, the GC held that the Commission did not infringe the principle of non-retroactivity in criminal law by applying the 2006 guidelines in the calculation of fines for an infringement committed prior to their adoption, because the new calculation method was reasonably foreseeable. Concerning the inability to pay fines, the GC confirmed the Commission's assessment and found that the companies were able to obtain the necessary funding or guarantees. Accordingly, the GC dismissed the appeals in their entirety. Source: General Court Press Release 2/6/2016
Public procurement: Court of Justice of European Union rules on equal treatment of tenderers
On 24 May 2016, the Court of Justice of the European Union ("CJEU") made a preliminary ruling on a reference from the Danish Public Procurement Complaints Board on questions relating to the interpretation of the principle of equal treatment of tenderers and transparency stated in Article 10 of Directive 2004/17.
The dispute in the main proceedings concerned a negotiated procedure for the construction of a new railway line between Copenhagen and Ringsted. In January 2013, the Danish railway infrastructure operator Banedanmark commenced a negotiated procedure for the award of a public contract for the construction of the new railway line. Five economic operators sought an invitation to take part in the procedure in the pre-selection phase. Those five candidates included a group consisting of Per Aarsleff A/S ("Per Aarsleff") and E. Pihl og Søn A/S ("E. Pihl og Søn"). However, on 26 August 2013, E. Pihl og Søn was declared insolvent. Banedanmark decided to allow Per Aarsleff to continue to participate alone and subsequently awarded the contract to it. Following the award, a competing consortium brought proceedings before the Danish Public Procurement Complaints Board claiming that Banedanmark had breached the principles of equal treatment and transparency in Article 10 of Directive 2004/17. In August 2014, the Danish Public Procurement Complaints Board decided to stay the proceedings and referred questions on interpretation of the principle of equal treatment of tenderers to the CJEU for a preliminary ruling.
In its ruling, the CJEU noted that Directive 2004/17 does not provide any rules specifically relating to alterations made to the composition of a group of economic operators that has been pre-selected as a tenderer for a public contract. Further, the CJEU stated that the question must be examined with regard to the general principles of EU law, as the Danish legislation and the contract notice in the main proceedings do not contain any specific rules on that subject either. The CJEU ruled that if an economic operator is to continue to participate in the negotiated procedure in its own name, following the dissolution of the group of which it formed part and which had been pre-selected by the contracting entity, that continued participation not infringe the principle of equal treatment of the tenderers as a whole. As such, two preconditions must be met. Firstly, the economic operator must meet the requirements of the contracting entity. Secondly, the continuation of its participation in that procedure must not place the other tenderers at a disadvantage. Accordingly, the CJEU concluded that the principle of equal treatment of economic operators does not prohibit a contracting entity from permitting a member of a bidding consortium to replace that consortium and to tender alone in a negotiated procedure, provided that the economic operator met the bidding requirements and its participation did not disadvantage the other tenderers.Source: Case C-396/14 MT Højgaard A/S, Züblin A/S v. Banedanmark, judgement of 24 May 2016
On 3 June 2016, the Commission published a DG competition working paper on state aid and tax rulings. The Commission notes that when public authorities grant certain undertakings favorable tax treatment that places them in a more favorable financial position than other taxpayers, this amounts to State aid. In addition, State aid control in tax rulings follows from the Commission's competence to investigate cases under the State aid rules with the objective of preventing distortions of competition through the granting of special tax advantages that are not available to all similarly situated taxpayers in a given Member State. In order to assess whether Member States have given State aid by way of tax rulings, the Commission commenced an inquiry into the tax ruling practices, which focused in particular on tax rulings that endorse transfer pricing arrangements proposed by the taxpayer for determining the taxable basis of an integrated group company.
The Commission stresses that governments should treat multinationals in the same way as companies that operate nationally. The working paper also explains the background to the Commission's negative state aid decisions on national schemes that accept multinational corporations pricing their intra-group transactions in a manner that does not reflect the conditions that apply between independent companies at arm's length. According to the Commission, the arm's length principle aims to ensure that all economic operators are treated in the same manner when determining their taxable base for corporate income tax purposes, regardless of whether they form part of an integrated corporate group or operate as standalone companies on the market.
The purpose of the working paper is to provide a short summary of DG Competition's preliminary orientations for its investigations into transfer pricing rulings. It does not, however, bind the Commission and is without prejudice to any further cases the Commission may open.
Source: DG Competition Working Paper on State Aid and Tax Rulings, 3/6/2016
Sector inquiry (Finland): Finnish Competition and Consumer Authority's report on competition in the healthcare and social services sector
On 8 June 2016, the Finnish Competition and Consumer Authority ("FCCA") published its report on competition in the healthcare and social services sector. The FCCA has particularly focused on the healthcare and social services sector in the past years and has in 2015 published three separate reports concerning competitive conditions. This most recent report in a continuation of this theme and focuses in particular on the proposed overhaul of the Finnish healthcare and social services (so-called Sote) and consumer choice (between publicly and privately produced healthcare and social services). The FCCA considers that in particular as concerns basic services (such as dental care and accommodation services), increasing consumer choice can lead to increased variety and quality. As concerns more complex services (such as surgery and elderly care) the effective utilization of consumer choice may require further provision of information, support and professional input. Moreover, the FCCA opines that effective competition in the healthcare and social services market requires not only the application of the Competition Act but also sector specific competition law rules and in particular the effective enforcement of rules on public procurement.Source: FCCA report on Opportunities and Requirements for Competition in the Healthcare and Social Services sector, 8/6/2016 (in Finnish)
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 between Hearst and Advance Publications
- Commission approves acquisition of SPF-Danmark by Danish Crown
- Commission approves acquisition of PitPoint.LNG by Primagaz Nederland
- Commission approves acquisition of DaVita Care by Khazanah, Mitsui&Co and DaVita Healthcare Partners
- Commission approves acquisition of Airbus Defence Electronics by KKR
- Commission approves joint acquisition of Duck Creek by Apax Partners and Accenture
- Commission approves acquisition of joint control over UK WIG by the 3i Group and Wood Creek
- Commission approves acquisition of Visa Europe by Visa Inc.
- Commission approves the acquisition of Coolblue by HAL Investments
- Commission approves acquisition of Tyco by Johnson Controls