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Competition Flashback Q1 2023 – EU and Dutch competition law developments

This is the Competition Flashback Q1 2023 by bureau Brandeis, featuring a selection of the key EU and Dutch competition law developments of the past quarter (see the original version here).

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Overview Q1 2023

Merger control

Cartels and vertical restraints

Abuse of a dominant position

Follow-on competition damages claims

State aid

Public Enterprises (Market Activities) Act

ACM blocks acquisition of Talpa Network by RTL Group

ACM, decision of 3 March 2023

The Dutch Authority for Consumers and Markets (in Dutch: Autoriteit Consument en Markt, “ACM”) decided on 3 March 2023 to definitively block the acquisition of media company Talpa Network (“Talpa”) by rival company RTL Group (“RTL”). According to the ACM, the concentration would render RTL/Talpa the largest provider of television channels, thereby gaining too much market power in both the television advertising market and the market for the distribution of television channels to parties such as KPN and VodafoneZiggo. Previously, the ACM decided on similar grounds that the concentration required a merger licence (see also CF Q1 2022). In the prohibition decision, the ACM confirms the concerns earlier identified.

In addition, the ACM examined whether the merging parties could leverage their market power in the television advertising market to the online advertising market (conglomerate effects). In the end, no such risks were identified. Finally, the ACM investigated the market for the purchase of TV-content, as RTL/Talpa could potentially gain an important buying position in some segments. Ultimately, the ACM left open whether this would be the case, as the acquisition was already blocked due to competition risks in the aforementioned markets.

RTL and Talpa tried to convince the ACM with various remedy proposals, yet without success. For instance, they offered to fully and exclusively transfer the sale of advertising space on Talpa channels to Mediahuis for a period of ten years. However, based on the market test, the ACM concluded that the proposed remedy would not allow Mediahuis to compete autonomously and independently from RTL/Talpa. In addition, the parties offered to separately and independently negotiate with TV-distributors on (the fees of) their channel packages for five years. According to the ACM, this behavioural remedy would also not eliminate the problems identified, as the proposed duration is insufficient and RTL and Talpa could still align their negotiations.

 

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Court overturns ACM veto of Mediq/Eurocept due to insufficient investigation and reasoning

Rotterdam District Court, judgment of 24 March 2023

On 24 March 2023, the Rotterdam District Court overturned the ACM’s decision to block the merger of Mediq and Eurocept. The ACM decided to refuse the merger licence because the merging parties would obtain a very strong market position on the market for the provision of ambulatory infusion pumps for domestic use. Mediq’s appeal mainly focused on this very specific market definition.

Besides ambulatory infusion pumps, the product group includes elastomeric pumps and stationary infusion pumps. Following its market investigation, the ACM concluded that elastomeric pumps and stationary infusion pumps are not interchangeable with ambulatory infusion pumps. The court ruled that the ACM had not sufficiently investigated the variety of medication that can be administered by the ambulatory infusions pumps and the elastomeric pumps. Therefore, it could not be concluded that these products are not interchangeable. In addition, the court did not follow the ACM’s statement that stationary infusion pumps are only rarely used in domestic situations, as other market players had stated that stationary infusion pumps are, in fact, suitable for domestic use.

Since the ACM has not made it sufficiently plausible that ambulatory infusion pumps are not interchangeable with elastomeric pumps or stationary infusion pumps, the court rejects the market definition maintained by the ACM decision, and hence, the basis for refusing the merger licence. The ACM will have to conduct further investigation into the relevant product market.

 

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Overview highlights merger cases European Commission

Adobe/Figma

The European Commission (“Commission”) is currently investigating Adobe‘s acquisition of Figma. Adobe is a software company offering, among other things, product design programme Adobe XD. Figma provides product design programme Figma Design and online whiteboard programme Figjam. As the acquisition does not exceed European merger thresholds, the parties were not subjected to a obligation to notify the transaction to the Commission. However, several national competition authorities submitted a request to the Commission under Article 22 of the Merger Regulation to investigate the acquisition. The ACM has also joined this request. The competition authorities concerned foresee a risk that the acquisition will restrict competition in the market for interactive design and whiteboard programmes.

Viasat/Inmarsat

In January 2023, Viasat notified the acquisition of Inmarsat to the Commission. Both companies are providers of in-flight connectivity (“IFC”)-services to commercial airlines. In its phase I-investigation, the Commission found, inter alia, that Viasat and Inmarsat are close competitors and that few other providers are active on the market. Viasat’s acquisition of Inmarsat could therefore reduce competition between providers of IFC-services. The Commission will therefore conduct an in-depth investigation into the impact of the acquisition on the market for IFC-services in the commercial aviation sector.

Sika/MBCC

On 12 December 2022, Swiss construction chemicals producer Sika notified the Commission of its intention to acquire its German rival MBCC. The Commission’s preliminary investigation found that the transaction would significantly reduce competition on the European markets for chemical and concrete admixtures, leading to higher prices and a decrease in innovation. In particular, the Commission concluded that the merged parties would acquire high market shares in the relevant markets, which are already characterised by a relatively weak level of competition and high barriers to entry. To address the Commission‘s concerns, Sika offered to divest MBCC‘s chemical admixtures business in the EEA, Australia, Canada, New Zealand, Switzerland, the UK and the US, including all global research and development facilities. British chemical giant INEOS will transform the divested business into an independently competing company. Under these conditions, the Commission approved the acquisition.

Deutsche Telekom, Orange SA, Telefónica, Vodafone

Following its phase II-investigation, the Commission has approved the creation of a joint venture by telecom companies Deutsche Telekom, Orange SA, Telefónica and Vodafone. The companies will use the joint venture to create a platform for digital marketing and advertising activities that generates and links a unique digital code to users, allowing them to better adapt their content to specific users. The Commission’s investigation found that there are sufficient alternatives for digital recognition of users and that there is no risk that the four providers will coordinate their behaviour outside the joint venture.

Korean Air/Asiana

The Commission has launched an in-depth investigation into Korean Air’s proposed acquisition of Asiana. Asiana and Korean Air are the two largest airlines in South Korea. The Commission’s preliminary investigation found that the two airlines are close competitors. In the second phase, the Commission will examine to what extent the acquisition may affect competition in the market for both passenger and cargo air travel between the EEA and South Korea.

Orange/VOO and Brutélé

Belgian telecom company Orange has received clearance from the Commission to acquire VOO and Brutélé, two retail providers of fixed and mobile telecommunications services. The acquisition is subject to conditions, as the Commission’s in-depth investigation found that the acquisition would restrict competition in the retail market. In several market segments, the number of telecoms providers would fall from two to three. The acquisition would also increase the likelihood of coordination between other operators. To address these concerns, Orange has committed to giving telecom company Telenet, one of Orange’s competitors, access to its fibre-optic network and to the network infrastructures of VOO and Brutélé for a period of ten years.

 

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CJEU declares Commission dawn raids in French supermarket sector unlawful due to insufficient evidence

Court of Justice of the European Union, judgment of 9 March 2023

The Court of Justice of the European Union (“CJEU”) has recently overturned a number of Commission decisions ordering dawn raids in the supermarket sector. In February 2017, the Commission carried out dawn raids at French supermarket Intermarché, distributor Casino and their joint purchasing group,  based on suspicions that the undertakings exchanged anti-competitive information, for example relating to their commercial strategies.

The Commission based its suspicions on conversations with several suppliers of Intermarché and Casino. The Commission only recorded these conversations in internal minutes. The CJEU ruled that this is not in line with the Commission’s duty to register, which requires it to record statements and provide a copy of the statement to the interviewee. The fact that the interviews with the suppliers served only as an indication for the opening of the investigation and were not held in the context of the gathering of evidence during the investigation, does not relieve the Commission from its duty to register the interviews. Any interview held to gather information for the investigation is covered by the duty to register, according to the CJEU. However, the Commission is free to decide how it registers the interviews, for example through a voice recording or in writing.

Because the unrecorded interviews were disregarded as evidence in the assessment of the legality of the dawn raids, the CJEU finds that the Commission did not have sufficiently serious evidence to justify these visits.

 

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CJEU calls General Court to order, but considers hybrid cartel decision (Euribor) lawful

Court of Justice of the European Union, judgment of 12 January 2023

Following the full rejection of its appeal by the General Court of the European Union (“General Court”), HSBC appealed at the CJEU against the fine imposed by the Commission for participating in the Euribor cartel.

The Euribor cartel is characterised by a hybrid procedure, in which four of the banks under investigation settled with the Commission (settlement decisions of 4 December 2013) and three banks followed the ordinary procedure. In the ordinary procedure, the Commission issued its statement of objections on 19 March 2014 and adopted decisions on 7 December 2016. The CJEU recently ruled on the appeal of one of the banks that did not settle, HSBC.

In its judgment of 12 January 2023, the CJEU ruled that the General Court had not properly assessed HSBC’s arguments relating to the presumption of innocence and the impartiality requirement. According to the CJEU, the General Court should have examined the decision in its entirety in order to establish that the Commission did not reach a premature conclusion regarding HSBC’s participation in the cartel. The CJEU, giving final judgment itself, concluded that the Commission chose its words in the settlement decision with sufficient caution. By expressly including reservations to prevent that banks that had not settled were being held liable in any way, and by referring to those banks only to the extent strictly necessary for a proper understanding of the facts, the settlement decision does not infringe the presumption of innocence.

Regarding the impartiality requirement, the CJEU noted that the Commissioner for Competition at that time had indeed made inattentive statements at the end of the settlement procedure and the statement of objections in the normal proceedings in 2014 (Almunia had stated that the case was not the most difficult and that there was a lot of evidence). However, as this was a preliminary finding and no information was disclosed that was not already revealed in the decision, the CJEU concluded that it could not be regarded as the expression of any bias.

Finally, the CJEU held that the General Court had also applied the wrong test when considering the pro-competitive effects of the conduct at issue, as argued by HSBC. The CJEU stressed that pro-competitive effects must be taken into account when assessing – under the first paragraph of Article 101 TFEU – the context in which a restraint of competition takes place, and not only in the context of ‘ancillary restraints’ or the third paragraph of Article 101 TFEU, as the General Court had held. However, the CJEU ruled that the pro-competitive effects brought forward by HSBC did not alter the characterisation of the Euribor cartel as a restriction by object. The decision thus remains fully intact.

 

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Non-notifiable mergers may constitute abuse of dominance

Court of Justice of the European Union, judgment of 16 March 2023

In the landmark judgment in Towercast, the CJEU ruled that Article 102 TFEU can apply to concentrations that do not meet national and/or European notification thresholds and have not been referred to the Commission under Article 22 of the Merger Regulation.

The judgment followed a complaint by Towercast to the French competition authority. Towercast claimed that Télédiffusion de France (“TDF”) abused its dominant position by acquiring competitor Itas in October 2016. The acquisition was not notifiable because neither the French nor the European merger notification thresholds were exceeded. According to Towercast, the CJEU’s 1973 ruling in Continental Can established that an acquisition could constitute an abuse of a dominant position if the acquirer enjoys a dominant position and the acquisition strengthens this dominant position, thereby restricting competition. The French competition authority rejected the complaint on the grounds that, with the entry into force of the Merger Regulation in 1989, a clear dividing line was drawn between (ex ante) merger control and (ex post) control of anti-competitive behaviour (Articles 101 TFEU and 102 TFEU), rendering Article 102 TFEU inapplicable when it comes to concentrations.

Towercast appealed the rejection of the complaint to the French court. The French court subsequently referred to the CJEU the preliminary question of whether a national competition authority could declare the acquisition to constitute an abuse of a dominant position in circumstances where that acquisition fell below the national and EU merger thresholds and had not been referred to the Commission under Article 22 of the Merger Regulation. The CJEU ruled that this was indeed possible, considering the wording, context, objectives and origin of the EU Merger Regulation.

As a result of this judgment, competitors have (even) more opportunities to arm themselves against so-called ‘killer acquisitions’. In our earlier blog, we discuss the Commission’s new policy on the application of Article 22 of the Merger Regulation and the opportunities for competition authorities to assess killer acquisitions.

 

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Partial removal of railway by Lithuanian rail operator constitutes abuse of dominant position

Court of Justice of the European Union, judgment of 12 January 2023

In 2008, Lithuanian national railway operator and carrier Lietuvos geležinkeliai AB (“LG”) dismantled nearly twenty kilometres of its railway track. The reason for this was that Polish oil refiner PKN Orlen wanted to engage with a competitor of LG to transport crude oil to and from its refineries. The Commission found that LG abused its legally obtained dominant position by dismantling the track, and fined the company over € 27 million. Upon appeal, the General Court upheld the decision, but reduced the fine to € 20 million.

Before the CJEU, LG argued that the General Court was wrong not to apply the essential facilities doctrine. This doctrine entails that an undertaking must provide access to certain infrastructure under certain conditions if such access is ‘indispensable’. The CJEU rejected this argument. Firstly, the case does not concern the refusal of access but the entire removal of the railway. This prevented not only LG’s competitor from running its services for PKN Orlen, but also LG itself. This constitutes a separate category of abuse distinct from refusal of access. Secondly, the railway track was an infrastructure funded by the Lithuanian state and not financed by the undertaking itself, as required under the essential facilities doctrine. Finally, the CJEU concluded that LG, as national railway operator, had a legal duty to provide access to the railway line. By removing it instead, LG thus abused its dominant position. The judgment of the General Court was upheld.

 

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CJEU clarifies burden of proof of anti-competitive effects of exclusivity clauses and liability of conduct of distributors in Unilever

Court of Justice of the European Union, judgment of 19 January 2023

In a preliminary reference regarding Unilever‘s abuse of its dominant position, the CJEU ruled that the Italian competition authority (“AGCM”) must prove that the exclusivity clauses used by Unilever actually had the ability to exclude competitors. In 2017, the AGCM imposed a € 60 million fine on Unilever for the use of exclusivity clauses (through its distributors) for the purchase of pre-packaged ice creams towards sales outlets such as cafes, sports clubs and swimming pools. While Unilever provided economic evidence to substantiate that there could be no exclusionary effect, the AGCM ruled that this evidence was ‘totally irrelevant’ given the harmful nature of exclusivity clauses as previously established in the court’s case law.

In line with the recent judgment in Qualcomm, the CJEU stresses that, although a competition authority does not have to prove that the conduct had an actual anti-competitive effect (i.e. the abuse does not have to have been ‘successful’), the authority does have to examine whether the conduct could have had such an effect in the underlying market. The specific evidence submitted by Unilever in that context must therefore be taken into account by the AGCM, according to the CJEU.

The CJEU did endorse the AGCM’s decision to fine only Unilever and not the distributors. It considered that the distributors merely act as instruments for the implementation of Unilever’s commercial policy, and hence, that Unilever should be considered the only responsible party, also considering its special responsibility under Article 102 TFEU. This does not require that the distributors concerned were part of the same undertaking or in a hierarchical relationship with Unilever. The fact that the conduct was not carried out independently by the distributors, but was part of a policy unilaterally adopted by Unilever and implemented only through the distributors, is sufficient to only impose a fining decision towards Unilever, the CJEU rules.

 

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Commission revises guidelines on Article 102 TFEU and abandons ‘more economic approach’

European Commission, communication of 27 March 2023

On 27 March 2023, the Commission amended its 2008 guidelines on enforcement priorities when applying the prohibition on the abuse of a dominant position. In the original guidelines, the Commission applied a ‘more economic approach’ to abuse cases. This approach was largely followed by the CJEU. For example, in the Intel judgment (which focused on the use of the as-efficient competitor test (“AEC-test”) in the context of fidelity rebates), the CJEU confirmed the crucial role of sound economic analysis in abuse cases. The amended guidelines show that the Commission wants to return to a less economic approach.

The three main changes to the guidelines are as follows:

  1. As to the concept of anti-competitive foreclosure, the original guidelines referred only to the dominant undertaking’s ability to profitably increase prices as a result of its abusive conduct. In the amended guidelines, the Commission clarifies that it is not appropriate to look at the ability to profitably raise prices. The concept of anti-competitive foreclosure is described as a situation where the dominant undertaking’s conduct has a negative impact on the effective competitive structure.
  2. In the original guidelines, the Commission seemed to suggest that, in the case of an exclusionary pricing abuse (such as loyalty discounts, predatory pricing and margin squeeze), it always applies the AEC-test. Using the AEC-test, the Commission analyses whether an equally efficient competitor can match the price charged by the dominant firm without loss. In the amended guidelines, the Commission clarifies that the  use of the AEC-test is optional and not necessary to prove abuse. The Commission also clarifies that in some cases the competition of less efficient competitors can also be taken into account to determine whether price-based exclusionary behaviour by a dominant firm leads to foreclosure.
  3. In the original guidelines, refusals to supply, margin squeeze and other ‘constructive refusals to supply’ were assessed using the same criteria. The Commission clarifies that these are independent forms of abuse with their own assessment criteria.

 

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Judgment in Regiojet provides wide access to evidence in cartel damages proceedings, also pending (suspended) investigation

Court of Justice of the European Union, judgment of 12 January 2023

Following the recent judgment in Paccar, the CJEU held that a national civil court can order access to relevant evidence even pending a Commission investigation. The fact that the investigation previously opened by the national competition authority, as well as the national civil action for damages have been suspended pending the Commission’s investigation, does not alter this conclusion.

In the context of an investigation by the Czech Competition Authority (“UOHS”) into an alleged abuse of dominance by the local national railway company, RegioJet brought an action for damages before the national civil court in 2015. After the Commission launched an investigation into the same behaviour in 2016, the UOHS suspended its investigation that same year. RegioJet then requested the civil court to order the national railway company to provide access to several types of evidence, including some documents that were specifically prepared for the UOHS in the context of the (as yet) suspended investigation. The national court decided to largely grant this request and suspended the proceedings on the merits regarding the damages claim pending the Commission’s investigation. Both parties appealed against the court’s decision to disclose (part of the) evidence, and a preliminary reference followed.

