Competition Flashback Q3 2021
This is the Competition Flashback by bureau Brandeis, featuring a selection of some of the key competition law developments of the past quarter (see the original version here).
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Overview Q3 2021
- Altice’s appeal against gunjumping fine dismissed by General Court
- Commission launches two investigations into Google and Apple after preliminary report Internet of Things
- ACM makes (long-awaited) turn and fines vertical price fixing agreements
- Genuine or non-genuine agency? New interlocutory judgment in Prijsvrij/Corendon is not yet conclusive
- ACM gives second green light for merger of Sanoma and Iddink
- Prestressing steel cartel and elevators cartel: far-reaching duty to allege cartel damage and causality
- Truck cartel damages: broad interpretation jurisdiction of national courts based on Erfolgsort
- Automobile manufacturers fined € 975 million by European Commission for illegal technological discussions
- Aircargo damage: flexible approach to the question of applicable law
- Fine of € 19.5 million imposed on pharmaceutical company for charging excessive prices
- ACM allowed to extend scope of investigation with accidentally obtained evidence
Altice’s appeal against gunjumping fine dismissed by General Court
General Court, judgement of 22 September 2021
In 2018, French telecom company Altice was fined twice € 62.25 million (a total of € 124.5 million) by the European Commission for its premature acquisition of PT Portugal. According to the Commission, Altice already had – and actually exercised – decisive influence over the day-to-day operations of PT Portugal before it obtained the necessary approval from the Commission. For example, it had the power to influence the (structure of the) senior management as well as the pricing policy of PT Portugal. You can read more about the case and the Commission decision in our blog on gunjumping.
Altice appealed the fine decision to no avail. On 22 September 2021, the General Court ruled in favour of the Commission. It held that the Commission had sufficiently established that Altice had effective control over PT Portugal and, moreover, that it actually exercised its control. The fine for the breach of the notification requirement, however, was reduced by 10% by the General Court, because Altice had notified the concentration to the Commission.
Commission launches two investigations into Google and Apple after preliminary report Internet of Things
European Commission, press releases of 22 and 20 September 2021
The European Commission has already launched two investigations relating to the Internet of Things investigations since the publication of its preliminary sector-wide report on June 9, 2021. The investigations concern Google and Apple. You can read more about the preliminary inquiry sector-wide report of the Commission in our blog on the Internet of Things.
The investigation into Google relates to the use of Google Assistant, the tech giant’s voice assistant. Google allegedly (ab)uses its Android operating system to exclude competing voice assistants. The Commission suspects that manufacturers of smart TVs and cars, for example, are being forced to (pre-)install Google Assistant as a standard service. This will give Google easy access to the user data of consumers of those products, which it can then use for its other services. The Commission is furthermore curious to know whether Google requires manufacturers to exclusively use Google Assistant, whether multiple voice assistants from different providers can be used simultaneously, and whether manufacturers receive a portion of the advertising revenue generated on the device from Google.
With respect to Apple, the Commission’s investigation focuses on how Apple’s iPhones and iPads interact with wearable devices (“wearables”). These include smartwatches, fitness bands and wireless headphones. The Commission is concerned that there may have been technical and/or contractual restrictions placed by Apple regarding the interoperability of iPhones/iPads with such wearables. This would entail that it is more difficult for wearables of other manufacturers to compete with Apple’s wearables, such as Apple Watch or AirPods. The Commission has now asked manufacturers of wearables whether Apple raises obstacles with regard to accessing features on iPhones and iPads, such as reading and replying to messages via the wearable or location services thereof. Both investigations are still ongoing.
ACM makes (long-awaited) turn and fines vertical price fixing agreements
ACM, decision of 14 September 2021
On 14 September 2021, the Netherlands Authority for Consumers and Markets (“ACM“) imposed a fine of over € 39 million on Samsung for influencing the online selling prices of its television sets. In its decision, the ACM finds that Samsung infringed the cartel prohibition by exercising undue pressure on seven of its retailers in the period between 2013 and 2018.
