IN THE NEWS: AT A GLANCE SINGAPORE Competition Commission of Singapore clears Visa’s Multilateral Interchange Fee system On 3 September 2013, the Competition Commission of Singapore cleared the Notification for Decision received from Visa Worldwide regarding its Multilateral Interchange Fee system. The Multilateral Interchange Fee system is a common credit card payment system involving fees paid from the merchant’s bank to the cardholder’s bank in respect of any given transaction. Drew & Napier’s Legal Update on this article can be found here. Competition Commission of Singapore clears Jetstar Pan-Asia Strategy On 5 September 2013, the Competition Commission of Singapore issued a clearance decision on the notified proposed conduct under the Jetstar Pan-Asia Strategy between Qantas Airways Limited and Jetstar Airways Pty Limited. The Jetstar Pan-Asia Strategy proposes to establish joint ventures by Qantas Airways/Jetstar Airways together with local airline partners, to operate low-cost carriers under the Jetstar brand and business model in a number of Asian jurisdictions. Drew & Napier’s Legal Update on this article can be found here. Competition Commission of Singapore issues proposed infringement decision against ball bearing manufacturers On 16 December 2013, the Competition Commission of Singapore (“CCS”) issued a proposed infringement decision against four Japanese manufacturers of ball bearings and their Singapore subsidiaries for allegedly engaging in anti-competitive agreements and unlawful exchange of information in respect of the price of ball and roller bearings sold to customers in Singapore. The media release of CCS’s full decision is available here. AROUND THE WORLD Anti-Competitive Agreements Malaysia Competition Commission issues roposed decision against ice manufacturers On 20 February 2014, the Malaysia Competition Commission issued a proposed decision against 26 ice manufacturers for infringing section 4(2)(a) of the Competition Act 2010 by entering into an agreement that has as its object to fix, directly or indirectly, the selling price of edible tube ice and the price of block ice in Kuala Lumpur, Selangor and Putrajaya. For more details, please click here. Bearings manufacturer fined in Canada for bidrigging Japanese bearings manufacturer NSK Ltd was fined CA$4.5m (S$5.1m) under Canada’s Competition Act for its participation in a bid-rigging arrangement with competitor, JTEKT Corporation, in response to requests for quotations to supply automotive wheel hub unit bearings to car manufacturer Toyota Manufacturing Canada Inc. For more details, please click here. Australian Competition and Consumer Commission files civil proceedings against alleged laundry detergent cartel In December 2013, the Australian Competition and Consumer Commission issued a press release stating that it had filed civil proceedings in the Sydney Federal Court against Colgate-Palmolive Pty Ltd and PZ Cussons Australia Pty Ltd for alleged cartel activity in the laundry detergent market. For more details, please click here. Banks fined by European Commission for participating in interest rate derivatives cartel On 4 December 2013, the European Commission announced the imposition of €1.71bn (S$2.97bn) in fines on eight financial institutions for their participation in cartels relating to interest rate derivatives denominated in the euro currency as well as denominated in the Japanese yen. For more details, please click here.
Brazil cement cartel may face fines and asset sales In January 2014, it was reported that Brazil's antitrust authority is considering a combined financial penalty of 3.1bn reais (S$1.64bn) (along with structural remedies to divest assets) on six cement companies for colluding to fix prices, establish production quotas, allocate markets and customers, co-ordinate the control of the sources of raw material and implement asset deals to harm companies that did not participate in the cartel. For more details, please click here. Abuse of Dominance Pfizer’s abuse fine reinstated by Italy’s Council of State Italy's Council of State has reportedly reversed the ruling of a regional Administrative Tribunal and affirmed the decision of the Italian Competition Authority to fine pharmaceutical group Pfizer for abusing its dominant position in a complex exclusionary strategy to slow the entry of generic medicine for treat glaucoma. For more details, please click here. Heineken received Statement of Objections for Abuse from Greek Competition Authority In December 2013, the Hellenic Competition Commission issued a statement of objections against Athenian Brewery SA, a subsidiary of Heineken, for allegedly abusing its dominant position in the Greek beer market to exclude its competitors by allegedly entering into exclusivity agreements with retailers, providing target rebates, as well as offering various types of significant payments to distributors conditional upon exclusivity or the agreement to discontinue the distribution of rival beers. For more details, please click here. Mergers Microsoft/Nokia deal cleared in US and EU The US Department of Justice and the European Commission granted clearance to Microsoft’s bid to buy the devices