The CJEU clarifies that, as an (ongoing) investigation by a national competition authority and/or the Commission does not preclude parallel national damages proceedings, this does not automatically prevent a national court from granting access to evidence. National courts should assess on a case-by-case basis whether disclosure of evidence may impede the investigation at this stage. In any event, the court must limit access to what is strictly relevant, proportionate and necessary. The CJEU emphasises that this cannot include documents that were specifically prepared in the context of a (national) investigation procedure or provided to the undertaking by the authority. Such grey-listed documents under Article 6 of the Cartel Damages Directive can only be provided after the official conclusion of an investigation. The CJEU finds that the suspension by UOHS of the national investigation pending before the Commission does not conclude the investigation in that sense.

To limit the information asymmetry between the alleged infringer and the claimant, this grey list should nevertheless be interpreted restrictively. Documents that have been provided to the authority in the context of the proceedings, but that also exist and need to be produced independently of these proceedings, do not fall under this exception and may therefore be eligible for access already pending the investigation. To assess whether a document is grey listed, the court may order that evidence to be placed under sequestration and review it, the CJEU ruled.

 

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Estimation of damages in follow-on cartel damages cases impossible after ‘inaction’ claimant

Court of Justice of the European Union, judgment of 16 February 2023

Article 17(2) of the Cartel Damages Directive allows a national court to estimate the damages resulting from a cartel when it is practically impossible or excessively difficult to accurately determine the damages suffered based on the available evidence. In a recent answer to preliminary questions from the Spanish court – in a case concerning an application for damages as a result of the truck cartel – the CJEU ruled that a national court may not carry out such an abstract estimation of damages where the impossibility of concretely determining the amount of damages is the result of inaction on the part of the claimant.

While the CJEU recognises that uncertainties about the scope of damages are inherent in follow-on cartel damages cases, the mere existence of such uncertainty is insufficient to estimate damages in abstracto. The CJEU clarifies that the information asymmetry between the cartelist and the claimant does not play a role here. In that regard, the Cartel Damages Directive already provides for specific instruments aiming to eliminate this asymmetry, including in particular the possibility of requesting access to evidence under Article 5 of the Cartel Damages Directive. Before proceeding to an abstract assessment of damages, it is up to the national court to consider whether the requesting party has made sufficient use of this key provision.

 

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Discounts on airport fees for Wizz Air may constitute state aid

General Court of the European Union, judgment of 8 February 2023

In September 2010, Romanian regional airline Carpatair filed a complaint with the Commission regarding alleged state aid granted to Hungarian Wizz Air by AITTV, the operator of Timișoara International Airport. 80% of AITTV is owned by the Romanian state. In particular, the complaint concerned certain discounts on airport fees granted by AITTV, for which only Wizz Air was eligible. After a lengthy investigation, the Commission subsequently decided on 24 February 2020 that it did not constitute state aid. The discounts were not selective as any undertaking could receive them as long as certain conditions were met. In addition, the agreement with Wizz Air on airport charges was very lucrative for AITTV: a private party would also have entered into this agreement, according to the Commission.

The appeal by Carpatair was upheld by the General Court. With regard to the discounts, the General Court held that the Commission could not conclude that they were not selective simply because all airlines could qualify. The General Court confirmed that Wizz Air was the only company that was actually eligible. The Commission should thus have assessed whether there was de facto selectivity by examining the effects of the discount system.

The General Court further concluded that it is the responsibility of the Member State, or in this case AITTV, to provide – prior to entering into the agreement with Wizz Air – an economic justification of its profitability, similar as a private company would do. Although such a justification had been carried out in advance, it was not submitted during the Commission’s investigation and therefore was not used by the Commission in its decision-making. The General Court therefore annuls the Commission’s decision.

 

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Commission adopts new Temporary Crisis and Transition Framework and amends General Block Exemption Regulation to speed up green transition

European Commission press releases, 1 February and 9 March 2023

On 1 February 2023, the Commission presented the Green Deal Industrial Plan, which follows the European Green Deal published at the end of 2019. The aim of this plan is to accelerate the transition to a climate-neutral industry. The Green Deal Industrial Plan should provide a simplified regulatory framework and facilitate quick access to funding for green initiatives. Earlier this year, the Commission had already requested comments from market players on its draft guidelines for sustainability in the agricultural sector.

The need for the Green Deal Industrial Plan is largely due to the high energy prices caused by the Russian war in Ukraine. In line with this, the Commission adopted a new Temporary Crisis and Transition Framework after consulting the Member States. At the same time, the Commission amended its General Block Exemption Regulation. Both initiatives aim to encourage and facilitate investments for a faster development of renewable energy and to support the ‘decarbonisation’ of the industry. Member States can now more easily support greener initiatives. This way, the Commission hopes to further accelerate the green transition in the EU. The rules in the Temporary Framework Guidance related to the green transition are valid until 31 December 2025. The rules related to the immediate crisis situation surrounding the Russian war in Ukraine apply until 31 December 2023.

 

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Free provision of source code by municipality not in violation of Dutch Act on Government and Free Markets

ACM, decision of 21 November 2022 (publication date 3 January 2023)

On 21 November 2022, the ACM issued a decision on objection following its earlier rejection of a complaint by Bloqzone. In the complaint, Bloqzone alleged that the municipalities of Nijmegen, Arnhem and the Drechtsteden violated the Dutch Act on Government and Free Markets (in Dutch: Wet Markt & Overheid, “Wet M&O”) by offering an open source code of their software. This means that a source code is made available online for free and can be viewed and used by anyone. Bloqzone develops a competitive software.

In its decision on objection, the ACM decided not to give priority to Bloqzone’s complaint. According to the ACM, open-source sharing of codes generally has many public benefits, such as increasing innovation power and promoting code quality. Enforcement would thus not be in the public interest. Also, according to the ACM, enforcement would not be opportune due to a currently pending legislative proposal that will exempt the provision of open-source code from the Wet M&O. Finally, the ACM sees no evidence of harmful effects on consumer welfare.

 

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For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist.

You can reach us via the links below.

 

Bas Braeken – Jade Versteeg – Lara Elzas – Timo Hieselaar – Demi van den Berg

 

 

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Competition Flashback Q3 2022

This is the Competition Flashback Q3 2022 by bureau Brandeis, featuring a selection of the key EU and Dutch competition law developments of the past quarter (see the original version here).

Would you like to receive Competition Flashback from bureau Brandeis by e-mail in the future? You can subscribe to our mailing list here.

 

Overview Q3 2022

Merger control

Cartels and vertical restraints

Abuse of a dominant position

Follow-on competition damages claims

Consumer law

 

Illumina/GRAIL: European Commission allowed by EU Court to investigate non-notifiable concentration and bans controversial transaction

General Court, judgment of 13 July 2022; European Commission, decision of 6 September 2022 and press release of 19 July 2022

There have been a number of noteworthy developments surrounding Illumina’s  high-profile acquisition of GRAIL. On 13 July 2022, the General Court of the European Union (“General Court”) ruled for the first time on the competence of the European Commission (“Commission”) to investigate a concentration following receipt of referral requests from national competition authorities under Article 22 of the Merger Regulation. The procedure for such a referral was explained in more detail by the Commission in its Article 22 Guidelines last year (see our previous blog). Although this provision functioned primarily as a safety net for Member States without a merger control regime, the General Court concludes that Article 22 has a broader scope and contributes to the purpose of the Merger Regulation. According to the Court, this interpretation does not undermine the principle of legal certainty. In that regard, it does emphasise that the Commission must observe a reasonable time limit. A period of 47 days between the moment that the Commission first learns about the acquisition (through a complaint) and that it sends an invitation to the Member States to submit a referral request, is considered unreasonably long. However, as this did not harm Illumina’s defence, it could not lead to the annulment of the decision. The General Court’s judgment thus appears to leave a fairly large degree of discretion to the Commission.

Hence, the Commission was allowed to launch an investigation into the Illumina/Grail-transaction and, after an in-depth investigation, banned the acquisition on 6 September 2022. GRAIL is an undertaking that develops blood tests for the early detection of cancer. Illumina is the only credible provider of so-called NGS-systems, which form a necessary input for the production of these blood tests. The Commission found that, post-transaction, Illumina would have the ability and incentive to exclude GRAIL’s competitors from the market, thereby significantly hampering innovation. As Illumina had already implemented the acquisition in August 2021, the Commission is currently considering measures to undo the concentration.

In parallel, the Commission launched an investigation into a possible breach by Illumina of the standstill obligation. On 29 October 2021, the Commission imposed interim measures on Illumina to restore/maintain competitive conditions on the market despite the implementation of its acquisition of Grail. On 19 July 2022, the Commission sent Illumina its Statement of Objections. An infringement could result in a significant fine (up to 10% of its annual turnover).

Illumina/GRAIL constitutes a special test case of Article 22 of the Merger Regulation where all kinds of novelties around merger control arise. Not only regarding the application of the referral regime itself, but also on the assessment of a possible breach of the standstill obligation (in the absence of a notification obligation) and the reversal of an already implemented transaction.

 

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Highest administrative court overrules Rotterdam court and upholds ACM’s approval decision Sanoma/Iddink

Trade and Industry Appeals Tribunal, judgment of 12 July 2022

The judicial review of the Dutch Authority for Consumers and Markets’ (“ACM”) second-phase decision on the acquisition of Iddink – provider of the electronic learning environment (“ELO”) Magister – by schoolbook publisher Malmberg (Sanoma) recently took a new turn. While the District Court of Rotterdam annulled the decision following an appeal by rival textbook publisher Noordhoff, the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, “CBb”) reversed that judgment and ruled that the decision is not unlawful.

Initially, the District Court of Rotterdam ruled that the ACM had not sufficiently examined whether the merging parties could deprive competing publishers (such as Noordhoff) of access to schools by bundling ELO services and educational programmes. According to the court, the ACM’s decision on this point was not adequately reasoned, as the ACM should not have concluded simply on the basis of a survey among schools that there was no need for bundling.

The CBb agreed with the Rotterdam District Court in that the ACM had not carefully presented the research results among schools, but ruled that this did not constitute a breach of the duty to state reasons which could lead to annulment. The demand of schools is only one of the factors the ACM took into account in its assessment of Iddink and Sanoma’s bundling strategy. As regards other aspects of the merger decision and the remedy proposal, the CBb found no shortcomings. For instance, the ACM has sufficiently substantiated its choice for behavioural remedies instead of structural remedies. Moreover, the CBb considers that the commitments are appropriately designed, despite their reactive nature, and the control mechanisms (external auditor, fast-track arbitration and audit options) are sufficiently effective and enforceable.

Hence, the ACM’s initial merger decision will revive and the amended decision following the court’s first ruling (see our Competition Flashback Q3 2021) is revoked.

 

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Insurance Ireland commits to providing non-members with access to its database

European Commission, decision of 30 June 2022

On 30 June 2022, the Commission accepted commitments offered by Insurance Ireland, a trade association for the insurance sector in Ireland. The procedure revolved around the access provided by Insurance Ireland to its Insurance Link information exchange system, a database which facilitates the detection of fraud.

In 2019, the Commission launched a formal investigation into the conditions for insurance service providers to gain access to Insurance Link, as designed and imposed by Insurance Ireland. In its Statement of Objections, the Commission considered that Insurance Ireland unfairly made access to the database dependent upon membership of the trade association. It also found that the conditions for being admitted to Insurance Ireland were not sufficiently clear, transparent and objective, and were discriminatory. Moreover, the membership application process was not handled in an adequate manner. The Commission concluded that Insurance Ireland arbitrarily delayed or de facto denied access to Insurance Link to companies that had a legitimate interest in being admitted to it, which put them at a competitive disadvantage.

To address the Commission’s concerns, Insurance Ireland has committed to separate access to Insurance Link from the association’s membership, to revise the access criteria, and to improve the application procedure. In addition, for applicants that have been refused access, it will be possible to appeal to an independent appeal body. Finally, Insurance Ireland will not use Insurance Link’s fee structure to hinder access to the database. The Commission will monitor the implementation of and compliance with these commitments for a duration of ten years.

 

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ACM allows sustainability agreements between soft-drink suppliers

ACM, press release of 26 July 2022

Using its draft Guidelines on Sustainability Agreements, the ACM announced that it will allow a joint agreement between soft-drink suppliers to abolish the plastic handle on multipacks of soft drinks. This is the fourth time the ACM has openly welcomed a sustainability initiative and reviewed it in light of its draft Guidelines (see two previous initiatives in the energy sector and the cooperation between Shell and TotalEnergies).

The ACM welcomes the initiative by Coca-Cola, Vrumona, Albert Heijn and Jumbo. It believes that the agreement will not negatively affect competition or come to the detriment of consumers, for example through an increase in price or a decrease in quality. The ACM also endorses the suppliers’ view that the handle does not play a role in the competitive process. Instead, the initiative makes a positive (non-mandatory) contribution to a sustainability objective and/or entails an improvement in product quality. The ACM does nevertheless emphasise, with reference to its Guidelines on sustainability claims, that suppliers may only use clear, correct and relevant sustainability claims if they wish to include this initiative in their advertisements.

 

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Lower court upholds cartel fine for H&S Coldstores after referral back from the CBb

District Court of Rotterdam, ruling of 7 July 2022

After a quashing and referral back from the CBb, the Rotterdam District Court ruled again on the case concerning H&S Coldstores. In 2015, the ACM imposed a fine for the exchange of commercially sensitive information about fish storage in cold stores, in violation of the cartel prohibition. In first instance, the Rotterdam District Court annulled the fining decision as, in its view, there was insufficient evidence showing that the contacts were part of an overall plan and therefore amounted to a single and continuous infringement. On appeal, however, the CBb ruled that these contacts did in fact amount to a common overall plan and endorsed the existence of a single and continuous infringement. The CBb referred the case back to the court of first instance to examine the remaining grounds of appeal.

In this (second) judgment, the court addressed, amongst other things, the legality of the dawn raids performed in the preliminary investigation. The court ruled that by using the words “the operation of cold-storage warehouses” in conjunction with the underlying documents, the ACM had sufficiently clearly defined its investigation purpose. The ACM had also correctly determined the amount of the fine, as the parties frequently coordinated their offers, which effectively eliminated price competition. The appeal was completely dismissed, resulting in the revival of the fine of €694,000.

 

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ACM receives extension of decision-making period and may supplement investigation report in complex cartel investigation

District Court of Rotterdam, judgments of 25 August 2022

In three (nearly identical) judgments, the Rotterdam District Court elaborated on the ACM’s decision-making period for (cartel) fining decisions and the possibility of supplementing its investigation report. Fifteen parties lodged an appeal against the ACM for the failure to adopt a timely decision after delivering a report in which it established a violation of the cartel prohibition. Under the General Administrative Law Act, the ACM must decide whether to impose an administrative fine within thirteen weeks after the delivery of the investigation report. Since the ACM has offered a data room procedure, several parties have initiated civil (interim relief) proceedings (and subsequent expedited appeals), and the parties have submitted further opinions, the ACM is of the opinion that an additional report is necessary before it can decide whether to impose a fine or not.

The court notes that the statutory decision period of thirteen weeks is (merely) an indicative period and that exceeding it does not deprive the ACM of its power to impose a fine. Given the complexity and size of the case, the court sees reason to honour the ACM’s defence and grants it until 31 December 2022 to hand down its decision. The court explicitly emphasises that this does not (yet) answer the question whether the ACM is actually authorised to issue a supplementary report and/or whether there is a violation of the principle of legal certainty. This might come up in subsequent proceedings, according to the court, in case a fine will be imposed.

 

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Court permits one-year post-contractual non-compete clause in franchise agreement in case of protectable know-how

District Court of Amsterdam, judgment of 27 July 2022

In a judgment of 27 July 2022, the District Court of Amsterdam ruled that a non-compete clause agreed between Multicopy and one of its franchisees did not infringe the competition rules. The non-compete clause prohibited the franchisee from operating a shop competing with Multicopy at the same location within one year after termination of the agreement.

The dispute mainly concerned the question whether Multicopy had provided relevant and protectable know-how to a franchisee justifying a post-contractual non-compete clause (Pronuptia judgment). According to the court, to answer this question a link should be made with the Dutch Franchise Act, which came into force on 1 January 2021. That Act defines protectable know-how as “the whole of […] practical information […] which is confidential, substantial and identified”. The court found that the documents and training provided by Multicopy were, although general in scope, when taken together, sufficiently specific to graphic service businesses that they constitute know-how that warrants protection. The fact that an independent operator in the sector can obtain the information by other means does not affect the confidential nature of the information provided by Multicopy.

The court concludes that the non-compete clause, taking into account both its limited duration and geographical scope, does not infringe competition law and is not unreasonably onerous.

 

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General Court largely upholds multi-billion-euro fine Google in Android case, yet uncovers some procedural errors

General Court of the European Union, judgment of 14 September 2022

On 14 September, the General Court delivered its judgment in the Google Android case. In 2018, the Commission imposed on Google its highest fine ever (over €4.3 billion) for maintaining multiple contractual restrictions on original equipment manufacturers (“OEMs”) and mobile network operators. OEMs had to pre-install Google Search and Google Chrome apps in order to obtain a licence for the Google Play Store, and were not allowed to sell devices with Android versions that were not approved by Google if they wanted to pre-install Google apps on any of their devices. Google also offered OEMs and operators a financial incentive to only pre-install Google Search (exclusivity payments). According to the Commission, these restrictions involved one overall strategy to cement Google’s dominant position on the market for general search services during the rise of mobile internet.

The General Court largely upheld the Commission’s decision. It confirms the Commission’s finding that Google enjoys a dominant position in the markets for (i) general search services (Google Search), (ii) Android app stores (Play Store) and (iii) licensable operating systems (Android). The General Court rejects Google’s repeated argument that it is subjected to competitive pressure from Apple. However, the Court does conclude that there is insufficient evidence that the exclusivity payments in themselves constituted an abuse. The Commission did not sufficiently demonstrate that the payments covered a significant part of the market for general search services, and that a hypothetically equally efficient competitor of Google would not be able to offset these payments. Given the shortcomings in the ‘as efficient competitor test’, and the fact that the Commission rejected Google’s request to have an additional hearing after receiving the additional letter of facts on this matter, the General Court reduced the fine to €4.125 billion.

