Competitive Edge: Competition & EU law news - February 2019

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Blockchain technology and competition law - issues to be considered

Blockchain has been labelled the single most important innovation since the advent of the internet and many foresee that this information technology has the ability to change the way business is carried out in the world. However, blockchain usually involves direct or indirect cooperation between competitors to varying degrees, therefore each company must consider the risks involved in order to avoid breaching the competition rules. In this article we discuss some issues to consider when applying competition law to blockchain.

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Updates from our network

EU - Public consultation on EU vertical agreements launched
Australia - Collective bargaining guidelines for small business
Belgium - BCA imposes interim measure on Norkring
Czech Republic - Czech competition authority fines Booking.com for allegedly restricting competition
Denmark - Danish competition authority establishes abuse of dominance case in the market for ambulance services
Finland - Enhanced co-operation between Nordic competition authorities
France - Interim measures imposed on Google
Germany - FCO finds Facebook to be dominant in the German market for social networks
Hungary - Hungarian National Association of Home Decorators found to restrict price competition on the Hungarian home decorator market
Italy - Privacy consent and abuse of dominant position
The Netherlands - Simplified settlement guidelines
UK - CMA updates its guidance for competition director disqualification orders

EU

Public consultation on EU vertical agreements launched

The European Commission has initiated a public consultation –which was launched on the 4th of February 2019- on the current vertical block exemption regulation ("VBER") along with the Commission Notice providing guidance on the interpretation of the VBER and Article 101 of the Treaty on the functioning of the European Union ("VGL") to determine whether they should be prolonged, revised or allowed to lapse.

This public consultation represents one of the methods of information gathering in the evaluation of the VBER, together with the VGL, which was launched on 3 October 2018 (a fitness check roadmap has previously been submitted and feedbacks have already been collected in this context). The current VBER is due to expire in 2022, and the public consultation is aimed at collecting via an online questionnaire in-depth and high quality views and evidence from the public and stakeholders relating to market developments and the main competition issues.

The online questionnaire raises in particular the question of a potential need for a revision of the VBER in light of recent developments during the past 5 years and points out the increased importance of online sales and the emergence of new market players. Besides, many questions relate to the legal certainty of both the VBER and the VGL in order to assess whether vertical agreements and/or specific clauses are exempted from Article 101 of the Treaty and whether the costs generated by this assessment are proportionate to the benefits induced.

A link to the public consultation can be found here (respondents can choose to remain anonymous while submitting their contribution).

The consultation period is set to expire on the 27th of May, 2019.

Australia

Australian competition authority (ACCC) publishes collective bargaining guidelines for small business

On 20 December 2018, the Australian Competition & Consumer Commission ("ACCC") published guidelines on collective bargaining for small businesses, including agribusinesses ("Guidelines"). Whilst collective bargaining can generally lead to more efficient negotiations, better access to information and scale efficiencies, it also risks infringing competition laws, particularly those relating to secondary boycotts and cartel conduct. The Guidelines provide an overview of how businesses can go about notifying or seeking authorisation of proposed collective bargaining from the ACCC.

Furthermore, given the well-established efficiencies of collective bargaining for small businesses, the ACCC is also considering the introduction of a collective bargaining 'class exemption' (similar to the block exemptions of the EU) to allow small businesses, agribusinesses and franchisees to negotiate collectively with their customers, suppliers, or franchisors. If introduced, it will be the first class exemption that the ACCC has implemented since being given the power under the Harper Review reforms to the Competition and Consumer Act 2010 (Cth) in 2017. The Guidelines can be accessed here.

Belgium

Belgian Competition Authority (BCA) imposes interim measure on Norkring in order to ensure the continuity of the FM broadcasts of the public broadcaster VRT

This decision of 22 January 2019 is the next step in an eventful public procurement procedure and it confirms the preference of the Belgian Competition Authority ("BCA") to tackle cases via interim measures.

Norkring has a service agreement to transmit the FM broadcasts of VRT that runs until 5 March 2019. In a public procurement procedure, VRT awarded Broadcast Partners an agreement for the subsequent period.

Broadcast Partners relies on the use of four specific transmission towers owned by Norkring. Norkring however allegedly refused to conclude an agreement with Broadcast Partners to ensure the continuity of service. The Competition College ruled that VRT did not demonstrate that the refusal would damage its interests. Nevertheless, it ruled that the general economic interest in continuity of the performance of VRT's public service is sufficiently important to warrant interim measures. It therefore obliges Norkring to continue the provision of services from the four transmission towers, from 5 March 2019 onwards under the conditions which Norkring proposed in its bid in the public tender until an agreement has been reached or until (whichever comes first) the Commercial Court rules on the cease and desist requested by Broadcast Partners.

Please find the link to the full decision here (in Dutch only).

Czech Republic

Czech competition authority fines Booking.com for allegedly restricting competition

On 18 December 2018, the Czech Office for the Protection of Competition ("Czech NCA") announced in a press release imposing a fine of in total CZK 8,336,000 (approx. EUR 322,000) on Booking.com for infringing the Act on the Protection of Competition by concluding illegal vertical agreements with various accommodation establishments.

