2018 in review: a selection of European competition law developments of interest
Posted by Chantal Lavoie on 31 December 2018
An exciting year it has been: from the European Commission’s infringement decisions in Google Android and in Qualcomm (excessive payments), to fines imposed in relation to restrictive vertical arrangements in connection with geo-blocking and RPM and commitments offered in the pay-TV investigation, the energy sector and in relation to inter-regional interchange fees. On the merger control front, filings have increased substantially and several key decisions have been adopted as reported below.
The European courts have also been key contributors with judgments, inter alia, on a range of important issues in relation to Article 102 TFEU, on the review of Commission inspection decisions, on parental liability, on the interpretation of the standstill obligation under EUMR, on Union interest in accepting or rejecting a complaint and on restrictions by object.
In addition to a pipeline of much-awaited merger and antitrust decisions, 2019 will also be a time for change with the appointment of a new Commission president and in particular a new Commissioner for Competition.
You will find below my selection of European competition law developments of interest which occurred in 2018.
JANUARY
15.01.2018 Sweden’s Patent and Market Court overturns competition authority’s finding of abuse against Nasdaq as operator of the Swedish, Danish and Finnish stock exchanges
An interesting abuse case in the financial services sector was just handed down by the Swedish Patent and Market Court in relation to NASDAQ, operator of the Swedish, Danish and Finnish stock exchanges. The court ruled against the Swedish Competition Authority's finding that NASDAQ abused its dominant position in 2010 by preventing Burgundy, a multilateral trading facility, from setting up its matching engine in the same data center as NASDAQ's own matching engine and the servers of numerous traders. The authority argued that this placed Burgundy at a competitive disadvantage as it prevented it from communicating more quickly with traders located in that same center (which would have increased its efficiency) and thus prevented it from attracting business to its platform. The court agreed that NASDAQ held a dominant position in 2010 in the markets for the trading of Swedish, Finnish and Danish equities. However, it did not find NASDAQ to have committed an abuse. NASDAQ exercised a contractual veto right it held with the data center owner. The judgment reminds us that holding a dominant position is not illegal in of itself and that the special responsibility which dominant players are held to has limitations.
23.01.2018 Court of Justice preliminary ruling in Hoffmann-La Roche on restriction by object (Case C-179/16 Hoffmann-La Roche and Novartis)
The Court of Justice's preliminary ruling of 23/01 in Hoffmann-La Roche should give rise to much discussion in the coming months. Central to the Court's ruling is the conclusion that an arrangement between two parties marketing competing products to disseminate misleading information regarding one of the two products can amount to a restriction by object. The case is interesting as regards (i) the arguably expansive application of the concept of restriction by 'object' to this case and whether the analysis required of the relevant arrangement, disseminated information and context does not in practice cross the line from an 'object' to an 'effect' analysis ; (ii) the assessment of the concept of ancillary restraints and the Court's finding that the arrangement between the competitors was not objectively necessary for the exploitation of their respective medicinal products (but rather was aimed at restricting the conduct of third parties, such as health professionals, in prescribing the medicinal products); (iii) the definition of the market and the fact that another medicinal product can be included in a market for the treatment of a disease, even though its marketing authorisation did not cover such treatment but was used for that purpose.
24.01.2018 Qualcomm fined EUR 997 million by European Commission for abuse of dominant position in connection with exclusivity payments
In a bold move a few months only after the Intel judgment, the European Commission announced today a fine of close to EUR 1 billion against Qualcomm for abuse of dominance. The fine is substantial and represents 5% of Qualcomm's 2017 turnover for an infringement duration of 5.5 years. Qualcomm is charged with abusing its dominant position by agreeing to make payments to Apple conditional on Apple exclusively using Qualcomm's LTE baseband chipsets. The decision is not yet available but the press release does point to a detailed effects analysis based on both qualitative and quantitative evidence. Factors taken into account to show a significant impact on competition include the size of the amounts paid, evidence of Apple's reduced incentive to switch, the significance of Apple's share of LTE chipsets demand and interestingly, Apple's ability to influence other manufacturer/customer choices. No doubt the Court's judgment in Intel will have weighed in the balance - as well as other recent judgments in relation to due process - and required the Commission to closely review its case and procedure prior to adopting its decision. Given the recent success rate of applicants before the EU Court, it would not be surprising if Qualcomm appealed.
