Court of Justice of the European Union Archives

Court of Justice of the European Union

Labor Markets in the Focus of European Competition Law

by Laura Stammwitz and Nils Stock | Jul 25, 2024 | Cartel Enforcement, EC Developments, EU Developments, Joint Ventures/Competitor Collaboration

In May 2024, the European Commission published a Competition Policy Brief classifying certain agreements related to labor markets as serious antitrust infringements. According to the Commission, so-called wage-fixing and no-poach agreements can only be justified in exceptional cases. The Brief follows the first unannounced inspections by the Commission concerning labor market agreements in Germany and Spain in the online meal ordering and delivery industry. It is vital that companies operating in Europe focus on educating their recruiting and human resources departments on antitrust rules to avoid severe fines.

LABOR MARKETS ON THE AGENDA

The Commission’s Competition Policy Brief could be interpreted as a warning for companies exposed to tight labor markets: Restrictive labor market agreements between competitors will be taken as seriously as price-related cartels. Companies must also bear in mind that competitors for labor are not limited to those companies with which they compete to sell products or services. It is sufficient that they compete for the same employees.

Given that restrictions on competition in labor markets mainly affect national markets, the main investigators will be (and already are) national competition authorities.

WHAT AGREEMENTS ARE CAUGHT

The following types of labor market agreements are considered potentially problematic:

No-poach agreements: In some cases, employers (in writing or orally) agree not to steal employees from each other. Such agreements can take different forms: In the case of nonsolicitation or no-cold-calling agreements, companies agree not to actively approach the other companies’ employees with a job opportunity. More far-reaching are no-hire agreements, i.e., companies agree not to hire (actively or passively) employees of other parties to the agreement. As a matter of principle, all forms of no-poach agreements in the Commission’s view constitute market sharing (supply-source sharing) within the meaning of Article 101(1)(c) of the Treaty on the Functioning of the European Union (TFEU) and therefore form a competition risk to be sanctioned.
Wage-fixing agreements: Sometimes, employers agree to fix wages or other types of compensation or benefits for their respective employees. The Commission considers these agreements akin to price fixing within the meaning of Article 101(1)(a) of the TFEU.

The Commission does acknowledge that no-poach agreements may pursue a legitimate objective by incentivizing companies to invest in training their own employees without fearing that they would be later lured away by competitors, and by preventing employees from taking non-patent intellectual property rights (such as trade secrets) to competitors. However, both types of agreements “reveal a sufficient degree of harm to competition” such that the Commission does not see a need to examine their effects. Due to their alleged negative impact on employees’ wages, firm productivity and innovation, they are regarded “by their very nature” as harmful.

The above does not apply, however, to collective bargaining agreements between organizations representing employers and employees, which are explicitly outside the scope of the Commission’s Competition Policy Brief. The Court of Justice of the European Union (CJEU) recognized that certain restrictions of competition are inherent in collective agreements, which [...]

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New Developments in French Competition Law Pose Risk of Ex-Post Challenge to Non-Notifiable Transactions

by Frédéric Pradelles, Stéphane Dionnet and Mary Hecht | Jun 5, 2024 | Agriculture, EC Developments, EU Developments, French Developments, Mergers & Acquisitions

In a significant development for French merger control, on May 2, 2024, the French Competition Authority (FCA) applied the jurisprudence laid down in the recent Towercast case to an alleged anticompetitive agreement matter in the meat-cutting sector.

In its Towercast ruling (C-449/21), the Court of Justice of the European Union (CJEU) held that a merger which is not notifiable (i.e., being below the European and national merger control thresholds) and which has not been subject to a referral under Article 22 of the Merger Regulation 139/2004 of 2004 may be challenged a posteriori by the European Commission or a national competition authority if an abuse of dominant position resulting from the merger but detachable from it can be established.

Less than a week after the Towercast ruling, the Belgian Competition Authority applied the principles set out by the CJEU by opening an ex officio investigation into the acquisition of the edpnet group by Proximus, ordering interim measures in June 2023 to ensure the continuity of edpnet’s activities and its operational and commercial independence from Proximus, ultimately leading to the sale of edpnet’s activities post-closing in November 2023. The president of the FCA, Benoît Cœuré, said that this instrument could “now be used, bearing in mind that its conditions of use are restrictive”. This has now been confirmed by the FCA’s May 2 decision, on which Cœuré said was an “important clarification for merger control”, particularly regarding Article 101 TFEU.

EU Court of Justice Confirms Annulment of Commission Prohibition Decision Due to a Procedural Irregularity

by McDermott Will & Emery | Feb 20, 2019 | EC Developments, EU Developments, Mergers & Acquisitions

On 16 January 2019, the Court of Justice of the European Union (CJEU) dismissed the appeal by the European Commission (Commission) against the 2017 judgment of the General Court of the European Union (GCEU). This annuls the Commission’s decision to block the proposed acquisition of TNT Express NV (TNT) by United Parcel Services (UPS) in its entirety (C-265/17 P). The judgment reminds the Commission that it must maintain a balance between the need for speed and the observance of the rights of the defence in merger proceedings.

