This is the Competition Flashback Q4 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). Would you like to receive the Competition Flashback by email in the future? You can subscribe to our mailing list here.

For a preview of 2025, we would like to refer you to our Flash Forward 2025.

Overview Q4 2024

Merger control

• Prohibition joint venture Thyssenkrupp and Tata Steel upheld by CJEU

• Microsoft informs European Commission of ‘acqui-hire’ Inflection AI under DMA

• Appeal against approval of Vodafone’s takeover of Liberty Global dismissed

• Application Vifo Act extended to new sectors

• Overview highlights merger cases

Cartel damages

• Heineken jointly liable for abuse subsidiary based on concept of undertaking

• Amsterdam court clarifies damages calculation for air cargo cartel claims

Cartels & vertical restraints

• FIFA transfer rules in violation of free movement and competition rules

• Final ruling CBb in cold-storage cartel

• General Court confirms revised €12.1 million fine Pharol and Telefónica for market sharing

• Commission fines Czech and Austrian railway companies for collective boycott

• CJEU clarifies role of counterfactual in determining restriction of competition by effect

• Fashion house Pierre Cardin and licensee Ahler fined for restricting cross-border sales

• General Court dismisses appeal banks in bond cartel

• Commission allowed to take over cartel investigation into metal packaging sector from Bka

• General Court confirms € 31.7 million fine HSBC for participating in euro interest rate derivatives cartel

Abuse of a dominant position

• Final annulment of Intel fine for abusive exclusivity rebates

• € 800 million fine Meta for tying Facebook Marketplace and unfair trading conditions

Regulated markets & consumer law

• ‘Place order’ button insufficiently clear about consumer payment obligation

• Enforcement Revised Payment Services Directive

• ZuivelNL pledges to provide more insight into spending on contributions dairy farmers

Prohibition joint venture Thyssenkrupp and Tata Steel upheld by CJEU

Court of Justice of the European Union, judgment of 4 October 2024

On 4 October 2024, the Court of Justice of the European Union (“CJEU”) dismissed Thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision prohibiting its proposed joint venture (“JV”) with Tata Steel. Thyssenkrupp and Tata Steel, both active in the production of steel products, had notified the Commission of their plans for the JV on 25 September 2018. The Commission blocked the proposed JV on the grounds that it would significantly impede effective competition. In particular, the JV threatened to restrict choice for business customers and increase prices of steel products for the automotive and packaging industries.

The General Court of the European Union (“General Court”) dismissed Thyssenkrupp’s appeal against this decision fully. Thyssenkrupp based its case on an earlier judgment of the General Court in the CK Hutchison case, which seemed to impose stricter requirements on the Commission for establishing a significant impediment to effective competition (the SIEC-criterion).

However, after Thyssenkrupp lodged its appeal, the CJEU delivered its judgement in the CK Hutchison case on appeal and reversed the stricter requirements imposed by the General Court. As a result, Thyssenkrupp’s argument – that the General Court had failed to adhere to the previously established stricter requirements – was undermined. The CJEU dismissed Thyssenkrupp’s appeal, leaving the Commission’s decision to block the joint venture firmly in place. What initially seemed like an opportunity to leverage a legal precedent turned out to be a misguided strategy, as the stricter standard had in the meantime already been rejected by the CJEU.

back to top

Microsoft informs European Commission of ‘acqui-hire’ Inflection AI under DMA

European Commission, publication of 17 October 2024

On 17 October 2024, tech giant and gatekeeper Microsoft informed the Commission of its hiring of a significant part of the staff of Inflection AI, a US-based technology company specialising in machine learning and generative artificial intelligence. Under the Digital Markets Act (“DMA”), gatekeepers like Microsoft are required to inform the Commission about all mergers related to core platform services, other digital services or those enabling data collection to the Commission.

Microsoft’s notification stands out for two reasons. First, Microsoft believes that the transaction does not constitute as a ‘concentration’ under European competition law, as it involves only the acquisition of key personnel and a non-exclusive licensing agreement – commonly referred to as an ‘acqui-hire’. Despite this position, Microsoft opted to inform the Commission. Second, this acquisition had previously been referred to the Commission by several Member States under Article 22 of the Merger Regulation (“EUMR”). However, following the Illumina/GRAIL judgment of the CJEU (see our Competition Flashback (“CF”) Q3 2024), these referral requests were withdrawn.

back to top

Appeal against approval of Vodafone’s takeover of Liberty Global dismissed

General Court of the European Union, judgment of 13 November 2024

On 13 November 2024, the General Court dismissed the appeals of Deutsche Telekom, Tele Columbus and NetCologne – three German telecom companies – against the Commission’s approval of Vodafone’s acquisition of certain Liberty Global activities in Germany, the Czech Republic, Hungary and Romania. The appellants argued that the Commission had made manifest errors in assessing the transaction’s impact on competition, particularly with regards to the German markets for the retail supply of TV signal transmission services, especially in view of Vodafone’s dominant position in those markets.

The General Court upheld the Commission’s decision, finding that the merging parties were neither actual (direct or indirect) nor potential competitors in the relevant markets before the transaction.  Consequently, the transaction did not weaken the competitive constraint exerted by their competitors. The Court stated that the mere fact that a concentration creates or strengthens a dominant position is not in itself sufficient to show that it is incompatible with the internal market. Although Vodafone was indeed dominant on the relevant markets, the Commission could rightly find that the acquisition did not result in a direct and significant impediment to effective competition.

back to top

Application Vifo Act extended to new sectors

Ministry of Economic Affairs and Ministry of Justice and Security, consultation document of 19 December 2024

Since mid-December 2024, a legislative proposal is pending to expand the scope of the Dutch Wet veiligheidstoets investeringen, fusies en overnames (“Vifo Act”) to include new sectors and technologies. The Vifo Act, which came into force on 1 June 2023, enables the government to assess investments and acquisitions involving vital providers and providers of sensitive technologies for potential risks to national security (see also our first and second Competition Newsflash on the Vifo Act). The proposal concerns an amendment to the Besluit toepassingsbereik sensitieve technologie, which regulates which sensitive technologies fall within the scope of the Vifo Act. The minister proposes to add biotechnology, artificial intelligence, advanced materials and nanotechnology, sensor and navigation technology, and nuclear technology with medical applications to this list. The public internet consultation on the proposal will take place from 19 December 2024 to 31 January 2025.

A legislative amendment is also pending at EU level, specifically regarding the European investment screening mechanism – the Regulation establishing a framework for the screening of foreign direct investment into the Union (“FDI Regulation”). Among other things, this proposal aims to harmonise national rules and ensure all Member States implement effective screening mechanisms. Key elements of the amendment include:

1. Requiring Member States to adopt screening mechanisms that meet specific (procedural) standards.
2. Introducing a minimum sectoral scope to ensure key industries are covered in all Member States.
3. Extending the FDI Regulation to cover investments by investors based in EU ultimately controlled by individuals or entities outside the EU.

This proposal is currently under consideration by the European Parliament and national parliaments.

back to top

Overview highlights merger cases

Heineken jointly liable for abuse subsidiary based on concept of undertaking

Amsterdam District Court, judgment of 23 October 2024

Pending the preliminary questions on the issue of jurisdiction, the Amsterdam District Court has handed down an interlocutory judgment on the merits regarding Heineken’s liability as the (grand)parent company of AB, which was fined by the Greek competition authority for abuse of dominance. The proceedings examine whether Heineken is jointly liable for the damage suffered by MTB as a result of AB’s infringement (see also CF Q1 2024, Q2 2023 and Q3 2022). The court answers this question in the affirmative on the basis of the concept of undertaking and in particular – as it concerns upward liability – on the basis of the ‘Akzo-presumption’ as was also elaborated by AG Kokott in her opinion in the preliminary reference proceedings.

First, the court clarifies that it is unnecessary to await the outcome of the preliminary proceedings on jurisdiction concerning Greek AB, as this issue only pertains to jurisdiction over the claim against AB. The court confirmed its jurisdiction over claims against Heineken, noting that Heineken is part of the same corporate group addressed in the infringement decision. It clarified that the Greek authority’s decision not to investigate Heineken’s role further does not preclude its liability.

Because Heineken (indirectly) owns almost all the shares in AB, the court finds that the Akzo presumption applies. The fact that it should be applied in a civil context in the same way as in a public law context is even an acte éclairé, according to the court. Heineken’s defence in which it claims not to have exercised decisive influence over AB’s abusive conduct is deemed irrelevant by the court. To rebut the presumption, Heineken needed to show it lacked decisive influence over AB in general, which it failed to do. The court highlighted factors such as Heineken’s ability to influence strategic decisions, the hierarchical reporting structure, and overlapping directors as evidence of its decisive influence. Consequently, Heineken was found jointly and severally liable for damages stemming from AB’s infringement. In the next step, Heineken (and AB if the court is found to have jurisdiction) must submit statements on the alleged damages.

Although upward liability is widely accepted in the public law sense, this judgment represents an important milestone for (Dutch civil) cartel damages law. It holds an unaddressed entity within a corporate group liable for damages arising from conduct committed by another group entity.

back to top

Amsterdam court clarifies damages calculation for air cargo cartel claims

Amsterdam District Court, judgment of 6 November 2024

In its interlocutory judgment of 6 November 2024, the Amsterdam District Court set out how to calculate the damages suffered by victims of the air cargo cartel. The court instructed economists hired by the parties to issue a Joint Expert Statement, outlining their points of agreement and disagreement. The claim foundations representing the victims, SCC and Equilib, proposed a ‘one-step’ model. This approach calculates damages directly using transaction data from shippers (the victims represented by SCC and Equilib). The airlines, on the other hand, proposed a ‘two-step’ model, first determining whether the airlines charged an overcharge to their customers, the freight forwarders, and then whether and to what extent these freight forwarders passed on any overcharge. The court stressed that both models are accepted in the Commission’s practical guide on quantifying harm.

