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This is the ninety-ninth quarterly report on developments in national competition laws published by Wirtschaft und Wettbewerb – WuW. This report summarizes principal developments in the competition laws of Australia, Austria, Belgium, France, Germany, Israel, Italy, the Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, United Kingdom and the United States of America during the period from October 1, 2018 – December 31, 2018. 1
The High Court dismissed a special leave application by the ACCC to appeal the Full Federal Court’s decision dismissing the ACCC’s case that Pfizer had engaged in misuse of market power and exclusive dealing conduct in relation to the supply of its atorvastatin products to pharmacies. Further, the High Court dismissed a special leave application by Yazaki Corp. to appeal the Full Federal Court’s decision increasing the penalty against Yazaki from $9.5 million to $46 million for engaging in collusive conduct with a competitor when supplying wire harnesses to Toyota Motor Corporation in Australia. This is the highest penalty ever imposed on a company under the Competition and Consumer Act 2010.
Dr. Wolfgang Hellmann, Sydney
The Federal Competition Authority (“FCA”) published a guidance paper on “good business conduct”, which is strongly inspired by the EU’s initiative against unfair trade practices in the food supply chain. The guidance paper contains a list of B2B practices considered unfair by the authority and provides some practical examples. The FCA published a further guidance paper on the Austrian funeral market. The paper aims to open up the market by resolving the industry’s transparency problems.
The Austrian Cartel Court issued a commitment decision involving the distribution system of a medical products company. Initially, a public hospital operator had complained about difficulties in obtaining surgical instruments due to exclusive distribution rights granted to an Austrian distributor. The parties to the distribution agreement committed themselves to a more liberal interpretation of the exclusivity clause. The Austrian Cartel Court imposed a fine of €223,000 on Devolo Austria GmbH for competition law infringements in the connectivity equipment industry between 2012 and 2015. The court found vertical coordination between Devolo Austria and various dealers and resellers restricting competition by resale prices maintenance. For the same reason, a fine of €289,000 was imposed on Ingram Micro GmbH, a distributor of computer and technology products, in December 2018. Also in December, the Austrian Cartel Court imposed a fine of €70,000 on A1 Tankstellenbetriebs GmbH for coordinating fuel prices with individual petrol stations between 2015 and 2018. The Austrian Cartel Court imposed a fine of €212,000 on REWE International AG for incorrect or misleading information in the takeover process of Zielpunkt stores by REWE. Zielpunkt GmbH was a supermarket chain that became insolvent in 2015.
A dispute between Wiener Linien, Vienna’s main public transport provider, and Mediengruppe Österreich, a media house, was settled after ten years of legal proceedings. Wiener Linien initially prohibited Mediengruppe Österreich from installing newspaper boxes in underground stations due to contractual relations with a competing newspaper. The settlement includes a commitment to allocate newspaper boxes fairly to ensure equivalent withdrawal potential.
Hanno Wollmann, Paul Nimmerfall, Vienna
The College of the Belgian Competition Authority (“BCA”) dismissed a request for interim measures regarding professional showjumping competitions. A year earlier, the BCA had imposed interim measures in the same case, which the Brussels Court of Appeal then annulled in June 2018. It referred the case back to the College, which led to the present BCA decision. In this case, a Belgian showjumping rider and a stable owner had filed a complaint and a request for interim measures relating to a Memorandum of Understanding (“MoU”) between the Fédération Equestre Interna‐WUW 03/2019 S. 136tionale (“FEI”) and the organizers of the Global Champions Tour (“GCT”) and Global Champions League (“GCL”) showjumping competitions. According to the MoU, a fixed 30% percentage of invitations for the GCT competitions were awarded exclusively based on the official FEI ranking, while the other invitations were mainly reserved for paying GCL teams.
In a related case concerning showjumping competitions, the BCA’s Investigation and Prosecution Service issued a decision after a three and a half year-long investigation and closed the case against commitments.
