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ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
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European Commission Launches New Cartel Reporting Tool, Member States Laud the Role of Whistleblowers

by | Apr 4, 2017 | , ,

European Commissioner of Competition Margrethe Vestager made news when she announced that the European Commission had launched a new IT system enabling individuals to anonymously report cartel activity. In parallel, several EU Member States have–in recent weeks–highlighted the role of individual informants in their own enforcement efforts. Taken together, these developments show that the stakes of effective and meaningful antitrust compliance continue to rise, as individuals have more avenues to report anticompetitive conduct.

Speaking in Berlin on March 16, 2017, Commissioner Vestager stated, “We’ve discovered a lot of cartels thanks to leniency programs […] But we don’t just rely on leniency. We pay attention to other methods as well. And that includes encouraging individuals to come forward, when their conscience is troubled by the information that they have about a cartel. That’s why we recently launched a new IT system to help people tell us anonymously about cartels. The system means that we can communicate both ways with them without risking their anonymity while we gather information.”

Commissioner Vestager noted that the European Commission’s new system is modelled on a system implemented by the German Federal Cartel Office (FCO) in 2012. Notably, the FCO itself published a brochure in late February 2017 titled “Effective Cartel Enforcement” highlighting, among other things, the success of its whistleblowing program. The FCO noted that its system is accessible from its website and “guarantees the anonymity of informers while still allowing for continual reciprocal communication with the investigative staff [at the FCO] via a secure electronic mailbox.” Between June 2012 and December 2016, the FCO reports receiving 1,420 tips, “some of which” have led to proceedings resulting in fines.

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McDermott EU Competition Annual Review 2016

by | Feb 2, 2017 | , , , , , ,

It is difficult for General Counsel and their teams to monitor all new developments adequately. With the growth of the Internet and the daily updates to EU competition rules, everyone receives and has access to masses of information, but it is difficult to select that which is really relevant to one’s business.

McDermott’s EU Competition team across Brussels, France, Germany and Italy has authored the EU Competition Annual Review 2016 to help General Counsel and their teams to focus on the essential updates that they should be aware of.

This Special Report summarizes recent developments in EU competition rules during the year 2016 where several new regulations, notices and guidelines were issued by the European Commission and many interesting cases were decided by the General Court and the EU Court of Justice.

All these new rules and judicial decisions can be relevant for international companies operating in the EU. Indeed, in addition to the daily update, this booklet provides an overview of the main recent developments in EU competition rules and can be kept as a ready reference when dealing with complex issues of EU competition law.

Read the full report.



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Finally Implemented! The Italian Council of Ministers Approves a Legislative Decree Implementing the EU Antitrust Damages Directive

by | Jan 17, 2017 | , ,

On 14 January 2017, the Italian Council of Ministers approved the Legislative Decree implementing Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the “Directive”). The final version of the Legislative Decree has not been published yet on the Official Journal. However, the key points emerging from it include:

  1. A strengthened mechanism of evidence disclosure in actions for damages related to alleged infringements of competition rules. In fact, the judge will have the power to request the defendant or a third party, including the Italian Competition Authority (the “Authority”), to disclose relevant evidence which lies in their control.
  2. The extent to which Italian courts will be able to rely on decisions of the Italian Competition Authority or other national competition authorities. For instance, an infringement of competition law ascertained by a decision of the Italian Competition Authority (or appeal judgment), which is not subject to further means of appeal, will be deemed to be indisputably established for the purposes of an action for damages brought before the national courts under Article 101 or 102 TFEU or under national competition law.
  3. The rules applicable to limitation periods for bringing actions for damages, as well as how Italian courts shall assess the joint and several liabilities of companies which are found to have infringed competition rules, and how they shall quantify the harm suffered as a consequence of the alleged infringements.
  4. The business sections of the courts of Milan, Rome and Naples, identified as the only competent courts for such actions for damages, including class actions.