 

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Refusal of DPG to continue to supply newspaper content to digital kiosk Blendle does not constitute an abuse of dominance

Amsterdam Court of Appeal, judgment of 2 August 2022

On 2 August 2022, the Amsterdam Court of Appeal delivered its judgment in the case of Blendle v DPG Media.* In these expedited appeal proceedings, Blendle argued that DPG abused its dominant position by refusing to continue to supply newspaper articles (from e.g. AD, Trouw, de Volkskrant and het Parool) to Blendle’s digital kiosk. Since DPG’s newspapers constitute an essential input to market the Blendle platform, this leads to an abusive refusal to supply, according to Blendle. Blendle further argued that DPG was engaged in a strategy of self-preferencing as the refusal aimed to squeeze Blendle out the digital kiosk market in favour of DPG’s own initiatives, including Topics and tijdschrift.nl.

In first instance, the preliminary relief judge rejected Blendle’s request, mainly because it found insufficient evidence of a separate relevant market for digital kiosks. The Court of Appeal took a different approach and considered that it could not be established that DPG was actually developing its Topics platform into a digital news kiosk. In any event, this requires a more extensive factual investigation which cannot be conducted in the underlying interim relief proceedings. As regards the refusal to supply, the Court of Appeal underlined that DPG is in itself willing to make its newspapers available, but only on the basis of a micropayment model (on a pay-per-article basis). Thus, even if it were to be assumed that Blendle is an innovative service for which there is consumer demand, and that access to DPG’s content is indispensable for the realisation thereof, there is an objective justification and no absolute refusal, according to the court.

As it did not establish an abuse, the Court of Appeal did not need to elaborate on the existence of a dominant position and the definition of the relevant market. Hence, the court did not need to address Blendle’s argument that DPG holds a market share of 63% on the Dutch daily newspaper market and enjoys a dominant position. The Court of Appeal thus upheld the judgment of the Amsterdam District Court.

*Bas Braeken and Demi van den Berg have assisted Blendle in these proceedings

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Advocate General Drijber and District Court of Rotterdam confirm ‘broad’ jurisdiction of Dutch courts based on the existence of an anchor defendant

Advocate General to the Dutch Supreme Court, opinion of 7 August 2022; District Court of Rotterdam, judgment of 17 August 2022

In his opinion of 7 August 2022, Advocate-General (“AG”) Drijber confirmed the judgment of the Amsterdam Court of Appeal in the case MTB/Heineken and AB. The case concerns a Greek brewery, Macedonian Thrace Brewery (“MTB”), which claimed damages from its competitor Athenian Brewery (“AB”), as well as AB’s Dutch parent company Heineken, for the abuse of dominance by AB in the Greek beer market. A central question in this case was whether the Dutch court has jurisdiction to hear the claims against the Greece-based AB due to the existence of a close link between the claims against AB and against the anchor defendant, Heineken. The court answered this question in the affirmative.

AG Drijber reaches the same conclusion: the Dutch court has jurisdiction to hear the claims against AB because the claims brought against AB and Heineken are closely linked. According to AG Drijber, it is important in this respect that, one way or the other, the Dutch court has to rule on the merits regarding AB’s actions, because Heineken – as a parent company – may be held liable for the alleged damage only if it is established that AB is liable. AG Drijber further concludes that a claimant only abuses procedural law where it creates jurisdiction artificially, for instance by bringing a claim that has no merit but solely aims to keep a defendant away from its own court.

In a damages claim relating to the bitumen cartel, the District Court of Rotterdam applied the same reasoning. The Dutch State claimed to have suffered damages as a result of the bitumen cartel and therefore sued Shell, Kuwait Petroleum and Total. These cartelists subsequently summoned, among others, the German oil and gas company Wintershall in indemnity. The District Court of Rotterdam confirmed the judgment of the Amsterdam Court of Appeal in MTB/Heineken and AB and ruled that there can only be grounds for refusing jurisdiction if it becomes sufficiently plausible that the claims were only brought to deprive the defendant of the jurisdiction of its national court, which was not the case here.

 

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Clarification of possibility for claim vehicles to choose Dutch applicable law and validity of assignments

District Court of Amsterdam, ruling of 27 July 2022

On 27 July 2022, the District Court of Amsterdam ruled on the applicable law in cases where claims have been bundled into a claim vehicle, such as a foundation, as well as on the possibility of transferring victims’ claims to a claim vehicle by assignment. The case concerned the admissibility of claim vehicles claiming damages resulting from the truck cartel.

In assessing the question of which law applies to the claims (on the basis of conflict of laws), the court held that the bundling of claims would result in the applicability of a multitude of legal systems. This would render the goal of the rules on conflict of laws futile. Moreover, the Dutch Conflict of Laws Act (Wet conflictenrecht onrechtmatige daad) does not provide a uniform solution for a situation where a competition infringement affects several Member States.

Therefore, in line with the judgment of the Court of Appeal of Amsterdam in the Aircargo case, the District Court of Amsterdam ruled that, taking into account the principle of effectiveness, the applicable law to the bundled claims should be determined in a manner corresponding to the choice of law (lex fori) provided for in the Rome II Regulation. Pursuant to that regulation, claimants can make a choice of law. In this case, Dutch law was chosen to be applicable. The applicability of Dutch law was also foreseeable for the truck manufacturers since the Dutch market was also affected by the truck cartel. In light of the principle of effectiveness, the court held that Dutch law applied to all bundled claims.

In addition, the court held that the assignments of the claims to the claim vehicles were valid. The claimants’ burden of proof as to the validity of the assignments entails that the defendants, in this case the truck manufacturers, must be able to establish that the assignor and assignee actually assigned their claim(s) on the basis of the documentation submitted. This burden of proof is satisfied when the assignment agreement and the deed of assignment are provided for each individual underlying party, from which it is clear that they were signed/issued by the (representative) assignor. Defendants can rebut this with specific evidence which demonstrates that there was no legally valid assignment.

 

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Obstruction of ACM investigation leads to significant fine for online shop owner

ACM, decision of 4 July 2022

On 4 July 2022, the ACM imposed a fine for obstructing the ACM’s investigation on the owner of an online store that sells accessories for mobile phones. During its investigation into a possible violation of Dutch consumer protection law, it asked the owner for information on multiple occasions.

Undertakings and individuals are generally obliged to cooperate with an ACM investigation. Although the ACM often merely threatens with a sanction for non-cooperation, it rarely actually imposes a fine. The owner in question did, however, not respond to any of the requests for information. As such, the ACM was unable to determine whether its suspicions were correct. According to the ACM, this seriously hindered the supervision of compliance with consumer protection rules and undermined its authority as a regulator. The ACM therefore decided to impose a fine of €10,000.

 

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Clothing companies offer commitments to ACM regarding sustainability claims

ACM, decisions of 19 August 2022 and 29 August 2022

In spring 2021, the ACM launched a large number of investigations into potentially misleading sustainability claims, including in the clothing sector. It assessed the claims of ten major companies and, on the basis of those findings, launched a follow-up investigation into six of those. The investigation carried out by the ACM revealed that Decathlon and H&M offered their products using general terms such as ‘Ecodesign’ and ‘Conscious’ without immediately specifying clearly the sustainability benefits in the claim.

Although the ACM did not establish an infringement, Decathlon and H&M have committed to adjust or no longer use the sustainability claims on their clothes and/or websites, as well as to inform consumers more clearly in order to minimise the risk of misleading practices. Furthermore, the two companies will donate €400,000 and €500,000, respectively, to sustainable causes to compensate for their use of unclear and insufficiently substantiated claims.

The commitment decisions regarding Decathlon and H&M are the first in which the ACM explicitly assesses sustainability claims on the basis of the Guidelines on sustainability claims, which contain rules of thumb and practical examples that can help businesses when phrasing sustainability claims. The ACM is currently also investigating the use of sustainability claims in other sectors. In January, for instance, the ACM launched a follow-up investigation into misleading sustainability claims made by two energy suppliers.

Read more about recent developments in consumer law (and sustainability) in our recent blog.

 

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For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist.

You can reach us via the links below.

Bas Braeken – Jade Versteeg – Lara Elzas – Timo Hieselaar – Demi van den Berg

 

 

Vision

Competition Flashback Q2 2022

This is the Competition Flashback Q2 2022 by bureau Brandeis, featuring a selection of the key EU and Dutch competition law developments of the past quarter (for the original, click here)

Would you like to receive the Competition Flashback news letter of bureau Brandeis by email in the future? You can sign up through our registration form.

 

Overview Q2 2022

  • New Block Exemption and Guidelines on Vertical Agreements;
  • A warning for M&A advisers: ACM and European Commission impose high fines for gun-jumping;
  • ECJ clarifies temporal scope Cartel Damage Directive: no retroactive effect of limitation period and no presumption of damage;
  • Mandatory notification of investments in vital providers and sensitive technology in sight;
  • Enforcement of consumer protection: highest administrative court clarifies framework for unfair commercial practices;
  • A special responsibility for Buma/Stemra: refraining from taking action can also lead to abuse of dominance;
  • ECJ prohibits use of state monopoly privileges for competition in liberalised markets in ENEL and upholds Sumal for abuse cases;
  • ACM gives green light for (sustainable) cooperation between competitors Shell and TotalEnergies in CO2 storage in empty gas fields in the North Sea;
  • ACM tries alternative regulation of fibre optic networks KPN and through commitments in competition investigation;
  • Legal vacuum: highest administrative court quashes minister’s final permit for acquisition of Sandd by PostNL;
  • Qualcomm and optical disk drives: Commission decisions annulled for procedural flaws and lack of actual foreclosure effects;
  • Compensation from ACM after annulled cartel fine decision in civil court only possible to a very limited extent;
  • Free podcast app of public broadcaster NPO Listen does not restrict competition.

 

New Block Exemption and Guidelines on Vertical Agreements

On 1 June 2022, the new Block Exemption on Vertical Agreements entered into force. The Vertical Block Exemption and revised Guidelines introduce new rules regarding, inter alia, online platforms, dual distribution, dual pricing and parity obligations.

Find our previous newsflash on vertical agreements here (Dutch only, English version available on request).

 

A warning for M&A advisers: ACM and European Commission impose high fines for gun-jumping

ACM, decisions of 11 May 2022 and 17 March 2022; General Court of the EU, judgment of 18 May 2022

The past quarter, the Dutch Authority for Consumers and Markets (“ACM”) imposed two fines on companies for gun-jumping. On 17 March 2022, the ACM fined the Dutch trade association for pharmacies (Verenigde Nederlandse Apotheken (“VNA”)), for failing to timely report the acquisition of four pharmacies. Before the acquisition, VNA indicated to the ACM that certain activities of one of the pharmacies would be sold within a year. As a result, the concentration did not meet the relevant turnover thresholds. One year later, the divestment had still not taken place and VNA decided to notify the concentration at last. The ACM subsequently imposed a fine of € 350.000 for failing to notify a concentration in time. According to the ACM, the turnover of activities to be sold may only be deducted from the turnover of the target company if it is unconditionally and legally determined that these activities will be sold on within one year.

On 11 May 2022, the ACM also imposed a fine of over € 1.8 million on Modulaire for failing to report the acquisition of BUKO HV Holding B.V. The acquisition took place on 31 October 2019, but was only reported to the ACM on 7 May 2021. The reason for the late notification was that Modulaire had not taken into account its group turnover when calculating the relevant turnover. As a result, it (incorrectly) believed that it did not meet the turnover thresholds.

The European Commission (“Commission”) has also been cracking down on gun-jumping and violations of the standstill obligation in recent years. In May 2022, the General Court of the EU (“GC”) confirmed the Commission’s € 28 million fine imposed on Canon for the early implementation of the concentration with Toshiba. The GC followed  the Commission and held that interim transactions which were necessary for the ultimate acquisition of control were to be considered as a single concentration together with the ultimate acquisition of control. The Court underlined that, if transactions are taking place which, in whole or in part, in fact or in law, contribute to the change in control, a notification is required prior to implementing those measures.

The assessment of the notification requirement and the timing of the filing of a notification listens very closely. Read our earlier blog about gun-jumping and the­ standstill obligation here.

 

ECJ clarifies temporal scope Cartel Damage Directive: no retroactive effect of limitation period and no presumption of damage

European Court of Justice, judgment of 22 June 2022 (Volvo and DAF Trucks)

In its judgment in Volvo and DAF Trucks, the European Court of Justice (“ECJ”) further clarified the temporal scope of the Cartel Damages Directive. In that case, Spanish company RM sought compensation from Volvo and DAF for damages suffered as a result of the trucks cartel. That cartel took place from 1997 to 2011; the damage proceedings were initiated on 1 April 2018. The Spanish judge referred questions to the ECJ asking which provisions of the Cartel Damages Directive apply to this dispute.

The ECJ reiterates that it follows from Article 22(1) of the Cartel Damages Directive that substantive provisions of that directive do not apply retroactively. Such provisions do therefore not apply to actions for damages in respect of cartels which took place before the implementation of the Cartel Damages Directive (at the latest: 27 December 2016).

The limitation period (Article 10 of the Cartel Damages Directive), as well as Article 17(2) of the Cartel Damages Directive, which contains the presumption that cartels cause damage, are substantive provisions according to the ECJ. This means that these provisions may not be applied to the present claim from RM for damages arising from the trucks cartel. RM can therefore not rely on the presumption of harm laid down in the Cartel Damages Directive.

Pursuant to Article 22(2) of the Cartel Damages Directive, the procedural provisions only apply to disputes initiated after the entry into force of the Cartel Damages Directive, i.e. after 26 December 2014. The ECJ held that Article 17(1) of the Cartel Damages Directive is such a procedural provision. Article 17(1) allows national courts to estimate the damage resulting from a cartel where a precise, concrete estimate is practically impossible or excessively difficult. This provision therefore does apply to RM’s damages claim, as it was brought after the entry into force of the Cartel Damages Directive (i.e. 2018).

 

Mandatory notification of investments in vital providers and sensitive technology in sight

House of Representatives, legislative proposal of 30 June 2021

The Security Review Investment Mergers and Acquisitions Act (“SRIMA”, Wet Veiligheidstoets investeringen, fusies en overnames) was adopted by a large majority in the House of Representatives on 19 April 2022,  and adopted in the Senate on 17 May 2022. The SRIMA follows the European Foreign Direct Investment (“FDI”) screening regulation adopted in 2019 (read our earlier blog on this topic here). The SRIMA aims to protect national security by introducing a mandatory notification and investment test for the acquisition of vital providers and providers of sensitive technology. Under certain conditions, takeovers of vital companies that are active in areas such as heat transport, air transport, ports, banking and recoverable energy or gas storage must be reported to the Investment Assessment Bureau (Bureau Toetsing Investeringen (“BTI”)). The acquisition of (increasing influence in) companies active in the field of sensitive technology, such as dual-use products (products that are suitable for both civilian and military use), is also subject to notification.

The BTI then performs a risk analysis based on national security and determines whether the acquisition activity should be subject to a review decision. In the review decision, the Minister may attach requirements or conditions to the acquisition activity to limit the risks identified.

The SRIMA is expected to enter into force in mid-2022. It is nevertheless already relevant today since it can have retroactive effect. This means that for high-risk recruitment activities carried out after 8 September 2020, yet before the SRIMA entered into force, the Minister may within eight months after the entry into force decide that the recruitment activity should still be reported.

 

Enforcement of consumer protection: highest administrative court clarifies framework for unfair commercial practices

Trade and Industry Appeals Tribunal, judgment of 19 April 2022 (Duinzigt)

On 19 March 2022, the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven (“CBb”)) ruled that the ACM wrongfully imposed an order subject to penalty on rental agent Duinzigt for maintaining an unfair commercial practice. Following an investigation into the rental agency sector, the ACM concluded that Duinzigt had violated the prohibition of double remuneration laid down in Section 4:417(4) of the Dutch Civil Code (“CC”). Duinzigt not only charged costs to landlords, but also to consumer tenants. Consumer tenants had to pay both a registration fee of € 40 per year and an administration fee of € 75.

The ACM was of the opinion that the agent acted contrary to the requirements of professional diligence. It impaired the consumer’s ability to make an informed decision, thereby causing the consumer to take a transactional decision that he would not have taken otherwise. The regulator therefore imposed an order for incremental penalty payments on Duinzigt. Our earlier blog provides a more detailed overview of the enforcement practice of the ACM in consumer law.

Although requiring consumer tenants to pay both registration and administration fees violates the prohibition of double remuneration, the CBb concluded, contrary to the District Court, that this did not amount to an unfair commercial practice. The decisive factor here was that Duinzigt had been transparent about the costs it charged to consumer tenants, hence allowing them to make an informed decision. The costs were included in the general terms and conditions – which were signed by the consumer tenant – and discussed during the intake interview. As there was no unfair commercial behaviour, the ACM was not authorised to impose an order for incremental penalty payments either.

  

A special responsibility for Buma/Stemra: refraining from taking action can also lead to abuse of dominance

Amsterdam Court of Appeal, judgment of 24 May 2022 (Buma Stemra/ABMD)

On 24 May 2022, the Amsterdam Court of Appeal (“CoA”) ruled that the joint collecting society for composers and music publishers (Buma/Stemra) abused its dominant position. According to the CoA, Buma and Stemra have a joint dominant position on the market for copyright licensing in order to make music available for commercial playback (for example in shops). On this market, music streaming services and ABMD members act as suppliers. They pay a fee to Buma/Stemra for the licence to distribute music to commercial customers. Music streaming services, such as Spotify, do not have a licence and are therefore not required to pay any fee. In practice, however, their services are often used to play music on a commercial basis.

