Antitrust and Competition: The EU Weekly Briefing Vol 4 Issue 10

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Volume 4, issue 10

Wednesday 30 March 2016

EU Competition

Allergan and Teva agree to divest assets in order to obtain European Commission’s approval of acquisition. On 10 March 2016, the European Commission (Commission) issued a press release granting conditional approval of Teva’s acquisition of Allergan’s generic pharmaceutical business. Among other assets, Allergan has agreed to divest its UK and Irish generics business.

ECJ hands down judgments on appeals against Commission’s information request. On 10 March 2016, the European Court of Justice (ECJ) handed down its judgments on appeals brought by HeidelbergCement, Buzzi Unicem, Schwenk Zement and Italmobiliare, four cement companies, challenging the General Court’s dismissal of their appeals challenging the Commission’s decision to request information as part of its Article 101 investigation. The ECJ noted that a vague and ambiguous statement of reasons does not fulfil the requirements of the obligation to state reasons laid down in Article 18(3) of Regulation 1/2003, unless it is at the outset of an investigation at a time when precise information is not yet available to the Commission. In this case, the request was made more than two years after the first inspections and several months after the decision to initiate proceedings.

ECJ grants order in respect of Evonik Degussa’s appeal of Commission’s decision. On 2 March 2016, the ECJ ordered that the Commission’s rejection of the request for confidential treatment by Evonik Degussa GmbH (Evonik) be suspended. Evonik had appealed the judgment of the General Court which upheld the Commission’s refusal to grant it confidential treatment. The ECJ found that it was not obvious that the information which is the subject of the dispute was not confidential and therefore, disclosure could cause serious and irreparable harm. The ECJ therefore, also ordered that the Commission refrain from publishing the non-confidential version of its decision until the final judgement of the proceedings.

Commission publishes full decision approving merger of Ball and Rexam. On 14 March 2016, the Commission published its full decision approving the merger of Ball and Rexam under Article 8(2) of the EU Merger Regulation. The Commission had conducted a Phase II investigation which revealed that the two parties were the largest suppliers of beverage cans and aluminium bottles in the European Economic Area (EEA), and following the acquisition would result in only two competitors remaining in the market. To address the concerns of the Commission, Ball agreed to divest ten can body plants and two can end plants located in the EEA.

General Court publishes details of appeals challenging Commission decision on disk drive cartel. On 14 March 2016, the General Court published details in the Official Journal of the appeals brought by Sony, Sony Electronics, Sony Optiarc, Quanta Storage, Hitachi-LG Data Storage and Toshiba Samsung Storage Technology, against fines imposed by the Commission. The fines concerned the eight suppliers of optical disk drives who had been found to have coordinated their behaviour in response to procurement tenders by Dell and Hewlett Packard. As a result the Commission imposed fines on the parties totalling EUR 116 million. The parties are now appealing the Commission’s decision on the basis that it erred in its assessment that they participated in a single continuous infringement and in its calculation of the fines.

Kraft paper and industrial paper sacks subjected to unannounced inspections under Article 101 of the TFEU. The Commission issued a press release on 16 March 2016 confirming that it had conducted unannounced inspections at the premises of several companies active in the sector of kraft paper and industrial paper sacks across several member states due to concerns of anticompetitive practices under Article 101 of the Treaty on the Functioning of the European Union (TFEU).

Commission suggests insurers should no longer benefit from a sector-specific “block exemption”. On 17 March 2016, the Commission published a report on the Insurance Block Exemption Regulation (Regulation 267/2010), in which it suggests that insurers no longer require the benefit of exemptions for certain practices. The exemption, the most recent version of which has been in place since 2010, allows insurers to, among other things, cooperate in compiling statistics and studies and expires on 31 March 2017.

