Competition: Court of Justice partly allows the appeals in the gas insulated switchgear cartel case

On 10 April 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgments on the appeals brought by Areva and Alstom (together as the “Areva cases”), Siemens Transmission & Distribution Ltd (“Reyrolle”), Siemens Transmission & Distribution SA (“SEHV”), Nova Magrini Galileo SpA (“Magrini”) (together as the “Siemens cases”) and the Commission against the General Court judgments on the Commission’s gas insulated switchgear cartel decision of 2007 in which the Commission imposed fines totaling approximately EUR 750 million on 20 companies for their participation in the cartel. By a number of judgments of 3 March 2011, the General Court (“GC”) partly annulled the Commission’s decision and reduced the increase in the basic amount of the fines in the Areva cases with the effect that Alstom was ordered to pay a fine of approximately EUR 48 million, for which it was jointly and severally liable with Areva T&D SA, the subsidiary of Areva. As regards the Siemens cases, the GC annulled the Commission’s decision in so far as it concerned the calculation of the amount of the fine imposed on SEHV and Magrini jointly and severally with Schneider (the GC increased the fine from EUR 4.5 million to EUR 8.1 million), whereas Reyrolle was ultimately ordered to pay, alone or jointly and severally, a fine of EUR 22.05 million. In the Areva cases the CJEU upheld in part the appeals lodged. The CJEU considered that the definition of joint and several liability adopted by the Commission and confirmed by the GC constituted an infringement of the principle of legal certainty and the principle that the penalty must be specific to the offender and the offence, in so far as both the Commission and the GC imposed de facto joint and several liability as between Areva and Alstom and thus infringed the rules governing joint and several liability for payment of fines. According to the CJEU, joint and several liability cannot be used to force one company to bear the risk of the insolvency of another company where those companies have never formed part of the same undertaking. Where the Commission intends to make a subsidiary (in this case Areva T&D SA) which has committed an infringement jointly and severally liable with each of the parent companies with which it has, in succession, formed a separate undertaking during the infringement period, it must fix separately for each of the undertakings involved the amount of the fine. In the Siemens cases, the CJEU dismissed Reyrolle’s appeal but upheld in part the appeal lodged by the Commission and that of SEHV and Magrini. The CJEU concluded that the GC had erred in finding that it is exclusively for the Commission  to determine the shares to be paid by each company held jointly and severally liable. The CJEU further observed that, while the Commission has the possibility of holding jointly and severally liable for  payment of a fine a number of legal persons forming part of one and the same undertaking that is responsible for the infringement, the EU competition rules and the principles of EU law concerning personal liability for an infringement and the principle that the penalty must be specific to the offender and the offence (including the question of joint and several liability) relate only to the undertaking per se, not the natural or legal persons forming part of the undertaking. Therefore, it is for the national courts to determine the shares to be paid by each person in a manner consistent with EU law, by applying the national law concerned. The CJEU also held that the GC had erred in varying the fines imposed jointly and severally on certain Siemens' subsidiaries and Schneider and exceeded its powers as the variation operated to the disadvantage of the appellants. Therefore, the CJEU restored the original fines imposed by the Commission. Source: Court of Justice of the European Union Press Release 10/04/14

Merger control: Commission approves acquisition of GTS Central Europe by Deutsche Telekom

The Commission has approved under the EU Merger Regulation the proposed acquisition of telecommunications company GTS Central Europe ("GTS") of Luxembourg by rival Deutsche Telekom ("DT") of Germany. DT is active internationally in the telecommunications sector and has as its core business the provision of fixed and mobile telecommunications as well as internet and internet protocol television services to consumers mainly in Europe. GTS is also active in the telecommunications sector and especially in the provision of telecommunications services and tailor-made information and communication technology services to business, carrier and government customers in Poland, the Czech Republic, Hungary, Romania and Slovakia. The Commission examined the effects of the merger on competition in several markets in Hungary, Romania, the Czech Republic and Poland, where the parties have overlapping activities or vertical links. GTS’ Slovak business was not concerned by the transaction. Further, the Commission also assessed the impact of the transaction on a large number of markets where the merging companies are active at different levels of the supply chain focusing, inter alia, on the upstream market for the wholesale provision of leased lines and the downstream markets for retail business connectivity services as well as the upstream market for the wholesale provision of domestic call transit services on fixed networks. Based on its investigations, the Commission concluded that the transaction does not raise competition concerns in the markets concerned as the merged entity would continue to face strong competition after the merger and customers would still have sufficient alternative suppliers in all markets affected. Source: Commission Press Release 15/04/2014

State aid: Commission adopts new rules on public support for environmental protection and energy

The Commission has adopted new rules on public support for projects in the field of environmental protection and energy (“Guidelines”). The remarkable growth of renewable energy over recent years, partly induced by public support, has helped to make progress on environmental objectives but has also caused serious market distortions and increasing costs to consumers. The Guidelines will support Member States in reaching their 2020 climate targets, while addressing the market distortions that may result from subsidies granted to renewable energy sources. To this end, the Guidelines promote a gradual move to market-based support for renewable energy by introducing competitive bidding processes for allocating public support while offering Member States flexibility to take account of national circumstances and foresee the gradual replacement of feed-in tariffs by feed-in premiums. The Guidelines also allow reducing the burden of charges levied for funding of renewable energy support for a limited number of energy intensive sectors defined for the whole EU as well as provide criteria on how Member States can relieve energy intensive companies that are particularly exposed to international competition from such charges. Furthermore, the Guidelines include new provisions on aid to energy infrastructure and generation capacity to strengthen the internal energy market and ensure security of supply. The Guidelines will be valid from 1 July 2014 until the end of 2020 Source: Commission Press Release 09/04/2014

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 acquisition of Alpha Trains by AMP, PSP and Arcus
  • Commission approves the acquisition by BNP Paribas of sole control over certain assets held by The Royal Bank of Scotland