The CoA ruled that Buma/Stemra applied dissimilar conditions to equivalent transactions, which falls within the scope of Article 102(c) of the Treaty on the Functioning of the European Union (“TFEU”). In addition, the streaming services themselves did not act against the commercial use of their streaming services. The ABMD members already informed Buma/Stemra of the competitive disadvantage they suffered due to the unfair policy in 2010, yet Buma/Stemra did not follow up on this. The CoA held that, by continuing to apply this system despite the complaints of the ABMD members, Buma/Stemra took for granted that its attitude would distort competition between the ABMD members and the music streaming services. Buma/Stemra was and is the only party able to end this distortion. By failing to do so, it abused its dominant position, according to the CoA.

 

ECJ prohibits use of state monopoly privileges for competition in liberalised markets in ENEL and upholds Sumal for abuse cases

European Court of Justice, judgment of 12 May 2022 (ENEL)

On 12 May 2022, the ECJ delivered a judgment on the preliminary questions referred by the  Italian Supreme Administrative Court concerning an exclusionary abuse by the Italian energy company ENEL. The judgment is particularly relevant in light of the interpretation of the concept of ‘competition on the merits’ by former state monopolists.

In 2018, ENEL was fined € 93 million by the Italian Competition Authority for abuse of its dominant position. ENEL was active in the protected energy market through its subsidiary SEN and therefore held (contact) data of customers. ENEL made commercial offers to these customers in order to persuade them to switch to its subsidiary EE, which operates on the liberalised market. The Italian competition authority considered that ENEL’s conduct was aimed at excluding competitors from the liberalised market. The Italian Supreme Administrative Court then referred a number of questions to the ECJ for a preliminary ruling.

The ECJ reiterates the importance of the concept of ‘competition on the merits’ for dominant undertakings. In that regard, it must be examined, also in cases like this that do not relate to price-setting, whether an equally efficient competitor can apply the same behaviour. The ECJ ruled that such was not the case. It emphasises that a dominant undertaking, upon liberalisation of the market, must refrain from using data to which it had access by virtue of its legal monopoly in order to strengthen or leverage its market position on a neighbouring market.

Furthermore, the ECJ confirms the concept of an undertaking in the context of abuse cases as defined in Sumal: it is the economic unit as such that is liable for an infringement of competition law. The entities comprising that (single) economic unit, such as subsidiaries, are also jointly and severally liable for the infringement, provided that there are economic, organisational and legal links between the infringing and the entity or entities addressed. Read our earlier blog on the concept of undertaking and liability here.

 

ACM gives green light for (sustainable) cooperation between competitors Shell and TotalEnergies in CO2 storage in empty gas fields in the North Sea

ACM, informal guidance of 27 June 2022

In an informal guidance dated 27 June 2022, the ACM notes that Shell and TotalEnergies are permitted to cooperate in the storage of CO2 in empty gas fields in the North Sea. The initiative is part of the project ‘Aramis’ in which the government, Gasunie and Energie Beheer Nederland are also involved. By transporting CO2 through pipes and storing it in old gas fields, the greenhouse gas will not end up in the atmosphere. According to the ACM, the initiative thus contributes to legitimate climate objectives.

The ACM examined whether the cooperation is necessary to get the initiative off the ground and realise the climate benefits. To launch the project, Shell and TotalEnergies must jointly offer the CO2 storage and jointly set the price for it with a view to commissioning the first 20% of the pipeline’s capacity. No agreements will be made for the remaining 80%. In its assessment, the ACM applied its (currently second draft of the) Guidelines on sustainability agreements. The ACM concludes that the advantages for consumers and society outweigh the disadvantages of the restriction of competition. The ACM thereby applies a broader test than the Commission, which only looks at the benefits for direct consumers. Given the innovative nature of the project, it is likely that the Commission has also have given the go.

This is only the third time that the ACM applies its draft Guidelines on sustainability agreements. Earlier, the ACM applied the guidelines to test a price agreement for CO2 to stimulate sustainable investments and a collaboration for the purchase of electricity from a windmill park.

 

ACM tries alternative regulation of fibre optic networks of KPN and Glaspoort through commitments in competition investigation

ACM, decision of 15 April 2022; District Court of Rotterdam, judgment of 31 March 2022

On 15 April, the ACM published a draft decision including the commitments offered by KPN and Glaspoort for access to their fibre optic networks. Since the annulment of the Market Analysis Decision on Wholesale Fixed Access by the CBb in 2020, KPN and Glaspoort have voluntarily provided access to their fibre optic networks. In 2020, the ACM launched an investigation to assess whether (re)regulation of access is necessary under the Telecommunications Act (“TA”) and/or intervention is required under the Dutch Competition Act (“DCA”).

Given the current levels of KPN’s wholesale tariffs, the ACM foresees, inter alia, that operators with access to KPN and Glaspoort will offer lower speeds and/or higher prices at a retail level. With the commitments to reduce the wholesale prices for access to fibre networks (ODF-access (FttH)), the ACM believes that these risks will be mitigated. Several third parties, such as T-Mobile, still consider that the tariffs are too high. In addition, the commitments only relate to the conditions that KPN and Glaspoort set centrally (high) in their networks, and do not specifically regulate the tariffs for wholesale broadband access. It is not yet clear whether the ACM will refrain from taking a new market analysis decision on the basis of chapter 6a TA, and/or whether or not these commitments will indeed be declared binding (in full).

Earlier this year, T-Mobile already appealed against the merger approval decision of the ACM concerning joint venture Glaspoort. T-Mobile primarily argued that the creation of Glaspoort did not amount to a concentration, since KPN and APG do not exercise joint control over Glaspoort, but KPN exercises sole control instead. This would mean that the regulatory framework applicable to the KPN group would automatically apply to Glaspoort as well. In light of relativity, the Rotterdam District Court considered that the strategic interest of T-Mobile not to be protected by the merger control regime, cannot be taken into account in this case. In fact, it is in the interest of competitors that their position on the market is protected and that the ACM substantially assesses the effects of the concentration. In addition, the ACM rightly saw no indications for a serious impediment of competition by the creation of Glaspoort. The District Court held that T-Mobile’s argument regarding the (accelerated) phasing out of copper networks and the risk of strategic overbuild of fibre optic networks is an uncertain circumstance, and not a (direct) consequence of the concentration as such.

 

Legal vacuum: highest administrative court quashes minister’s final permit for acquisition of Sandd by PostNL

Trade and Industry Appeals Tribunal, judgment of 2 June 2022 (PostNL/Sandd)

On 2 June 2022, the highest administrative court has annulled the ministerial approval for the realisation of the concentration between PostNL and Sandd.

In the PostNL/Sandd merger decision, the ACM refused the application for a licence in the second phase, after having determined that PostNL’s acquisition of Sandd would strengthen PostNL’s dominant position and lead to a 30-40% price increase for business senders of postal mail. The market investigation of the ACM also showed that, although the volume of postal mail will decrease, a substantial amount will remain in the long run. Without the acquisition, the ACM expects Sandd to remain active and PostNL to continue to profitably provide universal postal services (“UPS”).

PostNL subsequently submitted an application for a licence to the Minister under Article 47 paragraphs 1 and 2 DCA and also lodged an appeal against the second phase decision of the ACM. The handling of that appeal has been suspended until an irrevocable decision has been taken on the licence from the Minister (‘priority rule’ pursuant to Article 47, paragraph 3 DCA).

In its decision, the Minister identified four important reasons of general interest that outweigh the expected impediments of competition as identified by the ACM. Three of these four reasons are based on assumptions and propositions about (the future of) the postal market, which are contrary to the ACM’s investigation. For example, the Minister expects that the ongoing decline in volume will lead to the disappearance of the postal market and that the UPS can no longer be carried out on a commercial basis.

In the appeal before the Rotterdam District Court against the Minister’s decision, the court ruled that the minister had insufficiently substantiated his assumptions and institutions that differed from those of the ACM. The court therefore annulled the decision. On appeal, the CBb took a different approach and discussed the systematics of the DCA. It considered that it is clear from the legislative history that, when taking a decision on an application pursuant to Article 47 DCA, the Minister is not only bound by the (significant) impediment(s) of competition identified by the ACM, but also by the entire factual and competition law assessment of the ACM on which this is based (since these form an inseparable whole). According to the CBb, it also follows from the ‘priority rule’ that the Minister may not form his own opinion on the facts, assumptions, analyses and conclusions.

Since the Minister should have taken the ACM’s second-phase decision as a starting point, the three reasons given by the Minister that contradict the ACM’s assessment cannot constitute compelling reasons in the public interest as referred to in Article 47(1) and (2) DCA. The remaining (fourth) reason, namely the protection of employees, does not carry sufficient weight compared to the expected (significant) impediments to competition. For this reason, the CBb annulled the decision of the Minister (and its replacement decision which was based on the same reasons) and decided to settle the matter itself by rejecting the request for a licence.

This leads to the unusual situation that the long-standing concentration between PostNL and Sandd has not received a licence from either the ACM or the Minister. However, the PostNL/Sandd saga has not ended yet: it is now up to the District Court in Rotterdam to rule on PostNL’s appeal against the ACM’s second-phase decision.

  

Qualcomm and optical disc drives: Commission’s fining decisions annulled due to procedural errors and lack of actual foreclosure effects

General Court of the EU, judgment of 15 June 2022 (Qualcomm); European Court of Justice, judgment of 16 June 2022 (Optical disk drives)

On 15 June 2022, the GC annulled the fine of almost € 1 billion that the Commission imposed on chipset developer Qualcomm. In 2018, the Commission established that Qualcomm abused its dominant position by making incentive payments to Apple on the condition that it purchased LTE chipsets exclusively from Qualcomm (exclusivity payments).

The GC found that the Commission wrongfully concluded that the payments in question had restricted competition. Although the payments might have reduced Apple’s incentives to switch to competing suppliers, the Commission explicitly acknowledged in the decision that for iPhones – the vast majority of its sales – Apple had no technical alternative to the LTE chipsets. The undisputed fact that there was no technical alternative on the relevant market is a relevant factual circumstance which must be taken into account when analysing the capability of the payments concerned to have foreclosure effects. The fact that Apple’s internal documents did somehow refer to a reduced incentive for a specific, limited group of iPad models is insufficient to support the foreclosure effects for (both) iPhones and iPads. The Commission therefore did not take all relevant circumstances into account when assessing Qualcomms behaviour.

In addition, the GC reveals a number of procedural irregularities. It emphasises that the Commission must record the precise content of all interviews conducted for the purposes of collecting information relating to the subject matter of an investigation. In the underlying case, the Commission wrongly omitted to record the meetings and conference calls held with third parties. Moreover, the GC notes that the contested decision limits itself to finding abuse on only one relevant market, whereas the Statement of Objections (“SO”) covered several relevant markets. Although this does not in itself imply a procedural error, the amendment of the SO (potentially) affected the relevance of the economic analysis and data submitted by Qualcomm. The Commission should therefore have given Qualcomm the opportunity to be heard and to adjust its analysis if necessary. With these two procedural errors, the Commission has violated Qualcomm’s rights of defence. The Court annulled the decision in its entirety.

Recently, the ECJ also underlined the importance of the content of the SO in its judgment regarding the optical disc drives cartel. On 16 June, the ECJ ruled on the importance of a proper preparation in the administrative procedure. In the cartel decision – addressed to Sony, Quanta and the two joint ventures of Toshiba and Samsung – the Commission found that there was a single continuous infringement as well as a number of separate infringements. However, the SO shared with the cartelists only concerned the single continuous infringements and did not mention the existence of separate infringements. It therefore amounted to an addition to the objections the Commission previously shared with the cartelists. Unlike the GC, the ECJ concluded that the cartelists’ rights of defence had been violated as these separate infringements had not been sufficiently investigated and qualified by the Commission in the SO.

 

Compensation from ACM after annulled cartel fine decision in civil court only possible to a very limited extent

District Court of The Hague, judgment of 20 April 2022 (Midac/ACM)

The annulment of the cartel fine that the ACM had imposed on Midac for its participation in the traction batteries cartel by the Rotterdam District Court (20 June 2019), was recently given a civil law dimension. Midac claimed compensation before the civil court for the costs of legal assistance as well as internal costs in the preparatory, objection and appeal procedures. It also claimed compensation for non-material damage resulting from the failure to remove Midac’s name (on time) in the ACM’s public press releases about the traction batteries cartel.

With regard to the costs incurred by Midac in the preparatory procedure, the District Court of The Hague held that the investigation by the ACM was not unlawful. After all, there were sufficient grounds for the ACM to investigate the possible involvement of Midac in the cartel. The fact that the unlawful conduct of the State has been irrevocable established by the judgment of the Rotterdam District Court (the ACM refrained from appealing that judgment) does not alter this conclusion. With regard to the costs of administrative objection and appeal procedures, the District Court ruled that only the administrative courts are authorised to rule on this (on the basis of the Legal Costs (Administrative Law) Decree). To this extent, Midac’s claim is inadmissible, according to the District Court.

Finally, the Court considered that, although the publication of the decision to impose a fine is not unlawful as such, the ACM should have amended the content of the publication of its own accord within a short period of time after the annulment by the Rotterdam District Court. As this took place much later – and only at the request of Midac – the Court ordered the State to pay compensation for immaterial damage of € 2.500.

 

Free podcast app of public broadcaster NPO Luister does not restrict competition

ACM, Market Impact Analysis of 8 February 2022 (NPO Luister)

On 8 February the ACM issued its advice to the Minister of Education, Culture and Science about the new podcast app, NPO Luister, of the Dutch Public Broadcaster (Nederlandse Publieke Omroep (“NPO”)) in which all podcasts of NPO will be offered through one channel. The ACM expects that the effect of the new channel on the Dutch market will be marginal. First of all, the market for podcasts is developing rapidly. Moreover, NPO Luister will only offer existing content in a bundled manner and the content will also remain available for other (commercial) supply channels. The market situation with NPO Luister will therefore hardly differ from a situation without the new supply channel.

The ACM nevertheless advises the Minister to keep an eye on whether NPO will start to offer the content exclusively in the future, and to ensure effective competition in the market for distribution of audio on demand content.

 

 

For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist.

You can reach us via the links below.

 

Bas Braeken (Partner) | Jade Versteeg (Attorney-at-law) | Lara Elzas (Attorney-at-law) | Timo Hieselaar (Attorney-at-law) | Demi van den Berg (Attorney-at-law) | Diederik Simons (Paralegal)

 

Vision

Competition Flashback Q1 2022

This is the Competition Flashback Q1 2022 by bureau Brandeis, featuring a selection of the key competition law developments of the past quarter.

Would you like to receive the Competition Flashback news letter of bureau Brandeis by email in the future? That is possible! You will find the registration form here.

Overview Q1 2022

  • Enforcement of consumer rights by ACM: principle of legal certainty as a safety net
  • Court of Appeal nullifies non-compete clause in cooperation agreement between radiologists due to breach of cartel prohibition
  • ACM’s focus areas: digital economy, energy transition & sustainability, housing market
  • Further investigation into merger RTL/Talpa by ACM
  • The Data Act: European legislative proposal for far-reaching data sharing
  • EU General Court annuls billion euro fine for Intel for alleged abuse of dominance
  • Court of Justice clarifies the application of ne bis in idem principle in competition law
  • Roadshows by the Ministry of Economic Affairs for public company DVI violate the Dutch Act on Government and Free Markets
  • Acquisition of Kustomer by Meta approved by European Commission and Bka
  • Supermarket chains Coop and Plus may merge under condition of selling several supermarkets
  • No compensation for UPS after the European Commission wrongly vetoed the UPS/TNT merger
  • European Commission must also pay default interest after (partial) nullity of a fine

 

Enforcement of consumer rights by ACM: the principle of legal certainty as a safety net

Rotterdam District Court, judgment of 20 January 2022 | ACM, press release of 20 January 2022

Consumer rights in the energy sector have been on the radar of the Authority for Consumers and Markets (“ACM”) for some time now. An interesting development in this context is the judgment of the District Court of Rotterdam of 20 January 2022, concerning a fine imposed by the ACM for the application of unreasonably high cancellation fees to freelancers. According to the ACM, this group should have been regarded as consumers and not as (small) business customers. The court ruled, with due observance of the lex certa principle, that the legislation offers no starting points for the distinction made by the ACM in its guidelines between consumers and (small) business customers. The fine of EUR 1,25 million imposed by the ACM was therefore annulled. The ACM has announced that it will appeal the ruling.

This judgment provides insight into the relationship between policy rules of the ACM and higher legislation. Although the ACM frequently uses guidelines, directives and other soft law in its supervision, the principle of foreseeability requires that ACM’s policy must always be regarded in the light of the intention of the legislator, according to the court.

In this context, reference can also be made to the in-depth investigation into misleading sustainability claims made by two energy suppliers, as published by the ACM on 25 January 2022. Following the publication of the Guidelines on Sustainability Claims, the ACM started a broad investigation in the energy sector in May 2021. The investigation showed that energy suppliers do not sufficiently explain what is the basis of their claims about green energy and sustainability, and fail, for instance, to indicate what percentage of the gas actually consists of green gas or whether it is CO2-compensated gas. The (increasing) supervision of the ACM in the energy sector is thus (again) based on its own policy rules. In the event of judicial review, it might be relevant to assess whether and to what extent the ACM’s guidelines are in accordance with the law.

 

Court of Appeal nullifies non-compete clause in cooperation agreement between radiologists due to breach of cartel prohibition

Court of Appeal ‘s-Hertogenbosch, judgment of 8 February 2022

On 8 February 2022, the Court of Appeal of ‘s-Hertogenbosch (the “CoA”) handed down a judgment annulling a non-compete clause on the basis of Article 6 of the Dutch Competition Act (“DCA”). The appellant before the CoA is a radiologist working at a hospital operated by Zuyderland. Since 1 January 2015, the appellant transferred his radiology practice to MSB: a cooperation of medical specialists affiliated to Zuyderland. MSB concluded a members’ agreement (the “Agreement”) with the professional company of the appellant, which contains a non-compete clause prohibiting the appellant to perform work (in)directly for healthcare providers competing with MSB without MSB’s permission. In addition, the non-compete clause was to apply for another two years after expiry of the agreement, within a radius of 30 kilometres.

