Competition Flashback Q3 2024 – EU and Dutch competition law developments
This is the Competition Flashback Q3 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 Q3 2024
Merger control
- Overview highlights merger cases
- Greater legal certainty in M&A transactions: Court of Justice strikes down Article 22 referrals in Illumina v Grail
Regulating digital markets (DMA)
- General Court dismisses ByteDance’s appeal against Commission decision to designate TikTok as gatekeeper under DMA
- Apple’s ecosystem under fire: third-party access to contactless payments on iPhone devices
Cartels and vertical restraints
- CJEU clarifies framework object restrictions in case of information exchanges
- Price parity clauses Booking.com violate EU competition law
Abuse of a dominant position
- CJEU confirms abuse of Google by favouring its own product comparison service
- General Court confirms Qualcomm’s predatory pricing strategy of UMTS chipsets for Huawei and ZTE
- General Court overturns Google AdSense decision due to inadequate investigation Commission
- Gazprom commitments upheld on appeal
Damages claims for competition law infringements
- Concept of undertaking cannot be used for service of summons on subsidiary entities that are not sued
- Concept of undertaking cannot be used on victim’s side in jurisdiction assessment based on Erfolgsort
- Amsterdam court assumes jurisdiction over US pharmaceutical AbbVie due to existence of economic unity with Dutch anchor defendant
Aviation
State aid and FSR
- Commission approves six Dutch aid measures for innovation, pharma and energy transition of several billion euros
- Nuctech may not hide behind Chinese servers in Commission dawnraid
- CJEU upholds Commission decision and orders Ireland to recover € 13 billion from Apple
Consumer law
- Tied up cash? ACM investigates Dutch savings market
- Volkswagen guilty of misleading business practices in diesel scandal
- CJEU shines light on conditions for price indications of products
- Rotterdam Court suspends orders subject to penalty payments for travel agents
Overview highlights merger cases
In another airline merger, the Commission announced that International Airlines Group (“IAG”) has withdrawn its proposed acquisition to acquire Air Europa. IAG owns several airlines, including Iberia and Vueling, making it the largest airline operator in Spain (see also CF Q1 2024). Air Europa is the third largest airline in Spain. On 24 January 2024, the Commission had announced the opening of a second phase investigation into the proposed acquisition. On 26 April 2024, IAG received a statement of objections. The Commission was concerned that the proposed acquisition would impede competition on domestic routes in Spain, short routes between Spain and countries in Europe and the Middle East, and long routes between Spain and the Americas. IAG subsequently offered remedies, but these were insufficient for the Commission to address the concerns. Thereupon, IAG withdrew its notification of the proposed acquisition.
Bunge’s acquisition of Viterra has been conditionally approved by the Commission. Both parties are vertically integrated agricultural companies active in the sourcing, trading and processing of agricultural products. Specifically, there is significant overlap between the parties’ activities in oilseeds (such as sunflower seeds, soybean or rapeseed). Based on its investigation, the Commission concludes that the proposed transaction would reduce competition in the markets for oilseeds. In particular, the acquisition would result in a concentration of processing facilities in Central Europe, with potential adverse consequences for both farmers and customers. To address the Commission’s competition concerns, both parties offered to divest Viterra’s oilseed business in Hungary and Poland including some logistical assets. Under these conditions, the Commission approved the acquisition.
The Commission announced on 24 September 2024 its conditional approval of e&’s acquisition of PFF Telecom under the Foreign Subsidies Regulation (“FSR”). This is the first time a merger notification under the FSR has been approved after an in-depth investigation by the Commission. In June 2024, the Commission launched its investigation into this acquisition due to indications that e& (based in the United Arab Emirates) had received foreign subsidies distorting the internal market (see also our CF Q2 2024). The Commission found that e& had indeed received foreign subsidies in the form of an unlimited guarantee, loans, grants and other debt instruments. While these subsidies did not lead to reduced competition in the acquisition, as e& itself had the funds to do so and there were no other bidders, the subsidies could lead to a distortion of competition in the market after the acquisition. The subsidies could potentially artificially strengthen the position of e& and PPF Telecom in the telecoms market relative to their competitors. e& has offered to waive the unlimited guarantee and not to use e&’s funding for PPF’s EU operations, despite PPF Telecom not being active in the whole of the EU. Moreover, e& has agreed to notify future acquisitions not falling under the FSR notification obligation to the Commission.
Greater legal certainty in M&A transactions: Court of Justice strikes down Article 22 referrals in Illumina v Grail
Court of Justice of the European Union, judgment of 3 September 2024
On 3 September 2024, the Court of Justice of the European Union (“CJEU”) ruled that the European Commission (“Commission”) is not authorised to encourage or accept referrals of proposed concentrations without a European dimension from national competition authorities where those authorities are not competent to examine those proposed concentrations under their own national laws. This judgment once and for all brings an end to the long saga of Illumina/Grail (see also our Competition Flashbacks (“CF”) of Q3 2022, Q3 2023 and Q4 2023). As a result of this judgment, national competition authorities have withdrawn their pending referral requests to the Commission to investigate certain acquisitions.
