The EC accepts Mastercard and Visa commitments on interregional interchange fees
On 29 April 2019, the European Commission ("EC") announced the adoption of two decisions against Visa and Mastercard, which make binding on Visa and Mastercard commitments that both card schemes have given for a gradual reduction of some of their interchange fees (See press release here - Visa MIF case file 39398 here and Mastercard case file 40049 here).
Interchanges fees are the fees paid by the acquirer (i.e. the operator providing a payment service to the merchant) to the card issuer on every card transaction. Acquirers typically pass-on the interchange to merchants, and therefore interchange fees are part of the costs that merchants pay for accepting cards.
The decision relates to the level of interchange fees applicable to consumer card interregional transactions within the European Economic Area ("EEA"), i.e., transactions undertaken at a merchant located in one of the 31 EEA countries, with a card issued outside of the EEA (e.g. a US tourist uses a Mastercard or Visa consumer card to pay at a merchant located in the EEA).
The agreed levels that Mastercard and Visa have committed to are as follows: •For card-present transactions: 0.2% for consumer debit/prepaid cards, 0.3% for consumer credit cards •For card-not-present transactions: 1.15% for consumer debit/prepaid cards, 1.50% for consumer credit cards
The EC claims in its press release that these amounts will lead, on an average, to a reduction of 40% of the existing levels.
The EC also states that "This is expected to lead to lower prices to the benefit of all European consumers". The EC therefore assumes that acquirers will pass-on the reduction of interchange fees to merchants, and that in turn merchants will pass-on that reduction to shoppers – which is obviously something that will be very hard to measure…
The reduction will become effective six months from the date that Visa and Mastercard will receive formal notification of the EC decisions. This reduction will last for five years and six months after that notification (this means that, de facto, the reduced rates will be in place for five years).
Mastercard and Visa have also offered to (i) publish all interregional interchange fees covered by the commitments in a clearly visible manner on their websites, and (ii) refrain from circumventing the above described caps by any measure equivalent in object or effect to interregional interchange fees.
Prior to adopting these two decisions, the EC had “market tested” the proposed commitments in December 2018 and collected feedback and reactions from interested third parties, in particular merchants. In light of the market test's results, the EC is satisfied that the commitments offered by Mastercard and Visa are adequate to meet the EC competition concerns and makes the commitments legally binding on both Mastercard and Visa.
The interchange fees applicable to domestic transactions within EEA Members States (i.e. card issued in a Member State and used at a merchant in that same Member State) as well as Intra-EEA transactions (i.e. card issued in a Member State and used at a merchant in another Member State) are also subject to caps pursuant to the 2015 EU Interchange Fee Regulation ((EU) 2015/751).
Australia's competition regulator signs cooperation agreement with FBI
In April 2019, Australia's competition regulator, the Australian Competition and Consumer Commission ("ACCC"), entered into a Memorandum of Cooperation ("MoC") with the United States Federal Bureau of Investigation ("FBI") in order to enhance its efforts in detecting, investigating and prosecuting anticompetitive conduct, including, in particular, cartel conduct at a local level. The MoC will complement an existing intergovernmental agreement between Australia and the USA, under which the ACCC and a number of competition law enforcement bodies in the USA (such as the FBI, Department of Justice and Fair Trade Commission) cooperate and collaborate.
Although the terms of the MoC have not been publicly released, it is understood that the MoC will pave the way for an increase in the level of expertise and staff being exchanged between the two agencies. Rod Sims, Chairman of the ACCC, has commented that the ACCC is particularly interested in learning more about the investigate tools and techniques being adopted by the FBI in detecting and investigating anticompetitive conduct. This comes in the context of the ACCC looking to increase the number and scale of its cartel investigations in 2019.
The entry into the MoC by the ACCC with the FBI is a further sign of the ACCC's ongoing commitment, and deepening resolve, to becoming more proactive in the detection and investigation of anticompetitive conduct in Australia.
