Competition Flashback Q1 2024: EU and Dutch competition law developments
This is the Competition Flashback Q1 2024 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 2024
ACM unconditionally clears acquisition of Youfone by KPN*
ACM, decision of 21 March 2024
On 21 March, the Dutch Authority for Consumers and Markets (“ACM”) granted a licence for KPN’s proposed acquisition of Youfone. Earlier, the ACM foresaw potential risks in both the retail and wholesale markets, and therefore decided that further investigation was required. Following an extensive second-phase investigation, the ACM concludes that there is no risk that competition in the market for mobile telecommunications services will be (significantly) reduced. The ACM expects a limited price effect in the retail market and considers that there will remain sufficient competitively priced choices for consumers after the transaction.
In addition, the ACM concludes that there are no significant negative effects on the wholesale market. Although the ACM considers there to be barriers for mobile operators without their own network (MVNOs) to switch to another network provider (Odido or VodafoneZiggo), they can effectively threaten to switch, which in turn incentivises KPN to continue to provide access to its network (on favourable terms). Hence, the ACM gives unconditional approval for the acquisition.
*Bas Braeken, Demi van den Berg and Jade Versteeg assisted Youfone in the second-phase investigation at the ACM
Holiday accommodation owners are not considered interested parties in relation to Roompot/Landal merger decision
Rotterdam District Court, judgment of 19 February 2024
The Rotterdam District Court recently declared inadmissible the appeal against the ACM’s decision in the Roompot/Landal merger by two owners of various holiday accommodations at Landal holiday parks. On 12 April 2023, the ACM granted a licence for the acquisition of Vacation Rental B.V. (“Landal”) by Sandy HoldCo B.V. (“Roompot”) under the condition that Landal and Roompot divest two holiday park brands and thirty holiday parks to Dormio Group B.V. (“Dormio”). Part of the package to be divested included the parks where the appellants’ accommodations are located. According to the appellants, the competition problems identified by the ACM were not sufficiently addressed by the accepted remedies.
The court concluded that the two owners cannot be regarded as interested parties in relation to the decision granting the merger licence, as they are one of many customers of Landal’s services and do therefore not have a sufficiently distinct and personal interest in the ACM’s decision. Furthermore, as the agreements between the owners and Landal run until 2031 and the ACM generally uses a period of no more than five years to assess the effects of a proposed concentration, the court also held that they do not have an actual and sufficiently certain interest. The court thus declared the appeal to be inadmissible.
Overview highlights merger cases
In Q3 2023, the European Commission (“Commission”) already concluded that Amazon’s acquisition of iRobot creates a foreclosure risk for competing robot vacuum providers. Amazon could favour iRobot’s robot vacuums (Roomba) through its control over its online sales platform. Amazon did not offer remedies to address the Commission’s concerns, and has now decided to withdraw the proposed transaction. Interestingly, the Commission did not assess the transaction less strictly despite the entry into force of the Digital Markets Act (“DMA”) on 7 March 2024, on the basis of which Amazon is already prohibited from engaging in any self-preferencing strategy. Apparently, the Commission still sees as much need to use merger control to continue to strictly assess structural changes in the market and require (far-reaching) remedies where necessary. Similarly, at the end of last year Adobe also decided to pull out of the planned acquisition of Figma (see CF Q1 2023) after receiving formal objections from the Commission.
On 23 and 24 January 2024, the Commission furthermore announced two second-phase investigations in the airline sector. In both the proposed acquisition of Air Europa Holding (“Air Europa”) by International Airlines Group (“IAG”), and the proposed acquisition of joint control of ITA Airways (“ITA”) by Deutsche Lufthansa (“Lufthansa”) and the Italian Ministry of Economy and Finance (“MEF”), the Commission expressed its preliminary concerns that the acquisition would significantly impede effective competition in the internal market or in a substantial part of it.
In airline mergers, the Commission generally distinguishes between domestic, short-haul and long-haul routes when defining the relevant market. Within this generic distinction, the Commission assesses each individual route between two airports (the so-called origin-and-destination approach, “O&D”). In both proposed acquisitions, multiple airport combinations raise preliminary competition concerns. IAG has already announced in the media that it has offered remedies.
On 25 March, the Commission sent its formal statement of objections to ITA/Lufthansa, indicating that it sees risks for various short- and long-haul flights to and from Italy. The Commission specifically mentioned the possible creation or strengthening of ITA’s dominant position at Milan Linate airport.
On 13 February 2024, the Commission approved Korean Air’s acquisition of Asiana subject to structural remedies during a second-phase investigation. The merger of the two largest Korean airlines would, according to the Commission, raise competition concerns on both cargo and passenger flights on routes between South Korea and the EU (see also CF Q1 2023). To address these concerns, the merging parties have offered (i) to divest Asiana’s air cargo business to a suitable buyer yet to be determined, and (ii) to divest not only slots but also traffic rights as well as aircrafts to competitor T’Way in order for it to become active on the routes where Asiana and Korean Air now overlap. The transaction may be implemented only after the buyers become actually active on the market. This comprehensive set of remedies potentially marks the start of a new approach by the Commission to (horizontal) mergers between airlines.