Commission publishes initial findings on geo-blocking in e-commerce. On 18 March 2016, the Commission published an issues paper presenting initial findings of the e-commerce sector inquiry conducted by the Directorate-General for Competition in respect of commercial practices preventing European users from shopping online cross-border or accessing digital content online across the EU. Geo-blocking activities identified included the refusal to deliver abroad, accept foreign payment methods and blocking access to websites.

EU Mergers

Phase I Mergers

M.7603 STATOIL FUEL AND RETAIL / DANSK FUELS (23 March 2016)
M.7746 TEVA / ALLERGAN GENERICS (10 March 2016)
M.7841 AVRIL POLE ANIMAL / TÖNNIES INTERNATIONAL HOLDING / JV (3 March 2016)
M.7850 EDF / CGN / NNB GROUP OF COMPANIES (10 March 2016)
M.7874 WARBURG PINCUS / GENERAL ATLANTIC / UNICREDIT / PIONEER US (22 March 2016)
M.7903 LÖWEN ENTERTAINMENT / SAFARI HOLDING / SCHMIDT GRUPPE SERVICE / GESELLSCHAFT FÜR SPIELERSCHUTZ UND PRÄVENTION (4 March 2016)
M.7906 EQUISTONE PARTNERS EUROPE / MECAPLAST GROUP (11 March 2016)
M.7909 LONE STAR FUND IX / N&W GLOBAL VENDING (4 March 2016)
M.7911 CNCE / KM GROUP (15 March 2016)
M.7918 INDORAMA NETHERLANDS / GUADARRANQUE POLYESTER (18 March 2016)
M.7923 LKQ CORPORATION / RHIAG GROUP (8 March 2016)
M.7925 NEWELL RUBBERMAID / JARDEN (22 March 2016)
M.7928 RPC GROUP / GCS (11 March 2016)
M.7953 AXA / GROUP CM-11 / TARGET (15 March 2016)
M.7964 RECRUIT HOLDINGS / USG PEOPLE (15 March 2016)
M.7967 APAX PARTNERS / NEUBERGER BERMAN / ENGINEERING (23 March 2016)

State Aid

Commission approves Finnish investment aid. On 10 March 2016, the Commission issued a press release confirming that it has found Finnish investment aid for the Metsä Fibre bio-product pulp mill in Äänekoski, Finland to be compatible with State aid rules. The total investment costs of the mill will be EUR 1.2 billion, of which EUR 32.1 million will be provided by Finland and EUR 275 million will be provided by the European Investment Bank. The Commission concluded that the project will contribute to EU Energy goals without unduly distorting competition.

Commission closes FagorBrandt investigation. On 15 March 2016, the Commission issued a press release confirming that it had closed its investigation into a temporary support package that FagorBrandt received from France, for the purpose of assisting medium-sized companies in financial difficulty. FagorBrandt received an initial EUR 10 million loan and then a second loan of EUR 47.5 million. The Commission has concluded that the loans were granted on more favourable interest rates than on the market. However, the company repaid the amount due under the loans during the course of the Commission’s investigation, leaving the case without any object, further to which the case has been closed.

General Court upholds Frucona’s appeal of Slovak tax write-off. On 16 March 2016, the General Court handed down its judgment in respect of an appeal made by Frucona Košice a.s. against the Commission’s decision that the Slovak tax authority’s write-off of 65% of its debts was incompatible with State aid rules. The General Court found that the Commission had erred in not considering whether the duration of the tax execution procedures would have a significant influence on the decision-making process of a private creditor and on that basis, annulled the decision.

EU Trade

EC publishes speech by Commissioner for Trade stressing importance of transatlantic cooperation. On 10 March 2016, the Commission published a copy of the speech titled “EU Trade Priorities in 2016” given by Cecilia Malmström, Commissioner for Trade, during her visit to Washington DC. The speech focused on the EU and US supporting each other in achieving their respective trade goals, through the World Trade Organisation, bilateral agreements with other partners and through the Transatlantic Trade and Investment Partnership.