IN DEPTH

Background

By decision on 30 January 2013, the Commission blocked the proposed acquisition of TNT by UPS (Case M.6570).

On 7 March 2017, the GCEU annulled the Commission’s decision in its entirety on the grounds that (i) the Commission infringed UPS’s rights of defence by failing to communicate to UPS the final version of an econometric model on which it relied in its prohibition decision and that (ii) UPS might have been better able to defend itself if it had at its disposal the final version of that model.

The Commission challenged the GCEU judgment before the CJEU. First, the Commission argued that it was not required to communicate the final econometric analysis to UPS. Second, the Commission claimed that even if UPS’s rights of the defence had been infringed, the GCEU should have dismissed UPS’s plea alleging infringement of the rights of the defence as ineffective because a significant impediment to effective competition (“SIEC”) could in any event be established in Denmark and the Netherlands without having to rely on the econometric model concerned.

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Antitrust M&A Snapshot

by McDermott Will & Emery, Jon B. Dubrow and Joel R. Grosberg | Nov 7, 2018 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions, Monopolization/Abuse of Dominance

United States: July – September 2018 Update

Both US antitrust agencies marked the third quarter of 2018 with significant policy announcements regarding the merger review process. The announced reforms seek to expedite the review process through cooperation between the agencies and the merging parties. Moving first, the Federal Trade Commission (FTC) revealed a Model Timing Agreement that provides the FTC Staff with earlier notice of the parties’ intent to substantially comply with a Second Request. Earlier notice allows the FTC Staff to create a more effective timeline for meetings with division management, front office staff and the Commissioners. Less than two months after the FTC revealed its Model Timing Agreement, the Antitrust Division of the US Department of Justice (DOJ) announced procedural reforms aimed at resolving merger investigations within six months of filing. The DOJ will commit to fewer custodians and depositions in exchange for the merging parties providing key information earlier in the investigation. Overall, these reforms appear to be a positive step forward for parties considering future transactions, but their effectiveness remains uncertain as the agencies start a difficult implementation period. While the FTC timing agreement may provide more certainty around the process, it does not reduce the review timing and actually extends it.

EU: July – September 2018 Update

The European Commission (EC) remained quite active clearing mergers in the third quarter of 2018. Most notably, the EC cleared Apple’s acquisition of Shazam without imposing conditions despite the EC’s stated concerns about access to data as a competitive concern. The EC opened a Phase II investigation into the transaction to investigate the potential for Apple to obtain a competitive advantage over competing music streaming services by accessing Shazam’s consumer data obtained through its music recognition services. In this case, the EC did not find evidence that the access to Shazam’s data would provide Apple a competitive advantage. In addition, the EC found that there were no concerns about Apple potentially restricting Shazam as referral source for Apple’s competitors. Going forward, it is clear that access to data is an issue that the EC will continue to investigate, but it is also clear that the EC is taking a careful approach in assessing when that access will truly lead to a competitive harm. (more…)

Antitrust M&A Snapshot

by McDermott Will & Emery, Jon B. Dubrow and Joel R. Grosberg | Aug 6, 2018 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions, Monopolization/Abuse of Dominance

United States: April – June 2018 Update

The second quarter of 2018 ushered in a trial defeat for the US Department of Justice (DOJ) and the beginning of a new era at the Federal Trade Commission (FTC). In June, Judge Richard J. Leon of the US District Court for the District of Columbia denied the DOJ’s requested injunction of the AT&T/Time Warner acquisition. The case marked the first litigated vertical challenge by the Antitrust Division in nearly 40 years. DOJ filed a notice of appeal of the district court’s decision. At the FTC, four new commissioners were sworn in in May, with a fifth to join upon the approval of current commissioner Maureen Ohlhausen to the US Court of Federal Claims. With the transition nearly complete, new FTC Chairman Joseph Simons announced plans to re-examine and modernize the FTC’s approach to competition and consumer protection laws, possibly charting a new course for FTC antitrust enforcement.

EU: April – June 2018 Update

In this quarter, we saw two significant developments concerning the issue of gun-jumping. First, the Court of Justice of the European Union (CJEU) clarified the scope of the gun-jumping prohibition, ruling that a gun-jumping act can only be regarded as the implementation of a merger if it contributes to a change in control over the target. Second, the European Commission (EC) imposed a €124.5 million fine on Altice for having breached the notification and the standstill obligations enshrined in the EUMR by gun-jumping. The EC also issued two clearance decisions following Phase II investigations in the area of information service activities and the manufacture of basic metals. (more…)

European Court of Justice Provides Guidance on Scope of the Standstill Obligation Enshrined in the EU Merger Regulation

by McDermott Will & Emery | Jun 7, 2018 | EU Developments, Mergers & Acquisitions

Pursuant to the EU merger control rules, a transaction that falls within the purview of the EU Merger Regulation (EUMR) must be notified to the European Commission (Commission) in advance (Article 4(1) EUMR), and must not be implemented until cleared by the Commission, known as the “standstill” obligation (Article 7[1] EUMR). A principal rationale behind the standstill obligation is to prevent the potentially negative impact of transactions on the market, pending the outcome of the Commission’s investigation.