The court concluded that the one-step model delivers sufficiently reliable results, while the airlines failed to convincingly demonstrate that the two-step model would produce more accurate or reliable outcomes. Damages will be calculated solely using transaction data from shippers. The analysis will focus on the total price paid by shippers, rather than only the surcharges, as the airlines had proposed. This decision streamlines the process of calculating damages in cartel claims, favouring simpler and more direct methods when they meet reliability standards. The ruling provides clarity for future cases and reinforces the practicality of the one-step model in similar claims.

back to top

FIFA transfer rules in violation of free movement and competition rules

Court of Justice of the European Union, judgment of 4 October 2024

The CJEU has issued another significant ruling on the intersection of sports and competition law, following its previous rulings on the International Skating Union and the European Super League. This latest case arose from a dispute initiated by footballer Lassana Diarra, who challenged various rules applied by FIFA regarding the international transfer system. Diarra complained that under FIFA rules, if a player terminates his employment contract without ‘just cause’ before the normal term, the new club is jointly and severally liable for any compensation due to the former club. Additionally, the new club may be prevented from registering new players in certain cases, and FIFA requires national associations to refuse to issue an International Transfer Certificate as long as the player and the former club are in dispute over the termination of the contract.

The CJEU ruled that these three rules are incompatible with EU law. First, these rules impede the free movement of workers (Article 45 TFEU), as they prevent professional football players from working for a new club in another Member State. The Court reasoned that the restrictions went beyond what is necessary to ensure the regularity of interclub football competitions or to maintain stability in the player rosters. Moreover, the CJEU finds that these rules violate the cartel prohibition laid down in Article 101(1) TFEU. The CJEU emphasises that the ability of football clubs to recruit professional players is an important parameter of competition. Restricting that possibility is similar to a non-compete or non-poach clause that has as its object the restriction of competition between clubs. Ultimately, the CJEU held that, subject to the final judgment of the Mons Court of Appeal (Belgium), these rules did also not appear to be necessary or indispensable for FIFA to achieve certain legitimate objectives.

back to top

Final ruling CBb in cold-storage cartel

Trade and Industry Appeals Tribunal, judgment of 5 November 2024

On 5 November 2024, the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, “CBb”) has delivered its final ruling on Samskip’s appeal against the € 901,000 fine imposed on the company for its involvement in the cold-storage cartel. The case, which dates back to 2015, saw the Dutch competition authority (Autoriteit Consument & Markt, “ACM”) fine several companies (including Samskip, Eimskip, Van Bon (now: H&S Coldstores) and Kloosterboer) for coordinating tariffs and/or exchanging competitively sensitive information related to fish storage in cold stores. The fining decision for Kloosterboer IJmuiden B.V. (“KBIJ”, a wholly-owned subsidiary of Samskip throughout the infringement) and Daalimpex Logistics B.V. (a wholly-owned subsidiary of Eimskip throughout much of the infringement) was annulled by the Rotterdam District Court in 2018. However, with the CBb’s ruling in 2020, this judgment was overturned, the ACM’s decision ‘revived’ and the case was referred back to the Rotterdam District Court.

In the present judgment, the CBb addresses Samskip’s grounds of appeal with regard to the attribution of the infringement and the calculation of the fine. Samskip mostly argued, both in relation to the rebuttal of the Akzo presumption and relating to various principles of good governance, that it was not Samskip, but the Kloosterboer group (from whom it had acquired KBIJ), that was responsible for determining KBIJ’s commercial policy during the relevant period. According to Samskip, the fine cannot therefore be attributed to it, or at least the ACM wrongly failed to take into account the links between KBIJ’s director and the Kloosterboer group when calculating the fine.

The CBb dismissed all Samskip’s material grounds of appeal, affirming the ACM’s conclusion that Samskip exercised decisive influence over KBIJ and was aware of the anti-competitive agreements entered into by KBIJ and failed to take any corrective action. It also rejects Samskip’s arguments regarding the scope of the ACM’s investigation, access to the case file and the proportionality of the fine, including the severity factor applied by the ACM and the mitigating circumstances that were recognised for other parties.

Nevertheless, the CBb does agree with Samskip’s argument that the case’s handling time – nine years and eight months – exceeds the reasonable time limit. As a result, the CBb reduced Samskip’s fine by € 45.000, accounting for nine six-month delays at € 5.000 each. This final ruling concludes the cold storage cartel case after nearly a decade, marking the end of a protracted legal saga.

back to top

General Court confirms revised €12.1 million fine Pharol and Telefónica for market sharing

General Court of the European Union, judgment of 2 October 2024

On 2 October 2024, the General Court upheld the revised fine of € 12.1 million that the Commission imposed on Pharol (formerly Portugal Telecom) and Spanish company Telefónica in 2022 for engaging in a market-sharing agreement. The ruling stems from an earlier 2013 Commission fining decision, by which the two telecom companies were jointly fined € 79 million. That fine was based on a non-compete agreement between Pharol and Telefónica, which the Commission deemed an illegal market-sharing arrangement entered into during a merger between the companies. Although the 2013 decision was upheld on appeal, the General Court ordered the Commission to reassess the turnover figures and adjust the fines accordingly.

In its revised 2022 decision, the Commission reduced the fine on Pharol from € 12.3 million to € 12.1 million after correcting the turnover figures. In that decision, the Commission furthermore referred to “preparatory steps” the telecoms companies could take to enter each other’s markets, a point that was not explicitly mentioned in the original 2013 decision. According to Pharol, the Commission should therefore have adopted a supplementary Statement of Objections to allow the company to formally respond. Instead, Pharol was provided (only) with an accompanying letter of facts.

The General Court rejected this argument, stating that a supplementary Statement of Objections is only required when there are new charges or when there is substantially altered evidence, such as newly formulated grievances. In contrast, a letter of facts is sufficient when existing objections are corroborated by new evidence, as is the case here. The General Court underlines that merely the turnover values were recalculated and that the parties had the opportunity to comment on any new evidence mentioned in the letter of facts. This did not change the core nature of the original decision. With this judgment, the Court dismissed Pharol’s appeal and confirmed the revised fine of € 12.1 million.

back to top

Commission fines Czech and Austrian railway companies for collective boycott

European Commission, publication of 23 October 2024

On 23 October 2024, the Commission announced that it had imposed fines totalling € 48.7 million on the Czech and Austrian railway companies České dráhy (“CD”) and Österreichische Bundesbahnen (“OBB”) respectively, for violating the cartel prohibition laid down in Article 101 TFEU. The Commission found that, between 2012 and 2016, the two companies jointly obstructed competitor Regiojet from entering and expanding in the Czech rail market and on the international route between Prague and Vienna. Specifically, CD and OBB coordinated (or: falsified) the sales procedures of OBB’s used train wagons to prevent Regiojet from acquiring them, thereby hindering its ability to compete with the two incumbents. Additionally, CD and OBB exchanged confidential information regarding the bids of other interested parties.

As part of the leniency program, OBB received a 45% reduction in its fine, which ultimately amounted to € 16.7 million. CD, however, did not cooperate with the investigation and was fined nearly € 32 million. The Commission had previously investigated CD for potential predatory pricing but closed this investigation in September 2022. Read more about the recent developments regarding the Dutch rail network in our blog.

back to top

CJEU clarifies role of counterfactual in determining restriction of competition by effect

Court of Justice of the European Union, judgment of 5 December 2024

In response to preliminary questions from a Latvian court, on 5 December 2024, the CJEU once again clarified the difference between the analysis for a by object and by effect restriction under Article 101 TFEU, and the role of the counterfactual analysis in that regard.

In 2014, the Latvian competition authority fined the only authorised importer of KIA cars in Latvia for entering into anti-competitive agreements with dealers and authorised repairers. In particular, these agreements involved imposing certain warranty conditions on car owners. These conditions obliged them, during the warranty period, to have (i) any periodic maintenance and (ii) repairs not covered by the warranty carried out exclusively by these parties, always using KIA spare parts in order for the warranty to remain valid. This, according to the authority, had the effect of hindering the access of independent repairers and spare parts manufacturers to the Latvian market. At the same time, the Latvian authority stated that the negative effects on competition resulted from the nature of the restrictive clauses so that it was not necessary to demonstrate the actual effects. After a successful cassation appeal and a referral back to the first instance court, the Latvian court questioned this approach, prompting the CJEU’s clarification.

The CJEU reiterated that only when the conduct in question cannot be presumed to have an anti-competitive object is it necessary to examine whether it actually or potentially has the effect of restricting competition. To do so, it is necessary to examine competition within the factual framework in which it would occur in the absence of the agreement (the counterfactual). This scenario must be realistic and credible, but the Court stressed that potential effects can be considered, as long as they are appreciable. It is up to the national court to assess whether the authority has examined this correctly.

back to top

Fashion house Pierre Cardin and licensee Ahler fined for restricting cross-border sales

European Commission, press release dated 28 November 2024

The Commission has fined fashion house Pierre Cardin and its largest licensee, Ahler, for a total of € 5.7 million for restricting cross-border sales of clothing bearing the Pierre Cardin brand. Based on its investigation, the Commission concluded that, between 2008 and 2021, the two companies had entered into agreements in breach of Article 101 TFEU. These agreements were aimed at restricting sales of Pierre Cardin clothing by other Pierre Cardin licensees, both offline and online, outside their assigned licensing territories and/or to discount retailers. The ultimate aim of these agreements was to provide Ahler with complete territorial protection in the countries covered by its licence agreement. This prevented retailers from freely sourcing products in Member States with lower prices and thus artificially dividing the internal market. Remarkable is that apart from the supplier (licensor Pierre Cardin), the buyer (licensee Ahler) also received a heavy fine.

back to top

General Court dismisses appeal banks in bond cartel

General Court of the European Union, judgment of 6 November 2024

In its judgment of 6 November 2024, the General Court upheld the fines imposed on Crédit Agricole and Credit Suisse (now part of UBS), among others, for their participation in a cartel relating to the secondary market for US dollar-denominated supra-sovereign and sovereign bonds as well as bonds issued by government agencies. The two banks were fined a total of almost € 16 million. Deutsche Bank reported the cartel to the Commission and thus escaped a fine.

