Summary of Commission decision in retail food packaging cartels and subsequent appeals. On 22 October 2015, the European Commission (Commission) published a summary of its June 2015 decision fining eight manufacturers and two distributors of retail food packaging trays a total of approximately €116 million for participating in at least one of five separate cartels. Each cartel took place in a different geographical region within the EEA and related to polystyrene plastic trays and polypropylene plastic trays used for packaging food sold in shops or supermarkets. The Commission found that the manufacturers of the trays (Huhtamäki of Finland, Nespak and Vitembal of France, Silver Plastics of Germany, Coopbox, Magic Pack and Sirap-Gema of Italy and Linpac of the UK), and two distributors (Ovarpack of Portugal and Propack of the UK), fixed prices and allocated customers of the trays. Linpac was given full immunity under the Commission’s 2006 Leniency Guidelines, while the other companies received reductions on their fines for their co-operation and to reflect the considerable duration of the proceedings. The Commission also granted fine reductions to two companies based on their inability to pay. Subsequently, on 26 October 2015, details were published in the Official Journal of the European Union of separate appeals brought by Consorzio Cooperative di Produzione e Lavoro SC (of which Coopbox is a subsidiary) and Italmobiliare SpA (of which Sirap-Gema is a subsidiary) against the fines imposed by the Commission. The applicants claim that the Commission made errors in attributing joint and several parental liability and in the calculation of the fines, and that it also misused its powers on the grounds of failure to investigate adequately. The applicants also claim that the Commission infringed the principles of proportionality, equal treatment, and its duty to give reasons.
Summary of Commission decision on blocktrains cartel. On 23 October 2015, the Commission published in the Official Journal of the European Union a summary of its July 2015 decision to impose upon cargo train operators (ÖBB-Holding AG, Rail Cargo Austria AG, Rail Cargo Logistics - Austria GmbH, Express Interfracht Hellas A.E., Deutsche Bahn AG, Schenker AG, Schenker & Co AG, and Schenker A.E.), a total of approximately €49 million in fines for their participation in a cartel. The cartel operated to allocate and protect certain customers or transport volumes and to co-ordinate prices for the jointly operated rail cargo transport services in connection with the Balkantrain and Soptrainblocktrains. The decision was reached under the Commission’s settlement procedure. Kühne+Nagel received full immunity under the Commission’s 2006 Leniency Guidelines.
High Court strikes out damages action by Chinese claimants against British Airways arising from air freight cartel. On 27 October 2015, the High Court handed down a judgment in which it struck out the claims of almost 65,000 Chinese companies seeking damages from British Airways for losses allegedly linked to an air-cargo cartel. The claim form and particulars of claim were signed by a then partner in the law firm Hausfeld & Co LLP (Hausfeld), who signed under a statement of truth. None of the claimants had authorised Hausfeld to bring proceedings in its name at the time the claim form was issued; however, it was argued that 362 claimants had recently expressly ratified the commencement of the proceedings on their behalf. CitingAdams and others v Ford and others  EWCA Civ 544, in striking out the claim, the High Court held that the evidence did not establish that any of the claimants on whose behalf the action was commenced by Hausfeld wished for it to continue. The claimants also had not authorised the claim in the first instance or ratified Hausfeld’s actions in starting the claim on their behalf. The High Court also ruled it appropriate to strike out the claim as an abuse of process.
Phase I Mergers
- M.7677 – OBI / BAUMAX CERTAIN ASSETS (23 October 2015)
- M.7788 – ARDIAN / ELECTRICITE DE FRANCE / GEOSEL (23 October 2015)
- M.7757 – AXA / GENWORTH LPI (29 October 2015)
- M.7750 – DELPHI / HELLERMANNTYTO (29 October 2015)
Commission approves further amendments to restructuring plan of Ethias. On 23 October 2015, the Commission announced that proposed amendments to the restructuring plan of the Belgian insurance company, Ethias, are in line with EU State aid rules. Ethias has already successfully implemented a large part of a Commission-approved restructuring plan. In relation to the proposed amendments, the Commission has agreed to a proposed capital increase in Ethias through the issuance of additional subordinated debt. Ethias’ restructuring plan requires it to pay dividends to its public shareholders provided its capital position permits, as part of the measures aimed at reducing competition distortions created by the State aid granted to Ethias. The Commission considers that the amount of new subordinated debt to be issued will be limited and will, therefore, not unduly affect the remuneration level paid by Ethias to its public shareholders. In fact, the Commission notes that Ethias will, in the first instance, significantly strengthen its capital base by management measures (investment, reinsurance, cost cuttings) before drawing on subordinated debt.
Commission finds that Hungarian measures resulting in lower mining fees for MOL do not involve State aid. On 26 October 2015, the Commission announced that Hungarian measures reducing mining fees for the Hungarian gas and oil company, MOL Nyrt. (MOL), did not constitute State aid. The measures concern a 2005 agreement between the Hungarian government and MOL and a 2008 legislative amendment to the Hungarian Mining Act. The Commission had re-assessed the measures in light of the ECJ’s June 2015 decision, in which it annulled a previous Commission decision of 2010 that these measures conferred an unfair advantage on MOL, in breach of EU State aid rules.
