Outline

£  Article 101 TFEU: Cases and Investigations

£  Article 102 TFEU: Cases and Investigations

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Article 101 TFEU: Investigations

Most Important Pending Investigations Clear focus on the financial services sector

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Date Sector Companies Involved Stage of the proceedings

20 May 2014 Financial Crédit Agricole, HSBC, JP Morgan SO

1 July 2013 Financial (Credit Default Swaps)

Bank of America, Merrill Lynch, Barclays, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Royal Bank of Scotland, UBS, International Swaps and Derivative Association and data service provider Markit

SO

9 April 2013 Financial (Inter-bank Fees)

Mastercard Opened Investigation

Article 101 TFEU: Cartels

Overview of fines for 2013-2014 £  Total amount of fines imposed (as of 3 September 2014):

2013: EUR 1 882 975 000

2014: EUR 1 575 981 000

Fines imposed (adjusted for Court judgments)

Period 2010-2014

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Infringement Decisions £  Normal Procedure

–  Smart Card Chips Producers (3 September 2014)

•  Infeon, Philips, Samsung and Renesas charged with EUR 138 million for adopting a common reaction to requests for lower prices

–  Underground and Submarine High Voltage Power Cables (2 April 2014)

•  EUR 302 million on 11 European, Japanese and Korean producers for market division; customers, projects and regions allocation; price level agreements and price information exchanges during a 10 year period

•  Parent companies of the producers, including Goldman Sachs, were also held liable

–  North Sea Shrimps (27 November 2013)

•  EUR 28 million on Dutch and German shrimps traders for price coordination at the retail level directly affecting end consumers mainly in Germany, France, Belgium and the Netherlands

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Infringement Decisions £  Settlement Procedure

–  Steel Abrasives (2 April 2014): •  EUR 302 million to steel producers Ervin, Winoa, Metalltechnik Schmidt and Eisenwerk Wurth

•  4th cartel case to be settled in 2014

–  Automotive Bearings (19 March 2014): •  EUR 953 million to 2 European and 4 Japanese companies for price coordination in EEA from 2004-2011

•  4th highest cartel fine in history

–  Polyurethane Foam (29 January 2014): •  EUR 114 million to four major foam producers for price-fixing in 10 different Member States for 5 years

–  Euro interest rate derivatives (EIRD) & Yen interest rate derivatives (YIRD) (4 December 2013): •  EUR 1.71 billion on 8 financial institutions - DB and SG charged with 4th and 6th highest cartel fines per

undertaking in history 7

Case-Law £  Parental Liability

–  Cases C-668/11 P and C-679/11 P Alliance One International v Commission, 26 September 2013 (Spanish Raw Tobacco)

•  The Commission may rely exclusively on the parental liability presumption or may establish that a parent company actually exercises decisive influence over its subsidiary by means of other evidence (the ‘dual basis’ method)

–  Cases C-408/112 P YKK Corporation and others v Commission, 4 September 2014

•  In determining the 10% of turnover upper limit of the fine imposed solely on YKK Stocko, only the turnover of YKK Stockco, the undertaking liable for the infringement during the relevant period, should have been used

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Case-Law £  Information Exchange as Anticompetitive Practice by Object

–  Cases T-587/08 Fresh Del Monte Produce v Commission and T-588/08 Dole Food and Dole Germany v Commission, 14 March 2013 (Bananas cartel)

•  Commission found that the exchange of future prices (or any factor relevant to set future prices) had to be regarded as an object-type infringement. Parties argued that the bilateral communications were “mere gossip on general market conditions”

•  GC held that the pieces of information were not publicly available and confirmed that the bilateral exchange of “pre-pricing” information, relating to the fixing of quotation prices constituted a concerted practice

£  NB

–  New generation “cartels”

–  Price-signalling

–  MFNs

–  Hub & spoke

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Case-Law £  Dawn Raids

–  Case C-37/13 P Nexans France and Nexans v Commission, 25 June 2014

•  Decision ordering inspections need not define precisely the relevant market, to set out the exact legal nature of the presumed infringements or to indicate the period during which those infringements were committed

•  Nevertheless, it was held in T-135/09 that the Commission must precisely delimit the products concerned by a dawn raid in the decision ordering the inspection

–  Cases T-289/11, T-290/11 and T-521/11 Deutsche Bahn and Others v Commission, 6 September 2013