The banks argued on appeal that the Commission misunderstood the role of banks as ‘market makers’, claiming that exchanging information was necessary to cover certain trading risks. The General Court dismissed Credit Suisse’s appeal in its entirety. Crédit Agricole’s appeal was largely dismissed, but the General Court did annul the fine decision insofar as it concerned the duration of the infringement. According to the General Court, Crédit Agricole’s participation did not start on 10 January 2013, but one day later – on 11 January 2013. Nevertheless, the General Court upheld the amount of the fine.

back to top

Commission allowed to take over cartel investigation into metal packaging sector from Bka

General Court of the European Union, judgment of 2 October 2024

On 2 October 2024, the General Court ruled that the Commission had jurisdiction to take over the investigation into cartel behaviour in the German metal packaging sector from the German competition authority (the ‘Bundeskartellamt’, “Bka”). The investigation, which started in 2015, involved several companies active in this sector, including Crown Holdings and Crown Cork & Seal Deutschland (collectively “Crown”). In 2018, the Bka requested the Commission to take over the investigation, a request that the Commission granted. Shortly thereafter, Crown submitted a leniency application, after which the Commission adopted the contested (settlement) decision in July 2022, imposing a fine of over € 7.6 million. Crown appealed this decision, arguing that the Commission did not have jurisdiction to take over the investigation in the first place, because the transfer was not made within the prescribed two-month period.

The General Court notes that the ‘Cooperation Notice’ (Commission Notice on cooperation within the Network of Competition Authorities), which outlines procedures for case referrals, merely prescribes that problems with a case referral are ‘usually’ resolved within two months. According to the Court, however, it is clear that this wording does not provide ‘precise certainty’ that these two months cannot be exceeded. Moreover, the principle of subsidiarity, which allows the Commission to act only when EU Member States cannot do so sufficiently themselves, had not been violated. The Court emphasises that the Commission acted at the express request of the Bka. This therefore does not infringe the rights of the Member States, the Court said.

back to top

General Court confirms € 31.7 million fine HSBC for participating in euro interest rate derivatives cartel

General Court of the European Union, judgment of 27 November 2024

On 27 November 2024, the General Court upheld the € 31.7 million fine imposed by the Commission on HSBC for its participation in a cartel in the euro interest rate derivatives sector, together with Crédit Agricole and JPMorgan Chase. This ruling follows an earlier fine decision by the Commission of 7 December 2016 where HSBC had been fined € 33.6 million for participating in the cartel. However, the General Court annulled that fine in September 2019 due to insufficient reasoning by the Commission.

Following the annulment, both HSBC and the Commission lodged an appeal. However, the Commission adopted a new fining decision in June 2021 to remedy the situation following the annulment of the previous decision. In this new decision, the amount of the fine was adjusted to € 31.7 million. The Commission subsequently withdrew its appeal against the 2019 General Court judgment. On 12 January 2023, the CJEU rejected HSBC’s appeal against the original decision, but upheld the General Court’s judgment insofar as it concerned the annulment of the € 33 million fine. The new 2021 fining decision provided precisely for that annulment to be remedied.

The General Court’s November 2024 judgment refers to the last decision of June 2021. The General Court again rejected HSBC’s grounds of appeal against this decision. HSBC argued that the Commission had not imposed the (new) 2021 fine in time. However, the General Court held that the appeal to the CJEU lodged by the Commission had suspensory effect. The fact that the Commission took a new decision to comply with the 2019 General Court judgment does not mean that the Commission’s interest in its appeal lapsed. The fact that the Commission subsequently withdrew its appeal does not alter this, according to the General Court.

back to top

Final annulment of Intel fine for abusive exclusivity rebates

Court of Justice of the European Union, judgment of 24 October 2024

On 24 October, the CJEU rejected the Commission’s appeal against the annulment of the € 1.06 billion fine it imposed on Intel. This puts a definitive end to the so-called Intel saga as regards the imposition of exclusivity discounts, after more than 20 years.

In the original 2009 fining decision, the Commission found that Intel abused its dominant position in the global market for microprocessors with an x86-architecture. Intel was accused of (i) offering exclusivity discounts to major computer manufacturers including Dell, HP, Lenovo, Acer, and IBM, and (ii) making payments to HP, Acer and Lenovo to delay or cancel the launch of products with processors manufactured by Intel’s competitor Advanced Micro Devices (“AMD”) (so-called ‘naked restrictions’).

The General Court upheld the fining decision in 2014. However, in 2017, the CJEU annulled the fine and referred the case back to the General Court. The General Court confirmed the annulment, against which the Commission appealed. Afterward, the Commission imposed a new fine of € 376 million in September 2023 for the ‘naked restrictions’ (see also CF Q3 2023). With this ruling, the CJEU now definitively rules that the Commission did not sufficiently prove that the exclusivity rebates applied by Intel could have anti-competitive effects and foreclosed competitor AMD.

The CJEU stresses several times in its judgment that it is for the Commission to prove that the exclusivity discounts could at least have had exclusionary effects, having regard to all the relevant factual circumstances. In doing so, the General Court is not required, despite any errors made by the Commission, to actively examine whether, on the basis of another reasoning, an infringement could possibly still be established when such reasoning as such is not part of the decision. All of the Commission’s grounds of appeal relating to the application of the ‘as efficient competitor’ test, standards of proof and infringement of defence rights are dismissed. Thereby, the fine imposed for applying exclusivity discounts is definitively off the table.

back to top

€ 800 million fine Meta for tying Facebook Marketplace and unfair trading conditions

European Commission, press release dated 14 November 2024

The Commission has imposed a fine of € 797 million on Meta, the parent company of Facebook, for tying Facebook Marketplace to the online social networking service Facebook, and for unilaterally imposing unfair trading conditions on other online advertising service providers that advertise on Meta’s platforms. In doing so, Meta abused its dominant position (Article 102 TFEU) in the European market for social networking services and national markets for online advertising on social networking services, according to the Commission.

By tying its online advertising service Facebook Marketplace to Facebook, all Facebook users automatically have access to and interact with Facebook Marketplace, regardless of whether they want to. The Commission concludes that this may exclude competitors of Facebook Marketplace from the market, as the tying gives Facebook Marketplace a significant distribution advantage. The Commission also concludes that Meta has unilaterally imposed unfair trading conditions on other online advertising service providers that advertise on Meta’s platforms, particularly in relation to Facebook and Instagram. This allows Meta to use data generated by other advertisers exclusively for the benefit of Facebook Marketplace.

back to top

‘Place order’ button insufficiently clear about consumer payment obligation

Supreme Court of the Netherlands, judgments of 4 October 2024

In October 2024, the Dutch Supreme Court (Hoge Raad, “HR”) issued two significant rulings on the legal consequences of unclear texts on order buttons in online transactions. Consumer protection law requires the text on an order button to make clear that the consumer is entering into an obligation to pay (see Article 6:230v (3) of the Civil Code).

In the first case, a consumer had ordered a number of items on the Dutch webshop bol.com. The district court sought clarification from the HR regarding whether the button text ‘place order’ met the legal requirements regarding an order button. In light of the wording of the provision and the legislative history, the HR held that a distinction must be made between the act of ‘placing an order’ on the one hand and ‘entering into an obligation to pay’ on the other. Texts such as ‘place order’ or ‘order’ do not make it sufficiently clear that a consumer enters into an obligation to pay when clicking the button. As a result, the HR ruled that if the text on the order button is inadequate, the consumer can annul the contract. As the consumer had not appeared before the court in the case at hand, the district court had to partially annul the contract, meaning that the consumer gets to keep the product but does not have to pay the full price.

The second case involved a consumer who had registered online for a course by clicking on a button with the text ‘register now’. According to the court, the text did not meet the legal requirements regarding the order button (Article 6:230v (3) of the Civil Code). Here, another question was submitted to the HR: despite the fact that the contract must be annulled on the grounds of violation of the order button provision and the transaction must be reversed, can a trader claim compensation for services rendered? The HR ruled that in cases of delivered performance, such as education, the trader can claim reasonable compensation for the value of the delivered performance if the contract is annulled.

back to top

Enforcement Revised Payment Services Directive

Authority for Consumers & Markets, press release dated 11 October 2024

On 11 October 2024, the ACM took action against Rabobank for failing to comply with the Payment Service Directive II (“PSD2”, or the Revised Payment Services Directive). This legislation, which came into force in the Netherlands on 19 February 2019, was designed to enable payment institutions to access bank infrastructure, allowing them to offer payment services to both consumers and businesses. Specifically, under the PSD2, payment institutions are entitled to open business payment account and payment service providers are entitled to access payment systems. The ACM, as the designated supervisory authority, is responsible for enforcing the directive.

In 2022, the ACM requested that the legislature address a gap in the law, as it found that it could not effectively supervise Dutch banks that refused to offer payment accounts to payment institutions from other EU Member States. Since then, the ACM has enforced (publicly) only once against a bank that did not comply with the directive. Following the ACM’s intervention, Rabobank pledged not to impose barriers in the future when payment institutions want to open a bank account with Rabobank. Rabobank put such access applications ‘on hold’ or imposed unnecessary financial requirements (such as high turnover thresholds).