General Court dismisses State aid appeal relating to property sale by Swedish municipality. On 28 October 2015, the General Court handed down its judgment in an appeal by the Swedish Municipality of Vanersborg against a Commission decision which found that the municipality’s sale of a food production facility to Hammar Nordic Plugg AB involved State aid. The Commission found that the sale at below market rates gave the purchaser an undue competitive advantage and ordered recovery of the aid. In its appeal, Hammar Nordic argued that the Commission made a series of incorrect assessments relating to the legal classification of the alleged State aid measures. The General Court dismissed the appeal as unfounded in its entirety, stating that the Commission may only revoke a decision where the decision was based on incorrect information provided during the procedure which was a determining factor for the decision. In this case, the General Court confirmed that the applicant had not provided any evidence that the Commission had relied on such incorrect information.
Commission publishes guidelines on avoiding the most frequent errors in public procurement of projects funded by the European Structural and Investment Funds. On 29 October 2015, the Commission published guidelines to help public officials avoid the most frequent errors in public procurement of projects funded by the European Structural and Investment Funds. The guidance is not legally binding but aims to provide general recommendations and to reflect best practice. The guidance takes a procurement officer through each stage of the procurement process (preparation and planning, publication, submission of tenders and selection of tenderers, evaluation of tenders, awarding the contract, and contract implementation), highlighting areas where mistakes are typically made and how to avoid them. It provides real-life examples, and explanations of specific topics, case studies and templates. However, the Commission notes it is essential that any public official involved in the procurement process complies with national legislation and with his or her organisation’s internal rules, as well as the EU rules.
General Court annuls Commission procurement decision and awards compensation to Vanbreda for procedural errors. On 29 October 2015, the General Court handed down its judgment on an appeal brought by Vanbreda Risk & Benefits (Vanbreda) relating to a decision of the Commission to award a procurement contract for insurance cover to another bidder, Marsh SA (Marsh). In its appeal, Vanbreda claimed that Marsh did not comply with the tender specifications. Vanbreda also brought an action that the Commission pay €1 million in damages for loss of an opportunity to win the contract, loss of references, and for non-material damage suffered. At the time of its appeal, Vanbreda also applied for interim measures relating to a suspension of the Commission’s decision to award the contract to Marsh (which the General Court granted on 4 December 2014), finding that Vanbreda had established a serious prima facie case. The General Court has now annulled the Commission’s decision awarding the contract to Marsh, finding that the Commission breached the principle of equality of treatment of tenderers by illegally awarding the contract to Marsh. The General Court noted that Vanbreda is entitled to compensation but was not able to quantify the amount and ordered the parties to reach an agreement on this within six months.
General Court dismisses appeal by Direct Way against European Parliament procurement decision. On 29 October 2015, the General Court dismissed an appeal by Direct Way and Direct Way Worldwide (together, Direct Way) against the European Parliament’s decision not to award it a procurement contract relating to the transport of members of European Parliament to Brussels. In May 2012, the European Parliament published a call for tenders relating to the transport of members of European Parliament to Brussels using the open procurement procedure. Two bids were submitted by Direct Way and TMS Limousine, but the European Parliament subsequently decided to abandon the tendering procedure on the grounds, in particular, that the proposed prices were too high compared to the value set out in the contract notice. In September 2012, the European Parliament invited the two bidders to submit bids for a similar contract, this time using the negotiated procurement procedure. This led to the contract being awarded to TMS Limousine. Subsequently, Direct Way appealed the decision to close the open procedure and open a new procedure and to award the contract to TMS Limousine. The General Court dismissed the appeal in its entirety on the basis that Direct Way’s appeal regarding closure of the open procedure was out of time and therefore inadmissible. As regards the award of the contract to TMS Limousine, the General Court was of the opinion that the European Parliament did not infringe the principle of equal treatment as the two procedures were independent.
CMA extends period for examining undertakings in lieu offered by The Original Bowling Company. On 26 October 2015, the CMA published a notice relating to an extension of the period for deciding whether to accept undertakings in lieu offered by The Original Bowling Company Ltd (TOBC) in relation to its anticipated acquisition of Bowlplex Ltd, in line with section 73A(4) of the Enterprise Act 2002 which allows the CMA to extend this period (by no more than 40 working days) if it considers that there are special reasons for doing so. The CMA stated in the notice that it was not possible to reach a decision on the acceptance of the undertaking by 27 October 2015, as previously required, because the undertaking involved an upfront buyer. TOBC has offered to divest a site (i.e. a bowling alley) in each of the six local areas where the CMA identified competition concerns, and has proposed Essenden Limited as a potential buyer of these sites. The extension ends on 22 December 2015.
CMA notes risks for facilitators of breaching competition law. On 29 October 2015, the CMA highlighted in an update that it is possible for parties to breach competition laws even when they are not active in the market where the anti-competitive arrangement is taking place. It used the example of the ECJ’s recent decision in the case of AC Treuhand, in which it was found that a facilitator consultancy firm participated in a cartel between producers of heat stabilisers. It also provided the example of its recent infringement decision in the property sales and lettings investigation in which it found that a newspaper publisher had, under pressure, become a party to an agreement between estate and lettings agents to prevent agents from advertising their fees or discounts in their local newspaper. The CMA notes that firms that are approached to facilitate or give effect to anti-competitive arrangements should assess whether they are complying with competition law.