According to the press release, accommodation establishments were required to provide Booking.com users with at least the same or better prices and conditions than available via the accommodation establishments' own websites. In other words, as a result of the agreement with Booking.com, the accommodation establishment could not offer better terms (lower prices or better availability) than those agreed with Booking.com.

The decision was subject to appeal. No information as to whether Booking.com challenged the decision is currently publicly available. Please find the press release summarizing the decision of the Czech NCA (S0664/2015) here (in Czech only).

Denmark

Danish competition authority establishes abuse of dominance case in the market for ambulance services

On 30 January 2019, the Danish Competition Council ("DCC") established that Falck abused its dominant position (Danish Competition Act § 11 - Article 102 TFEU), by excluding the Dutch company BIOS from the Danish market for ambulance services. Falck is the largest provider of ambulance services in Denmark but lost a public tender for the provision of ambulance services in the Region of Southern Denmark from September 2015 and 10 years forward to BIOS. The alleged abuse by Falck consisted of a series of actions creating uncertainty and concern with respect to BIOS as a supplier of ambulance services which made it difficult for BIOS to recruit paramedics in the Region.

According to the DCC, the strategy was carried out by secretly conveying negative stories about BIOS to the press and to Falck's employees, and purposefully influencing those paramedics who considered jobs at BIOS, in order to prevent them from applying for jobs at BIOS. This behavior ultimately resulted in BIOS leaving the market. The DCC confirmed that according to EU-case law (e.g. AstraZeneca) isolated acts, which may not individually breach Article 102 TFEU, are capable of constituting an abuse of dominance when the acts occur as part of a general strategy of excluding competitors. Falck has not appealed the ruling and the DCC has as consequence hereof on 4 February 2019 ceded the case to the Public Prosecutor for Serious Economic and International Crime, which may lead to the imposition of fines. The Danish decision joins case law from France and Italy recognizing denigration as a possible abuse of dominance, whilst these cases have primarily been in the pharmaceutical sector.

Please find the DCC decision here (in Danish only) and a summary of the decision by the DCC in English here.

Finland - Nordic competition law developments

Enhanced co-operation between Nordic competition authorities

The Finnish, Swedish, Danish, Norwegian and Icelandic competition authorities have agreed to enhance their co-operation in antitrust investigations by signing a cooperation agreement on 8 September 2017. Currently, Finland, Sweden and Denmark have already acceded to the new agreement by ratifying it and accession of Norway and Iceland will follow.

According to the Nordic co-operation agreement, Finnish, Swedish, Danish, Norwegian and Icelandic competition authorities will co-operate e.g. through notifications and information exchange in on-going antitrust investigations as well as to merger control issues. The Nordic competition authorities will also be able to submit official requests for information on each other's behalf as well as assist each other in conducting dawn raids. Assistance in dawn raids will be limited to investigations into suspected infringement matters, which means that dawn raids relating to merger control remain outside the Nordic co-operation agreement.

The Implementation Regulation 1/2003 or the EC Merger Regulation 139/2004 do not contain provisions concerning official information requests by and between Member States, so in this respect the possibility to oblige companies to provide information relating to proceedings in other Nordic countries is a significant extension to the extra-territorial reach of the competition authorities in question. Prior to the co-operation agreement, information exchange at the authority level has only been possible between EU member states, i.e. in the Nordics between Finland, Sweden and Denmark. Between EU Member States, information exchange has been limited to article 101 and 102 TFEU cases, leaving merger control investigations outside the scope of information exchange. The addition of merger control investigations in information exchange and the inclusion of EEA EFTA-members Norway and Iceland in the co-operation, enhance the possibilities of co-operation between Nordic competition authorities even further. The co-operation between Nordic competition authorities will also be possible in cases where trade between Member States has not been appreciably affected by the practices under investigation, i.e. local infringements with no EU community dimension.

The desire to enhance co-operation in the Nordics has been motivated by the findings of the competition authorities suggesting restrictions occurring across the Nordics in the same markets and between the same companies. The competition authorities also want to benefit from market information from other Nordic markets where e.g. similar mergers or acquisitions have taken place.

Please find the cooperation agreement (in English) here.

France

Interim measures imposed on Google for its Google Ads activities

On January 31st 2019, the French Competition Authority (“the FCA”) imposed interim measures on Google following a complaint lodged in May 2018 by Amadeus (a company offering directory enquiry services) alleging that Google had abused its dominant position on the online search advertising market and engaged into abusive practices by suspending some of its Google Ads accounts.

Pending its decision on the merits, the FCA concluded that the conditions for the imposition of interim measures were fulfilled given that the alleged practices might :

• infringe competition law : Google's practices are likely to be characterised as a sudden termination of commercial relations under conditions that are neither objective nor transparent and are also likely to be analysed as an abuse of dominant position given their discriminatory nature;
• cause serious and immediate damage to competition or to a stakeholder in the sector : the suspension of Google Ads accounts resulted in a serious and immediate damage for Amadeus' business activities.

