The European Commission has invited comments as it reviews the current regime for Technology Transfer Agreements. All stakeholders that have worked with the current set of rules will have a real interest in its improvement and should find it worthwhile to take part in the consultation process. In order to be involved in the shaping of these proposals and not just in the polishing of them, it is important to submit comments ahead of the 3 February 2012 deadline.
The General Court rejects intervention of damages claimants in appeal before the European courts by taking a narrow and rather formalistic view of legal interest in the appeals. While it is true that damages actions are legally possible as stand-alone actions, the reality in Europe is that third parties’ damages actions stand and fall with the decision that finds an infringement.
On November 23, 2011, the European Commission published a new brochure, “Compliance Matters – What Companies Can Do Better to Respect EU Competition Rules.” Its stated purpose is to help companies that do business in the European Union "stay out of trouble" and to ensure their compliance with EU competition rules. However, it does not cover the various practical and legal problems that companies face when developing and implementing compliance programs.
The first part the brochure focuses on the general obligation to comply, as well as the benefits of compliance, such as the enhancement of a company’s reputation and attractiveness for promotional and recruitment purposes. The second part describes the costs of non-compliance: fines for companies, sanctions on individuals, nullity of illegal agreements and the possibility for damage claims before national courts, and bad press and collateral consequences. The third part gives an overview on the applicability of EU competition rules. The fourth part sets out the strategy that companies should follow to ensure compliance, including the basic steps for identifying the overall risk and individual exposure, as well as steps for implementing the compliance strategy, staff-training, keeping the compliance program current, and monitoring and auditing.
The European Commission makes clear that "although all compliance efforts are welcomed, the mere existence of a compliance programme is not enough to counter the finding of an infringement of competition rules." With respect to setting the level of fines, the Commission reinforces its position that while a company’s specific situation is taken into account "the mere existence of a compliance programme will not be considered as an attenuating circumstance,” nor will it be a valid argument to justify a reduction of the fine. Thus, the position of the European Commission stands in contrast with recent statements by the UK Office of Fair Trading (OFT) and France’s Autorité de la Concurrence, both of which stated their intention to take the existence of a compliance program into account when setting the amount of fines.
Public Consultation on Settlement and Compliance Programs Launched by the French Competition Authority by Louise-Astrid Aberg and Lionel Lesur
On October 14, the French Competition Authority (FCA) launched a two-month public consultation for guidelines on settlement and compliance programs. Both these guidelines have been highly anticipated since they were first announced last May.
The draft settlement guidelines contain details on the FCA’s approach and decisional practices which were developed under the control of the French courts. Among the guidelines, the FCA determined that settlement is possible in all cases where infringement on competition law has taken place, including cartels, vertical restraints and single firm conduct. In the event of infringement, settlement becomes an option only after the parties have been formally charged. Once parties fully acknowledge their participation in anticompetitive conduct, the casehandler in charge of the matter would decide whether to respond positively to their request for a settlement. Parties retain the same procedural rights that they would in an ordinary procedure; in particular, they would be granted access to file. The FCA would reward parties who wish to settle with a fine reduction of 10 percent. In contrast to the settlement procedure of the European Commission (EC), it would not be possible to cumulate both a settlement reduction and a leniency reduction. However, parties settling with the FCA may decide to adopt behavioral or structural remedies which would enable them to benefit from an additional reduction of 5-15 percent. With regard to cartels, parties would benefit from a reduction up to 10 percent if they commit to changing their behavior in the future, in particular, by implementing a compliance program.
The draft guidelines elaborate further on the benefits of implementing a compliance program. The FCA clarifies several instances in which a compliance program would enable a party to benefit from a reduction of its fine. In the course of ordinary proceedings resulting in the imposition of a fine, the existence of a compliance program or the lack of it would not act as an attenuating or an aggravating circumstance. However, in the case of a settlement procedure, the commitment to implement a compliance program would be considered a commitment by the company to change its behavior in the future and would, thus, enable the party to benefit from a reduction of its fine. In this sense, the FCA and the EC agree that implementing compliance program would not have a significant effect on a fine that is set outside of a settlement procedure. The FCA only differs with respect to the specific context of a settlement procedure.
A fine reduction of up to 10 percent may not be easy to obtain. A compliance program would only be considered by the FCA if it includes the following characteristics: (i) the company’s top executives are strongly committed to the program, (ii) the company has designated persons to oversee the program and take charge of its implementation, (iii) the company has taken effective [...]
On Sunday November 13, 2011, Mario Monti, a former member of the European Commission, conditionally accepted a mandate to form a new Government. The main task of the new Italian Government will be to adopt a package of economic reforms considered necessary by the European Union to cut Italy’s massive debt and restore the market’s confidence. Italy must repay or refinance around €200 billion (approximately US$276 billion), worth of maturing bonds by April 2012. If Italy is forced to continue to pay high rates for borrowings, it will have difficulty in handling its debt load, which is among the highest in Europe.
Monti is expected to present his cabinet and program for reform to the Italian Parliament in a few days. In order to be able to push through the urgent economic measures, he will ultimately need the support of a broad parliamentary coalition, which (considering Italy’s current political environment) might put the durability of the new Government at risk.
Mario Monti is one of the most prominent economists in Europe and former President of Milan Bocconi University. Between 1995 and 2004, he served as European Commissioner responsible for the Internal Market and Competition, where he won cornerstone antitrust cases such as those against Microsoft and General Electric. He also adopted important legislative changes, showing great sensibility for antitrust related matters.