According to the established Italian case-law, in case of actions for damages regarding alleged violations of competition rules, the judge shall use all available investigation means in order to address the obstacles faced by the claimant to access the relevant evidence in antitrust cases, and therefore apply broadly the rules on the disclosure of evidence and information requests (Corte Suprema di Cassazione, judgment no. 11564 of 4 June 2015).

On 26 November 2014, the European Parliament and the Council of the European Union adopted the Directive, which entered into force 26 December 2014, setting 27 December 2016, as the deadline for its transposition at national level. On 27 October 2016, the Italian Council of Ministers approved an initial proposal for a Legislative Decree implementing the Directive and sent it to the relevant commissions of the Italian Parliament for their mandatory (non-binding) opinions. The Legislative Decree was therefore finally approved in the Council of Ministers’ meeting of 14 January 2017. Although it is difficult to predict the likely impact of the Legislative Decree, it will definitely provide a more certain legislative framework for companies and consumers interested in claiming damages on the basis of alleged antitrust infringements.

Gabriele Giunta contributed to this post. 



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Unfair Commercial Practices – The Italian Competition Authority and The Italian Communication Authority Sign a Memorandum of Understanding

by | Jan 17, 2017 | , ,

On 13 January 2017, the Italian Competition Authority (AGCM) and the Italian Communication Authority (AGCOM) signed a memorandum of understanding concerning several aspects of their cooperation in the application of consumers’ protection rules. Under the memorandum of understanding, in the case of consumers’ protection matters, which potentially involve both authorities, there will be coordinated actions, even during the preliminary investigation phase. Furthermore, AGCM will inform AGCOM on cases concerning the violations of rules enforced by AGCOM, which will do the same in case of hypothesis of unfair commercial practices in the electronic communications sector. The authorities agreed also to set up a standing working group in order to promote the debate on consumer protection issues. Finally, the agreement provides rules on the exchange of information between the authorities on investigations.

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General Court of the EU Confirms Fines Imposed on Lundbeck and Generic Drug Manufacturers for Entering into Patent Settlements

by | Sep 22, 2016 | , ,

On 8 September 2016, the General Court of the EU (GCEU) handed down five judgments upholding a decision by the Commission of 19 June 2013 imposing fines on Lundbeck, an originator company, and Merck (the parent company of Generics), Arrow, Alpharma and Ranbaxy, four generic companies. The Commission found that the companies had entered into anticompetitive “pay-for-delay” settlement agreements whereby Lundbeck paid a lump sum to the generic companies in exchange for their agreement to delay their entry on the market for Citalopram, an anti-depressant drug.

This ruling is notable in that it is the first time that the GCEU has been asked to rule on patent settlements between originators and generic companies. The GCEU upheld the Commission’s reasoning, noting that the Commission’s reasoning in this case reflects the provisions of its Guidelines on the application of Article 101 of the Treaty on the Functioning of the EU (TFEU) to technology transfer agreements.

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US and EU Requirements for Pre-Merger Notification of an Acquisition of a Minority Shareholding Interest

by and | Aug 31, 2016 | , , , ,

In May, the Federal Trade Commission (FTC) required Hikma Pharmaceuticals PLC to divest its 23 percent interest in Unimark Remedies, Ltd. and its US marketing rights to a generic drug under manufacture by Unimark as a condition to allowing Hikma to complete its acquisition of Roxane Laboratories. The FTC was concerned that Hikma’s continued holding of a 23 percent interest in Unimark after consummation of its proposed acquisition of Roxane would create the incentive and ability for Hikma to eliminate future competition between Roxane and Hikma/Unimark in the sale of generic flecainide tablets (a drug used to treat abnormally fast heart rhythms) in the United States.

The FTC’s divestiture requirement was unusual but not unprecedented. The Horizontal Merger Guidelines identify three theories of competitive harm associated with an acquisition or holding of a small but significant minority interest in a competitor.