https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1533050936562&uri=CELEX:52018XC0731(01)
FEBRUARY
21.02.2018 Advocate General opinion in Orange Polska on the concepts of ‘capability to restrict’ and ‘legitimate interest’ under article 102 TFEU
In an opinion delivered today in Orange Polska, AG Wathelet suggests to set aside the General Court's judgment and refer the case back. The Opinion is interesting for two reasons: (i) its reliance on the recent Intel judgment: Wathelet concludes that the 'capability to restrict' under article 102 is relevant to assess not only the substantive finding of an infringement but also, as in this case, the nature and gravity of an infringement when determining the amount of the fine. According to Wathelet, the GC failed to review whether the evidence of the Commission relating to the likely effects of the abuse warranted the amount of the fine, including to consider the arguments of Orange. The Opinion highlights the potential for Intel to extend beyond the specific facts of its case and to restrict the Commission's discretion under article 102 to fine setting by requiring it to also conduct a review of 'all the circumstances" when determining the amount of a fine; and (ii) Wathelet suggests that the Commission has no obligation to show a 'legitimate interest' when imposing a fine whether in relation to an ongoing infringement or, as in this case, a past infringement. A legitimate interest need only be shown where no fine is imposed for a past infringement.
The judgment was delivered on 25.07.2018. See below under this date for a report.
19.02.2018 DGComp taking an interest in common ownership and potential anticompetitive effects
An important development to watch out for. With calls building in the US to assess the potential anti-competitive effects of common ownership, DG Comp is also taking an interest in the matter. It is considering whether there exists a common practice in Europe of common ownership (shares in different companies in the same industry held by the same investors) and its potential effects. One concern expressed by certain academics and interest groups is that cross shareholdings in an industry could reduce competition and encourage collusion.
MARCH
01.03.2018 European Commission clears Essilor/Luxotica merger
Essilor/Luxottica merger cleared today in Phase 2 without conditions. Still puzzled as to why this case required a phase 2. This is a complementary merger with Luxottica holding less than a 20% market share in frames in Europe and with clear conclusions in the press release as to the parties' inability and limited incentives to foreclose. One does wonder whether such an extensive investigation and market test involving 4,000 opticians was not overkill.
http://ec.europa.eu/competition/mergers/cases/decisions/m8394_4217_3.pdf
01.03.2018 UK payment systems regulator open own competition law investigation
One to watch: after the FSA opening its own competition investigation into aviation broking last year, the UK payment systems regulator (PSR) has launched its first competition investigation into the card-acquiring market. The PSR is concerned that competition for the supply of card-acquiring services may not be working well for merchants and ultimately for consumers.
Since then, the PSR has announced its intention to carry out a market review with final terms of reference to be published in early 2019.
09.03.2018 Spain competition authority sanction verbal non-aggression pacts
A reminder for companies: verbal non-aggression pacts between market players (aka we won't go after each other's clients) are a clear breach of competition rules. This week in Spain several courier and parcel delivery companies were sanctioned for agreeing such a pact verbally. One of the parties to the pact disclosed it to the Spanish competition authority in return for immunity from fines. Emails and WhatsApps were relied upon as supporting evidence.
https://www.cnmc.es/node/367349
21.03.2018 European Commission conditional clearance of Bayer/Monsanto
Like many, I'm looking forward to reading the recently adopted European Commission's decision in Bayer/Monsanto. The conditional approval is not surprising and would appear to follow in the footsteps of the other two decisions in Dow/Dupont and Syngenta/ChemChina in the seeds and pesticides business. As in Dow/Dupont, the European Commission's focus in Bayer/Monsanto is on price competition and innovation competition. We'll need to wait for the redacted version of the decision to be published to see whether there any change in approach to innovation competition is apparent.
