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

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

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

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

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

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

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

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

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

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

Hostile takeover of Suez by Veolia conditionally approved

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

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

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

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

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

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

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

Court of Justice repeatedly underlines fundamental importance of preliminary reference procedure, also in arbitration proceedings

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

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

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

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

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

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

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

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

Court of Justice deals with “object restrictions” in vertical relations in Visma

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

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

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

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

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

Dieselgate: European Commission clarifies green transition agreements

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

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

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

European Commission triumphs in landmark ruling on Google Shopping

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

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

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

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

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

ACM diminishes scope of Public Enterprises Act, whilst Court extends it

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

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

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

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

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

Court of Justice redefines the concept of undertaking and allows bottom-up liability

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

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

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

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

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

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

ACM imposes fines for purchasing cartel of used cooking oil

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

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

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

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