On 20 February 2024, the Commission conditionally cleared the proposed merger between mobile network operator Orange and hybrid operator MásMóvil. During its second-phase investigation (see CF Q2 2023), the Commission foresaw that the transaction could potentially restrict competition in the retail markets for mobile and fixed internet services in Spain, notably because the two parties are each other’s direct and closest competitors. In addition to Orange and MásMóvil, Telefónica and Vodafone operate as MNOs in the Spanish market. As a result of the transaction, the merged entity would become the largest mobile network operator in Spain. The Commission also anticipated a potential price increase for consumers of “well above” 10%.
To address the Commission’s competition concerns, the parties offered to transfer part of MásMóvil’s mobile spectrum to DIGI, the largest and fastest growing MVNO in Spain, with experience as an MNO in other Member States. DIGI should also be allowed to enter into a roaming agreement with the merged entity with respect to the areas that are not covered by DIGI’s future mobile network. With these remedies, DIGI seems to practically take over the current role of MásMóvil’s in the Spanish market. According to the Commission, these remedies will ensure that a competitive telecoms market will be maintained in Spain, both in terms of price and quality, and the development and deployment of 5G networks.
District court decides on publication of ACM decisions on egg cartel; ACM publishes decision on objection
Rotterdam District Court, judgment of 12 February 2024; ACM, decision of 27 October 2023 (publication: 14 February 2024)
On 12 February 2024, the Rotterdam District Court again ruled on the publication of the ACM’s decisions on the egg purchasing cartel. Earlier, the court already held that the ACM’s fining decision could be published, save for the amount of the fines imposed and the method of calculation thereof (see CF Q4 2023). Following the ACM’s decision on objection of 27 October 2023, manufacturers of egg products Interovo, Wulro and Global again appealed before the court, this time seeking to set aside the objection decision and the related publication decision.
The court first stated that, since the ACM’s position did not change in the meantime, there is only a reason to reconsider the previous judgment in case it has serious shortcomings or if there is a material change in the relevant facts or circumstances. After a marginal review of the court’s earlier considerations regarding the (role of the) market delineation and the interplay between the two investigation reports by the ACM and the subsequent fining decision, the court concludes that there is no reason to reconsider its earlier judgment. The court does not follow the egg products manufacturers’ argument that the ACM has infringed the principle of equal treatment by deciding to only publish a press release in another separate fining case. Thereby, the court emphasised the nature of the general disclosure regime under the Establishment Act (Instellingswet) and stated that the ACM is not obliged to ‘repeat a mistake’, if any. The interim relief judge did however follow the companies’ view that the ACM was inconsistent in anonymising certain business-sensitive information, and ruled that the names of farmers, customers and competitors should be anonymised. The same applies to certain topographies in the decision, on the basis of which it can still be deduced which parties were involved. Subject to the foregoing anonymisation requirements, the ACM may proceed with publication, the court ruled.
On 14 February 2024, the ACM subsequently published the decision on objection, in which it largely declared the grounds for objection raised by Wulro, Global and Interovo to be unfounded. In its decision, it first disposes of the egg producers’ arguments regarding the nature and purpose of the different types of communication and the existence of an object restriction and/or a single and continuous infringement. Referring to many WhatsApp messages, the ACM finds that during the cartel period, the aim of the manufacturers was to reduce competitive pressure in the market. Any possible interruptions in the communications or the fact that some communications involved prices that were already negotiated, was deemed irrelevant. Referring to the Rotterdam District Court’s judgment in the Tobacco-case, the ACM emphasises that by exchanging information, the producers simply removed uncertainty about their future market behaviour, which is clearly in violation of the cartel prohibition.
The procedural arguments put forward by the producers, for example regarding the extension of the investigation to Interovo, the issuance of a supplementary investigation report, access to the case file and the composition of the appeals committee within the ACM, do not succeed either. The same applies to the calculation of the basic amount of the fine. The egg producers’ behaviour constitutes a serious infringement justifying a basic fine of 15% of their turnover, as they are close competitors and have a (very) strong market position vis-à-vis the farmers, who in turn have limited bargaining power and alternatives. However, in line with the doubts earlier casted by the Rotterdam District Court, the ACM concludes that the two separate but somewhat connected continuous infringements by Wulro should be taken into account when setting the total amount of the fine. It therefore reduces both fines for Wulro by 10%.
CJEU confirms that object restrictions cannot be justified under the Wouters-doctrine
Court of Justice, judgments of 18 and 25 January 2024
Further to its recent rulings in ISU, Super League and the Home Grown Talent case, the Court of Justice of the European Union (“CJEU”) has confirmed that the Wouters-doctrine does not apply in case of a restriction of competition by object. In the three sport-related judgments, the CJEU already determined that the (potential) object restrictions could not be justified by a legitimate aim as referred to in Wouters and later specified in Meca-Medina (as regards legitimate sports purposes) and OTOC (for professional organisations).
In January 2024, the CJEU reached the same conclusion in two different judgments on minimum rates for lawyers’ and notaries’ fees following preliminary references from a Lithuanian and Bulgarian court. In the Lithuanian case, the CJEU considered whether the uniform method of calculating fees established by the Lithuanian Chamber of Notaries restricted competition. The preliminary reference by the Bulgarian court revolved around a direct fee scale with minimum amounts for lawyers’ fees that national courts must take into account when awarding legal costs. According to both professional organisations, the measures were necessary to guarantee the lawyer a sufficient income and thus ensure high-quality legal services for the benefit of society.