The decision has since been published on 14.12.2018.
http://ec.europa.eu/competition/mergers/cases/decisions/m8084_13335_3.pdf
APRIL
10.04.2018 General Court upholds European Commission inspection decision in bioethanol investigation (Case T-274/15 Alcogroup and Alcodis)
This case concerns an appeal by Alcogroup and Alcodis seeking, inter alia, annulment of a European Commission inspection decision addressed to them in connection with an investigation into bioethanol as well as a Commission letter rejecting a request to suspend the second inspection. The appellants argued that the European Commission reviewed during the second inspection legally privileged documents which had been prepared following the first inspection, notwithstanding an agreement at the beginning of the second inspection not to review such documents. In its judgment, the General Court confirms existing jurisprudence whereby the irregularity of an inspection which forms the basis for a second inspection can be relied upon to annul a second inspection decision. The General Court concludes however that it cannot be adduced from this jurisprudence that the irregularity of an inspection in itself can be used to put into question the validity of the decision on which the same inspection is based. In addition the General Court concluded that the Commission’s letter refusing to suspend the inspection was a preliminary act which could not be subject to annulment by the court.
The judgment confirms that the protection afforded to documents covered by legal professional privilege remains difficult to enforce during inspection proceedings and until a final decision is adopted by the Commission.
19.04.2018 Court of Justice preliminary ruling in MEO on discriminatory pricing (Case C-525/16 MEO)
The Court of Justice’s ruling in MEO is an important confirmation that discriminatory pricing applied by a dominant company to its clients or suppliers for an equivalent service is not sufficient in of itself to constitute an abuse of dominant position under EU competition law. The Court gives full effect to the second leg of the test under article 102(c) TFEU by finding that the “specific effects” of the discrimination must be considered to determine whether it produces or is capable of producing a “competitive disadvantage” as between the trading partners. This requires showing that the competitive disadvantage affects the interests (costs; profits; other) of the company which was price discriminated by considering all the circumstances (e.g. negotiating power; tariff conditions). Of interest is the Court’s finding that (i)there is no need to show “actual quantifiable deterioration in the competitive situation” nor to meet an appreciability threshold; but (ii) a higher tariff should not place a company at a competitive disadvantage if it represents a “relatively low percentage” of its total costs and has a limited effect on its profits; (iii) in principle a dominant party should have no interest to exclude trading partners on the downstream market.
MAY
16.05.2018 General Court annuls Commission decision refusing to waive merger commitments (Case T-712/16 Deutsche Lufthansa)
The case concerns the European Commission’s conditional merger clearance of the acquisition by Lufthansa of Swiss in 2005. The parties were required to comply, inter alia, with pricing commitments in respect of certain routes until a new air service provider began operations on those routes. In 2013, the parties requested a waiver from these commitments which was rejected by decision of the European Commission on the ground that the conditions contained in the merger decision were not met.
The General Court accepted Lufthansa’s appeal and annulled the Commission’s decision in relation to one of the two routes. Points to note are: (i) whilst the Commission has a certain margin of discretion in assessing a waiver request, it also has an obligation to carry out ‘a careful examination’ and conduct an investigation if necessary to support its findings, including examining the alleged change in contractual relationships and impact of the codeshare agreement, change of policy in relation to alliance partners, existence of competition between relevant parties operating the routes and Lufthansa’s offer to terminate a relevant bilateral alliance agreement; (ii) a waiver request does not entail the withdrawal of the merger decision and is not to be assessed under the same standard as merger decisions which can only be modified or revoked under exceptional circumstances; (iii) the burden of proof lies on the parties applying for a waiver to provide sufficient evidence that the conditions for a waiver are fulfilled (iv) it is not sufficient for the Commission to demand ‘compelling evidence’ without explaining why the evidence provided was inaccurate or inconclusive.
31.05.2018 Court of Justice interpretation of Article 7 EUMR (C-633/16 Ernst & Young)
The case concerns the merger between KPMG Denmark companies and Ernest & Young companies and involved an alleged infringement of the standstill obligation which prevents implementation of a merger prior to clearance (the merger was subject to Danish merger filing rules which is similar to the provisions of the EU Merger Regulation and contains an identical clause to article 7(1) EUMR). The Court of Justice ruling is important as it clarifies when a concentration is deemed to be implemented for purposes of article 7(1) EUMR and therefore when merging parties may be in breach of the standstill obligation. The Danish competition authority had found an infringement of the standstill obligation as a result of the KPMG DK companies giving a six-month notice on 18.11.2013 to terminate a cooperation agreement prior to clearance of the merger on 30.06.2014. Ultimately, the cooperation agreement was ended on 30.06.2014.