On 21 September 2020, Illumina, a US company specialising in genetic analysis solutions, announced its intention to acquire Grail, a US company developing blood tests for the early detection of cancer. As the concentration had no European dimension, in particular because Grail did not generate any revenue yet in the European Union or elsewhere in the world, the transaction was not notified to the Commission nor to any national competition authority within the EU. After receiving a complaint about this concentration, the Commission requested the Member States to submit to it requests to examine this proposed concentration under Article 22 of the Merger Regulation nevertheless. The competition authorities of several Member States, including the ACM, subsequently filed such a request and the Commission launched an investigation and ordered the parties to await the Commission’s approval before implementing the transaction. When Illumina and Grail implemented the proposed merger nonetheless, the Commission imposed a record fine of € 432 million and decided that Illumina should unwind it.
Illumina and Grail unsuccessfully appealed to the General Court of the European Union (“General Court”). The CJEU now sets aside the General Court’s judgment and the Commission’s decisions. The CJEU finds that the General Court erred in concluding that a literal, historical, contextual and teleological interpretation of the Merger Regulation allows national competition authorities to ask the Commission to examine a concentration that not only lacks a European dimension but also falls outside their own national jurisdiction. In particular, the CJEU held that the Merger Regulation does not provide for a “corrective mechanism” under which such concentrations – which do not meet either the European or national notification thresholds – can still be investigated. In particular, this would run counter to the principles of foreseeability and legal certainty: undertakings should be able to easily determine in advance when and to which authority they will have to notify a concentration. The turnover thresholds are an important guarantee of that foreseeability and legal certainty. This cannot be circumvented through referral requests under Article 22 of the Merger Regulation, the CJEU held.
General Court dismisses ByteDance’s appeal against Commission decision to designate TikTok as gatekeeper under DMA
General Court of the European Union, judgment of 17 July 2024
On 17 July 2024, the General Court dismissed ByteDance’s appeal against the Commission’s decision of 5 September 2023 to designate TikTok as a gatekeeper. ByteDance, the parent company of social networking service TikTok, argued in its appeal that, despite TikTok meeting the quantitative thresholds of section 3(2) Digital Markets Act (“DMA”), TikTok did not meet the qualitative thresholds of section 3(1) DMA.
First, ByteDance argued that TikTok does not have a significant impact on the internal market (Article 3(1)(a) DMA) because most of its turnover derives from China. The Court stated that this does not preclude the conclusion that ByteDance’s high annual turnover, combined with the number of TikTok users in the EU, reflects its financial strength and its potential to monetise TikTok users.
Second, ByteDance argued that TikTok does not constitute an important gateway for business users to reach end-users (Article 3(1)(b) DMA) because it has no ecosystem and does not benefit from so-called network effects or lock-in effects. Again, the Court rejects the argument. Despite these circumstances, ByteDance has been able to grow the number of TikTok users exponentially since 2018 and TikTok already reached half the size of Facebook and Instagram by 2022, without such an ecosystem.
Finally, ByteDance argued that it does not hold a firmly entrenched and durable position (section 3(1)(c) DMA), but is a challenger contesting the position of Meta and Alphabet. The Court noted that TikTok was indeed a challenger in 2018, but that it rapidly consolidated its market position, and in recent years has continued to build on that position, well exceeding the quantitative thresholds of section 3(2)(b) DMA. For these reasons, the General Court upholds the Commission’s decision to designate ByteDance as a gatekeeper under the DMA in respect of the social networking service TikTok.
Apple’s ecosystem under fire: third-party access to contactless payments on iPhone devices
European Commission, press release of 11 July 2024
The Commission made commitments by Apple regarding mobile wallets legally binding on 11 July 2024. Apple offered the commitments after the Commission raised concerns that Apple was not making available to third parties the technology that enables contactless payments through iPhone devices (aka: the “tap-and-go” technology). Based on its investigation, which started in 2020, the Commission provisionally concluded that Apple was abusing its dominant position in the mobile wallet market on iPhone devices. Apple has created a closed ecosystem on its iPhone devices and can reserve markets for different services within that ecosystem for itself, such as the market for mobile wallets, it said.
Apple now pledges to open up this market by allowing third parties to access mobile wallets on iPhone devices. The Commission tested the proposed commitments and invited third-party market participants to submit their responses. In response to the outcome of that inquiry, Apple amended the commitments. Third parties can now not only offer mobile wallets, but will also have access, for example, to functionalities on iPhone devices that facilitate the payment process, such as facial recognition to validate the payment. The modified commitments have been made binding by the Commission.
Moreover, following a Commission investigation into compliance with the DMA, Apple says it is in the process of improving its pricing and terms and conditions for the use of its App Store. Lately it also announced that it had given Epic Games’ new app store access to its iOS and iPadOS system.
CJEU clarifies framework object restrictions in case of information exchanges
Court of Justice of the European Union, judgment of 29 July 2024
In a preliminary reference in the Portuguese banks case, the CJEU further elaborated on when an information exchange between competitors has the object of restricting competition. In 2019, the Portuguese Competition Authority (“AdC”) fined Banco BPN, BPI, Santander, Barclays, Caixa and several other Portuguese banks for exchanging information on commercial conditions on a large-scale and on a monthly basis. In particular, the banks exchanged information on current and future credit spreads and risk variables, on the basis of which the banks set the indicative interest rate eventually offered to customers. In addition, there was a ‘stand-alone’ information exchange on past sales volumes between the banks.