EU and Japan announce plans to enhance cooperation during competition investigations. On 15 March 2016, the Japan Fair Trade Commission issued a press release confirming that they will be commencing preparatory works for a negotiation of their existing agreement with the EU concerning cooperation to allow for the exchange of information between the EU and Japan during investigations into anticompetitive behaviour.

Competition Commissioner meets Chinese counterparts to discuss cooperation on competition issues. On 18 March 2016, the Commission issued a press release confirming that the Competition Commissioner had met with her counterparts in China to discuss cooperation between the EU and China with respect to issues of competition and enforcement, particularly in light of the co-operation framework agreement entered into in October 2015. She also met with the newly appointed Chairman of the State-Owned Assets Supervision and Administration Commission to discuss reform of Chinese state-owned companies.

Public Procurement

AG opinion handed down on whether a contracting authority must establish evaluation criteria in contract notice/documents. On 10 March 2016, Advocate General Mengozzi (AG) handed down his opinion regarding the application of Article 53(2) of Directive 2004/18, which stipulates that a contracting authority must specify the weighting given to criteria on which a tender will be evaluated. Read in light of the principle of equal treatment and the obligation of transparency, the AG stated that the Directive must be interpreted as meaning that the contracting authority is not required to make known to potential tenderers, in the contract notice/documents, the evaluation method to be used in respect of the award criteria, provided that the method, where adopted after submission deadline but before the tenders are opened, does not alter the award criteria and/or weightings as set out in the contract notice/documents; does not contain any elements which, if known prior to submission, could have affected their preparation; and was not adopted in the light of matters capable of having a discriminatory effect on one of the tenderers.

Public Procurement Regulations to come into force on 18 April 2016. The Concessions Contracts Regulations (SI 2016/273), Utilities Contracts Regulations (SI 2016/274) and Public Procurement (Amendments, Repeals and Revocations) Regulations 2016 (SI 2016/275) will become effective on 18 April 2016 and will apply to new procurement exercises taking place following this date, except to the extent modified by other regulations.

UK Competition

CMA publishes full text of decision to refer Clariant/Kilfrost merger to Phase II investigation. On 11 March 2016, the Competition and Markets Authority (CMA) published the full text of its decision referring the Clariant/Kilfrost merger for a Phase II investigation. Clariant AG’s proposed acquisition of the Kilfrost Group’s European aircraft de-icing fluid (ADF) and rail de-icing fluid business raised concerns with the CMA, as the parties are the two largest suppliers of ADF.

CMA clears First TransPennine Express Limited acquisition of TransPennine Express Franchise. On 14 March 2016, the CMA announced that it had cleared the award of the TransPennine Express rail franchise to First TransPennine Express Limited (a subsidiary of FirstGroup) by the Department of Transport. Any potential market overlaps were examined by the CMA but ultimately not considered to give rise to a substantial lessening in UK competition.

CMA considers releasing FirstGroup/SB Holdings from merger undertakings. On 15 March 2016, the CMA issued a press release confirming that it has provisionally decided to release the undertakings affecting FirstGroup’s bus business across southern and central Scotland. The undertakings limit fares, affect the scheduling of services and require the maintenance of a minimum service level in certain areas.

Tesco settle CAT dispute on anticompetitive land use restrictions. On 17 March 2016, the Competition Appeal Tribunal (CAT) published an order withdrawing the fast-track claim made by Shahid Latif and Mohammed Abdul Waheed against Tesco Stores Limited (Tesco) for damages in respect an alleged infringement of the prohibitions in the 1998 Competition Act, following a settlement between the parties. The claimants had argued that the transfer agreement, pursuant to which they had sold land to Tesco, contained a restriction on certain uses of the retained land, constituting an agreement and/or concerted practice that had the object or effect of preventing, restricting and/or distorting competition in the relevant market within the UK; and also argued that Tesco has a dominant and/or significant market share protected under the agreement, which has the effect of preventing, restricting and distorting competition.