Belgian legislator adopts new Competition Act
On 25 April 2019, the Belgian Federal Parliament adopted an Act reforming Belgian competition law (please note that the version of the Act adopted by the Parliament is not public yet and our analysis below is based on the fact that no amendments have been adopted to the version which was approved by the Parliamentary Commission - see here for the Parliamentary file and here for the text adopted by the Parliamentary Commission). Although the new Act completely replaces the existing Book IV of the Belgian Code on Economic Law, it does not fundamentally alter existing procedures or the structure of the Belgian Competition Authority ("BCA") and it does not change the substantive rules of Belgian competition law. The Act therefore mainly concerns technical legislative improvements, such as streamlining procedures, formalising existing administrative practices and updating terminology.
Certain aspects of the Act however merit highlighting:
•The new Act clarifies the provisions on personal liability of individuals. Under the current rules, individuals can already be sanctioned with fines up to EUR 10,000 for negotiating or concluding certain hardcore infringements with competitors of their undertaking. The new Act clarifies that individuals may be held liable regardless of whether they act within or outwith the powers conferred onto them by the undertaking. At the same time it is also specified that individuals can only be held liable if their actions have led the undertaking to infringe competition law. •The Act also increases the maximum fine which can be imposed on undertakings for infringements of competition law to 10% of the undertaking's worldwide turnover. Under the current rules, the maximum fine was limited to 10% of the "turnover on the Belgian market and from export". This amendment brings the Belgian rules in line with practice in neighbouring countries and in line with the minimum level which will be required across the EU under the ECN+ Directive (2019/1). •An undertaking can, as is the case at EU level, only obtain immunity from fines by admitting guilt to the infringement and providing the BCA with additional information or proof of the restrictive practice. Previously, immunity could be obtained by simply admitting guilt to an infringement, without providing additional information or proof. Immunity from prosecution is still available to individuals following a simple admission of guilt.
The new Act will enter into force ten days after its publication in the Belgian Official Gazette with immediate effect on pending procedures. The new rules on personal liability of individuals and the new maximum fine however only apply to infringements after the entry into force.
With the exception of the increased maximum fine level, the changes in the new Act are mainly aimed at improving consistency and legibility. It is however doubtful that the new text will remain unchanged for very long, as further amendments may be needed to bring Belgian competition law fully in line with the ECN+ Directive, which must be implemented by 4 February 2021. It should also be noted that the new Act does not change the recently adopted provisions on abuse of economic dependence (reported in our April edition – see here), which will be incorporated into the new Act after the provision's entry into force.
Cartel instead of the competition – consulting companies have illegally affected public procurement
On the 26 April 2019, the Office for the Protection of Competition ("Office") adopted its first-instance decision regarding four competitors operating on the grant consultancy market. In its decision, the Office imposed fines amounting to CZK 1,883,000 (approx. EUR 73,000) on the four competitors for bid rigging in public procurement. The decision can be appealed.
In 2010, companies RPSC ideas, s.r.o., RENARDS, s. r. o., EUNICE CONSULTING, a. s., and Erste Grantika Advisory, a. s., co ordinated participation and offers in the small-scale public tender "Transmission of data and information in the territorial administration of the Statutory City of Přerov", submitted by the Statutory City of Přerov. The subject of the public tender was consultancy services in aspects of preparation and realization of the project, in particular preparation of the feasibility study and preparation of the application for financial aid and subsequent management during the realization period.
The aim of the anticompetitive behaviour was to allow the company RPSC ideas, s.r.o. submitting an offer with the most favourable conditions. Meanwhile, the company EUNICE CONSULTING a.s. should have acted as a sub-contractor of the winner of the tender without submitting its own offer. Companies RENARDS, s.r.o., and Erste Grantika Advisory, a.s. should have submitted less favourable offers.
The parties to the proceedings acted in concert, thereby affecting the outcome of the public procurement and distorting competition on the grant consultancy market in the Czech Republic. Thus, they violated the Antimonopoly rules in the Czech Republic.
Danish companies receive injunctions to remove illegal payment-card fees
On 5 April 2019, the Danish Competition and Consumer Authority ("Authority") announced that 45 retail and online stores (including pharmacies, shops, cafés, restaurants and online stores) have received injunctions from the Authority to remove all illegal payment-card fees they were charging consumers.