The CJEU first reiterates its established case law that information exchanges between competitors result in a restriction of competition by object if the information exchange leads to coordination whereby competitors no longer compete in the same way as they would without coordination. In order for a market to operate under normal conditions, each operator must (i) be obliged to determine its market behaviour independently, and furthermore (ii) be uncertain at least as to the timing, extent and details of any future changes in the conduct of its competitors on the market. Removing this uncertainty may cause market participants to tacitly follow the same course of conduct, the CJEU repeats.
The CJEU subsequently finds that both the information on credit spreads and future changes in risk variables qualify as strategic information, so that their exchange has the object of restricting competition. Although it is unlikely that information relating to past sales volumes can reveal the future intentions of the banks by itself, its strategic nature can be inferred when considered in conjunction with the other types of information exchanges. Therefore, it is also irrelevant that the exchanges occurred only very sporadically or concerned only one of the components of the final interest rate. What matters, according to the CJEU, is that the information exchange was able to reduce uncertainty about the (future) behaviour of the other banks. The fact that none of the banks actually changed its rate after receiving the information does not alter this conclusion, as the concrete effects need not to be examined in case of a restriction of competition by object.
Price parity clauses Booking.com violate EU competition law
Court of Justice of the European Union, judgment of 19 September 2024
On 19 September 2024, the CJEU answered in the negative the preliminary question whether price parity clauses qualify as ancillary restraints and are therefore compatible with European competition law. The District Court of Amsterdam referred these questions in the context of a dispute between Booking.com and 63 German hotels on the validity of price parity clauses used by Booking.com in its agreements with these hotels. These clauses prohibited accommodations from offering rooms on their own sales channel at a price lower than offered on Booking.com (‘narrow parity clauses’), or even on third-party sales channels (‘wide parity clauses’).
Under the ancillary restraints doctrine, a clause – which, taken in isolation, may potentially infringe competition law – may fall outside the scope of Article 101 TFEU, provided that the restrictive clause is objectively necessary for the achievement of the (primary) agreement in which it is included and proportionate to its objective. While stressing that Booking.com’s provision of online hotel reservation services (the primary activity) appears to have had a neutral or even positive effect for consumers, as it increases and facilitates consumer choice, the CJEU held that price parity clauses do not qualify as ancillary restrictions.
According to the CJEU, the clauses were not shown to be objectively necessary for the achievement of Booking.com’s online hotel reservation services and proportionate to the objective pursued thereby. Thus, the CJEU finds that broad price parity clauses may restrict competition between hotel reservation platforms. Moreover, there is a risk that small and new platforms could be forced out of the market as a result of parity clauses. The same applies to narrow parity clauses. While these clauses are prima facie less restrictive of competition and are intended to mitigate the risk of free-riding behaviour, they too are not objectively necessary to ensure the economic viability of hotel reservation platforms. The case is now back at the national court to rule on Booking.com’s parity clauses, taking into account the CJEU’s judgment.
CJEU confirms abuse of Google by favouring its own product comparison service
Court of Justice of the European Union, judgment of 10 September 2024
Seven years after the Commission imposed a record fine on Google for abusing its dominant position by positioning Google Shopping more prominently and attractively on Google’s search results pages than competing services, the fining decision became final on 10 September 2024.
The CJEU confirms the General Court’s judgment of 10 July 2019 in which it held that the Commission was right to find that Google’s behaviour (self-preferencing) in the context of this particular market (Google Search infrastructure and data traffic as an indispensable input for product comparison services) constituted an abuse. The CJEU stressed that all relevant facts must be considered in the analysis, as it cannot be generally assumed that a dominant company’s more favourable treatment of its own products or services is always abusive.
Google’s argument that the Commission should have applied the Bronner criteria is (also) rejected by the CJEU. Indeed, this case does not involve a refusal to supply and does not force a company that has developed its own infrastructure to enter into an agreement with a competitor. The behaviour in this case concerns an independent form of abuse through ‘leveraging’ in a market with high barriers to entry in which competition has already been weakened by the presence of a dominant party, the CJEU said. The fact that Google could potentially eliminate the abuse by granting competing product comparison services access to the special ‘boxes’ (in which Google Shopping is displayed) does not change this. There is no automatic link between the criteria for the legal classification of the abuse and the corrective measures enabling it to be remedied.
The CJEU does not use the terms ‘abnormality of the conduct’ and ‘superdominance’ as the General Court did, but nevertheless finds that such elements are not necessary to reach a finding (these terms were also not part of the disputed fining decision). In order to establish abuse it is sufficient that the unjustified difference in treatment, given the characteristics of the market, meant that Google did not compete on the merits. The Commission proved this conclusively.