Although enforcement of the PSD2 has been limited in recent years, competition authorities have put the enforcement of a level playing field high on their agendas. For instance, the ACM championed a level playing field between Big Tech and other market participants and stressed the importance of access to NFC technology for the development of payment apps. Since March 2024, the DMA requires gatekeepers to give third parties access to hardware and software features, including NFC technology on mobile devices. Moreover, it enforced commitments from Apple in this area last summer.

back to top

ZuivelNL pledges to provide more insight into spending on contributions dairy farmers

Authority for Consumers & Markets, decision of 17 October 2024

On 17 October 2024, the ACM declared binding commitments made by ZuivelNL – the chain organisation of the dairy sector in the Netherlands – on the spending of contributions paid to it by dairy farmers. ZuivelNL collects contributions to carry out, among other things, research, animal welfare and sustainability, food safety, education, export and market information. Dairy farmers do not pay this contribution directly to ZuivelNL; instead, they pay a contribution to the milk processors, such as FrieslandCampina or Royal Lactalis Leerdammer, who purchase their milk. The milk processors then pay contribution to ZuivelNL. On 5 July 2022, the ACM received an enforcement request from a supplier association of dairy farmers, accusing ZuivelNL of using the received contribution for activities not related to the sale of milk. This allegedly violated the Unfair Trade Practices in Agriculture and Food Supply Chain Act (“Wet OHP”). Indeed, Article 2(1)(d) of that act prohibits a buyer from requiring the supplier to make payments unrelated to the sale of the supplier’s agricultural and food products.

The concern among dairy farmers was that they lacked transparency regarding how their contributions were being spent, leading to confusion about whether the funds were being used for activities tied to milk sales. To address this, ZuivelNL committed to making the link between the contributions and milk sales-related activities more visible in its budgets and annual accounts. The organisation also pledged to publicly disclose this information and have its annual accounts audited by an independent accountant. Furthermore, ZuivelNL agreed to review and adjust the contribution levels every three years. The ACM considered these commitments to be effective in ensuring that dairy farmers are only required to pay dues that are relevant to the milk supply chain. As a result, the ACM declared the commitments binding.

The Wet OHP, which came into force on 1 November 2021, aims to strengthen the bargaining power of farmers, growers and fishermen against larger and concentrated market players. Research by the ACM shows that many buyers and suppliers are not yet fully aware of the new law. This lack of awareness is a significant issue, as many parties are not yet reporting violations.

back to top

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 – Joost van Belois

Introduction

In our blog of 26 May 2023, we discussed some developments in the field of railway law. The focus was in particular on the then upcoming concession for the Dutch Main Railway network (in Dutch: Hoofdrailnet, “HRN concession”) in light of the 4^th European Railway Package. The HRN concession for the period 2025 to 2033 has now been directly awarded to the Dutch Railways (in Dutch: Nederlandse Spoorwegen, “NS”) on 21 December 2023. In this blog, we will discuss the background and relevant legal framework of the unconditional direct award of the HRN concession. In doing so, we will also examine the European Commission’s (“Commission”) objections to the procedure by which the concession was awarded. Finally, we highlight several other recent developments regarding Dutch and European railway regulation.

4^th Railway Package and the HRN concession

Central to assessing the legality of the HRN concession, and the award to NS, is the 4^th Railway Package. This package consists of European law aimed at liberalising European passenger railway transport and is divided into two pillars. The technical pillar deals with the safety and interoperability of the European railway system. The market pillar deals with opening up the railway market. This pillar includes the SERA Directive (Single European Railway Area) and the PSO Regulation (Public Service Obligation), most of this legislation is implemented in the Netherlands in the Passenger Transport Act 2000 (Wp2000) and the Railway Act.

Prior to the entry into force of the 4^th Railway Package, the Dutch railway network was divided into two tiers: one central and multiple (smaller) decentralised concessions. The HRN concession is the primary concession. All rail lines and services not covered by the central HRN concession are granted as decentralised concessions to (alternative) transport operators. Currently, several railway companies operate on decentralised concessions including Arriva, Connexxion, Syntus/Keolis, Qbuzz, Abellio and Eurobahn. Apart from small overlaps between the concessions, the concessionaires have an exclusive right over the relevant rail lines and services. Whereas decentralised concessions are publicly tendered, thus allowing for competition between railway companies, the HRN concession has, to date, always been awarded directly and privately to NS.

Figure 1: railway companies & concessions on the Dutch railway network

The 4^th Railway Package brought change to this system. In principle, the entire railway network should be served by normal market conditions on the basis of open access. Infrastructure managers (ProRail in the Netherlands) must grant all railway companies access to their railway networks (Article 13 SERA Directive). This ensures maximum competition between railway operators. Nonetheless, the 4^th Railway Package foresees that not all railway services benefit from unbridled competition. This is particularly the case where certain services are unprofitable and, therefore, provide an insufficient impetus for railway companies to operate those services. To ensure that these services, although perhaps commercially uninteresting for the operator but important for passengers, are also provided for, a Member State can designate them as a public service obligation.

Article 2(e) of the PSO Regulation explains that a ‘public service obligation’ is an obligation imposed on an operator by the relevant competent authority to provide railway services that it would not provide under normal circumstances (i.e. without compensation). A public service obligation can be granted under Article 1 Wp2000 and Article 3 PSO Regulation as an exclusive right, for example in the form of a concession. However, to promote competition even in the case of public service obligations, Article 5(6) PSO Regulation stipulates that their direct award was only possible before 24 December 2023. Public service contracts must in principle be awarded through a public tender procedure after 24 December 2024. Only under strict conditions is the direct award of a concession still allowed after that date (see articles 8 paragraph 2 sub iii and 5 paragraph 4a PSO Regulation). The HRN concession for the period 2025-2033 was awarded directly to NS on 21 December 2023 (on the basis of Article 19a and 19b Wp2000).

Infringement procedure European Commission

On 14 July 2023, the Commission sent a letter of formal notice to the Dutch government explaining that it considers the proposed HRN concession to be unlawful. The Ministry of Infrastructure and Water Management (“Ministry”) had previously received a formal warning from the Commission in relation to the HRN concession. This second letter constituted the initiation of an infringement procedure. The opening of the infringement proceedings by the Commission did not go unnoticed in Dutch politics and led to several questions from the House of Representatives. In response, the Ministry reiterated several times, such as in a letter to the House of Representatives, that it was sticking to its plan to directly award the concession to NS. Following the direct award of the HRN concession to NS on 21 December 2023, the Commission sent a supplementary letter of formal notice to the Dutch government on 13 March 2024.

In its letters of formal notice, the Commission identifies two concerns based on which it opposes the direct award. First, the Commission criticises the fact that the Ministry has already awarded the HRN concession 2025-2033 a year before its commencement, on 21 December 2023. The reason for this was that directly awarding the HRN concession would no longer be possible after 24 December 2023 without justification under strict conditions. However, the Commission sees no objective justification for this long period of time between the date of award and the date of commencement of the concession, and even considers it a circumvention of the obligation to initiate a public tender procedure.

The Commission’s second objection concerns the scope of the HRN concession. The Commission questions whether (parts of) the HRN concession actually qualify as a public service obligation. As explained above, the award of a public service contract requires the existence of a public service obligation within the meaning of Article 2(e) PSO Regulation, and must thus be limited to services that are not commercially beneficial to the concessionaire. According to the Commission, the Ministry should have conducted a market analysis to test whether parts of the HRN concession could be operated under normal commercial conditions and on the basis of open access. The fact that NS pays a tariff for the concession suggests, according to the Commission, that parts of it could be fulfilled under regular market conditions.

Interestingly, in doing so, the Commission seems to break with the ruling of the Trade and Industry Appeals Tribunal (“CBb”) of 9 February 2017. In that case, the CBb ruled that the HRN concession 2015-2025 as a whole constituted a public service obligation. The fact that part of that concession, specifically the HSL-South (high-speed rail line), could be profitable did not alter that. In the CBb’s view, Article 2(e) of the PSO Regulation does not prevent a concession from being “a mix of profitable and loss-making lines”. By contrast, in the Commission’s view, the Ministry is required to examine whether parts of that “mix” could be operated as an open access service.

For the time being, it is unknown how the Ministry responded to the second letter of formal notice, for which the deadline to respond has now expired, and if so, whether this was enough for the Commission to refrain from further pursuing the infringement procedure. If the Commission is not satisfied with the response, it may choose to send a reasoned opinion. If the Dutch government then fails to comply with the Commission’s requirements within a specified period, the Commission may refer the case to the Court of Justice of the European Union (“CJEU”). Several scenarios are conceivable should the CJEU rule in favour of the Commission. In the most drastic scenario, the HRN concession will have to be awarded through a public tender procedure after all. It is also possible that the Dutch government will have to decentralise parts of the current concession. In both cases, alternative railway operators will have the opportunity to compete for services currently provided by NS.

Scope of the HRN concession and open access services

In addition to the Commission’s objections, the scope of the HRN concession also came under scrutiny at the national level. The scope of the HRN concession is of particular importance in the context of the old Dutch system of concessions for railway operators wishing to offer train services on the Dutch railway network alongside NS. Against that background, at the time of our previous blog, it was not yet established whether the Groningen-Zwolle and Leeuwarden-Zwolle sprinter routes would become part of the 2025-2033 HRN concession. Besides NS, Arriva was also interested in running train services on those routes. In the end, the Ministry chose not to decentralise these services. State Secretary Heijnen considered that these routes are of great importance to regional travellers and that they should be protected against austerity or discontinuation of train services by commercial parties as a result of disappointing revenues. Although these routes will continue to fall under the HRN concession for the time being, the Ministry may decide halfway through the course of the HRN concession, during the mid-term review, to still decentralise these services.