As a result of the new Danish Payment Services Act, it became illegal for companies to charge payment-card fees on consumers starting 1 January 2018. After the new Payment Services Act entered into force, the Authority has received a total of 221 reports in 2018 on illegal payment-card fees.
The new rules entail that companies are not allowed to charge fees on card-payments regardless of whether the transaction takes place online or in-store if the card is issued in the EU. Before 2018, the legality of payment-card fees depended on which types of credit cards were used and if transaction took place online or in-store. The reasoning behind the rules is to make it easier for consumers to navigate and is a result of the European regulation contained in the Payment Services Directive (PSD2).
The prohibition applies to the most common payment-cards. However, fees are still permitted on some types of cards; corporate cards as well as American Express and Diners Club as these providers negotiate individual agreements with the shops and the consumers.
The full decision can be read here (in Danish only).
FCCA investigates Finnish taxi dispatch centres
The Finnish Competition and Consumer Authority ("FCCA") suspects several taxi dispatch centres of illegal restrictions on competition. The Finnish taxi market was deregulated and opened to competition on 1 July 2018. Before the deregulation the Finnish taxi market was divided between local dispatch centres and the consumer prices were regulated. Since the deregulation, the FCCA has received hundreds of complaints from taxi entrepreneurs regarding the activities carried out by dispatch centres and for example refusal to accept new drivers. The FCCA conducted a market survey in autumn 2018 and based on the survey findings, the FCCA has reason to suspect that several dispatch centres may be acting in breach of the Finnish Competition Act
For more information, please see the FCCA's press release here.
French Government streamlines merger notification process
On 18 April 2019, the French government adopted a decree ("Decree") introducing several measures aimed at modernizing and simplifying the notification of mergers to the French Competition Authority ("FCA").
The Decree, which came into force on 21 April 2019, has been preceded by a public consultation initiated by the FCA at the end of 2017. One of the most discussed proposals was the introduction of a notification threshold based on the value of the transaction, to catch acquisitions of companies whose market value is not reflected in their turnover, in particular in the digital economy. This proposal was however finally abandoned in June 2018.
The measures aimed at streamlining the notification process and alleviating the administrative burden for the notifying party are the following: •the threshold above which a market is considered to be affected for the analysis of the vertical effects of the merger is raised from 25% to 30%; •the notification file must now be submitted in one single hard copy (instead of 4 copies previously); •the number of financial information that the companies involved must provide is significantly reduced from 93 financial data down to 12 (mainly relating to turnovers).
The FCA also indicated that an online notification process for mergers eligible to the simplified procedure is currently in the test phase and should be available before mid-2019.
For more information: please refer to the FCA press release of 25 April 2019 available here (in English), the French decree n°2019-339 of 18 April 2019 available here (in French) or the FCA press release of 7 June 2018 available here (in English).
Consumer protection - German Federal Cartel Office demands new competences to fight infringement of consumer rights
On 11 March 2019 the German Federal Cartel Office ("FCO") published its final report on its sector inquiry into comparison websites which the FCO had initiated in October 2017 (the relating press release can be found in English and German).
The FCO’s competence to carry out consumer protection related investigations as the aforementioned as well as the competence to give opinions in consumer protection related court proceedings was legally implemented into the German Act against Restraints of Competition ("ARC") in June 2017. However, the FCO was not provided with administrative competences in order to terminate violations of consumer rights. Apart from the inquiry into comparison websites the FCO has also started a second consumer protection related inquiry into smart TVs with regard to the commercial use of collected consumer data. This inquiry is still ongoing.
During the sector inquiry on comparison websites the FCO detected several consumer protection issues which concern the non-transparent and misleading ranking of the listed providers on certain comparison websites (i.e. by an unclear exclusion of certain key providers or rankings influenced by commission payments) and the indication of misleading exclusive offers and benefits. Furthermore, the FCO also objects cooperation between comparison websites on database and calculator tools which, in the FCO’s view, could mislead consumers in the interpretation of identical results on allegedly independent comparison websites.