Building on CHEZ Elektro Bulgaria, in which the CJEU already condemned the setting of minimum fees applicable between lawyers and clients, it ruled in both cases that the minimum fees in fact led to horizontal price-fixing and must therefore be classified as having as their object the restriction of competition. The CJEU continues that, in such cases, there is no room for a justification under Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) on the grounds of pursuing a legitimate objective. The CJEU thereby explicitly confirms that conduct that has as its object the prevention, restriction or distortion of competition can only be justified under Article 101(3) TFEU, which is up to the national court to assess.
ACM not liable to pay additional compensation to auction dealers for annulled cartel decision
The Hague Court of Appeal, judgment of 30 January 2024
In the lengthy aftermath of the foreclosure auction cartel, the court of appeal recently upheld the judgment of the District Court of the Hague that the ACM is not liable for additional damages after an annulled cartel decision. Back in 2013, the ACM (then NMa) fined a large number of auction dealers for participating in a single and continuous infringement of the cartel prohibition. In response to the published cartel decisions, Rabobank terminated its relationships with a number of these dealers.
After the Trade and Industry Appeals Tribunal (“CBb”) annulled the cartel decisions as they failed to adequately demonstrate the single and continuous nature of the infringement, the auction dealers claimed compensation for the damages suffered. Following negotiations, the ACM offered them a settlement agreement (“VSO”) under which the dealers were entitled to a lump sum for financial loss and immaterial damage suffered. The VSO thereby left open the possibility for the dealers to claim additional financial loss.
In the underlying dispute, the question arose whether or not the ACM had surrendered the possibility of defending against such additional damages claims (including contesting the causal link or asserting other defences). According to court of appeal, the VSO does not exclude that possibility. However, in the subsequent assessment of the additional damages claimed by the dealers, the court ruled that Rabobank’s termination of the banking relationship could not reasonably be imputed to the ACM. The court reasoned that Rabobank itself decided to no longer enter into relationships with the dealers, despite the formal annulment of the cartel decisions. The dealers’ arguments regarding the damages they allegedly suffered as a result of the uncertainty about what would constitute a lawful course of conduct were also rejected. According to the court of appeal, once an infringement has been established, the ACM is in principle under no obligation to provide concrete instructions as to what conduct is permissible.
CJEU provides definitive answer in hybrid cartel procedures; settlement and normal procedure may be settled by same EC case team
Court of Justice, judgment of 1 February 2024
In Scania’s appeal against the fine imposed by the Commission for its participation in the truck cartel, the CJEU discusses again the legality of hybrid cartel proceedings (see also Pometon and HSBC). In the context of the truck cartel, the Commission settled with all cartel participants except Scania. As regards Scania, the Commission followed the ordinary administrative procedure and eventually found that Scania (also) participated in the EEA-wide cartel practices in the truck market.
In its appeal against this decision, Scania invoked, inter alia, its rights of defence, the principle of good administration (in particular impartiality) and the presumption of innocence. According to Scania, these principles were breached because the Commission cannot rule on Scania’s liability without prejudice following the settlement decisions (in which other truck manufacturers admitted guilt). The General Court of the European Union (“General Court”) previously rejected all of Scania’s grounds but set the door slightly ajar by suggesting that it might be justified on the basis of the “tabula-rasa” principle (clean slate principle) to have the two proceedings heard by different case teams. This could remove any doubt about impartiality.
According to Scania, the General Court only assessed the Commission’s subjective impartiality (showing prejudice), and not its objective impartiality (providing safeguards to exclude any justified doubt about impartiality). The CJEU however found that the General Court did consider both aspects, but corrected the General Court on the application of the “tabula rasa” principle, which relates purely to respect for the presumption of innocence. The way the settlement procedure and the ordinary procedure are organised satisfy this principle, according to the CJEU. The fact that the same team was in charge of the case during the ‘hybrid’ procedure does not cast doubt on the Commission’s impartiality. On the contrary, the CJEU finds that making changes to the Commission’s team would violate the principle of good administration given the necessity to conduct the investigation within a reasonable time. The CJEU thus validates the Commission’s practice in hybrid cartel proceedings.
CBb upholds bid-rigging fine for roofing contractor
Trade and Industry Appeals Tribunal, judgement of 27 February 2024
In its ruling of 27 February 2024, the CBb declared the appeal by roofing contractor Van Venrooy against the cartel fine imposed on it by the ACM to be unfounded. In 2020, the ACM fined roofing contractors Schadenberg and Van Venrooy for coordinating their bids for a public procurement. Prior to bidding for the tender, Schadenberg shared its draft bid with Van Venrooy via email, asking it to submit a similar bid a day later. A few days later, Van Venrooy indeed submitted a similar bid. Van Venrooy objected and later appealed against the ACM’s decision. Both the ACM and the court in first instance declared the objections/application to be unfounded.
Before the CBb, Van Venrooy argued that there was in fact no concurrence of wills between Schadenberg and him. According to the CBb, concurrence of wills does not have to be present for the establishment of a concerted practice. The fact that Van Venrooy had knowledge of the contents of the offer by Schadenberg and later submitted a similar offer leads to the presumption of a causal link. To avoid an infringement the cartel prohibition, Van Venrooy should have publicly distanced itself from this conduct or given notice to the ACM, the CBb ruled. The fact that Van Venrooy claims not to have used the content of the email is irrelevant in that regard.