CMA publishes outcome of review into the use of merger notices and initial enforcement orders. On 21 March 2016, the CMA published the outcome of its review of merger notices and initial enforcement orders as part of its reforms to the phase 1 merger control procedure, pursuant to the Enterprise and Regulatory Reform Act 2013. While the CMA noted that the use of merger notices and initial enforcement orders had worked well overall, initial enforcement orders and derogation requests were identified as areas that could benefit from further clarity.

CMA reaches settlement of over £2.6 million in connection with galvanised steel tank investigation. On 21 March 2016, the CMA issued a press release confirming that it had agreed to a settlement with Franklin Hodge Industries Ltd., Galglass Ltd., Kondea Water Supplies Ltd. and CST Industries Inc., of fines totaling over £2.6 million. The settlement follows an investigation by the CMA into the companies’ arrangements to fix prices and rig bids from 2005 to 2012. The fines include a discount reflecting savings to the CMA as a result of the companies’ admissions and their co-operation during the investigation.

CMA publishes panel code of conduct. On 22 March 2016, the CMA published a code of conduct for its panel members in which it sets out the principles with which they are to have regard while carrying out their responsibilities. The new code of conduct will form part of the terms of appointment for CMA panel members and includes, acting with integrity, objectivity and in the best interests of the CMA.

Speeches / Publications / Consultations / Communications

European Medicines Agency reviews cancer medicine at the request of the Commission. The European Medicines Agency (EMA) issued a press release on 11 March 2016, confirming that it has started its review of the medicine, Zydelig (idelalisib), currently authorised in the EU to treat blood cancer. The Commission requested the EMA review the medicine, under Article 20 of Directive 2001/83/EC, due to the increased rate of adverse events that resulted from clinical trials.

Commissioner Vestager gives speech on tackling the EU merger control system. On 10 March 2016, the Commission published a speech by the Competition Commissioner, Margrethe Vestager titled “Refining the EU merger control system”, in which she reviews her last 16 months in the position and looks forward to how the process may be further simplified. Suggestions include, exempting certain types of State aid from the rules and looking more closely at minority shareholdings giving rise to a controlling influence affecting competition.

CEER publishes report on regulatory conditions in individual EU member states affecting investments in electricity and gas networks. On 14 March 2016, the Council of European Energy Regulations (CEER) published its report on “Investment Conditions in European Countries”. The report provides a general overview of the regulatory regimes, the required efficiency developments and analyses the overall determination of capital costs in EU Member States and Norway.

Commission announces public hearing on enhancing the enforcement powers of national competition authorities. On 18 March 2016, the Commission announced that a public hearing on “Empowering the national competition authorities to be more effective enforcers of the EU competition rules" will be taking place from 09:00-12:30, on 19 April 2016. Topics include leniency and sanctions in the Member States when enforcing the EU competition rules; and enforcement powers and independence of national competition authorities when applying the EU competition rules.

Hamina LNG terminal receives Commission sign-off for Finnish state aid. On 18 March 2016, the Commission issued a press release confirming that it had approved the grant of EUR 28 million by Finland for the construction of a small-scale LNG terminal at Hamina. The Commission found that the project would improve security of energy supply in the region and contribute to reducing carbon dioxide emissions in line with EU energy and environmental objectives without distorting competition in the Single Market.

Commission publishes latest issue of its “Competition Merger Brief”. On 21 March 2016, the Commission published issue 1/2016 of its Competition Merger Brief. This issue focused on the mergers of: General Electric/Alstom; Siemens / Dresser; Pfizer / Hospira; NXP / Freescale; T-Mobile/tele.ring; and T-Mobile/Orange.

New director in DG Competition. On 23 March 2016, the European Commission issued a press release confirming that it has appointed Mr. Henrik Mørch as Director "Markets and cases V: Transport, Post and other services" in DG Competition.

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