In view of the aforementioned findings the FCO now calls for farther-reaching own competences to enforce consumer protection law more effectively. In this context the FCO points out that in particular with regard to the market power of digital platforms, networks and information asymmetries resulting from digital intermediary services (i.e. comparison websites) an effective toolkit is needed for the administrative enforcement of consumer protection law.
Andreas Mundt, president of the FCO, stated in a recently published article that the traditional enforcement of consumer protection by civil law, i.e. through civil claims either by individual consumers or by associations or other private institutions, does not suffice to ensure an adequate consumer protection enforcement. In this respect, Andreas Mundt pointed out the existing asymmetries with regard to market power, information and legal advice between (often) worldwide active internet companies and the individual consumers. He also stressed that individual consumers, in general, are not willing to become aware of all applied general terms and privacy policies in detail and, in particular, are also not willing to oppose unjustified small payment requests nor to claim minor losses. Insofar, from a consumer’s perspective the private expenditure of time would significantly outweigh the expectable refund or damage claims. On the other hand, according to Andreas Mundt, the bigger an internet company is or the more clients it has, the more profit it can generate even out of smaller overpayments.
Thus, Andreas Mundt supports the idea to apply the administrative enforcement tools stipulated in the ARC also on violations of consumer protection law, i.e. information and document requests, reimbursement orders, disgorgement of benefits, interim measures and orders of immediate enforcement. In this respect he also points out the legal situation in several countries in and outside the EU (e.g. USA, UK, Australia, Ireland, Italy, Netherlands, Hungary, Finland and Denmark) in which competition and consumer law are both enforced by one single authority.
An expert opinion commissioned by the Federal Ministry of Economics recognized the FCO as basically appropriate authority to enforce consumer protection law by supplementary administrative competences.
Hungarian Competition Authority cracks down on bid rigging solar panel installing companies
The Hungarian Competition Authority ("GVH") unveiled a bid rigging cartel and imposed the maximum fines statutorily possible on the five solar panel installing companies involved.
In the frame of the EU funded Environment and Energy Operative Program ("KEOP") published by the Ministry of National Development, undertakings and municipalities could apply for non-refundable subsidies primarily for the installation of solar panels. Applicants were required to obtain at least three fee quotes for the installations in order to receive the subsidies. The GVH initiated its procedure after having received a complaint from the government body supervising the KEOP in 2015 reporting irregularities in connection with bids in case of certain KEOP projects.
The GVH conducted dawn raids and based on the electronic evidence discovered established that Alter Energetikai Bt., Megújuló Energiapark Kft., Új Irány Energetika Kft., LKM.HU Service Kft. and Havrilla-Ép Kft. shared 26 of the KEOP projects among themselves between 2011 and 2013. The bids in all 26 projects were provided by a selected three of these five companies, and were apparently all prepared by Alter Energetikai Bt. and Megújuló Energiapark Kft. both belonging to the same group of companies in a way that their own bids would win.
The GVH applied the maximum amount of fine of 10% of the net turnover achieved in the last business year of the undertakings concerned that amounted to, in aggregate, HUF 81 million (EUR 253,000). Havrilla-Ép Kft. agreed to a settlement procedure and therefore its fine was reduced by 30%.
Italian Competition Authority launched an investigation against Amazon on potential abuse of a dominant position in online marketplaces and logistic services
On April 10 2019, the Italian Competition Authority ("AGCM") launched an investigation against five companies of the Amazon Group, namely Amazon Services Europe S.à r.l., Amazon Europe Core S.à r.l., Amazon EU S.à r.l., Amazon Italy Services S.r.l. and Amazon Italy Logistics S.r.l., for an alleged abuse of a dominant position in breach of Art. 102 TFEU.
Amazonallegedly have discriminated on their e-commerce platform in favour of third-party merchants using Amazon's logistics services. In particular, they believe that Amazonhave granted improved visibility of the seller’s offerings, higher search rankings and better access to consumers on Amazon.com only to third-party sellers that subscribe to Amazon Logistics or Fulfillment by Amazon ("FBA"), putting other third-party merchants at a disadvantage.