  1. Minority ownership, and any associated rights, such as veto rights over the competing firm’s budget or strategic decisions, or representation on its board of directors, may allow the shareholder to forestall, delay or otherwise hamper the competing firm’s further development or marketing of competitive products
  2. The holder of a minority interest in a competing firm has diminished incentives to compete aggressively with the competitor firm because the holder obtains an economic benefit from the success of the competing firm through its partial ownership of that competitor.
  3. The holder of a minority interest in a competing firm may have access to non-public, competitively sensitive information of the competing firm, and thus may be better able to coordinate its business decisions—such as pricing, output, or research and development efforts—with those of the competing firm, thus diminishing competition.

These theories of potential antitrust harm from minority interest acquisitions are not unique to the United States; other competition agencies, including the European Union’s competition directorate, accept and apply these theories when considering the competitive impact of a firm’s actual or proposed partial ownership interest in a competitor. However, the United States applies a significantly lower threshold than the European Union (and other competition agencies) for the pre-acquisition notification of an entity’s acquisition of a minority, non-controlling interest in another firm.

Read the full article here.



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McDermott’s Antitrust M&A Snapshot Published on July 17, 2016

by , and | Jul 27, 2016 | , , , , , ,

McDermott’s Antitrust M&A Snapshot is a resource for in-house counsel and others who deal with antitrust M&A issues but are not faced with these issues on a daily basis. In each quarterly issue, we will provide concise summaries of Federal Trade Commission (FTC), Department of Justice (DOJ) and European Commission (EC) news and events related to M&A, including significant ongoing investigations, trials and consent orders, as well as analysis on the trends we see developing in the antitrust review process.

United States: January – June Update

The Federal Trade Commission (FTC) and US Department of Justice (DOJ) have been actively challenging mergers and acquisitions in the first half of 2016. In some instances, the parties abandoned their deal once the FTC or DOJ issued a complaint, in others, the parties entered into consent agreements with the agencies. In matters where a divestiture is an acceptable remedy, the FTC and DOJ have required robust divestitures with financially and competitively viable buyers. There is increasing pressure for broad divestitures and for upfront buyers in industries where the agencies do not have ample experience and where there may not be multiple competitive buyers willing to acquire the assets.

In merger challenges, the agencies have been successful in obtaining preliminary injunctions in Washington, DC, but have been less successful outside of their home court. The agencies have successfully argued price discrimination markets, where sales of products to a narrow group of customers were the market, and courts are accepting the agencies’ narrow market definition. We also see a trend in challenges due to innovation, where the merging parties are the market leaders in new developments and research and development in particular areas. Investigations continue to take many months, with many approaching or exceeding a year.

EU: January – June Update

In the EU, there has been a noticeable increase in the number of notified transactions to the European Commission (from 277 notifications in 2013 to 337 in 2015). Most of these transactions have been cleared by the EU regulator in Phase I without any commitments. However, there have still been a number of antitrust interventions requiring the merging parties to offer, often far-reaching, remedies. One industry has recently seen a particularly high ratio of antitrust intervention is the telecoms sector. For example, in the merger between the mobile operators Telenor and TeliaSonera, the parties abandoned the transaction due to European Commission opposition to the transaction. The European Commission publicly announced that the transaction would not have been cleared, and that the remedies offered by the companies were not convincing. A prohibition decision was also issued, despite the offered remedies, in the failed combination of Telefónica UK’s “O2” and Hutchison 3G UK’s “Three”. This transaction involved the longest merger control review by the European Commission to end up in a prohibition decision (243 calendar days, compared to the average of 157 calendar days to block a deal).

With regard to current trends in merger control remedies at the level of the European Commission, there continues to be [...]

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Online Sales Restrictions Remain a Hot Topic: UK CMA Issues Statement of Objections

by | Jun 24, 2016 | , ,

On 9 June 2016, the UK’s Competition and Markets Authority (CMA) issued a statement of objections (SO) to Ping Europe Limited (Ping), a golf equipment manufacturer, alleging that Ping had breached EU and UK competition law by banning the sale of its golf clubs online.