In a similar case, the ACM recently fined a contractor for exchanging quotes with another contractor for the design of a school site.
Commission accepts commitments from Renfe to promote competition in online train ticketing services in Spain
European Commission, press release of 17 January 2024
Earlier this year, the Commission has made the commitments offered by Spain’s national rail operator Renfe legally binding. Renfe competes through its own digital channels with companies offering online ticketing services through apps or websites. On 28 April 2023, the Commission opened a formal investigation to assess whether Renfe may have abused its dominant position in the Spanish passenger train market by refusing rival ticketing platforms access to (i) complete information about Renfe’s range of tickets, discounts and features and (ii) up-to-date data relating to its passenger train services. According to the Commission, the refusal to provide access potentially prevented competing ticketing platforms from competing with Renfe’s own direct digital channels.
To address the Commission’s preliminary concerns, Renfe offered a number of commitments. First, Renfe has committed to make all current and future content and current data displayed on any of its own online channels available to competing ticketing platforms, subject to certain maximum Look-to-Book ratios (“L2B”). The L2B is the ratio between the number of availability requests related to the sale of tickets from a platform to Renfe’s ticketing system, and the number of actual sales during a given period. Renfe may only temporarily suspend a competing platform’s access to its sales system if it exceeds the applicable maximum L2B and if the exceedance adversely affects Renfe’s sales system or immediately threatens to impede the sale of Renfe tickets, in order to prevent a system overload. Finally, Renfe has made commitments regarding the maximum number of failed reservation requests and the availability of its sales system. These commitments imply a best-efforts obligation for Renfe to provide high-quality IT services to competing ticketing platforms.
Renfe’s commitments remain in force indefinitely and will be monitored for a period of ten years by a trustee appointed by Renfe. In our earlier blog, we covered the Commission’s investigation into Renfe in the context of Mobility as a Service.
Supreme Court quashes ruling on abuse of dominance by Buma/Stemra
Supreme Court, judgment of 1 March 2024
On 1 March 2024, the Dutch Supreme Court ruled that the Amsterdam Court of Appeal erred in its reasoning that Buma/Stemra abused its dominant position. At issue in the proceedings between the Associated Business Music Distributors Association (“ABMD”) and Buma/Stemra are the fees charged to them by Buma/Stemra for the licences required to play music in commercial settings (such as in shops, cafés and restaurants). According to the members of ABMD, as music streaming services like Spotify are nowadays also often used for business purposes, Buma/Stemra abuses its dominant position by charging different rates and not enforcing the prohibited commercial use of music streaming services. Both the District Court and the Amsterdam Court of Appeal went along with the ABMD’s arguments in their previous judgments. They found that Buma/Stemra indeed holds a dominant position in the music licensing market and that the present case involves prohibited price discrimination under Article 102 TFEU.
In his opinion of 6 October 2023, Advocate-General (“AG”) Drijber already criticised the Amsterdam Court of Appeal’s stance on the relevant market definition. According to AG Drijber, the fact that customers illegally use music streaming services for business purposes does not make Spotify itself active in the same market as the ABMD-members. Therefore, in his view, the services of the ABMD and music streaming services are not interchangeably substitutable, so that there is no direct competitive relationship and there can thus not be any competitive disadvantage either.
In cassation, the Supreme Court ruled that apart from the market definition and possible dominant position of Buma/Stemra, there must in any case also be an actual competitive disadvantage. According to the Supreme Court, the Court of appeal did not sufficiently examine whether the possible price discrimination affects the competitive position of the ABMD-members. In that regard, Buma/Stemra had also put forward concrete figure-based defences to the existence of a competitive disadvantage, which the court did not include in its judgment. Referring to the MEO judgment, the Supreme Court emphasised that the mere existence of a disadvantage does not mean that competition is or could be distorted. The court’s line of reasoning that it is plausible that the ABMD-members could be disadvantaged is insufficient in that regard. The Supreme Court referred the case back to the Amsterdam Court of Appeal with the specific instructions to determine the concrete impact of the price discrimination on the competitive position of the AMBD-members.
Amsterdam District Court applies irrebuttable presumption of illegality to Greek competition authority’s infringement decision
Amsterdam District Court, judgment of 6 December 2023 (published 12 January 2024)
In its judgment of 6 December 2023, the Amsterdam District Court assessed what significance an infringement decision of the Greek competition authority has for the Dutch courts. The Greek competition authority established that the Greek brewery AB, a subsidiary of Heineken, abused its dominant position in the Greek beer market. A rival Greek beer brewery, MTB, initiated proceedings in the Netherlands against Heineken and AB, claiming damages from both companies. The jurisdiction of the Dutch courts has been the subject of litigation for several years and has recently also triggered the Dutch Supreme Court to refer preliminary questions to the CJEU. Meanwhile, the claims against Heineken, over which the Dutch court has already assumed jurisdiction, are currently being dealt with by the Amsterdam District Court.