Relying on the recitals to EUMR and the concept of ‘concentration’, the Court of Justice made the following findings (i) ‘a concentration is implemented only by a transaction which, in whole or in part, in fact or in law, contributes to the change in control of the target undertaking’; (ii) the termination of the cooperation agreement in this case did not contribute to the change of control of the target, even though withdrawal from the cooperation agreement was conditional to the merger taking place and termination would have effects on the market (iii) the termination by one of the merging parties of its participation in the cooperation agreement did not give the other merging parties the possibility to exercise any influence on the merging parties and all merging parties remained independent before and after termination of the cooperation agreement.
JUNE
07.06.2018 UK Competition Appeal Tribunal overturns CMA’s excessive pricing decision against Pfizer and Flynn
The UK Competition Appeal Tribunal overturned yesterday the CMA's finding of abuse in the Pfizer/Flynn excessive pricing decision. This will be a blow for the CMA in its recent attempts to come down on price gouging in the pharma sector. The judgment confirms the difficulty of bringing a successful abuse case based on excessive pricing and the need for a solid and thorough assessment. The CAT found that the CMA (i) was wrong to limit itself to a cost plus methodology which failed to look at 'effective competition' and the 'real world' (ii) did not take account of other comparable products and this misinformed the assessment as to whether prices were unfair and (iii) did not appropriately assess the right economic value which is relevant to assessing whether the price has a reasonable relation to the economic value. The judgment takes into account the important ruling of the Court of Justice in AKKA/LAA of last year on excessive pricing and confirms the very high threshold for showing that an excessive price is unfair and abusive.
https://www.catribunal.org.uk/sites/default/files/2018-08/1275-1276_Flynn_Judgment_CAT_11_070618.pdf
08.06.2018 Styrene monomer purchasing cartel under investigation
The European Commission has launched inspections in the styrene monomer purchasing sector. This will be an interesting case to follow, if an investigation is ultimately opened, as it appears to focus on whether purchasers of these chemical products took part in cartel or other anti-competitive arrangements. This case is reminiscent of the car battery recycling decision of last year in which the Commission imposed fines on a purchasing cartel which had coordinated to lower prices. Such cases are rare and intuitively difficult to reconcile with competition policy's aim of ultimately protecting and benefitting consumer welfare, particularly where the effect of the purchasing cartel is to obtain lower prices.
There have been no further developments announced in this case this year.
http://europa.eu/rapid/press-release_STATEMENT-18-4101_en.htm
19.06.2018 Court of Justice preliminary ruling on professional secrecy and business secrets (Case C-15/16 Bundesanstalt für Finanzdienstleistungsaufsicht v Ewald Baumeister)
Interesting preliminary ruling this week by the Court of Justice on professional secrecy and business secrets which could find some application in EU competition law. Some key findings: (i) business secrets typically lose their secret nature after 5 years, unless the information still represents an essential element of the entity's competitive position (ii) in the specific context of this case, the confidential nature of information is to be assessed at the time of the request for disclosure and regardless whether the information was, or was identified as, confidential when initially disclosed (ii) the information obtained by a supervisory authority -in this instance the German financial authority- from a supervised authority is not necessarily confidential information covered by professional secrecy (iii) information held by a supervisory authority which is not public and can affect negatively the rights of the entity providing it or of third parties should be confidential. Information may also need to be kept confidential in this instance for prudential supervisory reasons. Whilst the ruling applies to another regulatory context, some aspects of the ruling could also be relied upon in the context of EU competition law.
19.06.2018 Study on algorithms by the French and German competition authorities
Algorithms under the spotlight of the French and German competition authority. The results of this joint study should highlight potential areas of concern for these authorities in relation to algorithms. Of particular interest will be the authorities' conclusions regarding the use of algorithms for dynamic price setting and the relationship between algorithms and companies with market power and any eventual foreclosure effect. No deadline has been announced for publication of the report on this joint study.
The results of the joint study have not been published yet.
21.06.2018 Qatar Petroleum’s supply agreements – new investigation
The Commission opened an investigation on 21 June 2018 to review supply agreements entered into by Qatar Petroleum with European importers of liquefied natural gas. It has been ‘tagged’ as a priority investigation, thus indicating that a ‘fast-track’ outcome could be expected. The investigation will focus on whether the agreements contain direct or indirect territorial restrictions, particularly in the light of the destination of imports and alleged contractual constraints imposed on EEA importers regarding resale or diversion of cargoes. The case is being investigated under both Articles 101 and 102 TFEU.