The judgment shows that the radiologist had repeatedly breached the non-compete clause during the term of the agreement. MSB therefore decided to terminate the agreement on 11 April 2018. On appeal, the radiologist argued that the non-compete clause in the agreement was null and void pursuant to Article 6 DCA. Therefore, it could not serve as a ground for termination.

The CoA ruled, first of all, that the non-compete clause is a restriction by object within the meaning of Article 6 DCA. The CoA added that, even if the non-compete clause does not qualify as a restriction by object, it is still a prohibited restriction. It referred to case law of the Court of Justice of the European Union (“CJEU”), from which it follows that a non-compete clause for members of a cooperation is generally subject to the cartel prohibition. According to this case law, a non-compete clause may not go beyond what is necessary to ensure the proper functioning of the cooperation. The CoA considered that the non-compete clause at issue did not meet this criterion of necessity, as the proper working of MSB can also be achieved by means of a less far-reaching exclusivity obligation. The CoA therefore upheld the appeal and ruled that the non-compete clause is null and void on the basis of Article 6 DCA. As the other grounds for termination did not justify immediate termination either, the CoA held that MSB did not have a (legitimate) ground for termination.

 

ACM’s focus areas: digital economy, energy transition & sustainability, housing market

ACM, focus areas 2022-2023, publication of 24 January 2022

The ACM has put three ACM-wide topics on the agenda for the next two years:

  • Digital economy: this subject was already on the 2020-2021 agenda and remains topical according to the ACM. The ACM announces, inter alia, that it will take action against online service providers for the use of unfair terms and conditions, decide on access to fixed networks for telecom providers without their own network, and publish guidelines on competition rules for IT-providers in the healthcare sector.
  • Energy transition and sustainability: the topic of energy transition was also on the 2020-2021 agenda, but has been expanded to include sustainability. The ACM has announced that it will for example continue to enforce misleading sustainability claims in the energy sector.
  • Housing market: The housing market is a new topic on the ACM’s agenda. The ACM will intensify the supervision on rental agencies and realtors and conduct a market study into market power on the municipal-land market.

The coming years, these three topics will receive extra attention from the ACM. This means that we can expect more investigations regarding these topics, and that the ACM will assess tips and complaints in these fields with particular interest.

 

Further investigation into merger RTL/Talpa by ACM

ACM, decision of 28 January 2022

On 28 January, the ACM decided that a licence is required for the acquisition of Talpa Network by RTL Group. In its Phase I-decision, the ACM specifically foresees the possible creation or strengthening of a dominant position on the markets for (i) the sale of television advertising space, (ii) the production and procurement of audio-visual content, and (iii) the wholesale supply of television channels to distributors such as KPN and VodafoneZiggo.

Due to their strong positions on the market for the provision of television advertising space, RTL and Talpa might increase their prices for advertisers. The ACM even mentions the possibility to leverage their positions on the television advertising market to the radio advertising market (on which Talpa is active with its radio station Q-Music). With regard to the market for wholesale supply of television channels, the ACM also expects that the parties (with a combined market share of 70-80%) could raise prices for distributors and worsen the conditions of, for instance, on-demand services (such as recording television programmes/interactive television). Moreover, the bundling of the parties’ TV activities could place external content producers in a worse bargaining position, and have the result that RTL and Talpa will no longer, or under worse conditions, externally supply the programmes they produce themselves to other broadcasters. According to the ACM, this may come at the expense of the diversity of the television offer. The extensive investigation in the licensing phase will therefore focus on these three – according to the ACM, strongly interrelated – markets.

At first sight, the ACM does not foresee any competition issues in the markets for the procurement of journalistic services, the procurement of facility services and for the provision of retail television services. The ACM for example considers an increase of video on demand services such as Netflix and Disney+, which (may) exert competitive pressure on the retail television services of the parties (RTL XL, Videoland and Kijk), and potentially even on linear television services (live television).

 

The Data Act: European legislative proposal for far-reaching data sharing

European Commission, legislative proposal of 23 February 2022

On 23 February 2022, the European Commission (“Commission”) presented a new legislative proposal that aims to create a harmonised framework for data sharing by public authorities and companies (such as providers of data-generating products including connected devices and data-sharing services such as cloud/edge computing). The aim of the regulation is to create a level playing field between data holders and re-users of data, and to enable data portability in the event that a user switches to another provider. This way, the Commission seeks to promote data-driven innovation, in line with the Commission’s data strategy to form a single market for data.

The Data Act is a so-called ‘horizontal’ regulation which outlines a general EU-wide framework. The Commission is also considering to adopt more detailed (vertical) regulation in certain specific sectors, such as healthcare and transport.

The legislative proposal was publicly consulted last year and will be discussed by the European legislative bodies in the coming period. Given its far-reaching consequences, the Data Act is expected to lead to much political discussion. Criticism has already been voiced by, for example, Big Tech companies that also qualify as gatekeepers under the Digital Markets Act. Under the current proposal, gatekeepers are excluded from receiving data when a customer switches to one of their products.

 

EU General Court annuls billion euro fine for Intel for alleged abuse of dominance

General Court of the EU, judgment of 26 January 2022

On 26 January 2022, the General Court of the European Union (the “General Court”) partially annulled the Commission’s decision in which it held that chip manufacturer Intel had abused its dominant position. As a consequence, the fine of EUR 1,06 billion imposed on Intel was also annulled. The judgment marks a departure from the per se approach whereby certain conduct is considered inherently anti-competitive. If a dominant company provides (economic) evidence in the administrative procedure that its conduct is not capable of restricting competition, the Commission has to investigate the anti-competitive effects of the conduct.

Background

In 2009, the European Commission fined Intel for abusing its dominant position in the microprocessor market from 2002 to 2007. The Commission found that Intel holds a dominant position in the x86 processor market, with a market share of around 70%. Intel abused this position by (i) offering rebates to four computer manufacturers (Dell, HP, Lenovo and NEC) on the condition that they purchase all or almost all x86 CPUs from Intel, and (ii) making payments to manufacturers that would delay, cancel or restrict the launch or commercialisation of laptops with CPUs of Intel’s rival AMD.

According to the Commission, these so-called loyalty rebates restrict competition by their very nature, so that it is not necessary to analyse the anti-competitive effects. In other words, loyalty rebates are thus considered prohibited per se. The Commission still applied the ‘as-efficient competitor‘ test (“AEC test”) to show that the loyalty rebates made it impossible for equally efficient competitors to compete profitably. Intel appealed against this decision in 2014. Following a rejection of the appeal by the General Court, Intel appealed to the CJEU in 2017. The CJEU subsequently set aside the General Court’s judgment, as the General Court had not examined the Commission’s analysis of the AEC test and Intel’s arguments in relation to that test. The case was referred back to the General Court.

The judgment of the General Court

In the recent judgment, the General Court found that the Commission’s economic analysis was flawed and did not sufficiently demonstrate that Intel’s conduct was capable of producing actual and/or potential anti-competitive effects. Loyalty rebates may be presumed, by their very nature, to potentially have restrictive effects on competition, yet the General Court underlines that this is a rebuttable presumption. According to the General Court, loyalty rebates are therefore not per se illegal. Since Intel brought forward supporting evidence showing that its conduct was not capable of restricting competition and producing foreclosure effects, the Commission should have examined the specific effects of the loyalty rebates. The General Court found that the Commission did not sufficiently demonstrate that the loyalty rebates were capable of having foreclosure effects throughout the relevant period.

As a result, the Commission must repay the fine of EUR 1,06 billion plus an interest of 3,5% (see below). The Commission has announced that it will appeal this judgment.

 

Court of Justice clarifies the application of ne bis in idem principle in competition law

Court of Justice of the EU, judgments of 22 March 2022 (Nordzucker and Others v. bpost)

On 22 March 2022, the CJEU delivered two interesting judgments concerning the application of the ne bis in idem principle in competition law. In Nordzucker and Others, the CJEU clarified the applicability of the principle where multiple national competition authorities (“NCAs”) investigate a cross-border cartel infringement. After the German Bundeskartellamt (“Bka”) issued cartel fines to German sugar producers for market sharing with effects in both Germany and Austria (partly on the basis of Article 101 TFEU), the Austrian court rejected a subsequent request from the Austrian competition authority to establish a cartel infringement regarding the same undertakings and on the basis of the same facts.

The CJEU ruled that the national court must examine whether the previous decision of the NCA had the purpose of establishing a cartel on the basis of effects on both the German and the Austrian market. If such is the case, the duplication of proceedings cannot be justified under Article 52(1) of the EU Charter of Fundamental Rights. In order to justify duplication, the subsequent decision must in fact pursue a complementary objective relating to different aspects of the same unlawful conduct. As both the German and the Austrian authorities could (and should) apply Article 101 TFEU, they both pursue the same objective of general interest. The fact that one of the cartel members in the German proceedings participated in a leniency programme does not, according to the CJEU, affect the applicability of the principle.

In case of duplication of infringement decisions based on different types of legislation, pursuing legitimate and distinct objectives, a breach of the ne bis in idem principle could potentially be justified. In bpost, the CJEU ruled that a previous fining decision by the Belgian postal regulator for maintaining a discriminatory tariff system did not, in principle, preclude a subsequent infringement decision by the Belgian Competition Authority (“BMa”) on the basis of Article 102 TFEU, despite the fact that it concerned the same conduct. The CJEU considered that the postal sectoral rules are intended to ensure the liberalisation of the postal sector, whilst the proceedings conducted by the BMa are intended to ensure free competition in the internal market. If there are clear, precise and foreseeable rules, the two procedures have been conducted in a sufficiently coordinated manner are and closely linked in time, and if the overall penalties imposed correspond to the seriousness of the offences committed, a duplication of proceedings would be justified.

 

Roadshows by the Ministry of Economic Affairs for public company DVI violate the Dutch Act on Government and Free Markets

ACM, decision on objection of 21 December 2021; press release of 24 January 2022

In its decision on objection of 21 December 2021, the ACM found that the Ministry of Economic Affairs and Climate Policy (“EZK”) violated the Dutch Act on Government and Free Markets (Wet Markt & Overheid, “M&O Act”) by favouring public company Dutch Venture Initiative (“DVI”) with regard to other investment funds. DVI invests in funds that, in turn, invest in innovative, fast-growing SMEs.

The Ministry of EZK tried to interest investors in the DVI by organising road shows, which, according to the ACM, constitutes an infringement of the prohibition on favouring companies within the meaning of Section 25j(1) DCA. The ACM holds that this prohibition is intended to prevent the government from providing competitive advantages to a company for the performance of economic activities in the same way as the prohibition on state aid in Article 107 of the TFEU. For this reason, the ACM assessed whether the attraction of investors to the DVI funds meet the cumulative state aid criteria of Article 107 TFEU, and eventually concludes that it does. Non-financial support can thus also qualify as preferential treatment within the meaning of the M&O Act.

 

Acquisition of Kustomer by Meta approved by European Commission and Bka

European Commission, press release of 27 January 2022 | Bundeskartellamt, press release of 11 February 2022

On 27 January 2022, the Commission conditionally approved the acquisition of Kustomer by Meta (formerly Facebook). In its in-depth investigation, the Commission envisaged that the acquisition of Kustomer, an innovative player in the market for customer service software applications, could potentially restrict competition in the market for customer service software and customerrelationshipmanagement (“CRM”) support software. Meta’s Whatsapp, Instagram and Messenger are popular messaging channels through which businesses interact with their customers, and therefore constitute important inputs for suppliers of customer service and CRM software. According to the Commission, Meta would, following the acquisition, potentially have the ability as well as the economic incentive to deny or degrade access to the Application Programming Interfaces (“APIs”) for Meta’s messaging channels to software providers competing with Kustomer.

To address these concerns, Meta has offered commitments with a 10-year duration. Meta undertakes to guarantee non-discriminatory access, without charge to its publicly available APIs for its messaging channels to competing customer service (CRM) software providers and new entrants. In addition, Meta offered to make available equivalent improvements and updates of the features or functionalities of its messaging channels to such providers.

The concentration was referred to the Commission under Article 22 of the Merger Regulation (“MR”) by Austria and supported by eight other Member States, including the Netherlands (find our blog on Article 22 MR here). The German Bka decided not to join the referral request and conducted a parallel review of the effects of the concentration. The parties also received approval from the Bka on 11 February 2022.

 

Supermarket chains Coop and Plus may merge under condition of selling several supermarkets

ACM, decision of 21 December 2021; press release of 6 January 2022

On 21 December 2021, the ACM decided that supermarket chains Plus and Coop may merge under the condition that they divest twelve supermarkets. The ACM has investigated whether the merger will result in higher prices or a less attractive supermarket offer for consumers. According to the ACM, this is not the case on a national level, due to the presence of strong competitors such as Albert Heijn, Jumbo and Lidl.

The ACM also investigated whether consumers have sufficient local supermarkets to choose from. It determined the definition of the local markets on the basis of customers’ willingness to travel to the supermarket by car within 10 minutes. In twelve areas, the ACM foresees that there may be no or limited choice for consumers, with a risk that prices will increase or the range of products and/or quality of service will deteriorate. To address the concerns of the ACM, Coop and Plus will sell their supermarkets in these twelve areas to a competitor.

 

No compensation for UPS after the European Commission wrongly vetoed the UPS/TNT merger

General Court of the EU, judgment of 23 February 2022 (UPS)

The world’s largest courier company, UPS, will not receive compensation from the Commission for the alleged damage resulting from the failed concentration of the Dutch parcel company TNT, the General Court ruled on 23 February 2022. The Commission decided in 2013 to prohibit the intended concentration between UPS and TNT. Subsequently, UPS decided not to go ahead with the concentration. However, in its decision, the Commission used an econometric model different from the one on which the Commission and UPS had exchanged views during the administrative procedure, without notifying UPS. The ECJ ruled in 2017 that this violated UPS’ rights and subsequently annulled the decision. The ECJ upheld the General Court’s judgment in 2019.

However, TNT had meanwhile been acquired by rival FedEx. This concentration was approved by the Commission on 8 January 2016. UPS therefore claimed damages of over EUR 1,7 billion from the Commission, consisting of inter alia a payment of EUR 200 million to TNT for terminating the proposed concentration, the costs incurred by UPS for being involved in the investigation of FedEx’s takeover of TNT, and the lost profits by not being able to complete the concentration.

According to the General Court, the failure to timely send the definitive version of the econometric model used during the administrative procedure constitutes a sufficiently serious breach of UPS’ rights of defence within the meaning of Article 266 TFEU. However, the General Court holds that there is no direct causal link between that infringement and the alleged damage. The damages stemming from the costs of being involved in the FedEx/TNT merger investigation and the termination clause are not the result of the Commission’s errors, but rather the result from UPS’ free choice to intervene in those proceedings and from a voluntarily agreed upon contractual obligation between UPS and TNT. Finally, there is also no direct causal link between the failure to send the adjusted econometric model and the alleged loss of profit. It cannot be assumed that the concentration would have been approved if the other econometric model had been used. Moreover, UPS itself decided to abandon the concentration after the Commission vetoed it and decided not to make a new offer for TNT to compete with FedEx.

UPS will therefore not be compensated for any of its losses. Although the judgment is understandable from the perspective of the regulators, it creates a high threshold for private parties by expecting them to still actively try to pursue a concentration after it has already been vetoed by the Commission. With this judgment, the General Court introduces a strict standard for successfully claiming damages for an unjustified veto of an intended merger.

 

European Commission must also pay default interest after (partial) nullity of a fine

General Court of the EU, judgment of 19 February 2022 (Deutsche Telekom)

The General Court ruled on 19 January 2022 that the Commission must repay more than EUR 1,7 million to Deutsche Telekom AG for refusing to pay default interest to the German telecom company. On 15 October 2014, the Commission fined Deutsche Telekom for abusing its dominant position in the Slovak market for broadband internet services. The Commission imposed a fine of approximately EUR 31 million on Deutsche Telekom. By judgment of 13 December 2018, the General Court reduced this fine by more than EUR 12 million. The Commission repaid this amount to Deutsche Telekom on 19 February 2019. Deutsche Telekom also claimed over EUR 1,7 million in default interest from the Commission for the period when it did not have that money at its disposal (i.e. 2014-2019). When the Commission refused to pay the interest, Deutsche Telekom claimed damages before the General Court.

By judgment of 19 January 2022, the General Court upheld that claim. First of all, the General Court concludes that there is indeed a sufficiently serious breach of Article 266 TFEU. The General Court confirmed the CJEU’s ruling in Printeos that Article 266 TFEU imposes an absolute and unconditional obligation to repay, with interest, payments collected in violation of European Union law. Second, the General Court holds that there is a causal link between the damage and the refusal to repay default interest. It points out that an undertaking may expect the Commission to reimburse it for the amount unduly paid, together with default interest, should the fine be annulled or reduced at a later stage.

Vision

Competition Flashback Q4

This is the Competition Flashback by bureau Brandeis, featuring a selection of some of the key competition law developments of the past quarter (see the original version here).

If you would like to receive the next Competition Flashback by e-mail you can subscribe to our mailing list here.