Samsung monitored the online retail prices of its television sets through so-called spider software and analysed their price movements. If it was alerted (through complaints of competing retailers) on a retail price lower than its desired market price, it contacted the retailer and urged it to increase its prices. Although Samsung only maintains ‘price recommendations’ and the agreements between Samsung and retailers stipulate that they are free to determine their own retail prices, the ACM concluded that these ‘recommendations’ in practice lead to illegal price-fixing.
The ACM held that Samsung’s monitoring, internal coordination and external communication are aimed at controlling and minimising price deviations. By frequently and individually contacting retailers about retail prices and informing them of the price intentions of their competitors, the ACM speaks of a systematic practice of price coordination between Samsung and its retailers. As retailers are consequently discouraged from lowering their prices and consumers are confronted with a higher price, the ACM held that Samsung’s behaviour had the object of restricting competition.
It is the first time in twenty years that the ACM has showed interest in vertical price agreements. In doing so, it appears to abandon its effects-based approach to vertical restraints and to align with the strict approach of the European Commission and other national competition authorities. In 2018, the Commission imposed four fines of in total € 111 million on Asus, Denon & Marantz and Philips for monitoring and pushing retailers’ prices. German authorities also maintain a strict approach. The Bundeskartellamt has for example been very active in fining resale price maintenance practices in recent years, and in 2018 the German Bundesgerichtshof confirmed that Asics may not prohibit its retailers from participating in price comparison websites.
For more insights into competition law in vertical relationships read our blog.
Genuine or non-genuine agents agency? New interlocutory judgment in Prijsvrij/Corendon is not yet conclusive
Amsterdam Court of Appeal, (interlocutory) judgment of 31 August 2021
A long-running dispute is ongoing between Prijsvrij and Corendon regarding the termination of an agency agreement by Corendon. In a recently published interlocutory judgment (in Dutch) of 3 December 2019, the Amsterdam Court of Appeal formulated a number of evidentiary assignments. Subsequently, on 31 August 2021, the Court of Appeal issued a new interlocutory judgment (also in Dutch) in the context of those evidentiary assignments.
The case between Prijsvrij and Corendon is of essential importance for sectors where resellers are frequently used, such as the travel sector. The main question is under which circumstances these agents can be qualified as ‘genuine’ agents within the meaning of competition law. This requires that the agent bears no or minimal commercial risks, so that the principal and its agent form a single economic unit. Only in that case is the cartel prohibition, including the prohibition on resale price maintenance, not applicable. In the case of genuine agency the principal may compel its agents to apply certain prices.
In the past, Prijsvrij was active as a reseller of Corendon’s package holidays until Corendon terminated its agreement with Prijsvrij in 2013. The Court of Appeal considered it (provisionally) proven that the reason for the termination could be found in the discounts offered by Prijsvrij to consumers. Such termination can be an instrument to achieve resale price maintenance and is therefore prohibited, unless Prijsvrij was a genuine agent of Corendon. In the interlocutory judgment the Court of Appeal gave Corendon the evidentiary assignment to prove that Prijsvrij qualified as an genuine agent.
In the context of these principal points of contention, Prijsvrij and Corendon have submitted documentary evidence and Corendon has called a number of witnesses. In doing so, a discussion has arisen as to whether the Court may include all of this evidence in its assessment of the evidence.
In its recent interlocutory judgment of 31 August 2021, the Amsterdam Court of Appeal decided to include all evidence submitted earlier and to reopen the examination of witnesses. Thereafter, the Court of Appeal will rule and is expected to provide clarity on the application of the doctrine of genuine agency.
*Bas Braeken and Jade Versteeg represent Prijsvrij in these proceedings.