This case falls clearly within the Commission’s priority of creating (and removing obstacles to the creation of) an integrated European energy market. It also follows closely on recent cases resolved by DGComp this year in this area, namely the commitments obtained from Gazprom relating to the CEE gas markets, the commitments obtained from Greece to ensure fair access to lignite-fired electricity generation for competitors of the incumbent electricity operator; commitments proposed by the German grid operator (and currently under market review) to address cross-border capacity restrictions which allegedly prevented Danish producers from selling electricity in Germany.
Note that DGComp is also looking into (i) alleged gas export restrictions by Romania’s Transgaz in an investigation opened in June 2017 as a result of inspections carried out in 2016 (ongoing); and (ii) the possible foreclosure of gas markets in Bulgaria in an investigation opened in July 2013 (fining decision adopted on 17.12.2018 – see below).
22.06.2018 General Court reviews the legality of two inspection decisions in Ceske Drahy v Commission (Case T-325/16 Ceske Drahy)
The General Court’s judgments of this week in Ceske Drahy v Commission deserve some attention. In these two judgments, the General Court examines the legality of two inspection decisions adopted by the European Commission under Regulation 1/2003 against the Czech national railway. In one judgment, the General Court annuls part of the inspection decision but confirms the right of the Commission to carry out inspections, even where the same matter is under investigation by a national competition authority (albeit under its national laws) and national court proceedings are pending. In the other judgment, the General Court finds that the partial annulment of the Falcon inspection decision does not lead to the automatic annulment of the Twins inspection decision and confirms the legality of the evidence obtained during the Falcon inspection which the Commission relied upon to adopt the Twins inspection decision. The General Court concluded that the evidence was relevant, even though some of the information collected was not directly related to the matter under inspection and did not specifically provide concrete and precise evidence on costs and foreclosure strategy.
27.06.2018 Rhone-Zodiac/Fluidra pool equipment JV cleared with conditions
This case is one of a handful of cases cleared this year with conditions in Phase 1. The parties offered to divest most of Fluidra’s robotic pool cleaner business to address concerns in this market where only a few competing suppliers would have remained. The need for R&D investment and the IP rights protection afforded to features of the robotic pool cleaners were relevant factors in assessing the (low) potential for market entry and therefore the market power of the merging parties.
JULY
4.07.2018 Tronox/Cristal acquisition cleared with conditions
Cleared in Phase 2, the parties offered an upfront buyer remedy to address concerns in the market for chloride-based titanium dioxide pigment for use in paper laminate. In this four-to-three merger, the Commission was concerned that too few suppliers would remain in the market, thereby leading to reduction in choice and possibly price increase. The purchaser of the divested assets – Venator Materials - has since been approved by the Commission on 17 August 2018 as a suitable purchaser of Tronox’s 8120 product laminate product grade which it had agreed to divest. US FTA clearance is still pending.
05.07.2018 DGComp consultation on draft guidelines to estimate economic harm caused by cartels
As a follow-up to the Antitrust Damages Directive which was implemented in Member States’ legislation at the end of 2016, DGComp is aiming with these guidelines to assist national courts in estimating the share of a cartel overcharge passed on by direct customers to indirect customers and final consumers.
The consultation closed on 4.10.2018. There have been no further public announcements since.
http://europa.eu/rapid/press-release_IP-18-4369_en.htm
06.07.2018 European Commission approves acquisition of Abertis by ACS and Atlantia
The joint acquisition of Abertis (and its subsidiary Hochtief) by ACS and Atlantia was cleared without conditions in phase I following an analysis of the impact of the transaction on the market for toll motorway concessions in particular in Italy and Spain. Relevant factors leading to clearance are the fact that ACS, Abertis and Atlantia were not each other’s closest competitors in this market and due to the presence of other important competitors. The Commission also considered the effect of the transaction on other ancillary markets where the parties’ activities overlap. For those interested in bidding markets and their relevance in merger reviews, the decision is an interesting read. The fact that the bidding market for granting toll motorway concessions is highly regulated weighed in the balance for clearance.
http://ec.europa.eu/competition/mergers/cases/decisions/m8894_531_3.pdf
9.07.2018 T-Mobile Austria/UPC Austria cleared
This is a mostly complementary merger of UPC’s fixed telecoms business in Austria with T-Mobile Austria’s mobile telecoms business. In the limited markets where the parties overlap, such as the provision of internet access services for residential customers, the Commission considered the competition impact to be limited due to the difference in product and technology and the presence of strong competition such as the incumbent A1 Telekom Austria and Hutchison Drei Austria. Vertical and conglomerate effects were also assessed, in particular whether the parties could resort to bundled fixed and mobile services such as multiple play services but competition concerns were discarded.