General Court confirms Qualcomm’s predatory pricing strategy of UMTS chipsets for Huawei and ZTE
General Court of the European Union, judgment of 18 September 2024
On 18 September 2024, the General Court largely upheld the € 242 million fine imposed on chip manufacturer Qualcomm. Following a 2009 complaint by Icera – later acquired by Nvidia – the Commission found in 2019 that Qualcomm abused its dominant position in the global UMTS chipset market between 1 July 2009 and 30 June 2011 by maintaining predatory prices for three types of chips to customers Huawei and ZTE. These chips are mainly used to connect phones, tablets and other devices to mobile telecommunications networks. The Commission found that such low prices (below the so-called long-run average incremental costs per unit) were intended to drive the then less powerful competitor Icera out of the market, in violation of Article 102 TFEU.
In the wide-ranging judgment, the General Court discusses all 15 of Qualcomm’s grounds of appeal, which concern, inter alia, the long duration of and flaws in the Commission’s investigation, the definition of the relevant market and Qualcomm’s position thereon, (the interpretation of) the evidence regarding the analysis of Qualcomm’s cost-price structure and the cost benchmark used by the Commission to establish that Qualcomm’s prices were of a predatory nature.
Whereas Qualcomm was successful before the General Court in 2022 with regard to exclusivity payments for its LTE chipsets (see CF Q2 2022), the General Court now finds that Qualcomm has not demonstrated that its defence rights were infringed by the Commission’s failure to record or document (in full) certain interviews with third parties. All grounds of appeal relating to the procedure, Qualcomm’s dominance and abuse are rejected. However, the Court does follow Qualcomm’s argument that the Commission when setting the amount of the fine wrongly departed from its 2006 Fining Guidelines without stating reasons. According to the General Court, the Commission had to justify why, in this case, it used the turnover during the entire infringement period instead of the general practice of using the turnover for the previous calendar year and multiplying it by the number of years of participation in the infringement. For that reason, the General Court reduces the fine to € 238.7 million.
General Court overturns Google AdSense decision due to inadequate investigation Commission
General Court of the European Union, judgment of 18 September 2024
Google’s appeal against the Commission’s fine decision on AdSense was upheld by the General Court on 18 September 2024. In March 2019, the Commission found that Google and parent company Alphabet (collectively: “Google”) had abused its dominant position in the advertising market and imposed on Google a fine of € 1.5 billion. With this judgment, the General Court annuls the Commission’s fining decision. The case revolves around Google’s online advertising intermediary service – AdSense for Search (“AFS”). Websites with integrated search engines (“Direct Partners”) can use this service to serve ads on results pages related to the end user’s search query. An end-user on a website such as Tripadvisor, for example, after entering a search query, will not only see results generated by the website, but also ads in the form of a search result matching the search query.
In that context, Google entered into agreements with Direct Partners containing exclusivity clauses from 2006 onwards that prevented Direct Partners from buying search advertising services from Google’s competitors. From 2009 on, Google began replacing these exclusivity clauses with ‘placement clauses’ and/or ‘authorisation clauses’. The placement clauses stipulated that the main (highest featured) ad space on a website had to be reserved for the ads delivered by AFS. The authorisation clauses required the Direct Partners to first seek permission from Google if they wanted to change the design and layout of their ads, this applied to ads supplied by Google but also its competitors. By way of these three clauses, Google could control the placement and form of both AFS and competitor ads. The Commission concluded that the imposition of these three clauses together constituted a single and continuous infringement of Article 102 TFEU.
The General Court first held that there is no overall market for all forms of online advertising, as Google argued. The Commission had rightly defined a separate market for search-related ads. As for the three clauses that Google imposed on Direct Partners, the Commission stated that competitors of AFS were excluded from the online advertising market by preventing Direct Partners from doing business with competitors, given in particular the exclusivity clause. According to the Commission, this resulted in a discouragement of innovation and a strengthening of Google’s dominant position. The General Court finds that, in doing so, the Commission erred in taking into account the cumulative period of the agreements (from 2006-2016) without assessing whether there were opportunities for the Direct Partners to renegotiate or terminate the agreements in the meantime, allowing them to choose a competitor of AFS. In addition, the Commission failed to prove that the three clauses actually covered a significant part of the market in 2016. The General Court therefore fully annuls the Commission’s decision.
Gazprom commitments upheld on appeal
Court of Justice of the European Union, judgment of 26 September 2024
On 26 September 2024, the CJEU dismissed appeals by Orlen, Poland’s largest gas and oil company, against the General Court’s judgment on the Gazprom commitments. Orlen had appealed to the General Court against a Commission decision declaring commitments by Gazprom to be binding. Those commitments were made by Gazprom in 2018 after the Commission carried out an investigation into the functioning of the gas markets in Central and Eastern Europe between 2011 and 2015. Based on that investigation, the Commission came to the preliminary conclusion that Gazprom was abusing its dominant position on national markets for upstream wholesale gas supply in some Central and Eastern European countries in violation of Article 102 TFEU.