While the standstill obligation represents a clear-cut rule, it can often be a significant challenge for businesses to apply in practice. Failure to get it right, however, can result in draconian penalties. Indeed, the Commission’s recent €124.5 million fine on Altice, which comes in the wake of a spate of enforcement actions in this arena, bears testimony to an increasingly hard stance against companies flouting the notification requirement/standstill obligation. (more…)

Advocate General Wahl Delivers Opinion on Legality of Bans on Online Sales via Third-Party Platforms in Selective Distribution Systems

by McDermott Will & Emery | Aug 23, 2017 | Distribution/Franchising, German Developments

According to Advocate General Nils Wahl’s opinion, delivered on July 26, in the Court of Justice of the European Union’s (CJEU) case Coty Germany GmbH v Parfümerie Akzente GmbH (case C-230/16), suppliers of luxury goods may prohibit their authorized retailers from selling their goods via third-party internet platforms. Such bans do not necessarily infringe Article 101(1) of the Treaty of Functioning of the European Union (TFEU) (which prohibits anticompetitive agreements).

Background of the Case

On July 16, 2016, the Higher Regional Court of Frankfurt lodged a request for a preliminary ruling with the CJEU asking whether selective distribution systems that serve to ensure a “luxury image” for the goods constitute an aspect of competition that is compatible with Article 101(1) TFEU and, whether bans on sales via third-party internet platforms constitute a restriction “by object” and should be viewed as “hardcore restrictions” under the Commission’s Vertical Agreements Block Exemption Regulation (VBER).

The initial dispute arose when Coty, a supplier of luxury cosmetics in Germany, brought an action against one of its authorized retailers, Parfümerie Akzente, for having infringed a provision in Coty’s selective distribution agreement that prohibited the retailers from distributing the luxury products via third-party platforms, such as Amazon, in order to preserve the brand image. The agreement provided that the authorized retailers could only sell the products online through an “electronic store window,” provided that the luxury character of the products was preserved. (more…)

The Court of Justice of the European Union (CJEU) Confirms the Commission’s Approach to Hybrid Settlements

by Louise Aberg | Mar 10, 2017 | Cartel Enforcement, EC Developments

The case follows on from the Commission’s Animal Feed Phosphates cartel decision pursuant to which fines totalling €176 million were imposed on a number of producers of animal feed for price fixing and market sharing throughout the EEA.

During the investigation into the infringement, all the companies involved engaged in settlement discussions with the Commission with a view to obtaining a 10 percent reduction in the fine that would otherwise have been imposed had they not settled with the Commission. However, during the settlement process Timab, a subsidiary of the Roullier Group, decided to withdraw from the settlement procedure. The Commission therefore followed the standard administrative infringement procedure against Timab – despite the fact that it had entered into settlements with the other companies involved in the cartel. This was the first time, therefore, that the Commission rendered a decision in a so-called ‘hybrid’ case i.e. where some parties settle but others do not.

During the initial settlement discussions, several meetings were held between the Commission and Timab, during which evidence of the infringement was discussed. On the basis of the evidence available, the Commission informed Timab that a fine in the range of €41 to €44 million would be imposed on it. However, in its final decision of 20 July 2010, the Commission levied a fine of nearly €60 million on Timab.

Timab challenged the Commission’s decision before the General Court of the European Union (GCEU) in case T-456/10, claiming that the Commission had infringed its legitimate expectations regarding the amount of the fine, on the one hand, and its right not to incriminate itself, on the other. Such challenge was unsuccessful, however.

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The European Court Of Justice Requires The European Commission To Provide Adequate Reasons For Its Requests For Information

by Louise Aberg | Jun 14, 2016 | Cartel Enforcement, EC Developments

On March 10, 2016, the Court of Justice of the European Union (CJEU) rendered its judgment in the so-called Cement case, (C-247/14 P HeidelbergCement v Commission, C-248/14 P Schwenk Zement v Commission, C-267/14 P Buzzi Unicem v Commission and C-268/14 P Italmobiliare v Commission) ruling that the General Court of the European Union (GCEU) had erred in law in finding that decisions of the European Commission (EC) requesting information from cement manufacturers during the course of a cartel investigation were adequately reasoned.

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The European Court of Justice Rules against Overreaching Requests for Information by the European Commission

by Louise Aberg and McDermott Will & Emery | Mar 14, 2016 | Cartel Enforcement, EC Developments

Last week, the Court of Justice of the European Union (ECJ) ruled that the General Court of the European Union (GCEU) had been wrong when deciding that the European Commission’s requests for information sent to eight cement manufacturers during the course of a cartel investigation were adequately reasoned (see judgments in casesC-247/14 P, HeidelbergCement v Commission, C-248/14 P, Schwenk Zement v Commission, C-267/14 P, Buzzi Unicem v Commission and C-268/14 P, Italmobiliare v Commission).

Read the full article.

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