and services business of Nokia on 29 November 2013 and 4 December 2013 respectively without imposing any conditions on the deal. For more details, please click here. SINGAPORE COMPETITION LAW WATCH Table 1: Singapore Competition Law Watch Scoreboard (Accurate as at 28 Feb 2014) ARTICLES & COMMENTARIES: UPDATES FROM AROUND THE WORLD REGULATORY UPDATES The Malaysian Competition Commission (“MyCC”) conducted a public consultation, which closed on 28 February 2014, on its draft Guidelines on Leniency Regime as well as Guidelines on Financial Penalties. Under the proposed Leniency Regime, MyCC may grant a reduction of up to 100% of any penalty imposed to qualifying infringing enterprises that admit involvement in a cartel, and provide information or other forms of co-operation to MyCC about the cartel in which MyCC has no knowledge. The proposed draft Guidelines on Financial Penalties sets out the method by which MyCC will determine the amount of a financial penalty and the factors it would consider in determining the penalty. In determining the amount of any financial penalty in a specific case, the stated objectives of MyCC include: (a) determining a penalty to reflect the seriousness of the infringement; and (b) determining a penalty to deter anti-competitive practices. The documents for consultation are available for viewing and download from MyCC’s website here. Co-operation between the Canadian Competition Bureau and Chinese competition authorities The Canadian Competition Bureau met with Chinese competition officials from the Antimonopoly Bureau of the Ministry of Commerce, the Anti-monopoly and Anti-unfair Competition Enforcement Bureau of the State Administration for Industry and Commerce, and the Price Supervision and Anti-monopoly Bureau of the National Development and Reform Commission in Beijing in January 2014 to discuss merger review, cartel conduct, abuse of dominance and consumer protection, and recent developments in their respective jurisdictions. ANTI-COMPETITIVE AGREEMENTS Malaysia Competition Commission issues proposed decision against ice manufacturers On 20 February 2014, the Malaysia Competition Commission (“MyCC”) issued a proposed decision against 26 ice manufacturers for infringing section 4(2)(a) of the Competition Act 2010 by entering into an agreement that has as its object to fix, directly or indirectly, the selling price of edible tube ice and the price of block ice in Kuala Lumpur, Selangor and Putrajaya. This latest proposed decision follows earlier proposed decisions by MyCC against the Cameron Highlands Floriculturist Association for engaging in an anti-competitive agreement to raise the prices of flowers by 10%, Megasteel Steel Sdn Bhd for abusing its dominant position in the Hot Rolled Coil market and engaging in a margin squeeze of its competitors in the downstream market, and Malaysian Airline System Berhad and AirAsia Berhad for entering into an agreement to share markets in the air transport services sector. The proposed decision in respect of the alleged ice cartel follows interim measures issued to the 26 ice manufacturers by MyCC on 20 January 2014. MyCC’s investigation into the alleged ice cartel was triggered by the ice manufacturers' announcement of their plan on 24 December 2013 to increase the price of edible tube ice by RM0.50 (S$0.19) per bag and the price of block ice by RM2.50 (S$0.96) per big block starting 1 January 2014. The total amount of proposed financial penalties to be imposed on all the enterprises involved is RM283,600 (S$108,810), with each enterprise facing a fine ranging from RM1,200 (S$460) to RM106,000 (S$40,670). In determining the quantum of the financial penalty, MyCC took into account several factors including the seriousness of the infringement, the duration of the infringement, and the level of cooperation during the investigation process. The maximum amount of financial penalties MyCC can impose must not exceed 10% of the worldwide turnover of the enterprise during the period the infringement occurred. The parties have 30 days from the date of the proposed decision to submit written representations to MyCC or indicate whether they wish to make oral representations before MyCC. In Singapore Agreements between competitors to fix prices would be caught under section 34 of the Singapore Competition Act (Cap. 50B) which prohibits agreements between undertakings which have as their object or effect the prevention, restriction or distortion of competition within Singapore. However, the Competition Commission of Singapore would typically only publish the level of financial penalties in its finalised infringement decisions. Bearings manufacturer fined in Canada for bid-rigging In January 2014, Japanese ball bearings manufacturer NSK Ltd (“NSK”) was fined CA$4.5m (S$5.1m) by the Quebec Superior Court of Justice for its participation in a bid-rigging arrangement with competitor, JTEKT Corporation (“JTEKT”), under Canada’s Competition Act.