The case was cleared in Phase 1 without conditions. Interestingly the parties appear to have offered commitments in Phase 1 thereby triggering a deadline extension but no reference to commitments is made in the press release. The decision is not yet available but presumably the commitments were not needed.
12.07.2018 Ryanair/LaudaMotion cleared
Ryanair’s acquisition of LaudaMotion, a leisure air carrier, was cleared without conditions. The Commission reviewed the effect of the deal on a number of overlapping routes from German, Swiss and Austrian airports to the Mediterranean and Canary islands. Also, the portfolio of airport slots to be acquired by Ryanair was not found to raise competition concerns, particularly in terms of creating barriers to entry for competing airlines.
The acquisition was notified in June 2018. However, note that the Commission reports that it granted Ryanair two derogations in March and May 2018 under Article 7(3) EUMR from the suspension obligation to allow it to implement the deal prior to notification. Such derogation decisions are highly exceptional, even more so when they arise, as in this case, not only prior to clearance but also prior to notification. The Commission states in its press release that this allowed Ryanair to sell seats on LaudaMotion flights whilst the merger review was ongoing.
12.07.2018 General Court confirms Commission fining decision in submarine power cables cartel (Case T-475/14 Prysmian and 14 other judgments )
The General Court confirms existing jurisprudence that, in the context of dawn raid proceedings, the Commission is not required to review documents only at the undertaking’s premises and that copy-images of hard disks can be made for review subsequently by the Commission at its own premises. As regards the territorial reach of EU competition law, the General Court concluded that the Commission is only required to show the effect on the internal market of anti-competitive practices as a whole and not in isolation. As regards parental liability, the General Court extends the presumption of actual exercise of decisive influence set out in the Akzo judgment to a parent company (including an investment bank) holding all voting rights in its subsidiary’s share (and a very high stake in the capital of that subsidiary, even though it does not hold 100% of the subsidiary’s share capital).
https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-07/cp180107en.pdf
13.07.2018 Siemens proposed acquisition of Alstom: phase II review
Unsurprisingly, Siemens' proposed acquisition of Alstom is now moving to phase 2 merger review by the European Commission. DG Comp's preliminary findings highlight concerns over higher train fares, significant reduction in train suppliers and impact on innovation as a result of the acquisition. This 2 to 1 merger to create a European rail champion is politically charged, with some calls for a strong global player needed to counter foreign competition. DG Comp's preliminary assessment is that entry from foreign rivals such as Chinese suppliers of trains and signalling components is 'unlikely in the foreseeable future" and it is concerned that the merger could lead to “higher prices, less choice and less innovation”, to the detriment ultimately of European passengers. On the other hand the acquisition will create by far the market leader in the EEA and world-wide in the supply of trains and signalling components. One to watch.
On 12.12.2018, the parties offered another package of commitments to address the Commission’s concerns identified in its statement of objections. The European Commission has until 18.02.2019 to adopt its decision. It is unknown at this stage whether the commitments will suffice. Whilst there is much political pressure for the European Commission to clear this transaction, competition law concerns remain significant..
http://europa.eu/rapid/press-release_IP-18-4527_en.htm
18.07.2018 Google Android decision – fine of EUR 4.34 billion
The Commission adopted its most-awaited decision in Google Android on 18 July 2018. The decision was adopted a little over two years after the opening of proceedings. The investigation focused on Google’s alleged restrictions imposed on Android device manufacturers and network operators to channel traffic to Google’s search engine. Three practices were found to be anti-competitive.