ACM gives second green light for merger of Sanoma and Iddink
ACM, decision of 26 August 2021
Sanoma may take over Iddink according to a recent second decision of the ACM on the matter. Sanoma is a publisher of both traditional and digital educational materials through its subsidiary Malmberg. Iddink is a distributer of educational materials and owns Magister – a student information system (“SIS”) and electronic learning environment (“ELO”).
The licence application for the concentration of Sanoma and Iddink was submitted to the ACM in January 2019. After the ACM had conditionally approved this merger mid-2019, rival publisher Noordhoff filed an appeal against this decision with the Rotterdam District Court. In its ruling (in Dutch) of 4 March 2021 the District Court annulled the contested decision of the ACM due to a failure to sufficiently state reasons. The Court held that the ACM should have conducted more research into the possible need of schools for ‘bundling’ the digital teaching materials and the electronic learning environment. If there were such a need, the concentration between Sanoma and Iddink could lead to market foreclosure.
In its recent decision, dated 26 August 2021, the ACM again approved the concentration under the same conditions as before. The ACM provided additional reasoning as to why it is not plausible that the concentration would lead to market foreclosure through anticompetitive bundling. The ACM argued that there are different procurement procedures for teaching materials and the ELO/SIS, with different timeframes.
Consequently, schools do not have the need to purchase teaching materials and an ELO/SIS at the same time. In addition, the ACM maintains that prices are of little importance for a school’s selection of educational materials. Schools are primarily focused on quality, which limits the possibility for Sanoma/Iddink to apply a bundling strategy. The ACM also considers it implausible that there is an incentive for Sanoma/Iddink to bundle products.
In a press release (in Dutch) of 27 August 2021, the ACM announced that it will appeal the ruling of the Rotterdam District Court since it believes that its original decision did not contain a lack of reasoning.
Prestressing steel cartel and elevators cartel: far-reaching duty to allege cartel damage and causality
‘s-Hertogenbosch Court of appeal, judgement of 27 July 2021 | Rotterdam District Court, judgement of 23 June 2021
Recently, two judgments were published that are relevant for the duty of an injured party (‘plaintiff’) to allege damages and causality in cartel damage cases. In cartel damages proceedings the plaintiff must allege and prove that his or her damages were caused by the cartel in order to be awarded compensation. An important aspect in that regard concerns the data that is necessary to further substantiate such claims.
On 27 July 2021, the Court of Appeal of ‘s-Hertogenbosch ruled (in Dutch) that Deutsche Bahn, who is the plaintiff in this case, must bring forward sufficient factual evidence to make it plausible that it suffered damage as a result of the prestressing steel cartel. Such factual evidence concerns information that specifies which cartel products were purchased, when, from whom and at what price. The submission of a few examples is considered insufficient by the Court of Appeal.
When providing concrete evidence a plaintiff must prove the identity of the cartel participants and provide insight into its transactions with them (on the basis of contracts, invoices, packing slips, administrative data, annual documents, etc.). Although the substantiation of a claim should normally take place in the early stages of proceedings, the Court of Appeal gave Deutsche Bahn the opportunity to provide the required evidence at a later stage.
In a judgment (in Dutch) of 23 June 2021 (published on 12 July 2021) the Rotterdam District Court provided other relevant guidance regarding the duty to furnish facts in relation to damages and causality. In the elevators cartel damage case, the District Court assessed whether Stichting De Glazen Lift (a claim foundation representing housing associations) had fulfilled its obligation in that regard.
The District Court ruled that in the event of concrete indications that an agreement was concluded between a housing association and one (or more) cartel participant(s) during the infringement period it is plausible that damages were suffered and caused by the cartel.
The District Court then examined for each housing association whether the foundation submitted sufficient documents to make the damage plausible. For each individual (underlying) claimant, it must be shown that the party claiming damages contracted with or paid a cartel participant during the infringement period.
Lastly, the District Court ruled that, in view of rental price regulation, it is unlikely that the housing associations could have passed on their damages to their tenants by raising rent. Therefore, it is plausible that the installation of a elevators and escalators is at the expense of the housing associations. The District Court concluded that all the housing associations sufficiently alleged damages and causality and referred the proceedings for the determination of damages.
