On 20 February 2013, the European Commission launched a public consultation in relation to a draft proposal for a revised block exemption for technology transfer agreements (the proposal). The Commission seeks to improve and update the current legal regime on technology licensing, with a view to encouraging competition, strengthening incentives for research and development activities and facilitating the diffusion of intellectual property.
Joaquín Almunia, the European Union’s Commissioner for Competition, has announced that the European Commission hopes to settle around half of its outstanding cartel cases in 2013. It’s time to review the European Union’s settlement procedure.
EU Court rules that European Commission must undertake an individual and specific review of requested cartel documents before it can deny a damages claimant access thereto.
The European Commission has launched a Green Paper consultation on credit card, internet, and mobile payments with regard to card-fees and related matters of concern to the competition authorities.
Interested stakeholders have until 11 April 2012 in which to submit their views.
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.
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.
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.
A recent decision by the Court of Justice of the European Union may make it easier for prospective claimants to obtain at least those leniency statements and related materials that are submitted to the national competition authorities of the EU Member States. Companies doing business in the European Union are urged strongly to follow developments in this area and factor the risk of disclosure into the decision of whether or not to apply for leniency.
The majority of merger control regimes around the world impose standstill or waiting period requirements for notifiable transactions, e.g. the US, the EU and most EU Member States. If a transaction meets the filing thresholds, it must be notified to the competent antitrust regulator and must not be closed without prior approval by the antitrust regulator or the expiration of the applicable waiting period.
Under German merger control rules, a notifiable merger must not be implemented without prior clearance decision. An infringement of the standstill obligation can (theoretically) lead to fines of up to 10 percent of the group’s worldwide turnover. In addition, the infringement of the standstill obligation renders the contracts ineffective under German merger control rules.
The German Federal Cartel Office (FCO) has recently taken a stricter approach to the enforcement of the merger standstill obligation. In the past, the risk of fines was minor if the merger did not lead to any serious competition concerns, if it was the group’s first infringement of the standstill obligation and if the company itself notified the FCO ex post of the implemented merger.
We see now a growing number of decisions imposing fines for the infringement of the standstill obligation (sometimes referred to as "gun jumping" in the United States). In May 2011, in the latest of a string of such decisions, the FCO imposed a substantial fine for infringement of the standstill obligation although the merger did not lead to any serious competition concerns and although the company had itself notified the implemented merger. These facts were only taken into account as mitigating factors for the calculation of the fine.
The European Commission has also recently imposed fines for the infringement of the standstill obligation.
In this changing environment, the filing requirement and the standstill obligation cannot be seen as a pure formality. It is therefore essential to always verify whether and in which jurisdictions a transaction is notifiable – and not to close the deal before the relevant competition authorities have cleared the deal.
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