The court holds that pursuant to Greek law, the infringement found by the Greek competition authority confers an irrebuttable presumption of illegality in civil proceedings seeking damages for that infringement. The court is faced with two possible approaches for assigning relevance to this Greek presumption of proof. First, pursuant to Dutch private international law, in this case Article 10:13 BW, the court must apply substantive rules of evidence from Greek law, including the aforementioned irrefutable presumption of proof. Second, and by contrast, Article 9 of the Cartel Damages Directive allows the court to give non-binding evidentiary value to decisions of foreign competition authorities. In that case, the court may determine itself the degree of evidentiary value it wants to attribute to the Greek infringement decision. For example, the Greek infringement decision can be assigned prima facie probative value (with the possibility of providing evidence to the contrary), but also (nevertheless) an irrebuttable presumption of evidence. The court concluded that the approach from Dutch private international law should be followed. This is mainly because Greek law applies here and the case (only) concerns a disruption in the Greek market, which was established by the Greek authority. The most correct result is therefore to apply the irrefutable presumption of evidence the same way as would be done in Greece, the court ruled.
Court of Appeal holds Otis and Kone liable for lift cartel and refers to follow-up proceedings for the determination of damages
The Hague Court of Appeal, judgment of 23 January 2024
The Hague Court of Appeal has referred a case between, on the one hand, the claim vehicle Stichting De Glazen Lift (“DGL”) and, on the other, Otis and Kone to the follow-up proceedings for the determination of damages, after it determined the joint and several liability of the two lift manufacturers for their participation in the lifts and escalators cartel. DGL represents 40 housing associations that assigned their claims to the foundation.
In the appeal proceedings, Otis and Kone argued, in brief, that the cartel was the least far-reaching in the Netherlands, that it was ad hoc in nature, and that it did not cover the entire Dutch market. Otis and Kone further claimed that, given the limited scope of the cartel, their mere participation in the cartel cannot suffice as a basis for liability. Rather, they argue that it must be established whether there was a prohibited restriction of competition for each individual order to a lift manufacturer, which DGL must properly state and prove.
The court of appeal dismisses these arguments. Apart from the fact that (some of these) contentions are unfounded in light of what the Commission established in the infringement decision, it notes that it can be left open whether the cartel actually covered all transactions in the market. The court of appeal stressed that only three requirements must be met for a referral to the follow-up proceedings for the determination of damages: (i) the basis of liability must be established, (ii) the possibility of damages must be plausible, and (iii) the court must not already be able to assess the amount of damages in the main proceedings. In that context, it is relevant that the cartel constituted a single and continuous infringement that restricted competition throughout the Netherlands. The cartel concerned an ‘overall scheme to share and regulate the market’, so that it is not necessary to consider whether the unlawful cartel conduct was committed for each individual transaction. The court of appeal thus established the (joint and several) liability of Otis and Kone for their participation in the lifts cartel and referred the case to the follow-up proceedings for the determination of damages.
Turkish manufacturer of television and computer screens gets awarded € 648 million in damages in default judgment over CRT cartel
East Brabant District Court, judgment of 17 January 2024
The East Brabant District Court has awarded € 648 million in damages, still excluding statutory interest from 2014 onwards, to the Turkish group Vestel. It estimated these damages without referring the case to the follow-up proceedings for the determination of damages. Vestel filed a follow-on cartel damages action against Philips, Samsung, LG and Technicolor as a result of the CRT cartel for which these companies were already fined by the Commission in 2012. Two entities formerly belonging to the Technicolor Group, TTD and TDP, were also sued. As Philips already reached a settlement with Vestel, Philips had been removed from these proceedings and this judgment. Although a number of entities from Samsung, LG and Technicolor have since also reached a settlement with Vestel, they are nevertheless addressed in these proceedings because they have largely put forward joint defences.
The district court’s ruling mainly addresses the inadmissibility defences of Samsung, LG and Technicolor. Before Vestel initiated these proceedings in the Netherlands, it brought the same claims against the same defendants in Turkey. In Turkey, Vestel was left empty-handed after being unsuccessful before the Turkish district court as well as the Turkish court of appeal, which declared Vestel to be inadmissible on procedural grounds under Turkish law. The (Dutch) district court subsequently ruled that the judgment of the Turkish court of appeal was final and binding and should be recognised as such in the Netherlands. This meant that Vestel’s claims could not be reassessed before the Dutch courts. Vestel’s claims against Samsung, LG and Technicolor were therefore dismissed.
However, as TTD and TDP were not themselves represented by a lawyer in this case since 2016, they did not put forward any arguments on the inadmissibility of Vestel before the district court. Consequently, the district court held that the claims against TTD and TDP are admissible as they were insufficiently refuted. Although the district court did not grant the “triple damages” claimed by Vestel, TTD and TDP were nevertheless held jointly and severally and were ordered to pay damages of € 648 million to Vestel.
Court of appeal holds prestressing steel companies liable for cartel damages Deutsche Bahn
‘s-Hertogenbosch Court of Appeal, judgment of 30 January 2024
The ‘s-Hertogenbosch Court of Appeal ruled on 30 January 2024 that several prestressing steel companies, including Nedri and Arcellormittal, are jointly and severally liable for the damages suffered by Deutsche Bahn (“DB”) as a result of the prestressing steel cartel. With this ruling, the court of appeal delivers its final judgment following two interlocutory judgments (see here and here).
In 2010, the Commission imposed significant fines on 17 steel companies for entering into market-sharing and price-fixing agreements across almost the entire EU between 1984 and 2002. During that time, DB purchased railway sleepers and bridges from prestressing steel companies for the German rail network that included prestressing steel. DB therefore filed a claim for damages against several steel companies that participated in the prestressing steel cartel. According to DB, it overpaid for the products in question during the period 1984-2002.