The 4^th Railway Package allows for a railway operator to offer train services even without a concession, and even if a concession has already been granted to another undertaking for the same route. It follows from Article 11(2) SERA Directive that the right to open access may only be limited if new (open access) services threaten the economic equilibrium of a concession. In the Netherlands, this threat primarily concerns the HRN concession, but also all decentralised concessions. Upon notification of a new service based on open access, the grantor (the Ministry), the concessionaire (NS) or the infrastructure manager (ProRail) may ask the ACM to carry out an objective analysis to examine whether the economic equilibrium of the relevant public service contract is disrupted (Article 10 Implementing Regulation 2018/1795).

In 2023 and 2024, a relatively large number of transport operators indicated their intention to use the Dutch railway network on an open access basis, especially for long-distance services within the Netherlands and internationally. For instance, Arriva has notified 26 new domestic train services and an international service between Groningen and Paris. Qbuzz has also notified new (international) train services, for example between Amsterdam and Berlin. In addition to these transport operators already operating in the Netherlands, Flixtrain has notified a new service between Rotterdam and Oberhausen, and new entrants Heuro and Flywise plan to offer international train services.

In response to each of these notifications, the Ministry and NS requested the ACM to conduct an economic equilibrium test (“EET”). The ACM declared those requests inadmissible in all cases. The ACM’s position is that it can only conduct an EET in respect of an existing public service contract (section 19a(2) Wp200), while the HRN concession 2025-2033 had not yet been granted at the time of the notifications. As an exception to that rule, the ACM can conduct an EET when a competitive tender procedure is initiated (Article 5(2) Implementing Regulation 2018/1795). However, as no competitive tender procedure has been carried out for the award of the upcoming HRN concession, this exception is not applicable. Without an EET, the ACM cannot prohibit the train services of alternative operators.

Competition in the European railway market

The 4^th Railway Package is (also) stimulating increased competition on railway networks throughout the rest of Europe. Thanks to liberalisation of the European railway network, previously nationalised, incumbent railway operators are facing increasing competition from alternative operators on an open access basis.

Most developments are taking place in the area of European high-speed routes. The increase in competition among high-speed train service providers is partly driven by a growing desire among consumers to travel more environmentally conscious. Train travel is more likely to be seen as an alternative to low-cost flights than it was 20 years ago. In response, national railway operators Renfe (Spain), Trenitalia (Italy) and SNCF (France) are expanding their open-access high-speed services to neighbouring countries. In addition, several new high-speed service providers have become operational on the basis of open access, such as Nuovo Trasporto Viaggiatori in Italy and Iryo in Spain. To date, Eurostar has had a monopoly on the high-speed route connecting the UK to continental Europe via the Channel Tunnel, but this may change in the future. Several established railway operators as well as start-ups Evolyn and Dutch firm Heuro have announced plans to offer services between London, Amsterdam and Paris.

In contrast to the trend of international expansion by French, Spanish and Italian national railway operators, NS and Deutsche Bahn (“DB”) have in fact divested their foreign operations in recent years. DB received Commission approval for the sale of Arriva to I Squared Capital on 5 January 2024. In the Netherlands, the Ministry of Finance publicly announced on 23 April 2024 that NS will sell its subsidiary Abellio Germany to BeNEX. The primary consideration is that Abellio Germany plays no role in cross-border railway transport or international services between the Netherlands and Germany. For this reason, the subsidiary provides insufficient added value for Dutch travellers. Combined with the fact that Abellio Germany is loss-making, the Ministry of Finance, in its capacity as shareholder, approved the sale.

Are your business operations affected by developments regarding the HRN concession? Are you coming into contact with the ACM in a regulatory matter or dispute? Or are you curious about the impact of new regulations? If so, contact one of our specialists.

Bas Braeken – Jade Versteeg – Joost van Belois

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).

Would you like to receive Competition Flashback by email in the future? You can subscribe to our mailing list here.

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

• Supreme Court overrules Amsterdam Court of Appeal and Minister I&W; flight reduction at Schiphol should first go past Brussels

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

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.

back to top

Greater legal certainty in M&A transactions: Court of Justice strikes down Article 22 referrals in Illumina v Grail

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

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

Overview Q2 2021

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

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

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

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

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

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

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

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

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

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

Court of Justice, judgment of 3 June 2021

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

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

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

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

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

CBb, judgment of 1 June 2021

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

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

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

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

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

Rotterdam District Court, judgment of 26 May 2021

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

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

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

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

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

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

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

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

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

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

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

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

ACM, announcement of 17 May 2021

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

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

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

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

Amsterdam District Court, judgment of 12 May 2021

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

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

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

Commission takes on Apple after Spotify complaint – national authorities follow

European Commission, press release of 30 April 2021

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

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

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

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

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

The rise of Tech Giants such as Google, Amazon, Facebook, Apple and Microsoft (“Big Tech”) and their integration into people’s lives has been interesting on many levels. Particularly in the context of fair and contestable digital markets, it raises many questions. The most pressing of these is whether ex-post enforcement of EU competition law is effective enough to keep up with rapidly evolving (digital) markets and Big Tech companies.

To expand its enforcement toolkit, the European Commission (“Commission”) published a proposal for a Digital Markets Act (“DMA”) in December 2020. Its overall objective is to complement antitrust intervention in digital markets with ex-ante regulation in the form of a set of obligations that platforms identified as “gatekeepers” should abide by.

This blog covers recent developments in the fight against Big Tech, followed by a more detailed analysis of the DMA and its implications for gatekeepers.

Ex-post enforcement of Big Tech companies

The fight against anti-competitive behaviour by Big Tech companies has kept both the Commission and national competition authorities (“NCAs”) quite busy over the last years.

Although the Commission was initially relatively passive towards Big Tech, its Google Android decision from 2018 seems to have been an important starting point for (EU) competition law enforcement towards Big Tech. In this case, the Commission concluded that Google had abused its dominant position by tying the Google Search app to the Android appstore. Not only did the Commission impose a massive fine on Google of €4.3 billion (the highest fine ever imposed), it also established guidelines for assessing dominance in the mobile ecosystem.

Margrethe Verstager, European Commissioner for Competition, indicated that it became her mission to counter the rise of increasingly powerful digital platforms. Subsequently, it did not take long for the Commission to launch two formal investigations into Amazon.

The first investigation concerned Amazon’s use of marketplace seller data. In the Commission’s assessment, by using such non-public data, Amazon is able to avoid the normal risks of retail competition and to leverage its dominance on the market. The second antitrust probe assesses Amazon’s practices regarding its “Buy Box” and “Prime” label, which enables it to favour its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services over the ones of third-party sellers. When digital platform providers play a dual role – in which they act both as platform provider for business users and as retailer in competition with business users – they are incentivised to engage in self-preferencing.

In June 2020, after Spotify filed a complaint, the Commission launched a formal antitrust investigation into Apple’s rules for app developers on the distribution of apps via the App Store. On 30 April 2021, the Commission published its preliminary finding that Apple was indeed abusing its dominant position by requiring app developers to use Apple’s own in-app purchase system.

The Commission also launched a parallel investigation into Apple Pay, Apple’s mobile payment app. The Commission has expressed concerns that Apple’s terms related to the integration of Apple Pay for purchases of goods and services may distort competition and reduce choice and innovation, because no other payment solution than Apple Pay can access the payment chip technology embedded on iOS mobile devices for payments.

Lastly, Epic Games, the creator of the global hit game Fortnite, has officially filed a complaint with the Commission earlier this year. Epic Games accuses Apple of foreclosing the market for app distribution as well as the market for iOS in-app payment processing, allowing Apple to charge a higher commission. Previously, Epic Games has initiated proceedings against Apple in the US, Australia and the UK.

Also on the national level digital platforms have been subject to numerous competition law investigations. The Bundeskartellamt (“BKartA”) has been very active in this regard. In 2015, for instance, the BKartA issued a decision in which it prohibited Booking.com from continuing to apply its ‘best price’ clauses (for further information on APPAs and MFNs and the BKartA’s decision see our previous blog “On APPAs, MFNs and a tenacious German competition authority”).

Another significant case brought forward by the BKartA, regarding Facebook, dates back to 2019. In this decision, the German competition authority concluded that Facebook abused its dominant position in the social networking market by excessively collecting and combining user data without the consent of its users.

In April 2021, the BKartA has received an antitrust complaint about Apple from nine associations representing German media, Internet and advertising industries. They claim that the iPhone maker is abusing its dominant position with its recently introduced App Tracking Transparency program. This feature on iOS requires apps to ask users for permission to collect their data. However, the complainants submit that Apple itself can still collect significant amounts of user data.

In addition, the Netherlands Authority for Consumers & Markets (“ACM”) has conducted an in-depth market study into the mobile app store market and its implications for competition. This study shows that the lack of realistic alternatives to Apple’s App Store and Google’s Play Store puts them in a position – at least in theory – to set unfair conditions. The ACM is now investigating specifically whether Apple is abusing its dominant position through its App Store by imposing certain conditions on app providers that do not compete with Apple’s apps.

Need for ex-ante intervention?

Competition authorities in the EU thus appear to be willing to act against distortions of competition caused by Big Tech. However, given the (legal and factual) complexity and length of investigations, it often takes a long time before a sanction can be imposed. By then, the (perceived) damage has often already been done. The question therefore arises whether these measures can restore competition in a timely and effective manner. In light of ‘prevention is better than curing’, the DMA was proposed in December 2020. With this Act, the Commission aims to prevent the manifestation of anti-competitive effects in the digital market.