Beatrijs Gielen, Brussels
The French Competition Authority (“FCA”) adopted its procedural notice on settlements, which applies to both anticompetitive agreements and abuse of dominance cases. Important features are that the settlement procedure (i) does not cap the amount of the possible reduction; (ii) does not require admission of liability and foresees that all files submitted during the settlement procedure will be destroyed from the investigation file; as well as (iii) does not require all parties to settle. With regard to the latter requirement, the FCA made it clear that it will not give priority of treatment to so-called “hybrid” cases.
The FCA imposed an overall fine of €189 million on household appliance manufacturers BSH, Candy Hoover, Electrolux, Indesit, Whirlpool, and Eberhardt Frères Fnac Darty, for agreements on price increases. It was the first time the FCA applied the concept of single and repeated infringement, which permits excluding periods during which the infringement was interrupted. Also for the first time, the FCA decided to apply the concept of “leniency plus”, allowing it to reward additional facts established thanks to the evidence provided by a leniency applicant.
Christina Renner, Petra Kupka, Brussels
The German Competition Authority (“FCO”) published an annual enforcement review for 2018, according to which it imposed cartel fines totaling approx. €376 million. With regard to mergers, the FCO examined around 1,300 notifications of which 13 were closely examined in a second-phase proceeding. The FCO and the German Federal Grid Agency published their joint annual monitoring report on developments in the German electricity and gas markets. The FCO presented its results of a sector inquiry into online comparison portals. The FCO hosted a meeting of the Working Group on Competition Law to discuss several proposals for a revision of market dominance abuse control in Germany.
The FCO cleared the acquisition of Norwegian TTS Group ASA’s marine cargo handling business by Finnish Cargotec Oyj (MacGregor), applying the de minimis clause for niche markets. The FCO cleared the merger between retailers Karstadt Warenhaus and Galeria Kaufhof. The FCO found that a general department store market does not exist. Instead, the FCO examined around 20 different product categories and took particular account of competitive pressure from online sales. The FCO cleared the acquisition of the waste management company Helene Müntefering-Gockeln GmbH & Co. KG by Remondis GmbH & Co. KG.
The FCO imposed a fine of approx. €1.43 million on a manufacturer of asphalt mixes for its participation in a cartel agreement to form a supplier consortium. The Higher Regional Court Düsseldorf imposed fines on a German sausage maker (€6.5 million) and one personally liable shareholder of the company (€350,000) for price-fixing between 1997 and 2009.
The German Federal Court of Justice ruled that damage claims following a quota-fixing and customer-assigning cartel cannot be based on prima facie evidence which assumes (i) that a cartel has caused damage and (ii) that business transactions with cartelists during the period of an ongoing conduct were affected by the cartel and the claimant thus suffered a damage.
Dr. Christian Zschocke, Dr. Michael Masling, Florian Hinderer, Frankfurt/M.
The Block Exemption for Restraints Ancillary to Mergers and the Block Exemption for Joint Ventures were amended to allow self-assessment. The revised rules provide merging parties and joint venture partners with a more flexible framework of self-assessment. Parties no longer need no obtain a specific exemption from the Director General for otherwise legitimate arrangements which previously fell outside the scope of the block exemption rules due to formal requirements and technicalities. Both amendments do not degrade from the applicability of the formal requirements under the previous versions of the block exemption rules. They will now serve as ‘safe harbors’ for merging parties and joint venture partners.
The Israel Competition Authority (“ICA”) concluded first ever criminal proceedings concerning withholding of information from the ICA. According to a plea bargain, Huliot Agricultural Cooperative Society Ltd. and its CEO will admit their role in withholding of documents and information from the ICA in a reply to an ICA request for information. They will agree to be convicted and pay criminal fines of NIS 150,000 and NIS 50,000 respectively, while the CEO will also perform two weeks of court-ordered community service.