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E-Commerce: National Competitions Authorities Weigh In on Sales Restrictions Regarding Online Marketplaces

by and | Mar 2, 2016 | , ,

In May 2015, the European Commission launched a two-year, industry-wide inquiry into the e-commerce sector to gather data on the functioning of e-commerce markets, so as to identify possible competition concerns. This sector inquiry focuses particularly on potential barriers erected by companies to cross-border online trade in goods and services where e-commerce is most widespread (e.g. electronics, clothing and shoes), as well as in digital content.

While the European Commission intends to provide specific guidance on European e-commerce issues when it publishes its final report in 2017, early insights can be found in national competition authorities’ recent decisions, particularly in France and Germany.

In France, the French Competition Authority (FCA) announced on 18 November 2015 the closure of an investigation into the contractual practices of the sporting goods manufacturer Adidas, as a result of Adidas’ change in its online sales policy.

This FCA investigation, which had been carried out in coordination with the German Bundeskartellamt (BKA), centered on the company’s restriction of online sales for its selective distributors. The conditions for online sales, which were introduced in 2012, included restrictions on retailers from selling via large online platforms such as eBay and Amazon Marketplace.

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General Court of the EU Upholds Cartel Fines of €131 Million Imposed on Toshiba and Mitsubishi Electric, Dismisses Arguments Based on Principle of Equal Treatment

by | Jan 27, 2016 | , ,

By two judgments of January 19, 2015 (Case T-404/12 Toshiba v. Commission and Case T-409/12 Mitsubishi Electric v. Commission), the General Court of the European Union (GCEU) upheld the fines of €131 million imposed by the European Commission (EC) on Toshiba and Mitsubishi for their participation in a cartel on the market for gas insulated switchgear (GIS), dismissing a line of reasoning essentially based on the principle of equal treatment.

The cartel, involving 20 European and Japanese undertakings, consisted in an agreement between competitors with the objective of coordinating the commercial activity worldwide of the members. The cartel members developed a quota system aimed at determining the market shares to allocate between them. In parallel, the cartelists reached an unwritten understanding, according to which GIS projects in the European market and Japanese market were reserved to European members and Japanese members of the cartel, respectively.

In its 2007 decision, the EC found a single and continuous infringement of competition law on the GIS product market between 1988 and 2004 and imposed fines on Toshiba and Mitsubishi, inter alios, of €86.25 million and €113.92 million, respectively. It also found the two Japanese undertakings jointly and severally liable for up to €4.65 million. Both companies challenged the EC decision, which led to two judgments of the GCEU (Case T-113/07 Toshiba v. Commission and Case T-133/07 Mitsubishi Electric v. Commission), subsequently upheld by the Court of Justice of the European Union (CJEU) (Case C-498/11 P Toshiba v. Commission and Case C-489/11 P Mitsubishi Electric v. Commission). The GCEU annulled the fines imposed on the two Japanese undertakings, finding that the Commission had infringed the principle of equal treatment in calculating their fines. The reference year used to calculate the fines for the applicants was indeed different from that chosen for the European participants in the infringement.

Having been asked to reexamine its decision, the EC recalculated the fines imposed on Toshiba and Mitsubishi and fixed them at €56.79 million and €74.82 million, respectively, without changing the amount of the fine for which they were held jointly and severally liable. The two Japanese undertakings then lodged a new appeal before the GCEU seeking the annulment of the revised fines. In support of their action, the applicants alleged, inter alia, an infringement of the principle of equal treatment as regards the determination of their level of culpability as compared to the European participants in the infringement and the starting amount of the fine.

First, Toshiba and Mitsubishi argued that they were less culpable than their European counterparts because their participation had been limited to agreeing not to enter the European Economic Area (EEA) market, whereas the European undertakings had distributed the GIS projects on that same market through active collusion. In other words, they contended that their participation only consisted in a failure to act and that, consequently, they could not be held as liable as the European undertakings for the implementation of the cartel.

The GCEU reiterated its settled case-law, according to which the [...]

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