Definition of “Gatekeepers”

The DMA is focused at gatekeeper platforms. A gatekeeper is a provider of a core platform service with a significant impact on the internal market, including, among others, online intermediation services (e.g. app stores, Amazon), online search services (e.g. Google), online social networking services (e.g. Facebook), video-sharing platform services (e.g. TikTok), number-independent interpersonal communication services (e.g. WhatsApp), operating systems (iOS, Android, Microsoft).

The DMA only applies to gatekeepers that meet the following thresholds:

• An annual EEA turnover equal or above €6.5 billion in the last three financial years or an average market capitalisation that amounted to at least €65 billion in the last financial year.
• To serve as an important gateway for business users to reach their respective end users the core platform service must have more than 45 million monthly active end users in the EU and more than 10 000 yearly active business users in the EU over the course of the last financial year.

A platform has to notify the Commission if it meets these thresholds and therefore potentially constitutes a gatekeeper (duty to notify). The Commission reserves the right to proactively designate a core platform provider as a gatekeeper when they meet the thresholds, even – or especially – in cases where it did not receive a formal notification.

Obligations for gatekeepers

Once a core platform provider qualifies as a gatekeeper (whether or not designated as such by the Commission), it has to comply with certain obligations as set out in Articles 5 and 6 of the DMA. Some of these obligations relate to (similar) conduct that has given rise to many Big Tech competition cases in recent years. The DMA also includes a provision that creates the power for the Commission to update the list of obligations as a result of market investigations (Article 10 DMA). This makes the DMA flexible in its application and suitable to account for the highly dynamic and innovation driven markets.

Some of the proposed obligations concern:

• Third-party personal data: Gatekeepers must refrain from combining personal data sourced from their own services with personal data from other services offered by the gatekeeper or third-party services without the consent of the user pursuant to the GDPR (Art. 5(a) DMA). The Bundeskartellamt reached the same conclusion in 2019 in its case against Facebook.
• MFN/parity clauses: Gatekeepers must allow business users to offer the same products or services to end users through third-party online platforms under different terms and conditions than those of the gatekeeper’s platform (Section 5(b) DMA). The cases of Amazon e-books and Booking.com involved this type of conduct.
• Anti-steering prohibition: Gatekeepers must allow business users to promote their products in apps purchased through the platform’s core service, such as Apple’s App Store (Article 5(c) DMA). Business users will thus be able to conclude contracts with their end-users outside the core platform. This will, for example, allow Epic Games to offer and sell their in-app products through their own channel, rather than exclusively through Apple’s in-app purchase system.
• Opening of the operating systems to third-parties: Gatekeepers must allow third-party apps and app stores within the operating system of the device (i.e. iOS and Android). Such practices also lie at the heart of the Commission’s Apple App Store case. This obligation will have far-reaching implication for Apple’s App Store and Google’s Play Store. At the same time, the DMA acknowledges that the gatekeepers can take proportionate measures to ensure that third-party software applications do not endanger the integrity of the operating system provided by the gatekeeper.
• Bundling prohibition: Gatekeepers are no longer allowed to bundle several of their core platform services, such as Google did with the pre-installation of Google Chrome on Android devices (Art. 5(f) DMA).
• Non-public data: Gatekeepers have to refrain from using, in competition with business users, any data not publicly available, which is generated through activities by those business users (Art. 6(a) DMA). Such practices are currently under investigation with regard to the Amazon Marketplace.
• Self-preferencing: Gatekeepers will have to refrain from treating their own services or products more favourably than those of third parties (Art. 6(d) DMA). The ongoing investigation of Amazon’s “’Buy Box” option is an example of this.

If gatekeepers fail to comply with these obligations, the Commission may impose fines of up to 10% of the gatekeeper’s worldwide annual turnover. It may also impose periodic penalty payments of 5% of the gatekeeper’s average daily turnover. Finally, the Commission has the power to take structural and behavioural measures when, following a market investigation, it finds that a gatekeeper is systematically violating its obligations under the DMA. An example of a structural remedy is the mandatory divestiture of (part of) a business.

Powers for national competition authorities

In principle, the enforcement of the DMA will lie with the Commission. However, the presidents of the NCAs in the EU have stated in their view that they should be given a complementary enforcement role under the DMA. They argue that their knowledge and expertise will make the DMA’s enforcement more effective and faster. Whether the NCAs will eventually be assigned a role in the enforcement of the DMA is unclear at this time.

Conclusion

Once in place, the DMA will embody the shift from ex-post enforcement to an ex-ante regulatory approach. In doing so, the Commission aims to improve competition in the Big Tech landscape. This could have a significant impact on the operations of gatekeepers within the EU.

However, the DMA is currently only a legislative proposal. Given the scope and expected impact of the DMA, it will be subject to much debate. Thus, it is still uncertain what the DMA will ultimately look like upon its enactment.

For further questions, you may contact Bas Braeken, Jade Versteeg, or Timo Hieselaar.

The (European) supervision of concentrations is in full development. Most notably, the European Commission (“Commission”) has been cracking down on violations of the Merger Regulation in recent years.

If concentrations meet certain turnover thresholds, the companies involved have a notification obligation (Article 4 Merger Regulation). The companies involved may then not implement the concentration until the competent authority has approved the concentration. This is the standstill obligation (Article 7 Merger Regulation).

There is strict enforcement of violations of the notification and standstill obligation – so-called ‘gun-jumping’. It is therefore important to know what is and what is not permitted under competition law in the case of (the preparation of) a concentration. This blog provides an overview of recent legal developments and clarifies what merging parties can do prior to the approval of a transaction to avoid gun-jumping.

Unexpected decisive control?

If a company intends to acquire decisive control of another company, the acquiring party must notify this, provided that the turnover thresholds are met. However, it is not always clear when decisive control exists. For example, in 2012, Norwegian fish farmer Marine Harvest (now Mowi) acquired 48.5% of the shares in its competitor Morpol. This was notified to the Commission with a notice that the voting rights would not be exercised by Marine Harvest until approval was granted by the Commission. Prior to the notification, Marine Harvest made a public offer for the remaining shares in Morpol. This transaction was notified to the Commission, which subsequently found that the notification and standstill obligations had been violated because Marine Harvest had already acquired de facto decisive control in the acquisition of 48.5% of the shares in Morpol. The Commission reached this conclusion by checking the usual attendance of shareholders at previous shareholder meetings. On that basis, the Commission found that Marine Harvest, with 48.5%, constituted a majority among shareholders and could therefore exercise decisive control.

Marine Harvest was subsequently fined €10 million for violating the notification obligation and another €10 million for violating the standstill obligation. Although these appear to be two sides of the same coin, they are two distinguishable obligations for which the Commission can impose separate fines. Thus, there is no violation of the ne bis in idem principle. The Court of Justice of the European Union (“CJEU”) upheld the fines, ruling that in this case it did not matter that Marine Harvest had not exercised the voting rights because de facto sole decisive control had already been acquired prior to the public offer.

Decisive control or customary protection rights?

In February 2015, the telecom company Altice notified a proposed acquisition of PT Portugal, which received conditional approval from the Commission in April 2015. However, it later turned out that Altice could already exercise decisive influence before the acquisition was approved. In fact, the acquisition agreement already gave the telecom company veto rights over the appointment of senior management, pricing policy and several important contracts.

While the acquiring company may protect the value of the (shares in the) target company, it may not exercise decisive control beyond the ordinary course of business before the concentration approval is granted. Factors that are relevant in assessing whether there is a normal course of business are (i) the degree of involvement of the acquiring party in the day-to-day operation of the business, (ii) the nature of the measures in the agreement in favour of the acquiring company, and (iii) the monetary thresholds for exercising a veto with respect to the value of the target or purchase price. When these thresholds are very low, the exercise of decisive control is more likely to occur.

In this case, Altice already exercised decisive control prior to the notification through its involvement in PT Portugal’s negotiation strategy and choice of suppliers and certain TV channels. On that basis, in April 2018 the Commission imposed a fine of €124.5 million on Altice for gun-jumping, whereof €62.25 million for violating the notification obligation of Article 4 Merger Regulation and €62.25 million for violating the standstill obligation of Article 7 Merger Regulation.

On 8 November 2016, Altice was again fined €80 million for gun-jumping, this time by the French competition authority. In 2014, Altice notified the proposed acquisition of two telecom companies, SFR and OTL, by its subsidiary Numericable. The French competition authority had launched an investigation into gun-jumping, which revealed that Altice already had access to strategic information from and could exercise decisive influence over both companies before the concentration was approved. Altice had thus already acquired decisive control prior to any approval of the concentration, thereby engaging in gun-jumping.

Inseparable step for transaction does not necessarily lead to decisive control

An example of a situation where no decisive control was acquired by the purchasing company concerned the proposed concentration of KPMG Denmark and EY. The consultancy firms entered into a merger agreement on 18 November 2013. Since the Danish branch of KMPG still had a cooperation agreement with the KPMG group, this agreement was terminated on the very same day. The Danish competition authority approved the concentration at the end of May 2014, but stated (in December 2014) that unconditionally and irrevocably terminating the cooperation agreement with the KPMG Group before the concentration was approved could be regarded as an act in breach of the standstill obligation. The CJEU disagreed, concluding that the termination of the cooperation agreement does not lead to a change in decisive control of KPMG Denmark, even if this termination is inextricably linked to the concentration and may constitute a preparatory or side transaction of this concentration. According to the CJEU, transactions that do not lead to a change in decisive control do not fall within Article 7 Merger Regulation.