Shai Bakal, Ayal HaCohen, Alex Wolf, Tel Aviv
The Italian Competition Authority (“ICA”) has imposed fines of €670 million on major captive banks, and their relative parent companies, for a cartel in the market of the provision of financial products for the purchase of motor vehicles. The investigation has revealed that between 2003 and 2017 the banks exchanged sensitive information on the conditions and volumes of financial products provided to car dealers and final users. In particular, the information exchanged included (i) the basic rate; (ii) the nominal interest rate; (iii) the annual percentage rate; and (iv) other kinds of fees, such as administrative or bank charges.
Vito Auricchio, Adriano Di Curzio, Rome
The District Court of The Hague (“Court”) has ruled that the Dutch Competition Authority (“ACM”) infringed its own guidelines on digital investigations (“Guidelines”) by copying the mailboxes of five persons it had identified in its WUW 03/2019 S. 137internal documents without informing the company about this prior to its investigation. The Court ruled that the ACM’s own Guidelines provide an important legal framework with respect to its far-reaching power to conduct unannounced inspections at an undertaking’s premises. The Guidelines must therefore be strictly observed by the ACM during its investigations. Since the ACM had breached its own Guidelines by copying mailboxes of five persons it had failed to inform the company about, the Court ruled that these mailboxes fall outside the scope of the investigation.
The Netherlands Trade and Industry Appeals Tribunal (“CBb”) has lowered a cartel fine for providers of laundry services in the healthcare sector. The ACM had imposed a fine on four of these laundry service providers for illegal market-sharing practices. The laundry service providers had started a franchise formula, which was jointly owned by the laundry service providers and had no other franchisees than those jointly owning the formula. The franchise formula included restrictions for the participating companies on active sales (and initially also on passive sales) into each other’s territories. The laundry service providers argued that they were free to include such restrictions in their franchise agreements, which were vertical in nature and had to be assessed as such. The CBb, however, ruled that the market-sharing arrangements were in violation of the cartel prohibition, considering that “the existence of the franchise agreements does not detract from the fact that the agreement has a predominantly horizontal character.” In respect of the horizontal character, the CBb points out that the franchisees were all (and the only) shareholders of the franchisor. However, the CBb lowered the amount of the fine imposed on the laundry service providers, because they had developed substantial know-how resulting from joint development activities, and had been transparent about their franchise arrangement during the infringement. Moreover, there was sufficient competition from other laundry service providers during the infringement, which caused the effects of the infringement to be minimal.
Berend Reuder, Mattijs Baneke, Amsterdam
The President of the Office of Competition and Consumer Protection (“OCCP”) cleared an acquisition of Pini Polonia by Smithfields. Both undertakings are active in the market of meat production and processing. The acquisition was initially notified to the EU Commission, which referred the case to the Polish authority. The OCCP issued competition concerns in the merger proceedings related to the takeover of ACP Europe and Eurocylinder by Air Products. The activities of these undertakings overlap in the markets for carbon dioxide and dry ice. The OCCP found that the merger may lead to a limitation of competition, primarily in the market for liquid carbon dioxide.
The OCCP accepted commitments of PKP PLK, the near-monopolistic operator of the Polish railways, to remove the onerous terms of delivery of railway products and technologies, such as rails or sleepers, from its procedures. PKP PLK had applied an arbitrary system of quality control that discouraged suppliers from raising objections or claims, resulting in potential market foreclosure lasting several years. The OCCP agreed that PKP PLK ceases this practice and issued a commitment decision which, by operation of law, may not contain any fines.
Jaroslaw Sroczynski, Warsaw
The Portuguese Competition Authority (“PCA”) issued a decision of non-opposition with respect to the acquisition of sole control of Goldenergy – Comercializadora de Energia, S.A, a supplier of natural gas and electricity power, by Axpo International, S.A.