•  DB sought the annulment of three Commission’s decisions authorising unannounced inspections and all measures taken on the basis of the inspections conducted under the decisions. It asked the GC to order that the Commission return all the copies of documents made during the inspections

•  GC dismissed the appeals and rejected arguments that the Commission’s decisions infringed DB’s fundamental rights to inviolability of premises and to an effective legal remedy due to the lack of prior judicial authorisation of the inspection decision

•  Exemplary description of the procedure

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Case-Law £  Cartel Members Liable for “Umbrella Pricing”

–  Case C-557/12, Kone AG and Others v ÖBB Infrastruktur AG, 5 June 2014

•  Compensation claimed from cartel members for damages resulting from the fact that non cartel members, having regard to the cartel’s practices, set prices higher than under standard competitive conditions

•  ECJ held that the full effectiveness of Article 101 TFEU would be put at risk if the right of any individual to claim compensation for harm suffered as a result of a cartel were subjected by national law to the existence of direct contractual links with the cartel’s members

•  AG Kokott: “ground breaking judgment in the context of private enforcement”

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Case- Law £  Repeated Infringements

–  Joined Cases T-73/09 and T-56/09 Saint Gobain, 27 March 2014 (Car glass cartel)

•  Saint Gobain found guilty of repeated infringements due to previous decisions against it in 1984 and 1988

•  Applicants argued that the fact that more than 10 years had elapsed between the previous findings of an infringement and the repetition of unlawful conduct precludes a finding of repeated infringement

•  GC finds that notwithstanding the period of time elapsed, the Commission is entitled to establish repeated infringement without breaching the principle of proportionality when the activities concerned are identical and the cartels in question similar

£  Negligent or intentional conduct does not matter

–  Case C-681/11, Bundeswettbewerbsbehörde, Bundeskartellanwalt v Schenker, 18 June 2013

•  Legal advice about the lawfulness of an undertaking’s conduct under EU competition law does not protect undertaking from being found to have infringed Article 101 TFEU and being fined for it

•  National competition authorities could not issue negative clearance (only the Commission may), they can only opt not to investigate

•  The principle of criminal law nulla poena sine culpa does not apply in cartel cases

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Case- Law £  Damages for Excessive Length of Proceedings

–  Cases C-50/12 P, C-40/12 P, C-58/12 P, 26 November 2013 (Industrial Bags Cartel)

•  ECJ holds that where the excessive length of the proceedings does not affect their outcome, failure to deliver judgment within a reasonable time cannot lead to the setting aside of the judgment under appeal in the context of appeal proceedings

£  Access to Documents

–  Case C-536/11 BWB v Donau Chemie, 6 June 2013

•  The principle of effectiveness prohibits national rules which only grant third parties access to the file (including leniency documents) following a breach of Article 101 TFEU, if consent of all the parties to the proceedings has been obtained.

•  The absolute protection of certain documents which are the only means of enabling a party to obtain the evidence needed to establish their claim for damages renders the right to compensation conferred on parties adversely affected by an infringement of Article 101 TFEU nugatory.

•  It is only if there is a risk that a given document may actually undermine the public interest relating to the effectiveness of the national leniency programme that non-disclosure of that document may be justified

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Article 101 TFEU: Horizontal & Vertical Agreements

Investigations £  Commission opens formal proceedings to examine certain provisions in licensing

agreements between major US film studios and the largest European pay-TV broadcasters, 13 January 2014

•  The investigation looks into agreements that grant EU broadcasters “absolute territorial exclusivity” for films licensed by US studios, thus denying access to subscribers located outside the licensed territory

•  It centres around restrictions imposed to passive sales and already existing subscribers and does not intent to give way to a pan-European licensing scheme

£  Commission opens formal investigation against container liner shipping companies 22 November 2013

•  Public announcements of price increase intentions through press releases on websites and in specialised trade press made a few days before the announced implementation date. several times a year disclosing the amount of increase and the date of implementation

•  Signal future price intentions to each other

Agreement not to Compete £  Agreement not to compete: Commission fines Telefónica and Portugal Telecom €79 million

for illegal non-compete contract clause (under appeal), 23 January 2013

•  In July 2010, in the context of the acquisition by Telefónica of the Brazilian mobile operator Vivo, which was until then jointly owned by Telefónica and Portugal Telecom, the parties inserted a clause in the contract indicating they would not compete with each other in Spain and Portugal as from the end of September 2010

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Patent Settlement Agreements £  9 July 2014: Decision on Servier