According to Orlen, the commitments, which the Commission declared binding by decision on 24 May 2018, are insufficient to address the competition concerns identified by the Commission. The General Court had identified some shortcomings in the commitments but ultimately upheld the decision on the basis of a holistic assessment. The CJEU now confirms that the Commission is allowed a margin of error and that only a manifest error of assessment, casting doubt on the correctness of the analysis carried out, can lead to the annulment of the contested decision. Moreover, contrary to Orlen’s argument, the CJEU held that there was no breach of Orlen’s legitimate expectations by the Commission. The content of a statement of objections is only preliminary and provisional in nature and cannot give rise to any legitimate expectations about future action by the Commission. For these reasons, the CJEU dismisses Orlen’s appeal.
Concept of undertaking cannot be used for service of summons on subsidiary entities that are not sued
Court of Justice of the European Union, judgment of 11 July 2024
On 11 July 2024, the CJEU answered the question of whether a parent company which is the subject of a claim for damage caused by a competition law infringement is validly served with a summons where the service was effected at the address of its subsidiary, which is domiciled in the Member State in which the action was brought and with which it forms an economic unit. The CJEU answers this question in the negative.
Swedish Volvo AB was sued before a Spanish court by Transsaqui, a Spanish company that purchased two trucks from Volvo during the infringement period of the trucks cartel and that subsequently requested compensation. However, Transsaqui served the summons on Volvo España, Volvo AB’s Spanish subsidiary, because, according to Transsaqui, they belong to the same undertaking.
The CJEU points out that an ‘undertaking’ does not have autonomous legal personality, which means that the legal entities that comprise it must be sued separately. Moreover, even if a subsidiary would form an economic unit with its parent entity, this does not imply that the subsidiary has been expressly authorised or designated by the parent company as a person empowered to receive on its behalf judicial documents intended for it. Nor does such a presumption arise from the concept of undertaking; this would prejudice the defendant’s rights of defence, according to the CJEU. The principles effectiveness of Article 101 TFEU and the right to an effective remedy under Article 47 of the Charter do not alter this conclusion, nor do the costs and time involved in foreign service allow for a different conclusion, according to the CJEU.
Finally, the CJEU notes that – in line with the Sumal judgment – a victim of a competition law infringement could also simply sue Volvo España itself and hold it jointly and severally liable for the damages suffered. This CJEU notes that, this way, time and costs of the service process would be saved.
Concept of undertaking cannot be used on victim’s side in jurisdiction assessment based on Erfolgsort
Court of Justice of the European Union, judgment of 4 July 2024
In another judgment on the concept of undertaking, delivered on 4 July, the CJEU addressed the question of whether the concept can be used to allow a parent company to claim damages in its place of domicile for all its subsidiaries (which are located elsewhere). The case also concerned a damages claim following the trucks cartel, this time against Mercedes. The Hungarian company MOL claimed damages on behalf of all its subsidiaries that had purchased trucks during the cartel period. According to MOL, the Hungarian court had jurisdiction to rule on the claims pursuant to the Erfolgsort, as the place where the damages were suffered was in Hungary, MOL’s place of business.
The CJEU held that Article 7(2) Brussels I-bis cannot be interpreted that way. That jurisdictional ground relates to the place where the direct damages are suffered. However, not MOL itself but rather its subsidiaries bought trucks during the cartel period. The parent company therefore suffered at most indirect (financial) damage, according to the CJEU. The CJEU held that a mirror (or reverse) interpretation of the concept of undertaking – according to which a victim is considered an economic unit and it can act as such, as opposed to the infringing undertaking – cannot be used when assessing jurisdiction under Article 7(2) Brussels I-bis.
Amsterdam court assumes jurisdiction over US pharmaceutical AbbVie due to existence of economic unity with Dutch anchor defendant
Amsterdam District Court, judgment of 17 July 2024
On 17 July 2024, the Amsterdam District Court assumed jurisdiction over US pharmaceutical AbbVie Inc (“AbbVie US”) because it forms an economic unit together with AbbVie B.V. (“AbbVie NL”). As a result, the claims against them are related within the meaning of Section 7(1) Dutch Code of Civil Procedure, the court said. The case concerned a class action (WAMCA) in which the claim vehicle Stichting Farma Ter Verantwoording (“FTV”) claimed a declaratory judgment that drug manufacturer AbbVie had acted unlawfully and abused its dominant position by overpricing Humira, a drug for rheumatoid arthritis. The ACM also investigated AbbVie’s prices for Humira in 2020, but this investigation was eventually closed after informal commitments were accepted.
FTV filed (identical) claims against AbbVie US, AbbVie NL and German AbbVie GmbH (“AbbVie Germany”). As AbbVie NL is domiciled in the Netherlands (Amsterdam), the court has jurisdiction over the claims against AbbVie NL. As for AbbVie US, the court emphasises that the conduct of a subsidiary (AbbVie NL) can be imputed to its parent company (AbbVie US). With AbbVie US holding 100% of the share capital in AbbVie NL, the court assumes the existence of decisive influence over AbbVie NL. AbbVie has not succeeded in rebutting the presumption of decisive influence. Moreover, it has not been refuted that AbbVie US is responsible for the pricing policy or that there is a specific link between the alleged infringement and AbbVie NL’s activities. As AbbVie US and AbbVie NL consequently form an economic unit, the court held that the claims are closely connected within the meaning of Article 7(1) Dutch Code of Civil Procedure. The similar basis for the claims also makes it foreseeable that AbbVie US will be sued in the Netherlands over a dispute relating to the Dutch market, according to the court.