The PCA has imposed fines of €12 million on two insurance companies in Portugal, Fidelidade – Companhia de Seguros, S.A. and Multicare – Seguros de Saúde, S.A., for customer allocation of large corporate customers in the insurance sector.
The PCA has condemned Sacyr Neopul, S.A., a Portuguese company active in the railway construction and maintenance market, for its participation in a cartel in order to increase the value of public procurements in this sector.
Ricardo Rodrigues Lopes, Henrique Sousa Freire, Lisbon
The Spanish Competition Authority (CNMC) conditionally cleared the acquisition by BP Oil of Petrocorner, the owner of 65 petrol stations. The concentration raised competition concerns in three areas. The commitments include selling a white-label petrol station to an upfront buyer which must maintain it independent from the leading operators in the market, terminating the exclusive distribution contracts with two petrol stations located in the areas concerned, and not to conclude exclusive distribution agreements in these areas for five years.
The CNMC decided not to open infringement proceedings against Uber, the intermediary platform in the provision of on-demand transport services. Madrid’s Town Hall had asked whether the discounts offered by Uber in summer 2017 on rides between the airport, train and bus stations and the city centre breached competition law. The CNMC rejected that there could be an infringement and considered that the unilateral conduct by an undertaking with a relatively low market share was beneficial for users.
The CNMC dismissed a complaint lodged by an association of distributors of veterinary health products (ASEMAZ-ASA) against 20 manufacturers of veterinary pharmaceuticals. All the contested practices – recommending resale prices, exchanging information between supplier and distributor and territorial exclusivity agreements – were held to be of a vertical nature and exempted under the EU Vertical Block Exemption Regulation since none of the parties exceeded the 30% market share threshold established in the Regulation.
The Supreme Court dismissed the appeal brought by British Telecommunications against a decision of the CNMC rejecting that Telefónica, Vodafone and Orange had committed an abuse of a collective dominant position in their wholesale pricing policies vis-à-vis MVNOs. The Supreme Court upheld the CNMC’s decision, previously already confirmed by the High Court (Audiencia Nacional), to consider the prices of all three undertakings together instead of those of each operator individually to analyse whether a margin squeeze has exclusionary effects.
Helmut Brokelmann, Madrid
The Swedish Competition Authority (“SCA”) has unconditionally cleared the acquisition of the security service provider Avarn by Nokas, which is a leading security group in the Nordics. Following the merger, the amount of players on the market for security guard services will be reduced from three to two in Sweden. However, after an in-depth investigation, the SCA concluded that Nokas and Avarn (number two and three on the market) do not exert a particular important competitive pressure on each other and that the merger not would reduce the competitive force on the biggest player in the market. It was also found that customers have possibilities of switching the supplier of security guard services without facing substantial switching costs.
The Market and Patent Court decided to set aside a decision by the SCA, in which it ordered an undertaking to provide it with certain market information, on the ground that doing so was unduly burdensome for the undertaking. The request for information was directed to an undertaking that is not under investigation, but holds information relevant to an abuse of dominance case currently investigated by the SCA.
Elin Eliasson, Stockholm
The Swiss Competition Commission cleared the takeover of Basler Zeitung by Tamedia and closed the investigation it had launched in August 2018 of Tamedia’s takeover of Basler Zeitung. The Competition Commission concluded its preliminary investigation of AMAG. The Commission announced its decision not to open an official investigation of the company, which is a major player in the Swiss automotive import and sale sectors.
The Competition Commission announced reaching an agreement with Apple a TWINT-friendly solution for POS terminals. A month after launching a preliminary investigation into an alleged boycott of Apple Pay by local financial institutions, the competition authorities disclosed in a press release that they had successfully intervened in the opposite direction: Apple had committed to offer a technical solution so as to enable payments to be made with the competitive application TWINT from Apple brand devices. Since Apple Pay is the mobile payment solution for Apple products like the iPhone and Apple Watch, the application is set to launch automatically whenever an Apple device is held next to POS terminals for contactless payment. In order to make a payment transaction with TWINT, customers have to scan a QR-code that appears on the POS terminal screen. So, presently, if a customer wishes to pay using TWINT from an Apple device, the transaction could be disrupted by the automatic launch of the Apple Pay application. Based on Apple’s commitment to provide a technical solution that will block Apple Pay each time when a payment transaction is made with the TWINT application, the Commission has resolved to close its preliminary investigation.
