update on eu competition law trends · average fine levied per undertaking average fine levied per...

Update on Update on

EU Competition Law TrendsEU Competition Law Trends

Bill Batchelor

19 giugno 2012

Updates from Brussels

1. Cartels and appeals

2. Updating your dawn raids policy

3. Compliance is its own reward…

4. Distribution

� Selective Distribution

� Internet Restrictions

� Parallel Trade

� Media Licensing

5. Dominance

� Rebates: no de minimis?

� Selective price cutting: a predatory standard?

Update on EU Competition Law Trends 2

1. Cartels

Fines Levied on Cartels by the European Commission (2007- May 2012)

€1,541

€614

€255

€2,887

€2,259

€2,869

€0

€500

€1,000

€1,500

€2,000

€2,500

€3,000

€3,500

2007 2008 2009 2010 2011 2012

Calendar Year

Fin

es L

evie

d

(in

mil

lio

ns)


Average Fines Levied on Cartels by the European Commission (1990-2011)

€1.86 €4.52

€43.75 €41.96

€105.24

€316.61

€20.11

€270.44

€27.10€31.30

€0

€50

€100

€150

€200

€250

€300

€350

1990-1994 1995-1999 2000-2004 2005-2009 2010-2011

Calendar Year

Fin

es

Le

vie

d

(in

millio

ns

)

Average fine levied per undertaking Average fine levied per case


Recent EU Cartel Decisions – Points of Interest– Consumer Detergents (April 2011)

� Started as legitimate industry initiative

� Separate national infringements fined in France, Czech Republic and Slovakia.

� None of the cartel participants managed to secure leniency in all jurisdictions (FR: Unilever, EU and CZ: Henkel, SK: P&G)

– Bananas (October 2011)

� Second cartel decision in relation to imports of bananas. Chiquita leniency applicant in both cases

� Certain documents relied on by the Commission were provided directly by the Italian tax authority


Recent EU Cartel Decisions – Points of Interest (2)

– Freight Forwarding (March 2012)

� 4 separate price fixing cartels (surcharges): EU/USA, EU/China

� Varying “success” of leniency applications

– Window Mountings (March 2012)

� Fines reduced for “mono product” nature of companies

� Further reductions for inability to pay


2011 – A Bad Year for the Commission…– Gas Insulated Switchgear – Melco (€118 million) and Toshiba (€90 million)

- fines annulled (- €208 million)

– Methacrylate – Arkema reduced from €219 million to €113 (- €116 million)

– Bleaching agents – Edison SpA – €58 million annulled, Solvay SA €167 million reduced to €139 million (- €86 million)

– Dutch beer - Heineken NV fine reduced from €219.28 million to €198 million, and Bavaria NV from €22.85 million to €20.71 million (- €23 million)

– Butadiene rubber – Kaučuk and Unipetrol €17.5 million annulled, Trade Stomil €3.8 million annulled, Eni and Polimera, fines reduced from €272 to €181 million (- €112 million)

– Escalators & Elevators – ThyssenKrupp reduced from €479 million to €319 (- €160 million)

– MCAA – Elf released from €45 million fine as parent

– Soda Ash – Solvay €23 million fine annulled

– Beer – Koninklijke Grolsch NV released from fine of €31.66 million as parent


What were the Grounds for these Reductions?– Insufficient evidence of involvement in cartel

� Kaučuk Unipetrol and Trade Stomil

� Heineken and Bavaria

– Insufficient reasoning as to involvement of parent

� Elf, Grolsch, Air Liquide and Edison

– Failure to give access to file/lost files

� Solvay

– Discrimination in base year used for calculation of fine

� Toshiba and Melco

– Incorrect recidivism uplift

� ThyssenKrupp


2. Dawn Raids

Updating Your Dawn Raids Guidelines

– Obstruction

� EU: EUR 2.5m fine in March 2012 on Energetický a průmyslový

(failure to block an email account, refusing to open encrypted emails,

diverting incoming emails during inspection)

� Poland: fined Polkomtel EUR 33m (March 2011): refusing to hand

over a hard drive, delaying the entry of investigators in certain

premises, and giving incomplete documentation to inspectors

� Spain: EUR 3.8m fines for obstruction in Sept 2010 on ferry operator

(start of raid was unduly delayed), and in March 2011 on one office

supplies maker €161.000 (documents disappeared during the raid)

– Breach of seals

� Suez fined EUR 8m in May 2011. The Commission took into account

the “immediate and constructive cooperation” of Suez which provided

“more information than was its obligation”


3. Compliance

3. Compliance Its Own Reward– European Commission: “Compliance Matters”

� No reduction in fine for existing compliance programme or

implementation of enhanced programme after the event

� Failure of compliance programme to prevent infringement will

not be treated as an aggravating factor

� Benefit of effective compliance programme: prevention of violations and early identification of failings

“The main reward for a successful compliance programme is not getting involved in unlawful behaviour…a company involved in a cartel should not expect a reward from us for setting up a compliance programme, because that would be a failed programme by definition.” (Almunia, April 2011)


4. Distribution

4.1 Selective Distribution

– Auto24 v Jaguar Land Rover France, paras. 31-32–

� No publication required “it is not necessary … the

selection criteria … be published”

� “it does not follow … that the criteria applied by the

supplier … must be … objectively justified and applied in a uniform and non-differentiated way.”