The court of appeal upheld DB’s claims. Furthermore, the court confirmed that DB’s claims should be assessed under German law. The court derives from case law that in cartel cases like the present one, a distinction must be made between (i) the requirements for establishing liability and (ii) the extent of liability. In this judgment, the court only pronounces itself on whether there is sufficient evidence to establish liability. The extent of liability must be determined in any subsequent proceedings to determine damages. According to the court of appeal, DB meets the requirements for establishing liability. Indeed, in view of the Commission’s cartel decision, it is established that there was a cartel, that the defendants were involved in it and that DB purchased products to which the competition infringement related. The court of appeal further ruled that DB validly assumed the claims of the German state and intermediate suppliers and thus does not further impose any high(er) requirements in vertically bundling the claims.
Amsterdam Court of Appeal declares foundation admissible in class action against Rabobank and foreign banks
Amsterdam Court of Appeal, judgment of 5 March 2024
Unlike the Amsterdam District Court, the Amsterdam Court of Appeal declared the Elco Foundation (“Foundation”) partially admissible in its damages claims against Rabobank and a group of foreign banks. The Foundation brought a class action under Article 3:305a (old) of the Dutch Civil Code against the banks based on a published settlement document of the US Commodity Futures Trading Commission regarding the manipulation of LIBOR and EURIBOR rates.
According to the court, the class action benefits stakeholders by providing them with efficient and effective legal protection. The class action also offers an advantage over initiating separate proceedings, because, this way, the court can assess whether Article 101 TFEU has been infringed for the class action in a single procedure as a prelude to compensation for damages or reaching a settlement. According to the court, the Foundation also has sufficient knowledge and skills to represent the interests of the (legal) persons on whose behalf the action is brought. The court therefore considers the Foundation’s to be admissible.
Additional written round needed to meet burden of proof in follow-on truck cartel case
Amsterdam District Court, judgment of 28 February
In a follow-on cartel damages action concerning the truck cartel, the Amsterdam District Court addressed the burden of proof that claimants must meet before referring to follow-up proceedings for the determination of damages. In the interlocutory judgment, the court first reiterated that the threshold for a referral to follow-up proceedings for the determination of damages is low: it is sufficient that the possibility of damage is plausible. Thus, in principle, the court should only determine that the truck manufacturers acted unlawfully towards the claimants and are therefore liable for the damage suffered as a result thereof. The court does note that these are not ‘ordinary’ proceedings – as more than 200,000 trucks are involved – which means that the court will take the lead extensively in these cases. An interlocutory judgment has already been delivered on the burden of proof on 15 May 2019.
The court now ruled that an additional round of written submissions is required. This will allow claimants to further respond to and – to the extent necessary and possible – supplement the information put forward by the truck manufacturers. Indeed, according to the court, some insight into the scope of the Volume of Commerce is needed before the extent of damages can be assessed. In that context, the court does provide some concrete tools to prove when and from whom which trucks were obtained. To do so, certain information must be provided for each truck (transaction), including the complete VIN (or chassis number), make, type of transaction (buy/rent/lease), weight, the name of the buyer and seller, the date of the transaction and when the ownership/lease ended.
Commission opens first investigation under FSR: evidence of foreign subsidies to Chinese rail company in Bulgarian tender
European Commission, press release of 16 February 2024
On 16 February 2024, the Commission opened an in-depth investigation into the Chinese State-owned company CRRC Qingdao Sifang Locomotive Co. (“CRRC”), the world’s largest manufacturer of rolling stock such as locomotives and railway vehicles. It is the first in-depth investigation under the Foreign Subsidies Regulation (“FSR”).
The investigation was triggered by a Bulgarian public procurement procedure for the purchase of rolling stock, worth € 614 million, for which CRRC and a Spanish company submitted tenders. As none of the received tenders satisfied the contract’s performance conditions, the Bulgarian contracting authority decided to initiate a closed (negotiation) procedure without prior publication, in which CRRC and its Spanish competitor participated. In that context, CRRC submitted a renewed tender on 17 January 2024 and subsequently notified the Commission pursuant to the FSR on 22 January 2024. In this notification, CRRC indicated that it had not received any foreign contributions within the meaning of the FSR.
On 24 January 2024, just two days after the notification, the Commission sent a request for information to CRRC. Upon the assessment of the received information, the Commission considered it justified to open an in-depth investigation, since there were sufficient indications that CRRC has been granted foreign subsidies that could potentially distort the internal market. The foreign financial contributions total € 1.745 billion and take the form of government grants as well as public contracts awarded to CRRC. This is five times the amount of the tender CRRC submitted for the tender. In addition, the Commission noted that CRRC’s bid was significantly lower than the estimated cost of the tender as well as the Spanish competitor’s bid. The Commission fears that the alleged foreign subsidies may have allowed CRRC to submit an unduly advantageous offer. The Commission provisionally concluded that there is sufficient evidence that the foreign contributions to CRRC could distort the internal market.
For more information on the FSR and its notification regime, read our earlier blogpost.
General Court annuls decision approving Dutch state aid to KLM
General Court, judgment of 7 February 2024
On 7 February 2024, RyanAir once again managed to have a state aid measure in the aviation sector overturned (see also our earlier blog on state aid in the aviation sector). This time, the General Court annulled the Commission’s approval of the Netherlands’ aid measures to KLM.