–  Fine of EUR 427.7 million on Servier and 5 generics companies

–  Servier also held in abuse of dominant market position

–  “Defending patents is essential if we are to continue the development of innovative medicines for the benefit of patients”, Servier’s Spokeswoman

£  19 June 2013: Lundbeck Citalopram Decision

–  Fine of EUR 93.8 m on Lundbeck and fines totalling EUR 52.2 m on generics

–  Commission found that instead of competing, the generics agreed with Lundbeck not to enter the market in return for payments and other inducements

–  Lundbeck and generics have appealed

–  Lundbeck “appalled”; “strongly disagrees with the Commission’s decision, and considers it contains several serious legal and factual errors”

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Pay for Delay Agreements £  10 December 2013: Johnson & Johnson and Novartis decision

–  EUR 16 million fine on Johnson & Johnson and Novartis for agreeing to delay entry of Fentanyl’s generic version to the market. Fentanyl is a stronger than morphine painkiller mainly used by cancer patients

–  Novartis/Sandoz received monthly payments exceeding possible profits from the generic product’s sales

–  VP Almunia: “Pharmaceutical companies should think twice before engaging into such anticompetitive practices harming both patients and taxpayers”

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E-books – MFN clauses £  13 December 2012: The Commission accepted legally binding commitments

from Simon & Schuster, Harper Collins, Hachette, Holtzbrinck and Apple for sale of e-books

–  The agency agreements between Apple and each of the four publishers contained a retail price MFN clause. The retail price MFN clause provided that, in the event another retailer were to offer a lower price for a particular e-book each publisher would have to lower the retail price of that e-book in the iBook store to match the lower retail price of this other retailer

–  The retail price MFN clause acted as a joint "commitment device" which ensured that the four publishers would have the same financial incentives to make Amazon and other retailers switch to the agency model during the same time period

£  Commitments:

–  Termination of agency agreements Termination of agency agreements concluded with retailers other than Apple Two-year cooling-off period; Five-year ban on retail price MFN clauses.

£  25 July 2013: Commission accepted legally binding commitments from Penguin

–  Penguin offered substantially the same commitments as those proposed by the other publishers

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Revenue-sharing JV (Commitments) £  23 May 2013: The Commission accepted commitments offered by Air Canada,

United and Lufthansa (Star Alliance) to address the Commission's concerns that the parties' cooperation under a revenue-sharing joint venture may be in breach of EU antitrust rules and harm premium passengers on the Frankfurt-New York route

–  The revenue sharing joint venture eliminated competition between the parties on price and capacity. The Commission had concerns that this may have resulted in higher prices for premium passengers on the Frankfurt-New York route

–  The parties offered to make landing and take-off slots available at Frankfurt and/or New York. The parties also offered to enter into agreements allowing competitors to offer tickets on the parties' flights (reducing competitors' frequency disadvantage) and to get better access to the parties' connecting traffic

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National territorial limitations £  Confederation of Societies of Authors and Composers (CISAC) appeals, 12 April

2013

–  GC upheld the appeal by CISAC against the 2008 Commission decision which had held that CISAC and its member societies had engaged in a concerted practice in order to restrict competition

–  Commission had not proved to a sufficient legal standard the existence of a concerted practice relating to the national territorial limitations and failed to prove that the collecting societies acted in concert in imposing territorial limitations

•  No documents proving the existence of concerted practice as regards the territorial scope of the mandates which they grant each other

•  Commission did not render implausible the applicants’ explanation that the parallel conduct of the collecting societies at issue was not the result of concerted practice, but rather of the need to fight effectively against the unauthorised use of musical works

–  GC dismissed the appeals in so far as they challenged the Commission’s decision that membership and exclusivity clauses in the collecting societies’ agreements

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Vertical restraints £  Case C-32/11 Allianz Hungária Biztosító Zrt v Gazdasagi Versenyhivatal, 14

March 2013

–  Vertical agreements can also be restrictions by object

–  The object of the agreements at issue should be determined in the light of the economic context of the two markets concerned

–  Impracticable definition of “object” infringement

•  “36. In order to determine whether an agreement involves a restriction of competition ‘by object’, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part (see GlaxoSmithKline Services and Others v Commission and Others, paragraph 58; Football Association Premier League and Others, paragraph 136; and Pierre Fabre Dermo-Cosmétique, paragraph 35). When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question (see Expedia, paragraph 21 and the case-law cited).”

•  BUT Asnef-Equifax and Administración del Estado, para 49 à effect!