Dr. Pascal G. Favre, Geneva
The Competition and Markets Authority (“CMA”) published a final report following its market investigation in the investment consultancy market. In its report, the CMA found competition problems within both the investment consultancy and, to a greater degree, the fiduciary management markets. The report recommends a package of measures to promote trustee engagement and a recommendation that the UK Government broaden the regulatory scope of both the Financial Conduct Authority (“FCA”) and The Pensions Regulator, to ensure greater oversight of the sector.
The CMA announced that it had been commissioned by the UK government to undertake research into the practice of targeting consumers through personalised pricing and search results. The research will explore whether and how personalised pricing makes use of personal data points such as a consumer’s address, marital status, birthday and travel history.
The CMA announced that it had issued a Statement of Objections to the companies operating a price comparison website under the domain name ‘comparethemarket.com’. The CMA had investigated the use of most favoured nation clauses by the comparison website in its contracts, which stop home insurers from quoting lower prices on rival sites and other channels. The CMA announced that it had provisionally found that the clauses could be causing customers to miss out on better home insurance deals.
The CMA announced that it had launched an investigation into the Atlantic Joint Business Agreement between American Airlines, members of International Airlines Group (British Airways and Iberia) and Finnair under Chapter I CA98 and Article 101 TFEU. The parties had been investigated previously by the European Commission, which had accepted commitments from the parties to address potential competition concerns in relation to 6 routes, 5 of which concerned the UK. With the expiry of these commitments due in 2020, and “to prepare for the time when the European Commission may no longer have responsibility for competition in the UK”, the CMA decided to review afresh the competitive impact of the agreement.
The CMA announced that the Court of Appeal had granted the CMA permission to appeal the Competition Appeal Tribunal’s (“CAT”) judgment of 7 June 2018 which had partially set aside the CMA’s abuse of dominance decision against Pfizer and Flynn. In that decision, the CMA fined Pfizer and Flynn for charging excessive prices to the National Health Service (“NHS”) for anti-epilepsy Phenytoin sodium capsules.
Frances M. Murphy, Joanna Christoforou, Michael Zymler, London
Assistant Attorney General Makan Delrahim announced an initiative to modernize and shorten the merger review process with the goal of resolving investigations within six months. Delrahim also announced the DOJ’s withdrawal from a prior policy statement issued jointly with the US Patent and Trademark Office warning that injunctions on standards-essential patents could violate the antitrust laws, reinforcing the DOJ’s new policy position that breaching commitments to license patents on FRAND terms is not an antitrust issue. The FTC continued to host a series of public hearings to provide the public with information on antitrust law topics. The FTC submitted its annual report on market concentration in the ethanol industry to Congress.
The DOJ announced that an electrolytic capacitor manufacturer would pay a $60 million criminal fine for its participation in a price-fixing conspiracy. In connection with a conspiracy to manipulate the London Interbank Offered Rate (LIBOR), the DOJ announced the conviction of two former bank traders for criminal violations of the antitrust laws. The DOJ further announced that a seafood packaging company pleaded guilty to a conspiracy to fix prices of packaged seafood products. As a result of the DOJ’s continuing efforts to investigate and prosecute individuals for rigging bids at real estate foreclosure auctions, multiple individuals in Mississippi and Florida pleaded guilty to schemes to rig these bids. The DOJ announced that three South Korean companies would pay a combined criminal fine of $82 million for their participation in a conspiracy to rig bids to supply fuel to US military bases in South Korea. In addition to the criminal fines, the South Korean companies also agreed to pay a combined $154 million to settle the DOJ’s civil antitrust claims. The DOJ announced that two executives arrested for a conspiracy to fix prices for freight-forwarding services pleaded guilty to criminal violations of the antitrust laws.