However, the court did not assume jurisdiction over AbbVie Germany because FTV had not sufficiently argued the specific link between AbbVie Germany’s activities and the subject matter of the alleged infringement in the Netherlands.
Supreme Court overrules Amsterdam Court of Appeal and Minister I&W; flight reduction at Schiphol should first past Brussels
Supreme Court, judgment of 12 July 2024
In the proceedings of IATA, KLM and several other airlines against the Dutch State and Royal Schiphol Group, the Supreme Court recently ruled that the Minister of Infrastructure and Water Management (“Minister”) could not decide (on an experimental basis) to reduce the amount of flights at Schiphol without following the prescribed (European) procedure.
In 2023, the Minister published a so-called ‘Experimental Regulation’ with the aim of reducing noise pollution around Schiphol Airport. In the Experimental Regulation, the Minister no longer uses the ‘New Standards and Enforcement System’ (NNHS) – which has been in used since 2010 on the basis of the use of those runaways that cause the least amount of noise – but reverts to the old enforcement system with specific ‘enforcement points’ around and near the runways. As a result, under the Experimental Scheme, the maximum number of aircraft movements at Schiphol would be reduced to 460,000 per year instead of 500,000.
On appeal, the airlines argued that the Minister was not entitled to simply limit the number of aircraft movements at Schiphol without following the correct procedure. Instead, in light of legal certainty and proportionality, the European consultation process described in the Noise Regulation – the so-called balanced approach procedure – should be followed first. The preliminary relief judge of the North Holland District Court ruled in their favour in April 2023, but was later knocked back by the Amsterdam Court of Appeal. In short, the Court of Appeal ruled that the Minister’s measures were only a clearly defined and time-limited experiment, for which the European procedure need not be followed.
Upon cassation, the Supreme Court took a more pragmatic approach, just like the court in preliminary relief proceedings, and ruled that the Experimental Regulation does (de facto) prescribe a limitation in the number of aircraft movements, or at least has that effect. As the term ‘operating restriction’ in the Noise Regulation is broadly defined, the Minister should therefore also go through the balanced approach procedure for the (perhaps not even so) temporary measures provided for in the Experimental Regulation. According to the Supreme Court, there cannot be a reasonable doubt in that regard. The Supreme Court therefore set aside the judgment of the Amsterdam Court of Appeal and referred the case back to the Hague Court of Appeal for further consideration and decision.
Commission approves six Dutch aid measures for innovation, pharma and energy transition of several billion euros
European Commission, publications of July 2024
In July 2024, the Commission approved six State aid measures of the Dutch state. On 29 July, the Commission decided on two Dutch aid measures supporting renewable hydrogen production. The first measure concerns € 998 million in aid – granted through a competitive bidding procedure – to increase electrolysis capacity and support the construction of at least 200MW of electrolysis capacity. The second support measure is a direct grant of € 80 million to Djewels B.V. for the construction and operation of a ‘demonstration project’. The project aims at demonstrating the feasibility of producing renewable hydrogen with an alkaline electrolyser. According to the Commission, this project concerns the latest innovation and is deemed one of a kind. Both measures are considered by the Commission to be necessary, appropriate and proportionate whilst only having a limited effect on competition. These measures contribute to achieving the objectives set out in the EU Hydrogen Strategy and the European Green Deal.
On 26 July, the Commission approved another Dutch aid measure worth € 2 billion. This scheme supports the Pallas project for the production of medical radioisotopes for the diagnosis and treatment of cancer. The project involves the construction of a reactor and a nuclear health centre in Petten. The Pallas project will produce radiopharmaceuticals that can then be administered to patients for amongst others the diagnosis and treatment of cancer. It contributes to ensuring security of supply of essential and life-saving medicines, in line with the Pharmaceutical strategy for Europe.
In addition, the Commission approved a Dutch aid measure worth € 750 million on 25 July. This aid measure focuses on the decarbonisation of industrial processes in line with the Temporary crisis and transition framework for State aid. Through direct subsidies, the aid measure aims to encourage companies in the Netherlands to reduce greenhouse gas emissions from industrial production processes by at least 40% compared to the current situation. The Commission also approved a Dutch aid measure of € 700 million aimed at small and medium-sized farmers who voluntarily close their livestock farm sites in order to reduce nitrogen emissions.
Finally, the Commission approved more than € 10 billion in Dutch and French aid to Air France-KLM after its initial decisions were overturned by the General Court on 20 December 2023 and 7 February 2024. In these judgments, the General Court ruled that the Commission had wrongly considered Air France and KLM as the sole beneficiaries of the French and Dutch measures respectively, without looking at the whole group. The Commission has now reassessed the French and Dutch measures with the Air France-KLM group as beneficiary, concluding that the measures still comply with the Temporary Framework for the COVID-crisis.