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Article 102 TFEU: Cases and Investigations

Updates on Investigations

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Date Stage of Proceedings

12 August 2014 Bulgarian Energy Holding – SO (wholesale electricity market)

5 February 2014

Google – Commitments submitted

13 December 2013

Gazprom – Commitments submitted

5 July 2013

Bulgarian Energy Holding – Opened Proceedings (gas infrastructure)

Commitment Decisions £  18 December 2013: Commission deems Deutsche Bahn’s commitments on

traction pricing legally binding

–  DB Energie committed to introduce a new universal pricing system to tackle Commission’s concerns for special discounts. Electricity providers / non members to the DB group will now be able to directly supply traction current to railway companies

£  10 April 2013: Commission accepted commitments from CEZ concerning the Czech electricity market and made them legally binding

–  CEZ proposed to divest about 800 – 1 000 MW of its generation capacity. A buyer could now establish itself on the Czech market for the generation and wholesale supply of electricity

£  6 March 2013: Commission fines Microsoft €561 million for non-compliance with browser choice commitments

–  Commitments legally binding until 2014 to address concerns for tying Internet Explorer to its dominant client PC operating system Windows

–  First time that a company was fined for non-compliance with commitments

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Standard Essential Patents £  Infringement Decision

–  Motorola Mobility, 29 April 2014

•  Motorola previously committed to license its Standard Essential Patents (“SEPs”) on fair, reasonable and non-discriminatory (“FRAND”) terms, to which Apple was “willing” to adhere

•  Commission held that “willing” licensees are not deprived of their rights to challenge the patents’ validity

•  Commission decided to exercise its discretion not to impose fines

£  Commitment Decision

–  Samsung Electronics, 29 April 2014

•  Samsung has for a period of five years committed not to seek any injunctions in the EEA on the basis of any of its SEPs concerning technologies implemented in smartphones and tablets against any company that agrees to a specific licensing framework

•  “Safe-harbour” for all potential licensees of Samsung SEP 26

Case-Law £  Standard of Judicial Review

–  Case C-295/12 P Press and Information Telefónica S.A. and Telefónica de Espaħa S:A:U: v Commission, 10 July 2014 (cf AG Wathelet’s Opinion of 26 September 2013)

•  The GC should not undertake of its own motion a new and comprehensive investigation of the file; it must rather carry out its review of legality on the basis of the evidence adduced by the applicant. In the present case, applicants did not identify the nature of the alleged errors

•  The GC exercised its power of unlimited jurisdiction in assessing the fine’s proportionality

£  Insufficient Community Interest – rejections of complaints

–  Case T-74/11 Omnis Group v Commission, 30 May 2013

•  Post Danmark “child”

–  C-56/12 European Federation of Ink and Ink Cartridge Manufacturers (EFIM) v Commission, 19 September 2013

•  Important principles for aftermarkets 27

Case-Law £  Infringement of Articles 106 and 102 TFEU

–  Cases C-553/12 P and C-154/12 P European Commission v Dimosia Epicheirisi Ilektrismou AE (Greek Lignite), 17 July 2014

•  An infringement of Article 106 TFEU in conjunction with Article 102 TFEU may exist, even if the Commission has not identified any actual abuse. It is sufficient for the Commission to identify a potential or actual anti-competitive consequence liable to result from the State measure at issue

•  “abus automatique”

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Case-Law £  Rebates

–  Case T-286/09 Intel Corp. v Commission, 12 June 2014

•  Exclusivity rebates are by their very nature capable of restricting competition (no longer “pricing abuses?”). Hence, the Commission is not required to assess the circumstances of the case or to conduct an “as efficient competitor” test in order to show actual or potential foreclosure effects.

•  Neither the level of the rebate, nor the duration of the contract, nor the share of the market affected by the rebate, nor the fact that only a segment is affected matter.

•  Categorisation:

•  Loyalty rebates à per se illegal.

•  Quantity rebates are lawful if they reflect gains in efficiencies and economies of scale

•  For other rebates (e.g. “target rebates”) it is necessary to look at all the circumstances (but no need to run an “as efficient competitor” test

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Case-Law £  Consequences of Intel

–  Complete disregard of the Guidance Paper

–  But see paras 162-164 à legitimate expectations may still apply

–  Is the Guidance Paper dead?

•  Not (yet)

•  Policy v. Law

•  Institutional issue (DG-Comp – Legal Service)

•  NCAs and national courts?

•  Perverse effects

£  30

Thank you