According to the Canadian Competition Bureau’s (“CCB”) press release, NSK and JTEKT “secretly conspired… to submit bids or tenders in response to requests for quotations to supply” automotive wheel hub unit bearings to car manufacturer Toyota Manufacturing Canada Inc. This follows the CCB’s investigation into the sales of automotive bearings in Canada after it was notified by JTEKT of such misconduct under the CCB’s immunity program. The fine was administered following NSK’s plea agreement with the Competition Bureau and reportedly took into account NSK’s cooperation with the investigation. There are several on-going international car parts cartel investigations and cases, including investigations into the ball bearings industry, spanning across jurisdictions including Australia, Japan, Europe, and the US, in which conspiracies involving various car parts have been uncovered. Some of the alleged cartelists have co-operated or are co-operating with the relevant authorities by admitting to the misconduct and disclosing information on the operations of the cartel in question, in exchange for leniency in the form of reduced penalties. In Singapore, the Competition Commission of Singapore (“CCS”) issued a proposed infringement decision (“PID”) against NSK and its Singapore subsidiary, NSK Singapore (Pte.) Ltd.; JTEKT and its Singapore subsidiary, Koyo Singapore Bearing (Pte) Ltd; NTN Corporation and its Singapore subsidiary, NTN Bearing-Singapore (Pte) Ltd; and Nachi-Fujikoshi Corp and its Singapore subsidiary, Nachi Singapore Private Limited, for engaging in anti-competitive agreements and unlawful exchange of information in respect of the price of ball and roller bearings sold in Singapore, contrary to Section 34 of the Competition Act. This follows CCS’s investigations in response to an application from one of the parties under its leniency programme. In Singapore Under CCS’s leniency programme, immunity or a reduction in financial penalties is available to cartel participants in exchange for full disclosure of the cartel and cooperation during its investigations, depending on the stage at which the participant comes forward and the fulfilment of certain stipulated conditions. Immunity may only be granted if the leniency applicant is first to provide CCS with evidence of cartel activity, prior to the commencement of an investigation. Where CCS investigations have already commenced, a reduction of up to 100% of the financial penalty may be granted to the first applicant who provides evidence. Entities or person(s) who are not the first to approach CCS for leniency may nevertheless be granted a reduction of up to 50% of the financial penalty if they come forward before CCS issues a notice of its proposed infringement decision. Australian Competition and Consumer Commission files civil proceedings against alleged laundry detergent cartel On 12 December 2013, the Australian Competition and Consumer Commission (“ACCC”) issued a press release stating that it had filed civil proceedings in the Sydney registry of the Federal Court of Australia against Colgate-Palmolive Pty Ltd (“Colgate”) and PZ Cussons Australia Pty Ltd (“Cussons”) for alleged cartel activity in the laundry detergent market. Unilever Australia Limited (“Unilever”) has been named as an immunity applicant in the investigation for having blown the whistle on the alleged cartel. The ACCC alleges that the companies entered into arrangements to cease supplying standard concentrate laundry detergents in the first quarter of 2009 and supply only ultra concentrates from that time. The parties simultaneously transitioned their laundry detergents to ultra concentrates which met certain requirements, and sell ultra concentrates for the same price per wash as the equivalent standard concentrated products while not passing on the cost savings to consumers. The ACCC alleges that these arrangements applied across the range of laundry products sold by Colgate, Cussons and Unilever, including popular brands like Cold Power, Radiant and Omo, and had a significant effect on competition in an industry valued at almost A$500m (S$568m) per annum. According to the ACCC, Woolworths, one of Australia’s largest supermarkets “played a key role in organising the simultaneous transition to ultra concentrates and the introduction of an anticompetitive pricing strategy for the transition”.
The ACCC is seeking pecuniary penalties, declarations, injunctions, compliance programs and costs against Colgate; Cussons; Woolworths and a Colgate sales director who had allegedly shared sensitive market information with senior Unilever executives, including information on when the price of laundry detergents would be increased by the companies. Banks fined by European Commission for participating in interest rate derivatives cartel On 4 December 2013, the European Commission (“EC”) announced the imposition of €1.71bn (S$2.97bn) in fines on eight financial institutions for their participation in cartels in the financial derivatives industry relating to interest rate derivatives denominated in the euro currency (ie Euro interest rate derivatives or “EIRD”) and interest rate derivatives denominated in the Japanese yen (ie Yen interest rate derivatives or “YIRD”). Interest rate derivatives are financial products used by banks or companies for managing the risk of interest rate fluctuations. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate (“LIBOR”), which is used for various currencies including the Japanese yen, or the Euro Interbank Offered Rate (“EURIBOR”), for the Euro. The benchmarks comprise an average of the quotes submitted daily by a number of banks who are members of a panel (“Panel Banks”) and reflect the cost of interbank lending in a given currency. Investment banks compete with each other in the trading of the derivatives. According to the EC, four of the institutions participated in the EIRD cartel and six of them participated in one or more bilateral cartels relating to YIRD. The EIRD cartel operated between September 2005 and May 2008 and was aimed at distorting the normal course of pricing components for the derivatives. Traders of the banks discussed their bank's submissions for the calculation of the EURIBOR as well as their trading and pricing strategies. The EC found that the YIRD cartel, which operated from 2007 to 2010, comprised bilateral discussions between traders of the participating banks on certain Yen LIBOR submissions. The traders involved also exchanged, on occasions, commercially sensitive information relating either to trading positions or to future Yen LIBOR submissions (and in one of the infringements relating to certain future submissions for the Euroyen Tokyo interbank offered rate). The fines imposed for the EIRD cartel, according to the European Commission’s press release, are shown in Table 2. The fines imposed for the YIRD cartels are shown in Table 3. The institutions had received a further fine reduction of 10% for agreeing to settle the case with the EC. Barclays, which was fined US$450m (S$570m) in settlement fines by the US Department of Justice (“DoJ”), UK’s Financial Services Authority (“FSA”) and US Commodity Futures Trading Commission and UBS, which had agreed to pay US$1.5bn (S$1.9bn) to the US DoJ, UK’s FSA and Swiss Financial Market Supervisory Authority, for attempting to manipulate the Libor interbank lending rate, received full immunity from the EC for having blown the whistle on the EIRD and YIRD cartels respectively. Participants Duration of participation Reduction under the Leniency Notice (%) Fine (€) Barclays 32 months 100% 0 Deutsche Bank 32 months 30% 465,861,000 Société Générale 26 months 5% 445,884,000 RBS 8 months 50% 131,004,000 Table 2: Table of fine imposed for EIRD cartel Participant Duration of participation per infringement(s) Reduction under the Leniency Notice (%) Fine (€) UBS (5 infringements) 1 month, 8 months, 5 months, 10 months, 1 month 100% for all infringements 0 RBS (3 infringements) 8 months, 5 months, 3 months 25% for one infringement 260,056,000 Deutsche Bank (2 infringements) 10 months, 2 months 35%, 30% 259,499,000 JPMorgan (1 infringement) 1 month 79,897,000 Citigroup (3 infringements) 1 month, 2 months, 3 months 35%, 100%, 40% 70,020,000 Table 3: Table of fines imposed for YIRD cartels
Meanwhile, authorities across Europe, the US, and Asia have commenced separate investigations into allegations of collusion and rigging practices in the foreign exchange benchmark rate, Forex. In Singapore Following the global investigation into rate-rigging by the banks, the Monetary Authority of Singapore (“MAS”) launched its own investigations into the setting of key interest rate benchmarks in Singapore. MAS’s review covered the Singapore dollar interest rate benchmarks – the Singapore Interbank Offered Rates and Swap Offered Rates – and the Foreign Exchange (“FX”) spot benchmarks that are commonly used to settle Non-Deliverable Forward FX contracts, over the period from 2007 to 2011. 20 banks were found to have “deficiencies in the governance, risk management, internal controls, and surveillance systems for their involvement in benchmark submissions. MAS has censured these banks and, amongst other things, directed them to adopt measures to address their deficiencies and set aside additional statutory reserves with MAS at zero interest for a period of one year. Brazil cement cartel may face fines and asset sales In January 2014, it was reported that Brazil's antitrust authority, Administrative Council for Economic Defence (“CADE”), is considering a combined financial penalty of 3.1bn reais (S$1.64bn) (along with structural remedies to divest assets) on six companies, Holcim do Brasil SA,Votorantim Cimentos SA, Camargo Corrêa Cimentos SA, Cimpor Cimentos do Brasil LTDA, Itabira Agro Industrial SA and Companhia de Cimento Itambé, after an eight-year inquiry by CADE. The six companies reportedly have a 90% share in Brazil’s cement and concrete market and allegedly colluded, through meetings and email exchanges, to fix prices, establish production quotas, allocate markets and customers, coordinate the control of the sources of raw material and implement asset deals to harm companies that did not participate in the cartel. In Singapore Price-fixing and market-sharing agreements are, similarly, prohibited under Singapore’s competition laws and are viewed as especially egregious by the Competition Commission of Singapore given the adverse impact of such agreements on competition in the market. ABUSE OF DOMINANCE Pfizer’s abuse fine reinstated by Italy’s Council of State Italy's Council of State