Transactions consisting of multiple steps

The Commission decision on Canon‘s acquisition of Toshiba Medical Systems Corporation (“TMSC”) shows that the notification and standstill obligation also applies to so-called ‘special purpose vehicles’. Canon intended to acquire TMSC by means of a ‘warehouse construction’. A special purpose vehicle was established which acquired 95% of the shares in TMSC for €800. Canon then acquired 5% of the shares for €5.28 billion and obtained a stock option on the remaining shares. The proposed acquisition was then notified to the Commission on 12 August 2016. After the Commission’s approval, the remaining 95% of the shares were acquired. The Commission launched an investigation into this construction in July 2017. It concluded that a transaction in which an interim buyer – the special purpose vehicle – acquires decisive control until the company will be sold to the ultimate seller, can be seen as the first step of the (final) transaction. After all, the preparatory step as such contributed to Canon’s acquisition of decisive control over TMSC, so that prior to this first step, notification was already required. As this was not done, the Commission imposed a fine of €28 million on Canon.

Another type of two-stage rocket was used by the French company Veolia. Veolia, active in the water, waste treatment and energy sectors, wanted to acquire decisive control of Suez through two steps. First, it obtained 29.9% of the shares in Suez from energy company ENGIE on 6 October 2020. The second step involved making a public offer for the remaining shares in Suez. Suez believed that these two steps should be considered as one transaction and that therefore Veolia should have notified the transaction before acquiring the shares. The Commission agreed that this was one transaction and that the two steps were interdependent; the public offer would never have happened without the previous acquisition of ENGIE shares. However, the Commission argued that both steps fell within the exception Article 7(2) Merger Regulation.

Article 7(2) Merger Regulation provides an exception to this standstill obligation for two types of transactions: a public bid and a series of share transactions where decisive control is acquired from multiple selling parties. However, the concentration must then be notified directly to the Commission and the acquirer may not exercise the voting rights. The Commission considered that the exception of Article 7(2) Merger Regulation regarding the public bid was also applicable to the first step of the concentration – the acquisition of 29.9% of the shares in Suez.

The Commission’s decision is in line with the General Court’s judgment in Marine Harvest. Indeed, the General Court concluded that it is possible for the acquisition of a minority stake, not yet acquiring decisive control of the target company, followed by a public takeover bid, to form part of one concentration falling within the scope of Article 7(2) Merger Regulation.

The difference between Marine Harvest and Veolia/Suez is that in the first situation, de facto decisive control was already obtained at the first step, namely through the acquisition of 48.5% of the shares in Morpol. This was not the case with Veolia with a 29.9% stake. Therefore, the standstill obligation is only violated if the first step already leads to an acquisition of decisive control. Although Suez has filed an appeal against the Commission’s decision, it does not appear to be going forward now that Veolia and Suez have reached a merger agreement on 12 April.

Lessons for the future

The aforementioned case law shows that the following points are important in the preparation of mergers:

• De facto acquisition of decisive control also triggers a notification and standstill obligation.
• This also applies to special purpose vehicles that acquire (temporary) decisive control.
• Always notify preparatory steps to a concentration if they as such contribute to the change of decisive control.
• Do not exercise decisive control prior to the approval of a concentration, insofar it is not necessary to protect the value of the target company.
• Decisive control may not relate to the day-to-day operations.
• In the case of a pre-closing veto right, the monetary threshold for exercising it must not be too low with respect to the transaction values.

Clean Teams

In addition to the notification and standstill obligation for concentrations, the cartel prohibition also still applies in full. In particular, the exchange of competitively sensitive information plays a role in the preparation of mergers. In that context, it is advisable under certain circumstances to set up Clean Teams in order to limit the risk of violating the cartel prohibition. Clean Teams are particularly advisable in transactions between two competitors.

• The exchange of information should not lead to the situation where the commercial market behaviour of parties could be influenced.
• Assemble the Clean Team, if possible, from a closed group of individuals who are not (as of that moment) involved (anymore) in the day-to-day operations of the parties.
  • For example, independent consultants or specially appointed employees.
• Treat information within the Clean Team as strictly confidential.
  • Establish (internal) protocols regarding what information is accessible and to whom.
• Seek legal advice when in doubt.
• Have individuals on the Clean Team sign a confidentiality agreement and monitor its compliance.

Finally, it is worth noting that the Commission has introduced a new policy expanding its supervisory role with respect to concentrations. In this regard, please read our blog on Article 22 Merger Regulation.

For all your questions regarding merger control, bureau Brandeis is happy to help. You can reach us through the links below.

Bas Braeken, Jade Versteeg and Timo Hieselaar

What to do when a dominant competitor takes over a promising start-up

Until recently, competitors and customers were left empty-handed in the case of a so-called ‘killer acquisition’. These are takeovers where a large, established company takes over a smaller, innovative and start-up competitor with the aim or effect of stifling innovation and/or eliminating potential competition. The reason for this was that many of these acquisitions do not have to be notified to a competition authority because the turnover thresholds are not met. Killer acquisitions could therefore not be assessed by the national competition authority or the European Commission. This has now changed.

On 26 March 2021, the Commission published new guidance on the application of the referral mechanism of Article 22 of the European Merger Regulation (“EU Regulation”). In addition to concentrations which are subject to notification to the national authorities, Article 22 of the EU Regulation also allows concentrations which are not subject to notification to be referred to the Commission for assessment.

The Commission is particularly interested in referrals of concentrations where the turnover of the parties does not accurately reflect their current or future potential. In practice, this will especially concern mergers involving new competitors and innovative companies. This will occur, inter alia, in digital, pharmaceutical, biotechnology and certain industrial sectors. The new policy is expected to have less impact on acquisitions in more traditional markets.

Background

On 26 March 2021, the Commission announced a major reform of the EU regulation. One of these major changes is a new policy on the application of Article 22 of the EU Regulation.

Old and new policy Article 22 EU Regulation

Article 22 of the EU Regulation allows one or more national competition authorities to refer a concentration to the Commission for examination when it may significantly affect competition in the internal market. The article dates back to 1989 when many Member States did not yet have a national merger control regime and therefore still had the possibility to have potentially anti-competitive concentrations examined by the Commission. Article 22 is also called the ‘Dutch clause‘ because it was introduced at the request of the Netherlands, which did not have merger control at that time. The article explicitly refers to concentrations that do not require notification. However, after almost all Member States had introduced a merger control regime, the importance of Article 22 significantly declined. It was even the Commission’s policy to discourage referrals of non-notifiable concentrations on the grounds that the concentrations would generally not significantly affect competition in the internal market.

The Commission’s new policy constitutes a major shift in the application of Article 22 of the EU regulation. The Commission now encourages Member States to refer certain concentrations to the Commission, even in cases where the referring Member State does not have jurisdiction to assess the concentration under the turnover thresholds. The Commission is free to decide whether to accept a referral request.

The new policy did not just come out of thin air. There had been a desire for some time by competition authorities to be able to assess killer acquisitions. The discussion was sparked in 2014 by Facebook’s acquisition of Whatsapp. The acquisition was not subject to notification in many member states because of Whatsapp’s low turnover. However, the acquisition was ultimately assessed by the European Commission because the acquisition was notifiable in three member states and was therefore qualified for a referral under Article 4(5) of the EU Regulation. The Commission approved the merger. This case was one of the reasons for Germany and Austria to adopt new laws introducing an additional notification threshold based on the value of the transaction. The Dutch Consumer and Market Authority (“ACM”), the Luxembourg Conseil de la Conucurrence and the Belgian Competition Authority (“BMA”) wrote a Benelux memorandum on the supervision of competition in the digital sector. This memorandum argued for a change in the notification thresholds, for example by introducing an additional threshold based on market power and/or the value of the transaction.

Test case: Illumina-Grail

Shortly after the Commission’s communication on the reforms of the EU merger control regime, it became known that the acquisition of Grail by Illumina was a test case for the application of the Commission’s new policy. For the first time since 1999, an Article 22 request was made without any of the expanding Member States having jurisdiction to assess the merger.

Illumina is one of the largest players in the world in the field of gene sequencing. Grail is a young company developing a blood test to detect about 50 types of cancer at an early stage by DNA sequencing. The company has no turnover in the EU, which means that, in principle, the concentration does not need to be notified to the Commission or the national authorities of the EU Member States. However, the acquisition had to be notified to the US Federal Trade Commission and is under attack there.

In February, the Commission expressed concerns about the potentially anti-competitive effects of the proposed merger in the field of cancer tests and encouraged national competition authorities to file a referral request in line with the new policy. The French Autorité de la concurrence has responded to the call and the ACM, BMA, and Greece Competition Commission supported the request. The acquisition was not subject to notification in any of those Member States. The Commission has accepted the request and will assess the proposed acquisition.

The referral request has caused quite a stir. Illumina brought lawsuits against the request in the Netherlands and France, but lost both cases. The case will undoubtedly be contested before the Court of Justice of the European Union. The new policy leads to much legal uncertainty in mergers and acquisitions in which a dominant competitor takes over a promising start-up. It is therefore important to take this into account during the (contract)negotiations of the acquisition. For example, when drafting the suspensive conditions in the contract, one should take into account the possibility of a referral to the Commission, even if the competition authorities in the Member States concerned do not have the power to assess the concentration themselves. On the other hand, the new policy also provides more opportunities for third-party stakeholders, such as competitors and purchasers, to complain.

What to do in case of a killer acquisition

Is a dominant competitor or supplier of yours taking over a promising start-up? Then take the following actions.