Truck cartel damages: broad interpretation jurisdiction of national courts based on Erfolgsort
CJEU, judgment of 15 July 2021
On 15 July 2021, the Court of Justice of the European Union (“CJEU”) ruled in RH v Volvo on how national courts should interpret article 7(2) of the Brussels I-bis Regulation, after preliminary questions were asked by a Spanish national court. The CJEU ruled on an interpretation for jurisdiction based on the place where the damage occurs, also referred to as ‘Erfolgsort’. The CJEU held that article 7(2) does not only relate to international jurisdiction (which Member State has jurisdiction), but also to territorial jurisdiction (which court within a Member State has jurisdiction).
Firstly, the CJEU holds that, in the case of damage resulting from a cartel that concerned the whole of the European Economic Area (“EEA”), the place where the damage occurred is considered to be within that entire market. This includes Spain, so the Spanish national courts have international jurisdiction.
Subsequently, the CJEU addresses the question on territorial jurisdiction. It observes that it is clear from the wording of article 7(2) that this provision directly and immediately aims to regulate both international and territorial jurisdiction. Nevertheless, Member States are free to designate a specific court to deal with certain specific types of disputes. In the absence of such national centralisation of competence/jurisdiction, territorial jurisdiction must comply with the principles of proximity, foreseeability and the proper administration of justice.
According to the CJEU, the court of the place where the goods of the cartel participants were purchased – possibly indirectly – has primary territorial jurisdiction. If the plaintiff has purchased goods in several jurisdictions, the seat of the plaintiff should determine the territorial jurisdiction. This reasoning is in line with the aforementioned principles, inter alia because cartel participants are deemed to be aware of the fact that the customers are located in the (entire) market affected by the anti-competitive conduct.
Automobile manufacturers to be fined € 975 million by Commission for illegal technological discussions
European Commission, decision of 8 July 2021
In a recent decision the European Commission has determined that Daimler, BMW and the Volkswagen group (Volkswagen, Audi and Porsche) violated competition law by jointly agreeing on technological development in the field of emissions cleaning. Daimler avoided a fine of € 727 million because it reported the conduct to the Commission.
The infringement is notable because this is the first time that a cartel decision has targeted agreements and contacts that took place as part of technological discussions related to innovation, rather than classic price or customer allocation agreements. For this reason, the fines were reduced by 20%.
Although the investigation started as a full-fledged cartel investigation, it was concluded with a voluntary settlement procedure. In addition, Daimler applied for leniency. BMW submitted a comprehensive statement after which the Commission dropped some of its allegations against the German car manufacturer.
Air cargo damages: flexible approach to the question of applicable law
Amsterdam Court of Appeal, (interlocutory) judgement of 6 July 2021
In its judgment (in Dutch) of 6 July 2021, the Amsterdam Court of Appeal ruled on the question of applicable law in the Air cargo damages proceedings. Many plaintiffs suffered damages as a result of paying excessive fees for the shipments of air cargo. Their claims are bundled in foundations Equilib and SCC.
As a preliminary matter, the Court of Appeal rules that it can rely on the facts determined by the European Commission in the cartel decision, even though that decision is still under appeal before the European Courts.
The Court of Appeal then ruled on the question of whether article 4 of the Dutch Tort Conflict of Law Act (“WCOD”) offers the relevant legal framework to answer the question of applicable law. The Court of Appeal finds that, in principle, for each separate claim of each individual plaintiff the damage resulting from a specific flight, the applicable law is that of the State in which the airport of departure is located.