Overview Q4 2021

  • Apple must offer dating app providers more choice in its App Store
  • Intensive merger control by ACM: further investigation into Roompot/Landal and block of two acquisitions in the healthcare sector
  • Hostile takeover of Suez by Veolia conditionally approved
  • Fines in Forex and canned vegetables cartels: hybrid approach to settlement proposals by European Commission
  • Court of Justice repeatedly underlines fundamental importance of preliminary reference procedure, also in arbitration proceedings
  • Court of Justice deals with “object restrictions” in vertical relations in Visma
  • Dieselgate: European Commission clarifies green transition agreements
  • European Commission triumphs in landmark ruling on Google Shopping
  • ACM diminishes scope of Public Enterprises Act, whilst Court extends it
  • Court of Justice redefines the concept of undertaking and allows bottom-up liability
  • ACM imposes fines for purchasing cartel of used cooking oil

 

Apple must offer dating app providers more choice in its App Store
Rotterdam District Court, summary judgment of 24 December 2021

On 24 December 2021, the interim relief judge of the District Court of Rotterdam ruled on the order subject to a penalty imposed on Apple by the Netherlands Authority for Consumers and Markets (“ACM”) for an abuse of a dominant position. On 24 August last year, the ACM established that Apple was acting contrary to Article 24 of the Dutch Competition Act (“Mw”) and Article 102 TFEU (prohibition of abuse of a dominant position) by imposing unfair conditions on dating app providers. Apple’s abuse consisted of requiring app developers to have payments for in-app purchases settled by Apple and prohibiting them from referring to payment options outside the app. ACM required Apple to bring the infringement to an end within two months. Apple subsequently requested a suspension of this decision as well as the publication decision before the Court in interim relief proceedings.

The interim relief judge largely declined both requests. For instance, the judge ruled that the ACM has put forward good grounds to assume that Apple has a dominant position on the market for app store services on the iOS mobile operating system. According to the ACM, due to network effects it is necessary for dating app providers to be present in both the Apple Store and the Google Play Store (“multi-homing”). As Apple does not allow alternative app stores on its smartphones, it has a market share of 100%. In addition, the ACM submitted that Apple’s conditions not only restrict the freedom of choice of the dating app providers, but also harm the customer relationship between the dating app providers and their users.

The judge followed the ACM in its reasoning that Apple’s conditions are harmful and disproportionate, since they are not necessary for the operating model of the App Store. The judge did not take into account that the assessment of the ACM is of an experimental nature, as Apple argued. Although the European case-law referred to by the ACM could be open to criticism, the general line followed by the ACM is considered correct by the interim relief judge.

With regard to the order, the judge ruled that Apple’s interest is not compelling enough to suspend the entire decision. According to the judge, the adjustments required by the order are not particularly drastic and do not have an irreversible character. Moreover, the burden concerns only a small group of customers and does not prevent Apple from continuing to offer its services.

However, the judge reached the conclusion that there are doubts about the alleged infringement to which (the confidential) ‘part b’ of the order relates. To this extent, Apple’s defence succeeds and the contested decision and the decision to publish are suspended. Now that the other parts of the order under penalty remain intact, the judge is of the opinion that the amount of the penalty payment must be reduced in proportion to the suspended part, up to a maximum of €5 million per week and €50 million in total.

Although the first battle has thus been (mainly) won by the ACM (and app developers), this is probably only the beginning of an extensive legal battle. In addition to administrative objection and appeal against the ACM decision, Apple is also embroiled in legal proceedings at the European level (Apple case of the European Commission (“Commission”) concerning music streaming apps) and in the United States (civil action against Epic Games). The final word on the competition law qualification of Apple’s app store services has therefore not yet been spoken.

 

Intensive merger control by ACM: further investigation into Roompot/Landal and block of two acquisitions in the healthcare sector
ACM, decision of 29 November 2021 | ACM, press releases of 23 and 24 December 2021

On 29 November 2021, the ACM issued a decision regarding the notified acquisition of Landal by Roompot. The ACM concluded that the concentration may significantly impede effective competition on both the market for holiday accommodations at holiday parks in the Netherlands, and the market for sales and marketing services for holiday parks.

Roompot and Landal are currently the two largest providers of holiday accommodations at holiday parks in the Netherlands. According to the ACM, Roompot and Landal might even be each other’s main competitors. The merger will thus create horizontal overlap between the activities of both parties. The ACM fears that the concentration will remove important competitive pressure and that there may not be sufficient competition left to discipline Roompot and Landal. In light of this, the ACM concludes that the competitive pressure between Roompot and Landal needs to be further investigated, as well as the competitive pressure between the parties and other holiday parks, holiday accommodations and providers of sales and marketing services to holiday parks.

The ACM notes that there are currently no vertical relationships between the activities of Roompot and Landal. However, the parties have identified potential vertical relationships in a number of markets (in which only Roompot carries out activities).

Furthermore, the ACM has prohibited two notified acquisitions in the healthcare sector in a second phase decision in December 2021: the acquisition of Eurocept Homecare by Mediq and the acquisition of Mauritsklinkiek by Bergman Clinics. These decisions have not yet been published at the time of this Flashback.

 

Hostile takeover of Suez by Veolia conditionally approved
Commission, press release of 14 December 2021

The proposed acquisition of Suez by Veolia, initially considered hostile by Suez, has been conditionally approved by the Commission. This brings an end to a protracted conflict between the parties, during which Suez raised several legal obstacles to thwart the acquisition.

Suez and Veolia are incumbent parties on the markets for water treatment and waste management in France. In addition, they are two of the largest providers of water treatment and waste management services worldwide. The Commission found that without commitments, the transaction would lead to a significant reduction of competitive pressure in the markets for: (i) municipal water management in France; (ii) industrial water management in the European Economic Area; and (iii) waste collection and waste treatment in France.

Veolia offered multiple commitments to the Commission to mitigate the potential distortion of competition. Veolia has offered to cease its industrial water management activities in France as soon as possible, as well as its non-hazardous waste treatment services. Suez will also cease to treat hazardous waste by chemical incineration. These branches of the merged companies will be sold in the near future, Veolia said. In the end, Suez resigned itself to the acquisition. Suez will divest part of its activities to a new company that will pursue the water treatment activities that Veolia has renounced.

 

Fines in Forex and canned vegetables cartels: hybrid approach to settlement proposals by European Commission
Commission, decision of 2 December 2021 and press release of 19 November 2021

The Commission has imposed fines on a number of cartel participants in two different cases. The establishment of the fines and the Commission’s policy in this regard provide insight into the Commission’s flexibility in dealing with settlement proposals in cartel cases.

On 2 December 2021, five major banks (Barclays, Royal Bank of Scotland, HSBC, UBS and Credit Suisse) were fined a total of 344 million euros for their participation in the Forex cartel. The sanction is the final part of a nearly decade-long investigation into the long-term manipulation of exchange rates by the banks involved. HSBC receives the heaviest penalty with a fine of 174 million euros, while whistle-blower UBS escapes its fine of 94 million euros. The fining decisions – save for the one directed at Credit Suisse – all constitute settlement decisions. The Commission decided not to reveal the amounts of the fines for the cartel participants in a press release until the investigation concerning Credit Suisse was completed. The settlement and fining decisions have not yet been published.

The Commission’s approach in the Forex case differs from its approach in an earlier decision of 19 November 2021 (unpublished). In that decision, a fine of 20 million euros was imposed on Conserve Italia (and subsidiary Conserves France S.A.) for its participation in the canned vegetables cartel, in which the price of canned vegetables was kept artificially high by means of information exchange and customer and market allocation. In contrast to the penalty imposed on the  participants in the Forex cartel, this fine follows more than two years after the Commission published the settlement decisions with other cartelists.

The contrasting decisions in these cartels indicate a “hybrid” approach to settlement proposals and the publication of subsequent settlement decisions by the Commission. This approach brings an end to a period of uncertainty regarding the fairness and efficiency of hybrid cartel investigations.

 

Court of Justice repeatedly underlines fundamental importance of preliminary reference procedure, also in arbitration proceedings
CJEU, judgments of 6 October, 26 October and 23 November 2021

At the end of 2021, the Court of Justice of the EU (“CJEU”) delivered a number of judgments on the importance of the preliminary reference procedure and the possibility and obligation of national courts to refer preliminary questions to the CJEU.

Article 267 TFEU generally obliges national courts to refer questions concerning the application or interpretation of European Union law to the CJEU. In the CILFIT judgment of 1982, the CJEU made two general exceptions to this obligation; if the question has already been answered by the CJEU (acte éclairé) or if its correct application may be so obvious as to leave no scope for any reasonable doubt (acte clair), a national court of last instance is relieved from its obligation to refer questions for a preliminary ruling.

On 6 October 2021, the CJEU particularly specified the acte clair exception. The CJEU states with regard to the acte clair that the national court must be convinced that the matter would be equally obvious to the CJEU and other courts of last instance of other Member States. The fact that a provision may be interpreted in different ways is not sufficient for the view to be taken that there is reasonable doubt as to the correct interpretation of a provision. On the other hand, the existence of diverging lines of case-law among the courts of a Member States or between Member States is a relevant factor to determine the existence of reasonable doubt.

The CJEU emphasises the autonomous responsibility of a court of last instance to determine whether and, if so, when a reference for a preliminary ruling must and can be made during national proceedings. According to the CJEU, the decision not to make a reference – whether or not at the request of a litigant – must include a statement of reasons that shows that one of the exceptions applies.

In the IS judgment, the CJEU also touched upon the autonomy of lower national courts in preliminary ruling proceedings. The CJEU ruled that the decision of a lower court to make a preliminary reference cannot be declared unlawful by a higher court on the ground that the questions raised are not relevant and necessary to the resolution of the dispute. The CJEU emphasises that it has exclusive jurisdiction to rule on the admissibility of questions referred for a preliminary ruling. The CJEU reiterates that the principle of primacy of European Union law generally requires the referring court to disregard a decision given by a supreme court if the lower court considers that that decision undermines the (effectiveness of the) preliminary ruling procedure.

The importance and purpose of the preliminary ruling procedure was further emphasised in Poland/PL Holdings Sàrl. In this case, the CJEU ruled on the application and interpretation of European law in arbitration cases. The case concerned a bilateral investment treaty between two EU Member States, which included a clause stipulating that any disputes were to be settled by arbitration.

The CJEU first held that the Member States concerned excluded disputes on the interpretation and application of European law from the jurisdiction of their own national courts – and thus from the European legal order – by concluding such an investment treaty. Relying on the 2018 Achmea judgment, the CJEU particularly ruled that such a clause prevents the possibility of a preliminary ruling procedure which constitutes a cornerstone of EU law. The CJEU held that the efficiency and effectiveness of European law cannot be guaranteed this way, and that therefore, such an arbitration clause is invalid.

In Poland/PL Holdings, the CJEU even went a step further by concluding that – based on the principles of the primacy of European Union law and loyal cooperation – Member States are obliged to ensure that disputes involving European law do not fall outside the European legal order. If such disputes are brought before an arbitral tribunal, the Member State must (actively) challenge the jurisdiction of that tribunal.

 

Court of Justice deals with “object restrictions” in vertical relations in Visma
CJEU, judgment of 18 November 2021 (not yet published in English)

In Visma, the CJEU further explains the notion of object restrictions by answering a number of preliminary questions referred by a Latvian court. Visma had included a clause in its software distribution agreements requiring distributors, at the commencement of a sale of Visma’s accounting software to an end user, to register this potential transaction in a database set up by Visma. The distributor to first register the potential transaction with an end-user is then given priority to conclude that sale, provided that the end-user does not object.

The Latvian competition authority qualified this clause as a restriction of competition by object as the distributors were not able to compete for these customers, which amounted to customer allocation. Therefore, no further analysis of the effects was carried out. The Latvian court wondered whether the clause in question could qualify as an object restriction, and whether this would constitute an infringement of Article 101 TFEU if the supplier’s market share was less than 30% (and was thus covered by the block exemption for vertical agreements).

The CJEU holds that the system of prior registration at issue does not automatically qualify as a restriction of competition by object. For such a qualification, it must first be determined whether this agreement is in itself sufficiently harmful to competition so it is not necessary to examine its effects. However, the facts of the case were not sufficiently clear according to the CJEU. For example, it was unclear what the exact purpose of the clause in question was and how it gave distributors an advantage in the sales process.

The CJEU held that the clause does not appear to contain an express prohibition on competition for customers by Visma’s distributors. It is for the referring court to determine the exact content of the agreement, including its purpose. The economic and legal context must also be ascertained. This includes analysing the structure and characteristics of the market as well as the counterfactual (i.e. the situation on the market in the absence of the agreement at issue). Finally, the market shares of the parties are important. This is crucial for the possible application of the Vertical Block Exemption Regulation. In this context, the CJEU reiterates its established case-law by stating that a restriction of competition between distributors of the same brand (intra-brand competition) is, in principle, only harmful if actual competition between different brands on the relevant market (inter-brand competition) is weakened.

Finally, the CJEU emphasises that the infringement of competition law is independent of a subsequent fine. The fact that only Visma was fined and not the distributors does not affect the qualification of a (prohibited) agreement under Article 101 TFEU. The CJEU continued that the finding of an infringement of Article 101 TFEU cannot be invalidated on the basis of the assessment made by the (national) competition authority with regard to liability for that infringement.

 

Dieselgate: European Commission clarifies green transition agreements
Commission, letter published on 15 November 2021

The Commission has issued a “comfort letter” to clarify the permissibility of concerted practices and agreements promoting the green transition. The letter, dated 8 July 2021 but not published until November 2021, is addressed to the participants of the Diesel cartel, who exchanged price information in the market for selective catalytic reduction systems for diesel cars (“SCR systems”).

SCR systems use AUS32, a mixture of urea in demineralised water (commonly known by its trade name AdBlue), to reduce emissions caused by driving, and thus meet European Union emission standards. The Commission has indicated its intention to take green transition into account in its competition policy. Car manufacturers Daimler, Volkswagen, Audi, Porsche and BMW all admitted their involvement in the Diesel cartel and have been jointly fined 875 million euros for exchanging price information. The Commission’s letter focuses on other forms of coordination between these car manufacturers and examines whether these practices qualify for a fine or could be considered as legitimate cooperation to promote green transition. These other practices include the development of an AdBlue software platform, the standardisation of the shape of AdBlue bottles and caps to simplify the filling process, discussions on the introduction of quality standards in the industry and the exchange of data to construct AdBlue infrastructure. In its letter, the Commission states that it does not foresee any competition problems as a result of these practices. It states that the development of a software platform and related infrastructure is desirable to promote the quality and efficiency of SCR systems, and that such cooperation should therefore be allowed. The same applies to the standardisation of components and the formulation of quality requirements. Finally, the Commission states that the exchange of data is permissible, provided that the data is properly aggregated and anonymised.

With this letter, the Commission gives a clear signal as to the importance of innovation in the green energy sector. The letter can be seen as a competition law guideline for future cooperation between large companies in the energy transition.

 

European Commission triumphs in landmark ruling on Google Shopping
General Court, judgment of 10 November 2021

On 10 November 2021, the General Court of the European Union (“General Court”) handed down the long-awaited judgment in the Google Shopping case. Google Shopping is one in the series of – a total of four – proceedings brought by the Commission against Google.

On 27 June 2017, the Commission imposed a fine of 2.42 billion euros on Google for abuse of its dominant position. In that fining decision, the Commission concluded that Google had protected and used its dominant position in the market for general online search services to strengthen its position in the market for online comparison services (leveraging). Google favoured its own online comparison service – Google Shopping – to the detriment of other online comparison services. This form of abuse is regarded as self-preferencing and was identified by the Commission as a separate theory of harm, fuelling the debate on its legitimacy as a theory of harm.

In the appeal proceedings before the General Court, Google argued, inter alia, that its conduct did not deviate from competition on the merits, that it was unlikely to give rise to anti-competitive effects and that it was objectively justified. The General Court largely upheld the Commission’s stance that Google favoured its own services by (i) improving the positioning of its own search results and (ii) downgrading the display of competitors’ search results through Google’s Panda algorithm.

The General Court ruled that, under certain circumstances, self-preferencing can indeed be considered an independent form of abuse. To that end, the strict Bronner-criteria do not have to be fulfilled, and the Commission is not required to apply the essential facilities doctrine. According to the General Court, self-preferencing qualifies as an independent form of abuse if the conduct has anti-competitive effects and deviates from competition on the merits.

The clarification of self-preferencing as a theory of harm renders this judgment of the General Court of great significance for competition law. It is expected that Google will appeal this judgment before the CJEU.

 

ACM diminishes scope of Public Enterprises Act, whilst Court extends it
ACM, decision of 7 October 2021 | Rotterdam District Court, decision of 14 October 2021

The past quarter has produced two interesting cases on the Dutch Public Enterprises (Market Activities Act) (“M&O Act”). The M&O Act contains rules of conduct for governmental organisations that perform “economic activities” and, in that capacity, (potentially) compete with private undertakings. The M&O Act thus only applies to activities that cannot be classified as a public task.

On 7 October 2021, the ACM decided on an objection, following its earlier rejection of a complaint by BlindGuide, Geodirect, GOconnectIT, MijnKlic, Prosilic, Syntax Inframediairs, GO WIBON and Spatial Eye (the “Service Providers”), who, among other things, offer a KLIC-viewer and thereby compete with the service for the land registry and the public registers (the “Land Registry”). In their complaint, the service providers argued that the Land Registry was acting in violation of Article 25i Mw by offering a free KLIC-viewer. By using a KLIC-viewer, (groundwork) contractors can see where cables and pipelines are located so as to prevent excavation damage.

In its decision on the objection, the ACM (again) explicitly refers to a number of judgments of the CJEU, including the Tendernet judgment delivered on 7 November 2019. Based on European case-law, the ACM notes that the connection criterion and the separation criterion constitute a two-step test. The connection criterion implies that, when answering the question of whether activities performed by public authorities should be classified as a public task, it is sufficient that there is a close connection between the activity in question and the exercise of the powers of public authority. Only in the absence of such a close connection, and if the activities qualify as economic activities, should the separation criterion be used to assess whether the activity can be separated from the public function. The argument of the service providers that the ACM should have applied the separation criterion even though a close link had been established between the public function and the activities of the Land Registry, is not followed by the ACM.

In that same month, the Rotterdam District Court annulled a public interest decision by the Municipality of ‘s Hertogenbosch (the “Municipality”), declaring the provision of protective administration services to be of public interest. By considering these services to be of public interest, the Municipality was able to offer protective administration to persons of limited means, unlike the situation before, where protective administration was mainly offered by private administrators. The decision implied that special assistance was no longer provided to persons of limited means by private administrators, with the result that the entire market segment of private protective administration was withdrawn from the market.