has reportedly reversed the ruling of a regional Administrative Tribunal and affirmed the decision of the Italian Competition Authority (“ICA”) to fine pharmaceutical group Pfizer for abusing its dominant position in a complex exclusionary strategy to slow the entry of generic medicine for treat glaucoma. The ICA had initially imposed a €10.7m (S$18.6m) fine on Pfizer, which allegedly has a 60% market share, for artificially prolonging the patent protection of its glaucoma drug, Xalatan, and threatening generic drug manufacturers with legal action and compensation claims should generic medicines be commericalised prior to the expiration date of the artificially prolonged patent. According to the ICA, Pfizer gained approximately €17m (S$29.5m) in monopolistic profits and caused Italy's National Health Service, which reimburses patients for glaucoma medicines, to lose an estimated €14m (S$24.3m) from the delayed entry of the generic drugs. In Singapore While there is no published case by the Competition Commission of Singapore (“CCS”) on settlement agreements, CCS conducted a joint seminar with the Intellectual Property Office of Singapore on pay-for-delay cases and competition law to highlight competition law issues in pay-fordelay cases, and discuss the possible implications for patent holders. Heineken received statement of objections for Abuse from Greek Competition Authority In December 2013, the Hellenic Competition Commission (“HCC”) issued a statement of objections against Athenian Brewery SA (“Athenian Brewery”), a subsidiary of Heineken, for allegedly abusing its dominant position in the Greek beer market to exclude its competitors from HORECA (Hotels/Restaurants/Cafes) chains and small retail outlets. According to the HCC's statement of objections, Athenian Brewery adopted and implemented a multi-faceted, long-standing and targeted policy to restrict the growth of their competitors at the retail level. This involved entering into exclusivity agreements with retailers, providing target rebates, as well as offering various types of significant payments to distributors conditional upon exclusivity or the agreement to discontinue the distribution of rival beers. The statement of objections also alleges that Athenian Brewery engaged in abusive conduct at the wholesale level “through a multitude of significant economic motives in exchange for exclusivity in addition to the threat of retaliatory measures in the event the wholesalers traded or introduced competitors’ products”. In Singapore The Competition Commission of Singapore (“CCS”) has so far only issued one infringement decision relating to an abuse of dominance. The decision relates to ticketing agent SISTIC.com Pte Ltd’s (“SISTIC”) exclusive agreements with the Esplanade Co. Ltd and the Singapore Sports Council. The decision was upheld on appeal, but SISTIC’s fine was reduced by 20%. In the appeal, the Competition Appeal Board adopted a test that was focused on whether there had been an “effect on the competitive process”. However, in a case involving exclusive agreements, it is foreseeable that an argument could always be made that the “process of competition is affected”, thereby shifting the onus onto the investigated party to justify that its conduct has a net positive effect on welfare. MERGERS & ACQUISITIONS Microsoft/Nokia deal cleared in US and EU The US Department of Justice (“DoJ”) and the European Commission (“EC”) granted clearance to Microsoft’s bid to buy the devices and services business of Nokia on 29 November 2013 and 4 December 2013, respectively, without imposing any conditions on the deal. The devices and services business of Nokia includes the mobile phones and smart devices business units of Nokia, as well as a design team, operations including the Nokia Devices & Services production facilities, related sales and marketing activities and support functions, as well as design rights that read on the devices produced by the devices and services business. The EC found that the overlap of the two companies’ activities in the field of smart mobile devices was minimal and there were several strong rivals, such as Samsung and Apple, which will continue to compete with the merged entity. The EC also investigated a number of the vertical relationships between the merged entity’s activities in the downstream market for smart mobile devices and Microsoft’s upstream activities in the mobile operating systems, mobile applications and enterprise mail server software and related communication protocols. According to the EC, Microsoft is unlikely to restrict the supply of its Windows operating system for smart mobile devices to third party manufacturers. This is because Microsoft’s share in the mobile operating system market is limited and Microsoft is likely to need to continue relying on third party device suppliers to broaden consumer adoption and attract mobile application developers. Further, the EC concluded that Microsoft is unlikely to restrict the supply of its mobile applications to competing providers of smart mobile devices after the acquisition as this would hamper Microsoft’s interest to attract more application developers and ultimately users to