Many McDermott lawyers have had the chance to work with and know Monti personally from his time at the European Commission. He has the necessary gravitas and rigour to lead the country for a transitional term, which may last a few months. His future administration is likely to reflect his long-run priorities, such as the adoption of liberalisation measures and the gradual reduction in state ownership of local services, as well as a higher level of antitrust scrutiny to increase market competition. These policy objectives are expected to be coupled with the adoption of the austerity measures needed to reform the Italian economy. Such measures may consist of a raise in the standard retirement age, or a pledge to raise funds from public real estate sales.
The European Union’s (EU) national competition authorities (NCA) and the European Commission have agreed upon best practices on cooperation in cross-border mergers. The best practices’ stated aim is to enhance cooperation in merger cases where the European Commission Merger Regulation does not apply and the merger needs to be notified in more than one EU Member State.The best practices follow a public consultation on draft best practices started earlier this year.
The best practices do not make cooperation between NCAs compulsory. The merging parties will not be able to insist that NCAs should cooperate in a multi-jurisdictional filing. Rather, NCAs will apply them in cases where they think cooperation could be beneficial for the NCAs, the merging parties and third parties, in particular where the merger raises similar comparable jurisdictional or substantive questions and concerns similar or the same product markets.
The best practices discuss a number of areas and instruments for facilitating a multi-jurisdictional merger review process, such as:
Exchange of certain basic non-confidential information
Aligning timelines in the review process and with regard to remedies
Regular contacts and updates between NCAs with regard to timing and with regard to decisions to open in-depth investigations
Dicussions of substantive analysis such as market definitions or possible anti-competitive effects of the merger
Merging parties are encouraged to contact each NCA where the merger will be filed and provide them with basic information, such as the jurisdiction where the merger will be filed, the date of the proposed filing and the sectors involved, to facilitate cooperation among the agencies. Also, the best practices support joint pre-notification contacts where useful. The best practices further highlight, that it will be for the merging parties to coordinate the timing and also the substance of possible remedies, e.g. where a remedy accepted in one Member State has an impact on the effectiveness of the remedy in another Member State.
Most important, the best practices clearly point out that it is fully within the merging parties’ respectively third parties’ discretion to provide waivers to the NCAs to exchange confidential information, that such information will be protected under national law in all Member States and that it will not be used for any purpose other than the review of the relevant merger. To this end a model waiver form can be found in the annex to the best practises. However, it should be noted that the best practice paper states that once a waiver has been provided, the parties will not be informed about the actual scope and timing of the exchange of the confidential information.
The best practices and its annex can be accessed here.
In Elf Aquitaine SA v Commission, the European Court of Justice ruled on 29 September 2011 that Elf Aquitaine was not jointly and severally liable as a parent company for the involvement of its wholly owned subsidiary in the cartel for monochloroaecetic acid. Taken with a number of recent judgments, this suggests that European courts are getting tougher with the Commission on parental liability.
The European Commission’s new guidelines for best practices during antitrust procedures introduce some new elements that could be beneficial for companies under investigation, complainants and interested third parties if handled in the right way.
On 9 September 2011, the European General Court in Deltafina ruled that the European Commission is entitled to withdraw the immunity of a leniency applicant in a cartel investigation if the leniency applicant discloses the fact that it had submitted a leniency application to the Commission and the disclosure does not correspond with the "real spirit of cooperation" (in particular, was not agreed with the Commission). The leniency applicant cannot rely on the protection of legitimate expectations in such a case. The General Court stated:
It should be also noted that the assessment of the facts, whether such a company behaved in manner that expressed the spirit of genuine cooperation in compliance with the requirements (…), can be done only with regard to the circumstances existing at the time when this conduct was performed. With regard to the “permanent” character of the required cooperation, which has to be continuously maintained throughout the whole procedure, any conduct contrary to the spirit of genuine cooperation in itself is sufficient to establish the breach of the duty of genuine cooperation. Therefore, any circumstance that occurred after the conduct in question cannot justify this breach (Judgment not yet available in English – convenience translation).
This judgment confirms that a company that wants to apply for leniency must know that it has to cooperate with the European Commission and that the cooperation obligation can be very far-reaching. Failure to cooperate will lead to a withdrawal of leniency. The company has to take this into account when making its decision, a decision that is increasingly complex and must balance many different, often conflicting, interests and obligations.
The European Commission (EC) imposed a EUR 8 million fine on Suez Environnement for the breach of a seal affixed during an antitrust inspection. This is the second case of such a fine on an EU level after the EC imposed a fine of EUR 38 million on E.ON in 2008. The fine was imposed even though Suez Environnement was able to prove that the breach of the seal was caused by negligence. The decision shows how serious the EC is about interference with antitrust inspections.
Therefore, in cases of ‘room-sealing’ during an EC investigation, it is crucial for companies to take all steps to ensure that the seal will not be broken, as even proof of negligence will not protect the company against a high fine. It may even be worth using security to protect seals against “accidents” involving cleaning or other personnel.
The decision concerns an incident that occurred in April 2010 when EU officials inspected Lyonnaise des Eaux (LDE), a subsidiary of Suez Environnement, due to suspicions of anticompetitive conduct. Before leaving the premises at the end of the first day of the inspection, the EC placed a seal on an office door. The next morning, that seal was broken. In this case, evidence suggested that the seal was broken by accident. However, neither the recordings of the surveillance-camera nor the testimonies of witnesses or the perpetrator himself helped the company to avoid a fine.
In the E.ON case, the company denied breaking the seal and maintained that the seal breach resulted from the ‘reduced adhesiveness of aging seals.’ However, despite this assertion, the fine was upheld by the EU General Court in December 2010. The Court clarified that the EC was right to assume at the very least a negligent breach of the seal in the present case, and that it is not necessary for the EC to prove how the seal was actually broken or that evidence had actually been manipulated after the breach of the seal to impose a fine (Case T-141/08).
It should be noted that fines can also be imposed for the breach of a seal affixed in the context of antitrust inspections by a national competition authority.
Subscribe