A group of private administrators who were consequently side-lined brought proceedings before the Court. The Court ruled that an administrative body that takes a decision in the public interest must weigh the pursued public interest against the interests of possible third parties, including in particular the economic operators active in the market. As the Municipality did not sufficiently substantiate its claims and motivate why less drastic measures would not suffice, the Court annulled the decision.

 

Court of Justice redefines the concept of undertaking and allows bottom-up liability
CJEU, judgment of 6 October 2021

On 6 October 2021, the CJEU elaborated on the European law concept of undertaking in Sumal. Following Skanska, the highest European court in Sumal further expanded the scope of the concept of undertaking in private law. In this judgment, the CJEU ruled that subsidiaries can also be (jointly and severally) liable for an infringement committed by their parent company.

Daimler AG, together with other truck manufacturers, had been fined by the Commission in 2016 for its participation in the truck cartel. Sumal had bought two trucks during the cartel period from a Spanish subsidiary of Daimler AG, Mercedes Benz Trucks España (“MBTE”). Sumal claimed damages from MBTE before the Spanish court in Barcelona. After the claim for damages had been dismissed at first instance, a number of preliminary questions were referred to the CJEU on appeal.

With these preliminary questions, the Spanish court wanted to know whether an injured party could also claim damages from a subsidiary of the parent company fined by the Commission, even though this subsidiary was not itself an addressee of the Commission decision. The CJEU answered in the affirmative.

The reason behind this is that it is “the undertaking”, as defined in competition law, that commits the infringement. According to the CJEU, this means that all entities belonging to that economic unit are in principle liable for the resulting damage (in civil proceedings).

However, the CJEU sets two requirements that must be met. Firstly, there must be economic, organisational and legal links between the subsidiary and its parent company. The so-called Akzo doctrine is relevant here, which entails that there is a rebuttable presumption that if the parent owns (practically) the entire share capital of its subsidiary, it can exercise decisive influence over that subsidiary. Secondly, a concrete link is required between the economic activity carried out by the subsidiary in question and the subject of the infringing conduct for which the parent company is held liable under public law.

With this second requirement, which supplements the requirements arising from Akzo Nobel and Skanska, the CJEU emphasises the functional approach to the interpretation of the concept of undertaking, where the actual subject matter of the cartel infringement is important. If both of these requirements are met, the undertaking as such is liable for the behaviour of one of its economic units.

 

ACM imposes fines for purchasing cartel of used cooking oil
ACM, decision of 30 September 2021

On 30 September 2021, the ACM imposed fines on the companies Rotie and Nieuwcom for their involvement in a purchasing cartel relating to the collection of used cooking oil (“UCO”). Although there were three cartel members in total (Rotie, Nieuwcom and HUCO Kampen), HUCO Kampen was not involved in ACM’s investigation due to its insolvency. The fines imposed by the ACM on Rotie and Nieuwcom amounted to 2,078,000 euros and 1,536,500 euros respectively.

UCO is a waste product from the hospitality and food industry that is collected by UCO collectors such as Rotie and Nieuwcom. In turn, they sell it on to biodiesel manufacturers or traders. Under normal circumstances, UCO collectors compete on the purchase price of UCO.

The agreements between Rotie and Nieuwcom related to the purchase prices of UCO and took place from November 2012 to December 2018. The communication between the cartelists shows that they entered into allocation agreements in relation to their UCO suppliers. Rotie and Nieuwcom confronted each other if one of them had not kept to these agreements. The companies also shared their (future) purchase prices and other competitively sensitive information with each other. The ACM classifies these horizontal purchasing agreements and supplier allocation agreements as restrictions by object that constitute a violation of Article 101 TFEU and Article 6 Mw.

The ACM also imposed fines on the individuals who exercised de facto leadership (in Dutch) of the companies involved in the cartel. None of the undertakings or individuals has appealed against the ACM’s fining decisions.

For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist you. You can reach us via the links below.

Bas Braeken (Partner) | Jade Versteeg (Attorney-at-law) | Lara Elzas (Attorney-at-law) | Timo Hieselaar (Attorney-at-law) | Demi van den Berg (Lawyer) Berend Verweij (Paralegal)

Vision

Competition Flashback Q3 2021

This is the Competition Flashback by bureau Brandeis, featuring a selection of some of the key competition law developments of the past quarter (see the original version here).

If you would like to receive the next Competition Flashback by e-mail you can subscribe to our mailing list here.

Overview Q3 2021

  • Altice’s appeal against gunjumping fine dismissed by General Court
  • Commission launches two investigations into Google and Apple after preliminary report Internet of Things
  • ACM makes (long-awaited) turn and fines vertical price fixing agreements
  • Genuine or non-genuine agency? New interlocutory judgment in Prijsvrij/Corendon is not yet conclusive
  • ACM gives second green light for merger of Sanoma and Iddink
  • Prestressing steel cartel and elevators cartel: far-reaching duty to allege cartel damage and causality
  • Truck cartel damages: broad interpretation jurisdiction of national courts based on Erfolgsort
  • Automobile manufacturers fined € 975 million by European Commission for illegal technological discussions
  • Aircargo damage: flexible approach to the question of applicable law
  • Fine of € 19.5 million imposed on pharmaceutical company for charging excessive prices
  • ACM allowed to extend scope of investigation with accidentally obtained evidence

 

Altice’s appeal against gunjumping fine dismissed by General Court

General Court, judgement of 22 September 2021

In 2018, French telecom company Altice was fined twice € 62.25 million (a total of € 124.5 million) by the European Commission for its premature acquisition of PT Portugal. According to the Commission, Altice already had – and actually exercised – decisive influence over the day-to-day operations of PT Portugal before it obtained the necessary approval from the Commission. For example, it had the power to influence the (structure of the) senior management as well as the pricing policy of PT Portugal. You can read more about the case and the Commission decision in our blog on gunjumping.

Altice appealed the fine decision to no avail. On 22 September 2021, the General Court ruled in favour of the Commission. It held that the Commission had sufficiently established that Altice had effective control over PT Portugal and, moreover, that it actually exercised its control. The fine for the breach of the notification requirement, however, was reduced by 10% by the General Court, because Altice had notified the concentration to the Commission.

Commission launches two investigations into Google and Apple after preliminary report Internet of Things

European Commission, press releases of 22 and 20 September 2021

The European Commission has already launched two investigations relating to the Internet of Things investigations since the publication of its preliminary sector-wide report on June 9, 2021. The investigations concern Google and Apple. You can read more about the preliminary inquiry sector-wide report of the Commission in our blog on the Internet of Things.

The investigation into Google relates to the use of Google Assistant, the tech giant’s voice assistant. Google allegedly (ab)uses its Android operating system to exclude competing voice assistants. The Commission suspects that manufacturers of smart TVs and cars, for example, are being forced to (pre-)install Google Assistant as a standard service. This will give Google easy access to the user data of consumers of those products, which it can then use for its other services. The Commission is furthermore curious to know whether Google requires manufacturers to exclusively use Google Assistant, whether multiple voice assistants from different providers can be used simultaneously, and whether manufacturers receive a portion of the advertising revenue generated on the device from Google.

With respect to Apple, the Commission’s investigation focuses on how Apple’s iPhones and iPads interact with wearable devices (“wearables”). These include smartwatches, fitness bands and wireless headphones. The Commission is concerned that there may have been technical and/or contractual restrictions placed by Apple regarding the interoperability of iPhones/iPads with such wearables. This would entail that it is more difficult for wearables of other manufacturers to compete with Apple’s wearables, such as Apple Watch or AirPods. The Commission has now asked manufacturers of wearables whether Apple raises obstacles with regard to accessing features on iPhones and iPads, such as reading and replying to messages via the wearable or location services thereof. Both investigations are still ongoing.

ACM makes (long-awaited) turn and fines vertical price fixing agreements

ACM, decision of 14 September 2021

On 14 September 2021, the Netherlands Authority for Consumers and Markets (“ACM“) imposed a fine of over € 39 million on Samsung for influencing the online selling prices of its television sets. In its decision, the ACM finds that Samsung infringed the cartel prohibition by exercising undue pressure on seven of its retailers in the period between 2013 and 2018.

Samsung monitored the online retail prices of its television sets through so-called spider software and analysed their price movements. If it was alerted (through complaints of competing retailers) on a retail price lower than its desired market price, it contacted the retailer and urged it to increase its prices. Although Samsung only maintains ‘price recommendations’ and the agreements between Samsung and retailers stipulate that they are free to determine their own retail prices, the ACM concluded that these ‘recommendations’ in practice lead to illegal price-fixing.

The ACM held that Samsung’s monitoring, internal coordination and external communication are aimed at controlling and minimising price deviations. By frequently and individually contacting retailers about retail prices and informing them of the price intentions of their competitors, the ACM speaks of a systematic practice of price coordination between Samsung and its retailers. As retailers are consequently discouraged from lowering their prices and consumers are confronted with a higher price, the ACM held that Samsung’s behaviour had the object of restricting competition.

It is the first time in twenty years that the ACM has showed interest in vertical price agreements. In doing so, it appears to abandon its effects-based approach to vertical restraints and to align with the strict approach of the European Commission and other national competition authorities. In 2018, the Commission imposed four fines of in total € 111 million on Asus, Denon & Marantz and Philips for monitoring and pushing retailers’ prices. German authorities also maintain a strict approach. The Bundeskartellamt has for example been very active in fining resale price maintenance practices in recent years, and in 2018 the German Bundesgerichtshof confirmed that Asics may not prohibit its retailers from participating in price comparison websites.

For more insights into competition law in vertical relationships read our blog.

Genuine or non-genuine agents agency? New interlocutory judgment in Prijsvrij/Corendon is not yet conclusive

Amsterdam Court of Appeal, (interlocutory) judgment of 31 August 2021

A long-running dispute is ongoing between Prijsvrij and Corendon regarding the termination of an agency agreement by Corendon. In a recently published interlocutory judgment (in Dutch) of 3 December 2019, the Amsterdam Court of Appeal formulated a number of evidentiary assignments. Subsequently, on 31 August 2021, the Court of Appeal issued a new interlocutory judgment (also in Dutch) in the context of those evidentiary assignments.

The case between Prijsvrij and Corendon is of essential importance for sectors where resellers are frequently used, such as the travel sector. The main question is under which circumstances these agents can be qualified as ‘genuine’ agents within the meaning of competition law. This requires that the agent bears no or minimal commercial risks, so that the principal and its agent form a single economic unit. Only in that case is the cartel prohibition, including the prohibition on resale price maintenance, not applicable. In the case of genuine agency the principal may compel its agents to apply certain prices.

In the past, Prijsvrij was active as a reseller of Corendon’s package holidays until Corendon terminated its agreement with Prijsvrij in 2013. The Court of Appeal considered it (provisionally) proven that the reason for the termination could be found in the discounts offered by Prijsvrij to consumers. Such termination can be an instrument to achieve resale price maintenance and is therefore prohibited, unless Prijsvrij was a genuine agent of Corendon. In the interlocutory judgment the Court of Appeal gave Corendon the evidentiary assignment to prove that Prijsvrij qualified as an genuine agent.

In the context of these principal points of contention, Prijsvrij and Corendon have submitted documentary evidence and Corendon has called a number of witnesses. In doing so, a discussion has arisen as to whether the Court may include all of this evidence in its assessment of the evidence.

In its recent interlocutory judgment of 31 August 2021, the Amsterdam Court of Appeal decided to include all evidence submitted earlier and to reopen the examination of witnesses. Thereafter, the Court of Appeal will rule and is expected to provide clarity on the application of the doctrine of genuine agency.

*Bas Braeken and Jade Versteeg represent Prijsvrij in these proceedings.

ACM gives second green light for merger of Sanoma and Iddink

ACM, decision of 26 August 2021

Sanoma may take over Iddink according to a recent second decision of the ACM on the matter. Sanoma is a publisher of both traditional and digital educational materials through its subsidiary Malmberg. Iddink is a distributer of educational materials and owns Magister – a student information system (“SIS”) and electronic learning environment (“ELO”).

The licence application for the concentration of Sanoma and Iddink was submitted to the ACM in January 2019. After the ACM had conditionally approved this merger mid-2019, rival publisher Noordhoff filed an appeal against this decision with the Rotterdam District Court. In its ruling (in Dutch) of 4 March 2021 the District Court annulled the contested decision of the ACM due to a failure to sufficiently state reasons. The Court held that the ACM should have conducted more research into the possible need of schools for ‘bundling’ the digital teaching materials and the electronic learning environment. If there were such a need, the concentration between Sanoma and Iddink could lead to market foreclosure.

In its recent decision, dated 26 August 2021, the ACM again approved the concentration under the same conditions as before. The ACM provided additional reasoning as to why it is not plausible that the concentration would lead to market foreclosure through anticompetitive bundling. The ACM argued that there are different procurement procedures for teaching materials and the ELO/SIS, with different timeframes.

Consequently, schools do not have the need to purchase teaching materials and an ELO/SIS at the same time. In addition, the ACM maintains that prices are of little importance for a school’s selection of educational materials. Schools are primarily focused on quality, which limits the possibility for Sanoma/Iddink to apply a bundling strategy. The ACM also considers it implausible that there is an incentive for Sanoma/Iddink to bundle products.

In a press release (in Dutch) of 27 August 2021, the ACM announced that it will appeal the ruling of the Rotterdam District Court since it believes that its original decision did not contain a lack of reasoning.

Prestressing steel cartel and elevators cartel: far-reaching duty to allege cartel damage and causality

‘s-Hertogenbosch Court of appeal, judgement of 27 July 2021 | Rotterdam District Court, judgement of 23 June 2021

Recently, two judgments were published that are relevant for the duty of an injured party (‘plaintiff’) to allege damages and causality in cartel damage cases. In cartel damages proceedings the plaintiff must allege and prove that his or her damages were caused by the cartel in order to be awarded compensation. An important aspect in that regard concerns the data that is necessary to further substantiate such claims.

On 27 July 2021, the Court of Appeal of ‘s-Hertogenbosch ruled (in Dutch) that Deutsche Bahn, who is the plaintiff in this case, must bring forward sufficient factual evidence to make it plausible that it suffered damage as a result of the prestressing steel cartel. Such factual evidence concerns information that specifies which cartel products were purchased, when, from whom and at what price. The submission of a few examples is considered insufficient by the Court of Appeal.

When providing concrete evidence a plaintiff must prove the identity of the cartel participants and provide insight into its transactions with them (on the basis of contracts, invoices, packing slips, administrative data, annual documents, etc.). Although the substantiation of a claim should normally take place in the early stages of proceedings, the Court of Appeal gave Deutsche Bahn the opportunity to provide the required evidence at a later stage.

In a judgment (in Dutch) of 23 June 2021 (published on 12 July 2021) the Rotterdam District Court provided other relevant guidance regarding the duty to furnish facts in relation to damages and causality. In the elevators cartel damage case, the District Court assessed whether Stichting De Glazen Lift (a claim foundation representing housing associations) had fulfilled its obligation in that regard.

The District Court ruled that in the event of concrete indications that an agreement was concluded between a housing association and one (or more) cartel participant(s) during the infringement period it is plausible that damages were suffered and caused by the cartel.

The District Court then examined for each housing association whether the foundation submitted sufficient documents to make the damage plausible. For each individual (underlying) claimant, it must be shown that the party claiming damages contracted with or paid a cartel participant during the infringement period.

Lastly, the District Court ruled that, in view of rental price regulation, it is unlikely that the housing associations could have passed on their damages to their tenants by raising rent. Therefore, it is plausible that the installation of a elevators and escalators is at the expense of the housing associations. The District Court concluded that all the housing associations sufficiently alleged damages and causality and referred the proceedings for the determination of damages.

Truck cartel damages: broad interpretation jurisdiction of national courts based on Erfolgsort

CJEU, judgment of 15 July 2021

On 15 July 2021, the Court of Justice of the European Union (“CJEU”) ruled in RH v Volvo on how national courts should interpret article 7(2) of the Brussels I-bis Regulation, after preliminary questions were asked by a Spanish national court. The CJEU ruled on an interpretation for jurisdiction based on the place where the damage occurs, also referred to as ‘Erfolgsort’. The CJEU held that article 7(2) does not only relate to international jurisdiction (which Member State has jurisdiction), but also to territorial jurisdiction (which court within a Member State has jurisdiction).

Firstly, the CJEU holds that, in the case of damage resulting from a cartel that concerned the whole of the European Economic Area (“EEA”), the place where the damage occurred is considered to be within that entire market. This includes Spain, so the Spanish national courts have international jurisdiction.

Subsequently, the CJEU addresses the question on territorial jurisdiction. It observes that it is clear from the wording of article 7(2) that this provision directly and immediately aims to regulate both international and territorial jurisdiction. Nevertheless, Member States are free to designate a specific court to deal with certain specific types of disputes. In the absence of such national centralisation of competence/jurisdiction, territorial jurisdiction must comply with the principles of proximity, foreseeability and the proper administration of justice.

According to the CJEU, the court of the place where the goods of the cartel participants were purchased – possibly indirectly – has primary territorial jurisdiction. If the plaintiff has purchased goods in several jurisdictions, the seat of the plaintiff should determine the territorial jurisdiction. This reasoning is in line with the aforementioned principles, inter alia because cartel participants are deemed to be aware of the fact that the customers are located in the (entire) market affected by the anti-competitive conduct.

Automobile manufacturers to be fined € 975 million by Commission for illegal technological discussions

European Commission, decision of 8 July 2021

In a recent decision the European Commission has determined that Daimler, BMW and the Volkswagen group (Volkswagen, Audi and Porsche) violated competition law by jointly agreeing on technological development in the field of emissions cleaning. Daimler avoided a fine of € 727 million because it reported the conduct to the Commission.