The Court of Appeal subsequently observed that this outcome leads to a strong fragmentation of applicable laws. Strict application of article 4 WCOD would lead to dozens of different applicable legal systems. To avoid this fragmentation, the Court of Appeal first rules that the separate claims of each plaintiff should be considered as one single claim, in analogy with the concept of a single continuous infringement as applied by the Commission in its cartel decisions. Second, the Court of Appeal considers that not only the airport of departure is relevant for determining the applicable law, but also the airport of arrival. Article 4 WCOD does not limit its scope to the place in which competition is directly affected by the anticompetitive behaviour, but also the place that is indirectly affected (e.g. in case of umbrella damages).
The international nature of airline services results in the distortion of competition in multiple places, as is also confirmed by the Commission in its decision. As a result, the Court of Appeal considers that the claim of a plaintiff is governed by several national jurisdictions. The WCOD does not provide for a solution in such instances, however. To fill this legislative gap, the Court of Appeal relies on broadly shared EU principles, such as legal certainty and effectiveness. It notes that the EU legislator has addressed this issue in article 6(3) sub b of Regulation (EC) No 864/2007 (‘Rome II’), in which claimants may choose the applicable law, albeit under strict conditions.
Given that Equilib and SCC requested that Dutch law is applicable, the Court of Appeal concludes that the follow-on damages claims of the foundations are governed by Dutch law. This applies to all claims relating to flights falling within the scope of the cartel decision (flights departing and/or arriving in the EEA and Switzerland).
Fine of € 19.5 million imposed on pharmaceutical company for charging excessive prices
ACM, decision of 1 July 2021
In a decision of 1 July 2021 the ACM imposed a fine of € 19.5 million on the Italian pharmaceutical company Leadiant, manufacturer of chenodeoxycholic acid (“CDCA”). The ACM ruled that Leadiant had abused its dominant position by charging an excessive price for the medicine. It is the first decision imposing a fine that concerns medicine prices after the ACM announced that it will conduct more investigations into medicines in 2018.
Leadiant acquired the right to produce CDCA from another pharmaceutical company and has been selling it on the Dutch market since 2008. In 2008, the price for a package of CDCA in the Netherlands was € 46. After that, Leadiant increased the price of CDCA, which it sold under changing brand names, several times until it finally reached a maximum of € 14,000 per package in June 2017.
The ACM ruled that Leadiant abused its dominance in the period from June 2017 to December 2019. According to the ACM Leadiant had a special responsibility in the context of its dominant position to abstain from charging excessive prices. The ACM accuses Leadiant of failing to fulfil its responsibilities in this respect and that the (excessively high) prices charged were out of proportion to its costs.
ACM allowed to extend scope of investigation with accidentally obtained evidence
District Court of The Hague, judgement of 3 June 2021 (published on 12 July 2021)
On 3 June 2021, the District Court of The Hague rendered an anonymised judgment in instituted by a number of undertakings whose premises had been raided by the ACM. The investigation of the ACM initially focused on possible prohibited purchasing price agreements. However, during the Dawn Raid the ACM also found indications of possible agreements on the selling price. Based on this information the ACM expanded the scope of its investigation. You can read more about Dawn Raids in this blog.
An important question was whether the ACM had not merely cursorily examined this information and whether the ACM was allowed to use the information for the purpose of extending the scope of its investigation. The Court ruled that the ACM, on the basis of the Deutsche Bahn judgment of the CJEU, is allowed to take a cursory look at evidence (in the present case: chat messages and e-mail conversations) in order to assess whether something falls within or outside the scope of the investigation. The ACM does not have to limit itself to viewing the most recent message while keeping the scope of the investigation in mind. In view of the interwovenness between the new evidence and the original scope of the investigation, the Court did not find it remarkable that the ACM stumbled upon the evidence by chance.
In addition, the Court was asked whether the ACM is allowed to select relevant chats by entering the names of persons in the chat program when inspecting mobile phones. The Court ruled that the search on names of persons is proportionate and thus permitted.
For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist you. You can reach us via the links below.
Bas Braeken, Jade Versteeg, Lara Elzas, Timo Hieselaar, Demi van den Berg and Berend Verweij