The Commission concluded that:
- Google is dominant in the markets for general internet search services, licensable smart mobile operating systems and Android app stores; and
- Google abused its dominant position by engaging in:
- illegal tying of Google apps to its app store
- illegal conditional payments based on exclusive pre-installation of Google Search
- illegal obstruction of competing Android operating systems through the way Google manages Android’s open source code and information (in particular Android forks)
The fine imposed on Google (EUR 4.34 billion) is the largest ever adopted by the Commission. As per the Google Search decision, Google is required to put an end to these illegal practices within 90 days of the decision. This means at least putting an end to the three practices mentioned above “in an effective manner”. However the Commission is not imposing any specific remedy but rather leaving it to Google to remove current illegal practices and ensure any new practices comply with the Commission’s decision.
Google confirmed that it will appeal this decision to the Court of Justice. Whilst a public version of the decision is not yet available, market definition could form a key ground for judicial review. Indeed, the Commission’s case on market definition relies on a narrow market definition, in particular to the exclusion of specialised search services as regards the internet search market and competitors such as Apple as regards the mobile operating systems market and the app stores market. Interestingly, as we can make out from the press release, the Commission did assess whether Apple constrained Google’s market power upstream for the licensing of Android to device manufacturers and for app stores but ultimately concluded it did not. The public version of the decision is not expected before the end of the year. The decision should shed further light on its application of the concepts of tying and conditional rebates to this case, in particular in the light of the most recent case law, including in Microsoft and in Intel.
19.07.2018 Qualcomm predatory pricing case – supplementary SO
On 19 July 2018, the Commission issued a supplementary statement of objections in the Qualcomm predatory pricing investigation. The Commission’s statement is reported to focus on certain aspects of the price-cost test used to assess if Qualcomm has been selling chipsets at below cost. The investigation has been open since July 2015.
24.07.2018 Commission decision fining consumer electronics manufacturers for online resale price setting
On 24 July 2018, the Commission imposed a fine of EUR 111 million on Asus, Denon & Marantz, Philips and Pioneer in four separate decisions. The decisions are not yet available. These cases were opened during the e-commerce sector inquiry which had identified online resale-related price restrictions as a key concern. The Commission had not adopted a decision on RPM since 2003, although the EU’s national competition authorities have been active in this area. These decisions bring back to the forefront RPM as a hardcore restriction under article 101 TFEU and the risks of adopting recommended prices in distribution agreements.
Significant reductions ranging between 40% and 50% were imposed on the parties for their cooperation in the investigations. By doing so, the Commission confirms its willingness to reduce fines for cooperation beyond cartel cases to all antitrust cases. The decision was adopted only a year and a half after the opening of proceedings.
The companies were found to have fixed or imposed minimum resale price maintenance on online retailers and to have resorted to threats or sanctions for non-compliance. Once available, the decision should shed further light on the Commission’s assessment of the effect of pricing algorithms on the pricing restrictions. The Commission states in its press release that the pricing restrictions had a “broader impact on overall online prices” as a result of the use of pricing algorithms by many online retailers. The use of online monitoring tools were also singled out as allowing the manufacturers to enforce compliance by its online retailers. The Commission does not appear to object to the existence of such price monitoring tools but rather to its use as a tracking mechanism to ensure the efficiency of price setting practices.
In a similar vein in the e-commerce sector, the Commission is also continuing to investigate (i) Nike, Sanrio and Universal Studios in three separate investigations in relation to their licensing and distribution policies for the sale of licensed merchandise cross-border and online (ongoing); and (ii) Guess’ distribution practices (fining decision adopted on 17.12.2018 - see below). These cases stem from the e-commerce inquiry which had outlined concerns regarding the possible barriers resulting from online licensing and distribution practices.
25.07.2018 Court of Justice on effects in Orange Polska (C-123/16 P Orange Polska)
The Court of Justice rejected Orange Polska’s appeal in relation to a decision by the European Commission of abuse of dominant position in the Polish wholesale market for fixed broadband internet access. Of particular interest is the Court of Justice’s finding that, when assessing the gravity of an infringement for purposes of determining the amount of a fine, the Commission does not have to show the actual or likely effects of the infringement if it has not taken them into account.
30.07.2018 Total Produce joint acquisition of Dole cleared with conditions
This is another case cleared this summer in Phase 1 with conditions. The notification consisted in the acquisition of joint control of Dole by Total Produce and Dole’s prior owner Mr David H. Murdock. The competition concern focused on the market for the supply of bagged salads in Sweden - where only one significant competitor would have remained - and resulted in commitments being offered to divest Dole’s bagged salad business in Sweden.