New EU Competition Commissioner: Margrethe Vestager ......Sep 15, 2015 · •Baby-formula...

Cadwalader, Wickersham & Taft LLP

www.cadwalader.com

New EU Competition Commissioner:

Margrethe Vestager

Webinar

Alec Burnside, Charles F. (Rick) Rule, Rocky Lee

15 September 2014

Cadwalader, Wickersham & Taft LLP 2

Panelists

Alec J. Burnside Rocky T. Lee Charles F. (Rick) Rule

Partner – Brussels

+32 (0)2 891 81 81

[email protected]

Partner – Beijing, Hong Kong

+86 (10) 6599 7288 (China)

+852 2946 1188 (Hong Kong)

[email protected]

Partner – Washington, D.C.

+1 202 862 2420

[email protected]


The EU institutions

Source: University of Portsmouth


Key appointments

Federica Mogherini

High Representative for Foreign Affairs

Vice-President of the Commission

(Italy)

Donald Tusk

President of the European Council

(Poland)

Jean-Claude Juncker

President of the European Commission

(Luxembourg)

Martin Schulz

President of the European Parliament

(Germany)


The European Commission: College of Commissioners

2014-2019

Source: European Commission


Vice-Presidents

Kristalina Georgieva

Budget & Human Resources

(Bulgaria)

Andrus Ansip

Digital Single Market

(Estonia)

Valdis Dombrovskis

Euro & Social Dialogue

(Latvia)

Alenka Bratušek

Energy Union

(Slovenia)

Jyrki Katainen

Jobs, Growth, Investment

and Competitiveness

(Finland)

Frans Timmermans

Better Regulation,

Inter-Institutional Relations,

the Rule of Law and the

Charter of Fundamental Rights

(Netherlands)


Key Commissioners

Jonathan Hill

Financial Stability,

Financial Services and

Capital Markets Union

(United Kingdom)

Margrethe Vestager

Competition

(Denmark)

Pierre Moscovici

Economic and Financial Affairs,

Taxation and Customs

(France)

Cecilia Malmström

Trade

(Sweden)

Günther Oettinger Digital Economy & Society (Germany)

Elżbieta Bieńkowska Internal Market, Industry, Entrepreneurship and SMEs (Poland)


• Until nomination, Denmark’s Deputy Prime Minister & Minister for Economic and Interior Affairs

(2011-14)

• Born 13 April 1968; married with three children

• Education

Masters in Economics from the University of Copenhagen (1993)

• Career at the European Union

Stagiaire in the European Parliament, Social Liberal Party (1991)

Headed Ecofin Council during Denmark’s presidency (2012);

Brokered deal on bank losses and capital requirements

• Political career in Denmark

Minister of Education and Ecclesiastic Affairs (1998-2001)

Member of the Danish Social Liberal Party

Chairwoman (2007-2011) and Party Leader (2011-14)

• No prior involvement in the competition field

Business exposure: Board of ID Sparinvest (1996-1998) and Royal Greenland (2004-2007)

Head of Agency for Financial Management and Administrative Affairs

New Competition Commissioner – Margrethe Vestager

facebook.com/margrethevestager

@vestager


• Previously at DG Trade,

Head of Unit for Trade and Sustainable Development (2007-2014)

• 13 years of trade policy experience

Worked on WTO issues (1995-2002)

EC Delegation to the United Nations, head of the economic

section (2002-2006)

• Education

Graduate in law from the University of Copenhagen

Post-graduate law degree from the College of Europe

Vestager’s Chef de Cabinet (Chief of Staff) –

Ditte Juul Jørgensen


• The Competition Commissioner shall closely liaise with and contribute to the work of

three Vice-Presidents:

Jobs, Growth, Investment & Competitiveness

Digital Single Market

Energy Union

• Juncker would like Vestager to focus on:

using competition policy tools to contribute to areas such as “the digital single market,

energy policy, financial services, industrial policy and the fight against tax evasion”

“developing an economic as well as a legal approach to the assessment of competition

issues”

“pursuing an effective enforcement” in all areas of competition law

“maintaining and strengthening the Commission’s reputation world-wide and promoting

international cooperation”


Juncker’s mission letter to Vestager


• Vice-Presidents will have the power to block any legislative proposals by

Commissioners working under them.

• Competition Commissioner decides many cases under the power of “habilitation”

without the need to refer to other Commissioners.

• So what will be the Vice-Presidents’ role in individual competition cases?

Role of the Vice-Presidents


Project team: A new boost for jobs, growth and

investment



Project team: A connected digital single market



Project team: A resilient energy union with a forward-

looking climate change policy



Joaquín Almunia

o

Joaquín Almunia and Alexander Italianer remain pro tem

Is due to move jobs under mandatory rotation rule, but timing and successor unknown.