1. Consider whether the turnover of the start-up gives an accurate view of its current or future potential. It may be that a start-up has little or no turnover yet, but is of great importance to the competition in the market or will become so in the near future. This can, among others, occur in the following situations:
   • the target is an important innovator or conducts potentially important research
   • the target is an important (potential) competitor
   • the target has access to important assets (such as raw materials, infrastructure, data or intellectual property rights)

2. Contact as soon as possible the ACM and/or other Member States where the dominant competitor is active. The competition authority has a period of 15 working days to refer a concentration to the European Commission after the transaction has been ‘made known to the Member State concerned’. The period only begins to run when sufficient information is provided tot he Member State to make a preliminary assessment as to whether the criteria of Article 22 of the EU Regulation are met. Member States seem to have a fairly wide discretion in determining when the deadline starts running.

3. Explain why the concentration affects trade between Member States. This is, for instance, the case if the dominant competitor is active in several Member States and/or (potential) customers are located in different Member States.

4. Explain also why there is a real risk that the concentration will significantly impede competition within the territory of the Member State(s) concerned. A real risk exists where, as a result of the acquisition:
   • an important (potential) competitor is eliminated;
   • there is a merger between two important innovative companies;
   • competitors have fewer incentives or opportunities to compete because, among other things, market entry or expansion becomes difficult or even impossible;
   • there is an incentive or possibility for a strong market position in one market to be leveraged into another market through tying, bundling or other exclusionary practices.

5. Contact the Commission. The Commission may encourage Member States to refer the acquisition.

Bas Braeken, Lara Elzas and Jade Versteeg

In almost every supply chain, agreements are concluded between suppliers and buyers to make the cooperation more efficient. Although vertical agreements are in many cases exempted by the Vertical Block Exemption Regulation (“VBER”) from the cartel prohibition under Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 6 of the Dutch Competition Act (“Mw”), not every restriction is permitted. After all, the VBER does not apply to a number of hardcore restrictions of competition, or where market shares exceed 30%. The distinction between permitted and prohibited restrictions is not always clear to companies. This is evident, for example, from a survey conducted by the Benelux Secretariat in which at least 89% of the companies questioned indicated that they had been confronted with prohibited territorial restrictions. This blog provides an overview of enforcement and case law from 2019 and 2020, and discusses the most recent developments.

Enforcement by ACM

In September 2020, the Authority for Consumers and Markets (“ACM”) announced that it had completed its investigation into drug manufacturer AbbVie. From the end of 2018, AbbVie offered significant discounts to hospitals for the rheumatology drug Humira. The patent on the active substance in Humira expired in October 2018, allowing other manufacturers to market a generic product. To prevent its market position from declining as a result thereof, Abbvie gave discounts to hospitals if they purchased Humira for all their patients. ACM considered that AbbVie thereby factually imposed an exclusive purchasing obligation on hospitals which limited competition for new products. AbbVie agreed not to include exclusive purchasing clauses in its agreements with hospitals anymore.

Case law on vertical agreements

In March 2019, the Court of Appeal of Arnhem-Leeuwarden ruled on the legality of an exit scheme of Avebe. The articles of association of Avebe, a cooperative of farmers, stipulated that if members wished to transfer the shares to Avebe upon termination of their membership, they had to pay an amount of €681 per share to the cooperative. Six arable farmers did not agree with this withdrawal arrangement. The Court of Appeal agreed with the lower court and ruled that although the exit scheme was a restriction of competition, the scheme did not divide the market or impose price restrictions or other hardcore restrictions and was therefore allowed.

At the end of 2019, the Amsterdam Court of Appeal ruled in an (as yet unpublished) interlocutory judgment in the case between Prijsvrij and Corendon that the termination of an agreement can be an instrument to achieve resale price maintenance. Customers could book trips of Corendon through Prijsvrij, which used discounts on its website on trips of Corendon. The tour operator did not want Prijsvrij to apply such discounts and eventually terminated the agency agreement. Prijsvrij held that this termination should be regarded as a form of prohibited resale price maintenance. The Court of Appeal agreed and considered it proven (for the moment) that the termination of the agreement with Prijsvrij was particularly caused by the discounts offered by Prijsvrij to consumers.*

On 12 June 2020, Advocate General Drijber concluded – with reference to the appeal in cassation against a judgment of the Court of Appeal of The Hague – that a settlement agreement regarding a patent did not violate competition law. Jet Set and Brielle Industrie Services (“BIS“) in this case, both active in the field of cleaning techniques for oil tanks, had reached a settlement which, according to BIS, included a non-compete and non-challenge clause. BIS considered this to be a licence agreement with hardcore restrictions within the meaning of the Technology Transfer Block Exemption Regulation (“TTBER“). However, Advocate General Drijber concluded that it was neither a licence agreement nor a non-compete clause. A prohibition to use Jet Set’s technology follows directly from the patent on that technology. There was therefore no need to review the TTBER or Article 6(3) Mw. Although a non-challenge clause does not generally fall under the TTBER, there was no such clause in this case either. BIS had in fact (successfully) contested the patent. The Supreme Court did not reach a substantive judgment.

A case that did involve vertical licensing agreements concerned a dispute between Dromenjager, the company behind the well-known Woezel & Pip children’s figures, and toy manufacturer International Bon Ton Toys (“IBTT“). IBTT produces and sells toys for which it is allowed to use the Woezel & Pip (figurative) trademark. The licence agreement included a provision requiring approval from Dromenjager for sales by the licensees to a certain number of retailers, including Kruidvat. IBTT wanted to sell its remaining stock of Woezel & Pip products to Kruidvat and complained that the required approval was contrary to competition law. The President of the court reached the provisional conclusion that the approval provision in the licence agreement is a hardcore restriction of competition law. The judgment in summary proceedings has been appealed.**

Vertical agreements also often play an important role in the pharmaceutical market. In its judgment of 8 June 2020, the district court of Midden-Nederland ruled that health insurer Zilveren Kruis was allowed to use a ‘discount policy’ to encourage hospitals to purchase medicines from a manufacturer that was cheaper for Zilveren Kruis. Together with other health insurers, Zilveren Kruis entered into an agreement with Janssen-Cilag, the producer of a medicine for leukaemia (named Imbruvica). On the basis of this agreement, Janssen-Cilag supplied Imbruvica to the hospitals, after which the health insurers received discounts (based on subsequent calculation). Zilveren Kruis applied a mark-up of 49% if hospitals purchased Imbruvica from suppliers other than Janssen-Cilag. Eureco-Pharma, a competitor of Janssen-Cilag, argued that Zilveren Kruis was channelling the Imbruvica offer to Janssen-Cilag through its discount policy. The judge, however, concluded that Zilveren Kruis’ policy is aimed at always paying the lowest price. A competitive company is able to pursue this aim. Moreover, Eureco-Pharma was able to conclude a similar agreement with Zilveren Kruis. Therefore, there was no prohibited vertical restraint.

Finally, at the end of 2020, the Amsterdam District Court ruled that Trek Benelux – supplier of fast, lightweight bicycles – had to continue an agreement with its distributor. Trek Benelux terminated the agreement when the distributor applied a discount on top of the recommended retail price. According to Trek Benelux, such discounts harmed its brand image. The agreement also included an obligation to deliver assembled bicycles to customers. The distributor argued that the recommended retail price is in fact a minimum price and that the obligation to deliver assembled bicycles limits its passive (online) sales. The judge in preliminary relief proceedings ruled in line with the VBER that forcing distributors to adhere to the recommended retail price constitutes a hardcore restriction of competition law. Moreover, no justification had been put forward by Trek Benelux. Therefore, the agreement had to be continued. Trek Benelux was, however, able to demonstrate that the obligation to deliver assembled bicycles was necessary to protect the quality of the bicycles, which requires accurate assembly and adjustment. This provision was not contrary to competition law.

Evaluation of the VBER

The current Regulation, which has been in force since 2010, expires on 31 May 2022. The European Commission (“Commission“) intends to amend the Regulation. In this context, the Commission conducted a review, the findings of which were published on 8 September 2020.

The review shows that the VBER, albeit still relevant, is no longer adequate for application to online sales. After all, the retail sector has changed tremendously in recent years, particularly as a result of digitalisation and the subsequent increase in e-commerce (e-tailing). Entirely new types of restrictions on online sales have been imposed on buyers the past few years, such as a ban on the use of Google AdWords by Guess or the (re)sale of products on online marketplaces by Coty. The Commission has also imposed fines on, amongst others, Asus, Philips and Pioneer for imposing resale price maintenance on their online retailers. The interpretation of the rules on online sales restrictions varies widely in Europe. The new VBER will have to provide clarification. According to the Commission, there is still too much uncertainty about the use and lawfulness of ‘across-platforms parity agreements‘ (APPAs) as well. For the background and recent developments regarding APPAs, please read our earlier blog.

In addition, the collection and use of data has become crucial to the business operations of (online) companies in recent years. In this context, the Commission has also launched an investigation into Amazon. The American company is said to use data of sellers on Amazon – which it obtained in its capacity as a platform – to benefit its sales channel on the same platform. For this ‘self-preferencing’, the Commission previously imposed a fine of more than €2.4 billion on Google, which put its own services above those of competitors in Google’s search results.

Conclusion

Vertical agreements can often benefit from the exemption from the cartel prohibition, but not every restriction can be imposed. Dutch and European case law over the past two years confirms this. It is therefore essential to know what may and may not be included in a vertical relationship. It is, in this regard, of great importance what the new VBER will entail, especially with regard to online sales. However, the clarifications that the Commission seems to have in mind will only apply after May 2022. In any case, both civil and administrative enforcement of competition law in respect of vertical relationships has increased dramatically in recent years. It is likely that this trend will continue in the coming years.

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

** Bas Braeken and Timo Hieselaar have (first) become involved on appeal as Dromenjager’s lawyers.