its operating systems for smart mobile devices. The EC also considered that Microsoft would not have the ability to restrict the interoperability of competing smart mobile devices with Microsoft’s enterprise mail server software because of the contractual terms of their current licenses to Microsoft patents covering the communication protocol that manages synchronisation of email, calendar and contacts between smart mobile devices and Microsoft’s enterprise mail server software. FEATURE ARTICLE OFT ACCEPTS COMMITMENTS FROM BOOKING.COM, EXPEDIA AND INTERCONTINENTAL On 31 January 2014, the UK Office of Fair Trading (“OFT”) issued a decision under Section 31A of the Competition Act 1998 (the “Act”) to accept binding commitments from two of the UK’s largest online travel agents (“OTAs”), Booking.com B.V. (“Booking.com”) and Expedia Inc (“Expedia”), together with InterContinental Hotels Group plc (“IHG”) which will allow OTAs and hotels to offer discounts on rates for hotel rooms. This is a culmination of OFT’s investigations and public consultations into the separate agreements made by Booking.com and Expedia with IHG, which restricted each OTA’s ability to offer discounts on the rooms that they distributed on behalf of the hotels. The probe was launched in response to a complaint it received in April 2010 from a smaller OTA, Skoosh. In its Statement of Objections, OFT alleged that the agreements were potentially anticompetitive by effectively imposing a form of resale price maintenance, limiting intra-brand competition in respect of room rates offered. It was also argued that the agreements potentially increased barriers to entry for new OTA’s, due to the extent of discounting involved. Against the wider industry context, the OFT also expressed concerns that the discounting restrictions could exacerbate what it believed to be a prevalent practice in vertical distribution arrangements in the sector. To alleviate these concerns, the three companies have adopted commitments under which they are obliged to allow all OTAs and hotels dealing with them to offer discounts off headline room-only rates so long as customers: • sign up to the membership scheme of an OTA or hotel to be able to view specific discounts, and • make one undiscounted booking with the OTA or hotel in question to be eligible for future discounts. Essentially, the commitments (which are binding for three years) allow for greater discounting freedom, which the OFT expects to result in greater price competition as between OTAs and between OTAs and hotels and also promote competition on quality range and service and other factors. In approving the commitments, the OFT also considered the efficiency arguments submitted by the parties justifying the requirement for customers to make one undiscounted booking before they are eligible for future discounts (as well as public comments in response to these submissions), in particular: (a) The headline rate for the hotel room acts as an important indicator of quality for consumers. Unrestricted discounting by OTAs may undermine this and damage the hotel’s brand or reputation, such that hotels may be reluctant to use OTAs which may in turn result in lower availability of rooms to consumers, lower inter-brand competition and higher prices and search costs. (b) Given that the relevant market is characterised by intense inter-brand competition, hotels often adopt ‘yield (revenue) management pricing’ to allow them to balance an uncertain and variable demand against a fixed and perishable inventory of rooms. Any form of discounting by OTAs has the potential to undermine the benefits of yield management to some extent, if it is difficult for hotels to predict and take into account when setting headline rates over time. (c) Unrestricted discounting by OTAs would cannibalise sales in the hotels’ direct online sales channels and their profitability, which may create a risk of hotels dealing with fewer OTAs, offering less inventory to the OTAs they use, or refusing to deal with OTAs altogether. (d) By enabling OTAs to engage in unrestricted discounting, there is a risk that no-frills websites could free-ride on the investment made by other OTAs, for example in the functionality of its website, range of travel offers, customer support, enhanced content quality or in advertising. This may undermine the incentive for OTAs to invest in valuable services for consumers. Although the OFT did not receive any evidence which either strongly confirmed or refuted the efficiency arguments, it indicated in the Commitments Decision that the arguments put forth are likely to have some merit in the present sector. Beyond this, it is noteworthy that the willingness of the OFT to create an outcome involving commitments, and the absence of any punitive measures may imply a shift from the European Commission’s almost per se prohibition of resale price maintenance. It this regard, it is possible that the OFT may be moving towards a more US-style ‘rule of reason’ approach in respect of resale price maintenance issues. To the extent that such an approach allows for greater sophistication in the analysis of discounting practices, this could be a welcome development.