Such conducts seems to fall outside the scope of the "competition on the merits" as the benefits are not necessarily related to the efficiency and quality of the service provided by the seller and are only based on its subscription to Amazon’s FBA ("self-preferencing" conducts).
In such a way, Amazon would unduly exploit its dominant position in the market for e-commerce platforms intermediary services in order to significantly restrict competition in the e-commerce logistics market, as well as - potentially - in the e-commerce platform market, to the detriment of final consumers.
Investigation shall be concluded by April 15 2020.
For more information please see the press release and the Decisions of the AGCM (in Italian).
Spanish Competition Authority imposes over €57 million in fines to major tobacco companies for anticompetitive conduct
On 10 April 2019, the Spanish Competition Authority ("CNMC") fined three of the world's largest tobacco companies - Philip Morris, Altadis and JT International – and their common distributor, Logista – with 57.71 million EUR for participating in an exchange of commercially sensitive information in Spain from 2008 to 2017.
In 2015, the CNMC came across some news on price movements in the Spanish tobacco market that caught its attention. In 2016, a competition authority from another Member State informed the CNMC that it had carried out dawn raids at several tobacco companies' premises and that some documents gathered referred to the Spanish market. It also provided some statements made in 2011 by a former employee of Philip Morris regarding the alleged existence of a global cartel. The CNMC opened formal proceedings in June 2017.
After its investigation, the CNMC concluded that the distributor Logista would have shared information on tobacco manufacturers' daily sales with its clients Philip Morris Spain, Altadis and JT International Iberia. In particular, these data were disaggregated by the brands, products and regions and far wider from the information published monthly by the Commissioner for the tobacco market.
Interestingly, the CNMC estates that the conduct cannot be qualified as a cartel since it did not have the object of restricting competition. However, it did have the effect of jeopardizing competition in the market and therefore can be viewed as a restrictive agreement forbidden under Articles 1 of Spanish Competition Law 15/2007 and 101 of the TFUE.
British American Tobacco was also involved in these proceedings. However, the decision indicates that this company would have stopped exchanging information in 2012, so the conduct was barred by the statute of limitation.
Finally, the decision imposes fines to the four companies involved (around 21 million EUR for Logista, 15 to Philip Morris, 11 to Altadis and 10 to JT International Iberia).
The CNMC's decision is not final. Logista has publicly announced that it will file an appeal before the National High Court on the grounds that the CNMC has not proven that the sales information has produced restrictive effects of competition between tobacco manufacturers (Logista holds that the information was aggregated and public).
For more information, please find the CNMC's final decision here (in Spanish).
Private equity investor held liable for cartel infringement by portfolio company
On 19 March 2019 the highest administrative court in the Netherlands (het College van Beroep voor het bedrijfsleven, "CBb") ruled that private equity investors could be held liable for cartel infringements committed by their portfolio companies. In this case the Dutch Competition Authority ("ACM") fined Bencis, one of the private equity investors in a flour producer calledMeneba, which was part of the so-called flour cartel. According to the ACM, and now confirmed by the CBb, Bencis had decisive influence over Meneba and exercised it. This followed from the influence Bencis had on business related discussions in the supervisory board of Meneba, its approval powers and the holding of a priority share with specific powers attached to it in the company. Therefore the court concluded that Bencis did not operate purely as a (passive) financial investor. Please find the judgment here (in Dutch only).
On the same day the CBb gave an interlocutory judgment concerning the flour cartel. This concerned the German flour producer Gebr. Engelke. In this case the ACM stated that Gebr. Engelke was incorporated as a German Kommanditgesellschaft (similar to a limited partnership) on which basis the ACM also held the general partners liable for the cartel infringement committed by Gebr. Engelke. However, the CBb ruled that the ACM could not establish decisive influence by the general partners (solely) on the basis of the civil liability of the general partners as the parties correctly argued that decisive influence was exercised differently under German law and the applicable Kommanditgesellschaft agreement. Consequently, the CBb concluded ACM did not correctly apply the principle of parental liability as established by EU law. The CBb ordered ACM to repair this error within three months. Please find this judgment here (in Dutch only).