In 2020, the Commission approved the provision of € 3.4 billion in state aid from the Netherlands to KLM. The purpose of the aid was to provide KLM with temporary liquidity in the context of the COVID-19 pandemic. On 19 May 2021, the General Court annulled that approval decision because the Commission had failed to give reasons for its determination of the beneficiaries of the aid. The effects of the annulment were suspended by the General Court pending the adoption of a new decision by the Commission. The Commission then adopted a new decision on 16 July 2021, concluding that the aid was compatible with the internal market and that KLM and its subsidiaries were the sole beneficiaries of the aid, to the exclusion of the other companies in the Air France-KLM group. Ryanair again lodged an appeal against that decision.
The General Court’s judgment on that appeal follows the same reasoning as the judgment of 20 December 2023, which annulled the Commission’s approval of France’s aid measures to Air France/KLM (see also CF Q4 2023). According to the General Court, the capital, organic, functional and economic links between the holding company Air France-KLM, Air France and KLM are indications that these entities constitute a single economic unit for the purposes of state aid rules. Therefore, the Commission could not simply conclude that KLM and its subsidiaries were the sole beneficiaries of that measure.
Italian aid scheme obliging foreign electricity providers to purchase green certificates possibly constitute unlawful state aid
Court of Justice, judgment of 7 March 2024
In national proceedings between Italian energy regulator ARERA, on the one hand, and Fallimento Esperia SpA (“Fallimento Esperia”) and GSE, on the other, the Italian court has referred preliminary questions to the CJEU on the compatibility of an Italian aid scheme with the European state aid rules. The Italian scheme relates to the production of green electricity and obliges importers who import electricity from non-renewable sources to provide an annual quota of green electricity. This can be done either by producing green electricity themselves or by buying green electricity (certificates) from other green electricity producers to compensate for the lack of green electricity produced. Italian electricity providers, however, were granted such green electricity certificates free of charge. The cause of the national proceedings was a € 2.8 million fine imposed by ARERA on Fallimento Esperia for its failure to buy the required number of green electricity certificates. Fallimento Esperia challenged this fine, claiming that the aid scheme violated European State aid rules by unfairly favouring Italian producers.
The CJEU explained that this aid scheme may involve a twofold advantage for Italian producers. First, they can sell electricity without having to buy green electricity certificates. Second, they can resell the green certificates received free of charge to foreign importers who do have to buy them. The CJEU thereby first examined whether the measure is financed through State resources, and noted that the amounts received by Italian power producers for green electricity (certificates), appear to be financed exclusively by the purchasing (foreign) importers and, thus, not by the Italian State. However, the CJEU continues that the aid scheme not only imposes an obligation to purchase green electricity certificates, but also ensures a minimum economic value of those certificates for Italian producers. This has to do with the fact that GSE, an entity (ultimately) owned by the Italian government, has to buy up any excess green certificates. This prevents a surplus of such certificates and ensures that these certificates maintain a certain minimum economic value. Therefore, the CJEU held that it can be regarded as a transfer of State resources within the meaning of Article 107 TFEU. Next, the CJEU instructs the referring court to determine whether the selectivity of the scheme can be justified by the nature of the aid scheme by looking at its content, structure and specific effects. For example, if the proper functioning of a competitive energy market requires the existence of a competitive supply of green electricity, the selectivity may be justified and does not constitute state aid (provided it is limited to what is strictly necessary). However, if this is not the case, the scheme constitutes state aid that has not been notified to the Commission in breach of Article 108 TFEU. This would also entail that the fine imposed on Fallimento Esperia is unlawful. It is up to the referring Italian court to make this assessment.
Commission declares aid granted to Blue Air by Romania unlawful
European Commission, press release of 16 February 2024
The Commission has concluded that the aid of € 33.84 million granted by Romania to Blue Air was unlawfully granted and must be recovered. In 2020, Romania granted aid to Blue Air under the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty. Under these Guidelines, Member States can support companies in difficulty under certain strict conditions. Aid can be granted for a maximum period of six months. After this period, the aid must either be repaid or Member States must notify a restructuring plan to the Commission for assessment under state aid rules. To get approval for restructuring aid, the plan must ensure that the company’s viability can be restored without continued state aid, that the company contributes sufficiently to the costs of its restructuring and that distortions of competition caused by the aid are addressed through compensatory measures.
After the Commission’s approval of the state aid measure in August 2020, Romania agreed to submit a liquidation plan or a comprehensive restructuring plan for Blue Air to the Commission if the loan was not repaid within six months of the first aid payment (which took place in October 2021). In April 2021, Romania submitted a restructuring plan, which was subsequently updated several times. Following the in-depth investigation opened in April 2023, the Commission concluded that Blue Air’s restructuring plan was not feasible, coherent and sufficiently far-reaching to restore the airline’s viability within a reasonable timeframe without unreasonably distorting competition in the internal market. This was supported by Blue Air’s inability to maintain operations and its request to initiate insolvency proceedings in March 2023. As a result, the conditions set out in the Guidelines have not been met and the state aid should be recovered.