4.2 Internet RestrictionsPierre Fabre (Case C-439/09)

– Requirement that personal care products sold only in pharmacies to ensure personal advice from trained pharmacist – fined €17k by French authority as an online sales ban

– PF is a minor player – market defined as “sales in pharmacies”allowing the finding of a 20% market share!

– Appealed and referred to European Court of Justice that ruled on13 October 2011:

� Online sales ban a restriction of competition “by object” since it considerably reduces a distributor’s ability to sell products by closing off an entire means of marketing – arguments as to lack of effect are relevant only to the level of fine imposed and not to liability and regardless of market share


4.3 Parallel Trade

– EU: looks again at Spain/parallel trade and dual pricing

� Once again on the agenda in relation to pharmaceutical products despite heavy hits caused

by emergency price cuts leading to shortages in some markets

� Information requests to wholesalers on dual pricing

� Cases pending in Spanish Supreme Court

– Switzerland: CHF 130m fine on BMW for impeding parallel trade frome EU to Switzerland


STEP 1 Broadcast uplink

“Communication of a

copyrighted work to the

public”

Takes place in Greece

STEP 2 Broadcast Downlink

No “communication to

the public” in the UK

(Art1(2)(b) of the Satellite Directive

STEP 3 Viewing

Creates ephemeral copies

But no act which requires authorisation

Covered by the temporary acts exception

For other means of dissemination, authorisation

required in the Member State of downlink

Step 4

Communication to an audience in a pub

A separate “communication to the

public” that would require authorisation

C-403/08 & C-429/08 FAPL v QC Leisure

4.4 Media Licensing

18

Free Movement

– UK restrictions on use of foreign decoder cards inconsistent with Article 56

� Derogations from Article 56 only permissible to the extent necessary to guarantee the specific subject matter of the IP concerned

� Effective remuneration part of the specific subject matter

� Right to the highest possible remuneration by partitioning the internal market not part of the specific subject matter

� No issue with calculating the revenue in this case (unlike Coditel) – sale of decoder cards


Article 101: Competition Law Restrictions

– Territorial restrictions in the licence restrictions by object.

– But no consideration of countervailing efficiencies:

� Innovation – to finance audiovisual works with niche or uncertain appeal a territorial franchise may be required.

� Protection against free riding – Sky spends millions in enhancing the quality of the sport. Should it be protected from broadcasters making no such investment?

– Could there be lawful restrictions?

� Active sales restrictions

� Field of use restrictions, e.g.

� Home Member State language (suggested by the AG’s opinion)

� Only within full subscription package (unattractive to buy full subscription to get only sports)

� Quotas, i.e. limiting the number of subscribers a broadcaster may reach .


5. Dominance

5.1 No de minimis for Loyalty Rebates

– CJEU judgment in Case C-549/10P Tomra (19 April 2012)

� Practice foreclose 40% of customers of recycling machines, focuses

on key customers, markets opening to competition

� No need to consider cost measures or actual evidence of

anticompetitive effects

– Confusion on economics:

� “competitors should be able to compete on the merits for the entire

market and not just for a part of it” (para. 41)

– Leaves open different approach for post Guidance cases?

� “the Guidance, published in 2009, has no relevance to the legal

assessment of a decision, such as the contested decision, which was

adopted in 2006” (para. 81)


A de minimis Threshold?– CJEU in Tomra fails to deal with the inconsistent dicta of the General

Court

� Para 241 of the GC judgment (restated as para 41 in the CJEU judgment): “the customers on the foreclosed part of the market should have the opportunity to benefit from whatever degree of competition is possible on the market and competitors should be able to compete on the merits for the entire market and not just for a part of it”

– Compare � EU Enforcement Guidelines (para. 20): “competitors are less likely to

enter or stay in the market if the dominant undertaking forecloses a significant part of the relevant market.”

� Norge Post (para 135) (EFTA Court): “It is clear that not any degree of foreclosure is sufficient. If the remaining share of the outlets in question still allows competitors effectively unfettered access to the entire market, or at most forecloses only an insignificant part of the market, the conduct does not raise barriers to entry that can beconsidered sufficiently relevant”.


NCAs’ Adherence to Guidance

– UK: Idexx (2012); DB Schenker (2010), (Guidance on predation); EWS (2006), BSkyB(2003), BT Surf (2001) (effects based analysis)

– Germany: MABEZ

(2009), (cites Guidance on margin squeeze)

– Italy: likely to

follow Guidance

– Greece: Hellenic

Telecommunications(2009) (cites Guidance on bundling and margin

squeeze)

– Netherlands: TNT (2010) (cites Guidance in predation and

bundling case)

– France: France Télécom(2009) (effects-based

approach to bundling), Royal Canin (2005)

(effects-based approach to rebate scheme)

– Spain: Prensa/Correos (2008)

(no effects based analysis) vs. Axión/Abertis (2009) (cites

Guidance on bundling)


5.2 Selective Price Cutting Legal If Above Cost

– Post Danmark (Case C-209/10, April 2012):

� Legal to price below the “average total cost” so long as it is still above the “average incremental cost”

� Confirms that a dominant company can “compete on the merits” – only anti-competitive foreclosure will be an abuse

� Endorses “as efficient competitor” test

– Reversal of T-228/97 Irish Sugar on selective price cutting?

� Consider too discrimination C-52/07 Kanal5 & TV4, C-95/04 P British Airways


Update on Update on

EU Competition Law TrendsEU Competition Law Trends

Bill Batchelor

19 giugno 2012

update on eu competition law trends · average fine levied per undertaking average fine levied per...

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