Outgoing Competition Commissioner remains in his role until new Commissioner is in place.

Alexander Italianer – Director-General, DG Competition


DG Competition



• Antitrust

Continuing vigorous cartel enforcement resulted in 3 of the top 4 highest cartel fines levied

on Philips, LG Electronics and Deutsche Bank AG

Initiated the Google and Gazprom investigations but did not close them

Secured the adoption of the Antitrust Damages Directive

Adopted the Visa decision and the MasterCard prohibition of the application of

multilateral interchange fees

Action on Standard Essential Patents (SEPs) – Samsung and Motorola

• Mergers

30 (3 pending) Phase II merger cases

3 prohibition decisions: Ryanair/Aer Lingus, UPS/TNT Express and

Deutsche Börse/NYSE Euronext

• State Aid

Undertook the modernisation of the entire state aid rulebook

Redesigned DG Comp’s state aid control instruments to help the rescue and restructuring

of financial institutions in light of the financial crisis

Almunia’s legacy


• Google: abuse of dominance in Search, Android and others

• Gazprom investigation into abusive terms of supply – on hold pending international crisis

• Cartels, especially in financial services (Libor, Forex, CDS), and autoparts

• Reforms to merger control, especially minority shareholdings

• Unfair tax competition

• National protectionism

• International dimension, especially relations with MOFCOM

Vestager’s in-tray


On economic matters

• “There are clear signs the euro area and the EU economy as a whole is growing. It’s not flashy in any

way but the economy is nonetheless slowly expanding out of the crisis.”

Source: Bloomberg, Denmark Meets Fiscal Limits in Bet

on Elusive European Recovery (29 August 2014)

• “We can’t just stimulate our way out of structural problems. We shouldn’t engage in stop-go policies;

they only create uncertainty.”

Source: Bloomberg, Denmark Criticizes Stimulus

Addiction Missing Structural Fix (15 August 2013)

• “Basically what we are doing discussing capital requirement is to make sure that the financial sector

is sound and solid both in order to avoid crisis but of course also in order to enable the financial

sector to provide guarantees, loans, whatever for businesses in order to make them create jobs.”

Source: Euractiv, Ecofin highlights EU divisions on

bank capital rules (2 May 2012)

A sample of Vestager’s politics


• “She has been criticized for coming across as being too forceful. But keeping in mind that the

last commission was often and rightfully criticised for lack of action on a number of key

issues, I am confident that she can turn this into strength as well.”

Source: Jeppe Kofod (MEP), in MLex’s Vestager

brings economic nous, political resolve to EU

competition post (10 September 2014)

• “She is a very bright and strong politician. In Denmark, many saw her as the real leader of the

government.”

• “She is thus extremely well qualified for the role of competition commissioner. It’s a good

appointment though the Danish government will be worse for her departure.”

Source: Christian Karhula Lauridsen, in GCR’s

Denmark’s Vestager given competition job in

reorganised commission (10 September 2014)

Talk around town…

Source: Morten Messerschmidt (MEP), Mlex (as above)

(10 September 2014)


• Juncker has called for a greater focus and a new direction in markets related to technology, telecoms,

and digital media.

• With “500 million potential customers for new digital products and services,” Juncker sees the benefits

of a strong ICT sector and need for reform.

• “To make better use of the opportunities offered by digital technologies, national silos in telecoms

regulation, in copyright and data protection legislation, in the management of radio waves and in the

application of competition law need to be broken down.”

Source: European Commission Memo Questions

and Answers: The Juncker Commission

(10 September 2014)

Juncker promises greater focus on digital agenda


• Pfizer/AstraZeneca and the “public interest test” (UK)

“One of our options as the government would be to consider using

our public interest test powers. This would be a serious step and

not one that would be taken lightly but I'm open-minded about it.”

Source: Vince Cable, in Reuters’ Britain could

intervene in Pfizer bid for AstraZeneca (6 May 2014)

Compatible with exclusivity of EU review?

Key challenge – managing the rise of national

protectionism

• “Decret Alstom” (France)

Adds to list of strategic sectors for which foreign investments

require government approval

Used as leverage in Alstom/GE/Siemens to secure French interests

“The rules have to change after this story, because we need to make champions.”

Source: Arnaud Montebourg, on EU competition rules, in GCR’s The European champions league (25 July 2014)


Continuity vs. the cult of personality:

• Continuity – 50 years of precedent

• The lure of the free market: differing backgrounds, similar approaches

Leon Brittan, British conservative

Karel Van Miert, the ‘Flemish socialist’

Mario Monti, the Professor

Neelie Kroes, the ‘businesswomen’

Joaquín Almunia, socialist

• Media coverage of Antitrust: the FT test

• Commissioner’s role vis-à-vis DG Comp

• Commissioner’s role within College of Commissioners

How much does the identity of the Commissioner matter?