Apple fined € 1.8 billion for unfair App Store terms and conditions
European Commission, press release of 4 March 2024
The Commission has fined Apple € 1.8 billion for applying restrictive terms and conditions for the use of its App Store to developers of music streaming apps such as Spotify. With these terms, Apple prohibited developers from informing iPhone and iPad users (“iOS users”) about alternative and/or cheaper ways to subscribe to their service outside Apple’s App Store. For instance, developers were not allowed to include links in their apps that redirected to websites outside the app to take out subscriptions or make payments. These types of ‘anti-steering’ provisions, which prohibit companies from diverting users away from Apple’s own platform, violate Article 102(a) TFEU, according to the Commission. This decision follows the sanction the ACM imposed on Apple back in 2021 for applying unreasonable App Store terms and conditions to dating app users.
The same week, the Commission questioned Apple over the removal of game developer Epic’s developer account. According to Apple, this was lawful because a US court recently decided that Epic violated Apple’s terms of use. Indeed, Epic deliberately decided to breach the terms, which prohibited the developer from informing iOS users about alternative and cheaper ways to subscribe to its services. After receiving the Commission’s critical questions, Apple restored the account a day later on 8 March 2024.
General Court rejects TikTok’s request for suspension of DMA obligations
General Court, judgment of 9 February 2024
On 9 February 2024, the General Court dismissed the application for interim measures by ByteDance, the parent company of TikTok. TikTok was designated as a gatekeeper under the DMA by the Commission on 6 September 2023. ByteDance subsequently filed an appeal against the designation decision on 16 November 2023. On 20 November 2023, ByteDance applied to the General Court for interim measures seeking a suspension of DMA’s obligations.
More specifically, ByteDance sought a suspension of the substantive obligations under Articles 5 and 6 DMA, as well as the audit obligation under Article 15, which requires ByteDance to submit to the Commission a description, audited by an independent body, of all consumer profiling techniques it employs. According to Article 15(3) DMA, ByteDance must also publish an overview of the audited description. Before the General Court, ByteDance inter alia argued that the immediate implementation of the designation decision would result in the disclosure of highly strategic information about TikTok’s user profiling practices, which would otherwise not enter the public domain. According to ByteDance, this would allow TikTok’s competitors and other parties to gain insight into its business strategies in a way that would cause significant harm to the company. According to TikTok, the information would give competitors an unfair competitive advantage.
The General Court dismisses TikTok’s claims. According to the General Court, the alleged damages are only hypothetical and of a financial nature. Damages of a financial nature cannot be considered irreparable, as it can be compensated by claiming damages on the basis of Articles 268 and 340 TFEU. ByteDance has also not shown that there is a real risk of disclosure of confidential information. The information disclosed under Article 15(3) DMA contains only a gatekeeper’s own compilation of the audited description. The General Court thus fully rejects the appeal.
Read more about the latest developments on the DMA in our latest blog.
Commission sends second formal notice to Netherlands over private award of concession for passenger transport services to NS
European Commission, additional letter of formal notice of 13 March 2023
On 13 March 2023, the Commission sent the Netherlands a second letter expressing its dissatisfaction with the government’s decision to award the concession contract for passenger transport services by rail from 2025 to 2033 directly to incumbent NS. This “additional formal notice” comes on top of an initial letter from 14 July 2023 in which the Commission already expressed concerns about the concession.
According to the Commission, the Netherlands should not have privately awarded the concession to current concessionaire NS. Instead, the government should have initiated a competitive award procedure. Other transport companies, such as Arriva and Connexxion, would then have had the opportunity to compete for the concession. This promotes competition, which is essential to offer travellers more attractive and innovative services at lower costs, the Commission said.
The Dutch government has two months to respond to the letter or correct the errors raised. If it fails to do so or does not do so adequately, the Commission may send a reasoned opinion. That will be the last opportunity for the Netherlands to come with a solution before the Commission may initiate infringement proceedings before the CJEU.
District court suspends fining and publication decision ACM due to inadequate scope of inspection decision
Rotterdam District Court, judgment of 27 December 2023
In its 27 December judgment, the Rotterdam District Court’s interim relief judge ruled that the ACM had not sufficiently clearly defined the purpose of its investigation when conducting inspections at various undertakings. By decision of 12 October 2023, the ACM imposed administrative fines on three companies for violations of consumer protection laws. To ensure that sufficient funds remained available for the payment of the fine, the ACM subsequently also ordered a prejudgment attachment (or ‘freezing injunction’) on assets of two of the companies. By decision of 8 November, the ACM decided to publish a cleaned version of the fining decision. After filing their objections, the applicants also requested the interim relief judge to suspend both decisions.
According to the interim relief judge, there is reason to suspend the publication of both decisions as it is unlikely that the fining decision will be upheld. The court considered that the ACM may have violated the right to respect for private life of Article 8 ECHR and Article 7 of the Charter of Fundamental Rights of the European Union by raiding companies other than those included in the description of the scope of its inspection. The ACM should have investigated which companies were suspected of an infringement before conducting a dawn raid. In this case, a suspicion of an infringement in respect of the fined companies only arose during the inspection. According to the interim relief judge, the fact that the ACM tried to mend the deficient inspection decision afterwards shows that even the ACM itself found the investigation scope and purpose to be inadequate. The court thus suspended both the publication decisions and the parts of the fining decision insofar it concerns the companies not included in the description of the scope of the investigation.
For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist.
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