Nuctech may not hide behind Chinese servers in Commission dawnraid
President of the General Court, order of 12 August 2024
Recently, the President of the General Court (“President”) dismissed the application by Nuctech Netherlands and Nuctech Warsaw (hereinafter collectively “Nuctech”) for suspension of the Commission decision pursuant to which raids were carried out at Nuctech’s premises. Between 23 and 26 April 2024, the Commission carried out unannounced company visits at Nuctech, a company active in the production and sale of scanning equipment for (air)ports. The Commission suspected that Nuctech may have obtained anti-competitive subsidies in violation of the FSR (see also our earlier CF Q2 2024) and therefore carried out raids requesting, among other things, access to mailboxes of some employees.
Nuctech argued, inter alia, that it could not comply with these requests because the employees in question were Chinese nationals and their emails were not stored on local (European) servers, but on the Chinese servers of parent company Nuctech Hong Kong, and that the Commission was violating international and European public law by requesting it nonetheless. The President ruled that the Commission is free to investigate and request information from companies operating in the EU, such as Nuctech; indeed, otherwise the Commission could never hold non-European companies liable for conduct that disrupts the internal market. Furthermore, according to the President, Nuctech had substantiated in an “extremely laconic” manner why releasing the e-mails would violate Chinese law. Therefore, that plea also failed.
Regarding the urgency of the request, the President ruled that Nuctech had only alleged financial losses. Financial consequences do not qualify as serious and irreparable harm, so the required urgency was not considered proven. The President continued that, moreover, the freedom for an EU company to store information wherever it so wishes, cannot preclude an investigation into a possible violation of EU law. Nuctech’s requests were therefore rejected.
CJEU upholds Commission decision and orders Ireland to recover € 13 billion from Apple
Court of Justice of the European Union, judgment of 10 September 2024
In its judgment of 10 September 2024, the CJEU ruled that Ireland must recover around € 13 billion in illegal State aid from Apple. In 2016, the Commission decided that two companies belonging to the Apple group had enjoyed tax benefits from 1991 to 2014 that constituted illegal State aid. This aid concerned tax benefits enjoyed by Apple through two tax rulings issued by Ireland in 1991 and 2007 in favour of two companies of the Apple group: Apple Sales International (“ASI”) and Apple Operations Europe (“AOE”). These entities were incorporated in Ireland but were not tax resident in Ireland. With the tax rulings, profits from the use of intellectual property licences by ASI and AOE were attributed to the parent company in the United States, although ASI and AOE were actually the only ones able to conduct the commercial activities concerning those licences. This unfairly excluded those profits from Irish taxes, which the Commission concluded to be State aid.
In 2020, the General Court annulled the Commission’s decision, ruling that the Commission had not sufficiently demonstrated the existence of a selective advantage that followed from the tax rulings. The CJEU in turn set aside the General Court’s judgment and upheld the Commission’s decision. The CJEU held – contrary to the General Court – that the Commission had sufficiently proved that the profits from ASI’s and AOE’s intellectual property licences were to be allocated to these Irish branches for tax purposes, given their activities regarding those licences. The CJEU thus confirmed the Commission decision and ordered Ireland to recover the unlawfully granted aid from Apple, which is estimated to be around € 13 billion.
Tied up cash? ACM investigates Dutch savings market
Authority for Consumers & Markets, publication of 16 July 2024
On 16 July 2024, the ACM published an investigation into competition in the Dutch savings market. The investigation was prompted by a public debate that arose in 2023, following which the Dutch Minister of Finance asked the ACM to investigate the relationship between (the lack of) competition in the Dutch savings market and lagging savings rates. The perception was that customers were receiving little to no benefits while banks were making historically high profits. In particular, saving interest rates of the largest banks remained quite low compared to ECB policy rates.
The ACM concludes that there is a high degree of concentration in the savings market: indeed, the combined market share of the four largest banks (ABN AMRO, ING, Rabobank and Volksbank) – in a market where 23 individual banks operate – has remained the same at 90-95% since 2014. The ACM therefore qualifies the market as an oligopolistic market, characterised by the presence of a few large providers on the supply side, with possibly a group of smaller providers who have no influence on the policies of these providers.
According to the ACM, the fact that the market is oligopolistic explains the discrepancy between the lagging savings rates of the major banks compared to the higher savings rates offered by the other banks in response to ECB policy rates, which rose 10 times during the period 2022-2024. According to the ACM, the major banks keep their savings rates the same by only reacting to each other, without explicitly agreeing to do so. Internal documents, which the ACM requested as part of this investigation, show that the major banks mainly focus on the other major banks in their decision-making. The ACM’s conclusion is therefore that the oligopoly of the dominant banks has led to anti-competitive outcomes, namely that consumers have not been able to benefit from competition on savings rates.
Finally, the ACM examined why major banks experience little competitive pressure from other banks. It found, for instance, that consumers experience switching barriers that prevent them from switching to more favourable offers. Switching barriers include, for example, the cost and time associated with opening a new savings account, or not being able to carry over their IBAN number to a new account. Moreover, many consumers inform the ACM that they are satisfied with their current bank’s offer. However, according to the ACM, the majority of consumers are not adequately informed about alternative offers. The ACM therefore makes recommendations to remove these switching barriers with the aim of improving competition in the savings market.