• Rise in Chinese competition enforcement

Recent raids

Alleged targeting of non-Chinese companies (ex. US Chamber of Commerce report)

• Extraterritorial enforcement / departure from positions taken in the EU and US

P3 Alliance, foreign-to-foreign network cleared in the EU and US, blocked by MOFCOM

• Call for fairness / due process in Chinese competition proceedings

• State of collaboration between EU and Chinese competition regulators

China – Rocky Lee


Foreign Luxury Automakers

• Under the current dealer-franchise agreements, auto makers in China can dictate the prices that their dealers pay

for branded replacement parts and the prices at which those parts are sold to consumers.

• China’s state media have accused automakers of earning exorbitant profits by overcharging consumers and

controlling the sale of auto parts.

• Under China’s antimonopoly law, companies could face fines of as much as 10% of their sales from the preceding

year.

Recently, China’s NDRC levied a record $200M combined fine against 10 Japanese auto-parts and bearings

makers for antitrust activities.

Denso Corp., Aisan Industry Co., Mitsubishi Electric Corp., Mitsuba Corp., Yazaki Corp., Furukawa

Electric Co., Sumitomo Electric Industries Ltd., NSK Ltd., JTEKT Corp. and NTN Corp. were fined

equivalent to between 4% and 8% of their last year's revenue from China.

Chrysler (China) Automobile Sales Co. and several dealers in Shanghai were fined by the Shanghai

Municipal Price Bureau the equivalent of $5.5 million for anti-competitive conduct.

• In response to antitrust probes by NDRC, price cuts on spare parts

BMW: cut by 20% on average on parts including car bodies, compressors, electric generators, storage

batteries and brakes

Chrysler: cut by 20% the price of 145 spare parts including headlights, mirrors and starters

Volkswagen AG’s Audi brand, Tata Motors Co.’s Jaguar Land Rover PLC, Daimler’s Mercedes-Benz,

Toyota, and Honda are also among the automakers that cut prices.

China (Cont.)


• Recently, Microsoft was given 20 days by China’s State Administration for Industry and

Commerce to explain compatibility and bundling issues between its Windows operating system

and its Office productivity software.

• Qualcomm has been under investigation by NDRC since last November over how it calculates

patent-licensing and royalty rates in China.

• Baby-formula producers, including Mead Johnson, Danone, Abbott Laboratories, Royal

FrieslandCampina, Fonterra, and Biostime International were fined by NDRC a combined

RMB 669M for fixing minimum resale prices.

• Drug-maker GlaxoSmithKline was subject to probe into its price-fixing practices, in addition to

anti-corruption investigation.

• An operational alliance named P3 Network by three global shipping firms, Maersk Line,

Mediterranean Shipping Company, and CMA-CGM, was rejected by MOFCOM for antitrust

concerns.

• TFT-LCD producers Samsung, LG, Chimei Innolux, and AU Optronics were fined RMB

353M by NDRC for price-fixing practices.

• Starbucks and Apple have also been accused of charging higher prices in China than in other

markets and, along with Caterpillar, Inc., are rumored to be the next targets for anti-monopoly

probes.

China (Cont.)


• While some complain about the Chinese government’s targeting of foreign corporations,

there are also instances of enforcement actions against domestic companies.

State-owned giants China Telecom and China Unicom have been subject to anti-trust

probes by NDRC over internet access pricing practices.

Alcohol makers Kweichow Moutai and Wuliangye were each fined more than RMB 200M

for monopolistic practices.

Shanghai Gold & Jewelry Trade Association was fined by NDRC the maximum penalty at

RMB 500,000 for fixing prices of precious metals, and five jewelry shops were fined 1% of

their annual sales at RMB 10M.

Three Jilin cement companies were fined RMB 114M by the NDRC for price fixing.

China (Cont.)


• Well established cooperation and strong convergence of US and EU law

Quite a while since GE/Honeywell

Coordination a regular feature of merger review and cartel cases

• US-EU coordination (plus other jurisdictions) on Asian cartel cases

• US and EU joint initiative to developing antitrust regimes world-wide through the

International Competition Network (ICN)

United States – Charles F. (Rick) Rule


• US (FTC/DOJ) versus EU institutions

Similarities

Differences

• The transatlantic antitrust machine

The past 5 years – Almunia’s legacy through American eyes

The next 5 years – prospects (competition law; TTIP)

United States (Cont.)


Questions?

New EU Competition Commissioner: Margrethe Vestager ......Sep 15, 2015 · •Baby-formula...

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