The infringement is notable because this is the first time that a cartel decision has targeted agreements and contacts that took place as part of technological discussions related to innovation, rather than classic price or customer allocation agreements. For this reason, the fines were reduced by 20%.

Although the investigation started as a full-fledged cartel investigation, it was concluded with a voluntary settlement procedure. In addition, Daimler applied for leniency. BMW submitted a comprehensive statement after which the Commission dropped some of its allegations against the German car manufacturer.

Air cargo damages: flexible approach to the question of applicable law

Amsterdam Court of Appeal, (interlocutory) judgement of 6 July 2021

In its judgment (in Dutch) of 6 July 2021, the Amsterdam Court of Appeal ruled on the question of applicable law in the Air cargo damages proceedings. Many plaintiffs suffered damages as a result of paying excessive fees for the shipments of air cargo. Their claims are bundled in foundations Equilib and SCC.

As a preliminary matter, the Court of Appeal rules that it can rely on the facts determined by the European Commission in the cartel decision, even though that decision is still under appeal before the European Courts.

The Court of Appeal then ruled on the question of whether article 4 of the Dutch Tort Conflict of Law Act (“WCOD”) offers the relevant legal framework to answer the question of applicable law. The Court of Appeal finds that, in principle, for each separate claim of each individual plaintiff the damage resulting from a specific flight, the applicable law is that of the State in which the airport of departure is located.

The Court of Appeal subsequently observed that this outcome leads to a strong fragmentation of applicable laws. Strict application of article 4 WCOD would lead to dozens of different applicable legal systems. To avoid this fragmentation, the Court of Appeal first rules that the separate claims of each plaintiff should be considered as one single claim, in analogy with the concept of a single continuous infringement as applied by the Commission in its cartel decisions. Second, the Court of Appeal considers that not only the airport of departure is relevant for determining the applicable law, but also the airport of arrival. Article 4 WCOD does not limit its scope to the place in which competition is directly affected by the anticompetitive behaviour, but also the place that is indirectly affected (e.g. in case of umbrella damages).

The international nature of airline services results in the distortion of competition in multiple places, as is also confirmed by the Commission in its decision. As a result, the Court of Appeal considers that the claim of a plaintiff is governed by several national jurisdictions. The WCOD does not provide for a solution in such instances, however. To fill this legislative gap, the Court of Appeal relies on broadly shared EU principles, such as legal certainty and effectiveness. It notes that the EU legislator has addressed this issue in article 6(3) sub b of Regulation (EC) No 864/2007 (‘Rome II’), in which claimants may choose the applicable law, albeit under strict conditions.

Given that Equilib and SCC requested that Dutch law is applicable, the Court of Appeal concludes that the follow-on damages claims of the foundations are governed by Dutch law. This applies to all claims relating to flights falling within the scope of the cartel decision (flights departing and/or arriving in the EEA and Switzerland).

Fine of € 19.5 million imposed on pharmaceutical company for charging excessive prices

ACM, decision of 1 July 2021

In a decision of 1 July 2021 the ACM imposed a fine of € 19.5 million on the Italian pharmaceutical company Leadiant, manufacturer of chenodeoxycholic acid (“CDCA”). The ACM ruled that Leadiant had abused its dominant position by charging an excessive price for the medicine. It is the first decision imposing a fine that concerns medicine prices after the ACM announced that it will conduct more investigations into medicines in 2018.

Leadiant acquired the right to produce CDCA from another pharmaceutical company and has been selling it on the Dutch market since 2008. In 2008, the price for a package of CDCA in the Netherlands was € 46. After that, Leadiant increased the price of CDCA, which it sold under changing brand names, several times until it finally reached a maximum of € 14,000 per package in June 2017.

The ACM ruled that Leadiant abused its dominance in the period from June 2017 to December 2019. According to the ACM Leadiant had a special responsibility in the context of its dominant position to abstain from charging excessive prices. The ACM accuses Leadiant of failing to fulfil its responsibilities in this respect and that the (excessively high) prices charged were out of proportion to its costs.

ACM allowed to extend scope of investigation with accidentally obtained evidence

District Court of The Hague, judgement of 3 June 2021 (published on 12 July 2021)

On 3 June 2021, the District Court of The Hague rendered an anonymised judgment in instituted by a number of undertakings whose premises had been raided by the ACM. The investigation of the ACM initially focused on possible prohibited purchasing price agreements. However, during the Dawn Raid the ACM also found indications of possible agreements on the selling price. Based on this information the ACM expanded the scope of its investigation. You can read more about Dawn Raids in this blog.

An important question was whether the ACM had not merely cursorily examined this information and whether the ACM was allowed to use the information for the purpose of extending the scope of its investigation. The Court ruled that the ACM, on the basis of the Deutsche Bahn judgment of the CJEU, is allowed to take a cursory look at evidence (in the present case: chat messages and e-mail conversations) in order to assess whether something falls within or outside the scope of the investigation. The ACM does not have to limit itself to viewing the most recent message while keeping the scope of the investigation in mind. In view of the interwovenness between the new evidence and the original scope of the investigation, the Court did not find it remarkable that the ACM stumbled upon the evidence by chance.

In addition, the Court was asked whether the ACM is allowed to select relevant chats by entering the names of persons in the chat program when inspecting mobile phones. The Court ruled that the search on names of persons is proportionate and thus permitted.

 

For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist you. You can reach us via the links below.

Bas Braeken, Jade Versteeg, Lara Elzas, Timo Hieselaar, Demi van den Berg and Berend Verweij

Vision

Competition Flashback Q2 2021

This is the first Competition Flashback by bureau Brandeis, featuring a selection of some of the key competition law developments of the past quarter (see the original version here).

If you would like to receive the next Competition Flashback by e-mail you can subscribe to our mailing list here.

Overview Q2 2021

  • Notarial deed paper cartel; fine reduced from €2 million to €10,000
  • CJEU Recyclex: antitrust immunity only in the case of an extended infringement
  • Fine of €40 million for Dutch railway company NS struck down by Court
  • Private equity firm can recover cartel fine for incorrect information during due diligence
  • State Aid to KLM and Condor called into question as a result of inadequate reasoning
  • New ACM merger decision Sanoma/Iddink on the way after appeal by Noordhoff
  • Preliminary findings in the truck cartel damages case: claimants may go ahead
  • European Commission takes on Apple after Spotify complaint

 

ACM publishes notarial deed paper cartel four years later; fine reduced from €2 million to €10,000

ACM, press release of 1 July 2021 | Rotterdam District Court, judgment of 11 May 2021

Almost four years after the first fine decision, a long-running cartel case has been made public with the publication of a news release and a number of decisions by the Dutch Competition Authority (“ACM”). At the same time, the Rotterdam District Court also published two judgments in this cartel case (Rotterdam District Court judgments of 6 December 2018 and 11 May 2021, as published on 30 June and 1 July 2021).

At the centre of this case were (alleged) price and market sharing agreements on the market for notarial deed paper. This case revolved around agreements between one producer (of which the subsidiary that implemented the cartel agreements was separated from the parent company during the infringement period) and two distributors. All three parties supplied notary’s offices with notarial deed paper.

For the agreements concerning these sales the ACM imposed a fine of almost €2.8 million on the producer in a decision dated 17 February 2017 (whereby the parent company was held jointly and severally liable for the entire sum and the subsidiary for €2.06 million). One natural person, the de facto manager of the producer, was (initially) fined €200,000 (reduced to €80,000 after an objection). One distributor was fined €3,000 and the third distributor received full immunity from fines under the 2006 Notice on immunity from fines and reduction of fines in cartel cases (“Leniency Notice“).

Initially, the interim relief judge of the Rotterdam District Court suspended the decision of the ACM to publish the fine decision (judgment not yet published). The interim relief judge considered that the contentious agreements were vertical in nature and not horizontal. The Rotterdam District Court saw this differently and ruled that Article 2 (4) (a) of the Block Exemption for Vertical Agreements is not applicable. Based on this provision, agreements between competing companies (i.e. agreements of a horizontal nature) can also fall under the Block Exemption if there is a “non-reciprocal vertical agreement”, whereby the supplier is both a manufacturer and a distributor and the buyer is only a distributor. According to the Court, however, the agreements are (purely) horizontal in nature.

The Court also considered that in the case of object restrictions, no analysis of the counterfactual is required. The counterfactual refers to the market situation as it would have been without the alleged agreements. The producer had argued that without the distribution agreements it had entered into there would have been no competition at all. Indeed, until recently, the market for notarial deed paper was strictly regulated on the basis of rules of the Royal Dutch Association of Civil-law Notaries.

The District Court did not follow this line of reasoning. The Court, however, did rule that the ACM had set the gravity factor too high and lowered it from 2.75 to 1, and set the fine for the producer at €1 million and for the de facto manager at €60,000. A previously published judgment by the Trade and Industry Appeals Tribunal (“CBb“) shows that the producer’s fine was eventually reduced to €10,000. The difficult financial situation in which the company found itself as a result of the Covid 19 crisis was partly the basis for this reduction.

CJEU Recyclex: (partial) immunity from cartel infringement only if the scope of the infringement is extended

Court of Justice, judgment of 3 June 2021

On 3 June 2021, the Court of Justice (“CJEU”) delivered a judgment on the interpretation and application of the conditions set out in the third paragraph of point 26 of the Leniency Notice.

Recyclex had relied on the third paragraph of point 26 of the Leniency Notice when it provided the European Commission (“Commission“) with information about a particular meeting within the Car battery recycling cartel in which it participated. Recyclex submits that the Commission would have been unable to provide sufficient evidence of this particular meeting and therefore claims to be entitled to partial immunity. In this respect, according to Recyclex, it is irrelevant that the Commission was already aware of the fact that the meeting had taken place.

The CJEU does not share this view and holds that undertakings concerned can claim partial immunity only if they provide the Commission with evidence which “complement or supplement those of which the Commission is already aware and which alter the material or temporal scope of the infringement, as found by the Commission.”

Therefore, in order to successfully claim (partial) immunity on the basis of the third paragraph of point 26 of the Leniency Notice a cartel participant must provide the Commission with information on new facts which alter the original scope of the infringement.

Fine for Dutch railway company NS struck down by Court because dominance was not proven

CBb, judgment of 1 June 2021

In its judgment of 1 June, the CBb struck down a fine of more than €40 million that the ACM had imposed on Dutch railway company NS. The ACM had adopted this fine in a decision of 22 May 2017 alleging that NS had abused its dominant economic position.

According to the ACM, NS used its economic dominance on the main rail network (“HRN“) of the Netherlands to hinder its competitors Arriva and Veolia in the province Limburg. Specifically, in 2016 NS had submitted what the ACM considered to be a loss-making bid in the tender for a 15-year public transport concession in Limburg.

The Rotterdam District Court ruled in its judgment of 27 June 2019 that the ACM had not convincingly proven that NS actually had a dominant economic position. In addition, according to the District Court, the link between NS’ position on the HRN and the concession in Limburg was uncertain after 2024 (the concession for the HRN expires in 2024).

The CBb largely confirmed the ruling of the Rotterdam District Court. The ACM did not prove that NS has a position of economic dominance. According to the CBb, there is (potential) competition as the barriers for entering the HRN market is not too high. The fine of more than €40 million that the ACM had imposed on NS has therefore been permanently struck down.

Private equity can recover cartel fine in case of incorrect information during due diligence

Rotterdam District Court, judgment of 26 May 2021

Between November 2004 and July 2011 private equity firm Bencis held 92% of the shares in flour producer Meneba (now acquired by Dossche Mills). During this period Meneba was fined by the ACM for its participation in the flour cartel. This decision was confirmed by the ACM after administrative objection, by the Rotterdam District Court on appeal and by the CBb on further appeal.

Almost four years after the first decision and under the influence of European developments, the ACM (also) imposed a cartel fine of over €1,2 million on Bencis because of Meneba’s participation in the flour cartel. The basis of Bencis’ liability was that it had decisive influence on Meneba due to their close economic, organisational and legal ties. Therefore, according to the ACM, the infringement could also be attributed to Bencis.

Bencis is later seeking to recover this fine from Meneba in a case heard by the Rotterdam District Court. To this end, Bencis primarily argued that only Meneba factually participated in the cartel agreements. In its judgement of 26 may the Rotterdam District Court did not uphold Bencis’ claim. It considered that there is no room for recourse on the basis of a joint obligation (Article 6:10 Dutch Civil Code (“BW”)) since Bencis and Meneba were not fined jointly and severally. It also considered that there is no room for a claim based on tort (Article 6:162 BW). The tort claim failed on the basis of the relativity requirement, since the right to compensation for cartel violations does not extend to the protection of other cartel participants (see Courage/Crehan).

However, the judgement of the Rotterdam District Court is unlikely to be the end of this matter. At the hearing, Bencis argued that Meneba, within the context of a due diligence investigation prior to the acquisition of the shares by Bencis, had allegedly stated that no infringements, including infringements of competition law, had taken place. If Bencis succeeds in proving this with documents, this could, according to the Court, constitute an unlawful act by Meneba towards Bencis.

State aid to KLM and Condor called into question as a result of inadequate reasoning

General Court, judgments of 19 May 2021 and 9 June 2021

On 19 May 2021, the General Court in Luxembourg held that the Commission wrongly approved the €3.4 billion state aid granted to KLM on the basis of Article 107(3)(b) TFEU. This article provides for the possibility to grant aid to remedy a serious disturbance in the economy of a Member State, such as caused by the COVID-19 crisis. In its decision, the Commission did not provide sufficient reasoning by failing to adequately take into account the fact that KLM and Air France, both part of the same group, have been the recipient of two aid measures.

In its decision the Commission states that the Dutch authorities ‘confirmed’ that the financing granted to KLM would not be used by Air France. However, in the General Court’s view, the Commission failed to provide sufficient reasons as to how this would be guaranteed. In that regard, the relationship between KLM and Air France within the group – and the aid granted to them – was not sufficiently taken into account. Although the decision has been annulled, the aid granted does not have to be recovered immediately. KLM may keep the aid at least until the Commission has adopted a new decision.

The decision in which the Commission approved the German aid to airline Condor was also annulled by the General Court on the ground that it contained insufficient reasoning. The aid, based on Article 107(2)(b) TFEU, was intended to compensate Condor for the damage caused directly by the COVID-19 pandemic.

However, the German authorities included approx. €17 million in additional costs in the aid for Condor, because the latter was under an insolvency procedure following the liquidation of its parent company (Thomas Cook). This procedure started well before the outbreak of the COVID-19 pandemic, though. The Commission did not explain how (the costs surrounding) the failed sale of Condor in the insolvency procedure were related to the COVID-19 pandemic.

In this case, too, the aid granted will not be recovered immediately. In order to avoid direct damage to the German economy, Condor is allowed to keep the amount until the Commission has taken a new decision.

New ACM merger decision in Sanoma/Iddink coming after successful appeal by Noordhoff

ACM, announcement of 17 May 2021

On 28 August 2019, the ACM decided that Sanoma Learning (publisher of Malmberg schoolbooks) may acquire Iddink Group, distributor of educational material, conditional upon commitments. Iddink Group owns Magister, an electronic learning management system that many secondary schools in the Netherlands use. The commitments ensure that competitors have equal access to Magister and data from Magister after the merger. In addition, the merging parties must guarantee that no commercially sensitive information from competing publishers will be shared with Malmberg via Iddink.

Noordhoff, a competitor of Malmberg, did not agree with the ACM and appealed the decision. In its ruling of 4 March 2021, the Rotterdam District Court annulled the ACM’s decision.

According to the Court, the ACM had not sufficiently substantiated that post-merger Sanoma/Iddink has no possibility to foreclose competitors by means of bundling and that therefore no conglomerate effects existed. The ACM has announced that it will take a new decision and has also appealed against the District Court’s ruling.

Interim position truck cartel damages case: green light for the time being

Amsterdam District Court, judgment of 12 May 2021

On 12 May 2021, the Amsterdam District Court rendered an interlocutory judgment in the damages claim proceedings instituted by, among others, CDC against participants in the Truck Cartel. This judgment is limited to (i) an assessment of the scope of the Commission’s penalty decision, and (ii) the truck manufacturers’ defence that the exchange of information did not have a price-increasing effect and that the infringement therefore did not result in any damage.

With regard to the first point, the Court finds that it is bound by (the operative part of) the Commission’s decision regarding (the temporal and geographical scope of) the infringing behaviour as well as the persons liable for it. However, this does not exclude plaintiffs from providing further factual interpretation of the infringing behaviour.

With regard to the second point, the Court considered that the truck manufacturers must demonstrate that it is generally impossible that the infringement could have resulted in damage. Based on the expert reports, the Court finds that this has not been established. It is therefore up to the plaintiffs – for the remainder of the proceedings – to make it plausible that they have possibly suffered damage as a result of the unlawful actions of the truck manufacturers. This is needed to meet the threshold for referral to the damages assessment procedure.

Commission takes on Apple after Spotify complaint – national authorities follow

European Commission, press release of 30 April 2021

In March 2019 Spotify lodged a complaint with the Commission accusing Apple of distorting competition on the market for music streaming services offered through the App Store. Spotify claims that Apple is abusing its full control over the iOS mobile operating system and the App Store to impose unfair terms on competitors, such as Spotify, and to favour its own music streaming service Apple Music.

On 16 June 2020, the Commission launched an investigation into Apple’s policies on the App Store. In its press release of 30 April 2021, the Commission stated that in the Statement of Objections it had reached the preliminary view that Apple was abusing its dominant position. The Commission accuses Apple of forcing competing music streaming services to use the App Store’s ‘in-app’ purchase mechanism and charging a 30% commission in return.

In addition, the Commission’s objections relate to so-called ‘anti-steering provisions’ that restrict app developers in their ability to inform customers of alternative purchasing options. National authorities such as the ACM and the British CMA have also started investigations into these practices by Apple.

 

For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist you. You can reach us via the links below.

Bas Braeken, Jade Versteeg, Lara Elzas, Timo Hieselaar en Berend Verweij

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