Volkswagen guilty of unfair and deceptive business practices in diesel scandal
Rotterdam District Court, judgment of 9 July 2024
Volkswagen is guilty of unfair and misleading business practices for manipulating mandatory emissions tests, the Rotterdam District Court confirmed on 9 July 2024 in the appeal against the €450,000 fine that the ACM imposed on Volkswagen in 2017. The case concerns the so-called diesel scandal; between 2009 and 2015, Volkswagen installed software in diesel cars that could recognise when the car was in a test situation and then caused it to emit less nitrogen than it normally did. At the request of Consumers Association, the ACM launched an investigation into the diesel scandal in 2017 and imposed the (then maximum) fine on Volkswagen. This was incidentally also the first case in which the ACM found that false sustainability claims were misleading.
Volkswagen appealed against that fine. Volkswagen argued, among other things, that the fine violated the ne bis in idem principle because it had also been fined in Germany for the diesel scandal. Since the German case, in which Volkswagen also invoked the ne bis in idem principle, was now before the CJEU, the court decided to await that judgment first. After, taking into account the CJEU judgment, the court ruled that, although the actual conduct of Volkswagen for which the ACM imposed the fine was described in the German fine, that conduct did not underlie the German fine. Thus, the German fine decision was not based on the same factual conduct as the Dutch fine decision. Thus, the ne bis in idem principle had not been violated.
The Rotterdam District Court then assessed whether Volkswagen’s business practices were actually misleading and unfair. The court upheld all three grounds on which the ACM fined Volkswagen. First, Volkswagen unlawfully claimed that its products had received approval from a public body (in violation of Article 6:193g(d) of the Dutch Civil Code), whereas it had obtained the approval only by manipulating the mandatory emissions tests. Secondly, by using, installing and concealing the manipulative software, Volkswagen violated the requirements of professional diligence (in violation of Article 6:193b(2) of the Dutch Civil Code). Finally, the green claims about the diesel vehicles were based on the manipulated emissions tests and were therefore misleading (in violation of Article 6:193c(1)(b) of the Dutch Civil Code).
CJEU shines light on conditions for price indication of products
Court of Justice of the European Union, judgment of 26 September 2024
Responding to preliminary questions, the CJEU answered on 26 September 2024 that a price reduction, or discount price, must actually be lower than the lowest price at which the relevant product was offered in the previous 30 days and that it is not enough for the seller to merely mention that previous lowest price. The preliminary questions were raised in the context of a dispute between a German regional consumer protection association and Aldi Süd over two price reductions for bananas and pineapples in a weekly advertising brochure. A discount price was listed for both products, along with another (crossed-out) price indication in smaller figures. Under both offers, the previous lowest price at which the products were sold in the previous 30 days was also listed. However, the so-called “discount price” in these cases was not lower than the lowest price used in the previous 30 days.
In particular, the case revolves around the interpretation of Article 6a of Directive 98/6, which states that when announcing price reductions, traders must indicate the lowest price applied during the previous 30 days. The referring German court questioned whether this article also implies that the new price must actually be lower than that lowest price, or whether it is sufficient to clearly display the price indications. The CJEU held that although the directive does not explicitly require the new price to be lower than the lowest price from the last 30 days, this does follow from the objectives of the directive. These objectives include improving consumer information and ensuring a high level of consumer protection. The CJEU stressed that the term “price reduction” in its colloquial meaning refers to an actual reduction of a previous price. By requiring that the new price must be lower than the lowest price of the previous 30 days, consumers are prevented from being misled. This safeguards the aims of the directive, the CJEU said.
Judge suspends charges for travel agents to curb price jumps*
Rotterdam District Court, judgment of 24 September 2024
The preliminary relief judge of the Rotterdam District Court recently suspended three orders subject to penalty payments (and publication decisions) imposed by the ACM on three travel agents. The ACM’s decision concerned ‘price jumps’ that may occur when searching for a package holiday online. The ACM reproached the travel agents that the starting price on the search page is not always bookable, but can change (higher or lower) after a price check. The ACM qualified this as a misleading omission.
The court agreed with the ACM that the ads on the search page constituted an invitation to purchase and the price was essential information, but casted its doubts as to whether the applicants actually engaged in an unfair commercial practice. This is because the ACM’s interpretation differs from that of the European Commission in the Unfair Commercial Practices Guidelines, and from the opinion of the Advertising Code Committee (Reclame Code Commissie) and the Board of Appeal which recognise that the travel industry is subject to sudden price changes. The travel agents explained that the starting price shown was correct and current, but may be outdated at the time of booking due to price fluctuations by suppliers of the travel elements. Other than the ACM stated in the orders, the travel agents have substantiated with reports that consumers are not (negatively) affected by the practice of price checks and that competition is not distorted. Accordingly, the court ruled that it is doubtful whether this practice causes consumers to make a commercial decision they otherwise would not have made, and thus whether there is a violation at all. Moreover, the court questions whether enforcement in this situation is proportionate and expedient. For this reason, the orders and publication decisions are suspended.
* bureau Brandeis assisted the applicants in these proceedings
For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist.
Bas Braeken – Jade Versteeg – Lara Elzas – Timo Hieselaar – Demi van den Berg – Coen Vermeij – Joost van Belois