To resolve civil claims against seven broadcast television companies accused of unlawfully exchanging competitively sensitive information with each other, the DOJ announced settlements whereby these companies must not directly or indirectly share any competitively sensitive information. To resolve civil claims against a hospital system accused of unlawfully using anti-steering provisions to prevent health insurers from offering more cost-effective healthcare solutions to consumers, the DOJ announced a settlement whereby the hospital system must not include new anti-steering provisions in future contracts and must not enforce anti-steering provisions in existing contracts. An investor agreed to pay a $609,810 civil fine to settle DOJ claims that he failed to observe the premerger notification and waiting period requirements of the antitrust laws when he acquired certain securities.
The DOJ required United Technologies Corp. to divest two businesses involved in the supply of aircraft safety components to resolve concerns that its proposed $30 billion acquisition of Rockwell Collins would substantially lessen competition in the markets for ice protection systems and trimmable horizontal stabilizer actuators. The DOJ required CVS Health Corp. to divest Aetna Inc.’s Medicare Part D prescription drug plan business to resolve concerns that CVS’s proposed $69 billion acquisition of Aetna would substantially lessen competition in the market for Medicare Part D prescription drug plans. The DOJ required Gray Television, Inc. and Raycom Media, Inc. to divest television stations in nine local markets to resolve concerns that their proposed $3.6 billion merger would substantially lessen competition in those local broadcast television markets. In a high-profile merger review case, a panel of three appellate judges heard oral argument on the DOJ’s appeal from a district court judgment rejecting the DOJ’s attempt to block AT&T Inc.’s $85.4 billion acquisition of Time Warner Inc.
The FTC required Penn National Gaming, Inc. to divest casino assets in three cities to resolve concerns that its proposed $2.8 billion acquisition of Pinnacle Entertainment, Inc. would substantially lessen competition in the casino services market in those three cities. The FTC required Praxair, Inc. and Linde AG to divest assets in nine product markets to resolve concerns that their proposed $80 billion merger would substantially lessen competition in these markets. The FTC required Marathon Petroleum Corp. to divest retail fuel assets in five local markets to resolve concerns that its proposed acquisition of Express Mart would substantially lessen competition in those five local markets for retail gasoline and diesel. The FTC closed its investigation into CareGroup, Inc.’s proposed merger with four other hospitals and physician practices after the Massachusetts Attorney General’s Office announced that it would approve the merger subject to caps on price increases and other conditions. The FTC required Northrop Grumman to offer its solid rocket motors on a non-discriminatory basis to all competitors for missile contracts to resolve concerns that its proposed $7.8 billion acquisition of Orbital ATK would substantially lessen competition in the market for solid rocket motors. An administrative law judge upheld the FTC’s complaint that Tronox Ltd.’s proposed $1.6 billion acquisition of Cristal would substantially lessen competition in the North American market for titanium dioxide. The three parties to a joint venture for the manufacture of polyethylene terephthalate (PET) resin agreed not to exercise control over the joint venture and agreed not to exchange commercially sensitive information beyond what was needed to sustain the joint venture as conditions for FTC approval of their proposed $1.1 billion purchase of a partially constructed PET resin production facility from a seller in bankruptcy.
John Clayton Everett Jr., Y. Frank Ren, Washington, D.C.
General information on the legislative and institutional framework of the countries covered by this report is included in WuW 2016, pp. 118 to 125. More detailed information on each of the developments referred to in the reports is available from WuW; responsible for this Section: Dr. Christian Zschocke and Dr. Michael Masling, Morgan, Lewis & Bockius LLP, Frankfurt/M.