The FCA ordered Google to clarify the Google Ads rules applicable to electronic paid information services and to review Amadeus' situation under these new rules.

For more information : please refer to the full decision (in French) here or the press release (in English) available here.

Germany

German Federal Cartel Office ("FCO") finds Facebook to be dominant in the German market for social networks and prohibits the company from combining user data from different sources

The FCO issued a decision in its Facebook proceeding on 7th February 2019 which concerns the interface between competition law and data protection law.

Facebook’s terms and conditions require the user to consent to Facebook’s unrestricted collection of user data and assignment of non-Facebook data to the Facebook user account. The users’ consent, thereby, also includes data collected outside of Facebook’s website, e.g. collected on Facebook-owned services like WhatsApp and Instagram or on third party websites and apps. In the FCO’s opinion this practice constitutes an abuse of a dominant market position. As a consequence the FCO prohibits Facebook from collecting data from non-Facebook websites without the users’ explicit and voluntary consent. The FCO also prevents Facebook from excluding users from its services if they do not consent to Facebook’s unrestricted collection and merger of data.

The decision is subject to appeal to the Higher Regional Court of Düsseldorf within one month.

For more information please see the respective press release of the FCO in English here. The FCO also published some background information on the whole Facebook proceeding that you may find here.

Dr. Jörg Witting, Bird & Bird competition partner in Düsseldorf, also published an article on the Facebook decision of the FCO (please see here).

Hungary

Mild sanctions levied on the Hungarian National Association of Home Decorators for restricting the price competition on the Hungarian home decorator market

The Hungarian Competition Authority (“GVH”) had found that the Hungarian association of home decorators (in Hungarian: Lakberendezők Országos Szövetsége, “LOSZ”) restricted price competition in the period between 1997 and 2016 by issuing, and monitoring compliance with, its Fee Regulation in the absence of a statutory authorization to do so. The GVH imposed a complex disclosure and information provision obligation on LOSZ and ordered the implementation of a compliance program.

The LOSZ decision is peculiar on not one, but two levels:

• The GVH was mild on sanctions and did not find it necessary to impose a fine on LOSZ even though it restricted price competition for over almost two decades.
• The last time the GVH reviewed price regulations by professional associations was in 2011.

You may find the complete text of the GVH’s decision on the LOSZ case (VJ/73/2014) here.

Dawn Raid Communication

In early 2019, the GVH issued a communications on dawn raids, detailing the process, the regulatory background and the rights and obligations of the GVH and the undertakings subject to such dawn raid. The Dawn Raid Communication summarized the GVH’s practice in dawn raids so far and can be found on the GVH’s website (in Hungarian only) here.

Italy

Privacy consent and abuse of dominant position

On 8 January 2019, the Italian Competition Authority ("AGCM") fined Enel (the national former incumbent in the electricity sector) for over EUR 93 million and Acea (the Rome municipality utility company) for over EUR 16 million for abusing dominance in regulated retail energy markets to gain customers in competitive markets. Both Enel (at least from January 2012 to May 2017) and Acea (from 2014 until the end of 2017) have collected the privacy-consent statements of the customers supplied under the "greater protection" regime to contact them for commercial purposes and make "targeted" offers to these customers with a view to encourage them to sign electricity supply contracts on the free market.

In 2017, the AGCM opened an investigation into various subsidiaries of the holding companies, Enel, Acea and A2A, for an alleged abuse of a dominant position (Art. 102 TFEU) consisting in the implementation of the following non-replicable practices vis-à-vis non-vertically-integrated companies:

• commercial exploitation of the information regarding the personal data and the billing data of the customers to be served under the “greater protection” regime;
• in the case of Enel, engaging with a campaign aimed at reacquiring customers from the competing company Green Network, allegedly also through defamation campaigns against the latter;
• in the case of A2A, the proposition of offers directed at its customers under the “greater protection” regime.

In the AGCM's Decision, these practices were intended "to alter future competitive scenarios resulting from the complete market liberalization at the expenses of non-vertically-integrated electricity suppliers" and, according to the applicant the Italian Association of Wholesalers and Energy Traders ("AIGET"), "to accelerate the ongoing process of emptying the pool of customers still in the 'greater protection' regime in the context of the possible implementation of competition-enhancing policies for the provision of electricity services to customers who have not yet chosen a supplier at the time of the termination of the 'greater protection' regime".

For more information please see here the press release and the Decisions of the AGCM in Italian.

The Netherlands

Dutch competition authority publishes settlement guidelines

On 21 December 2018, the Dutch Authority for Consumers & Markets (“ACM”) published guidelines on its simplified settlement procedure (“Settlement Guidelines”). This procedure may be followed if the ACM intends to impose a fine and the undertaking or person involved is prepared to admit to the allegations and to accept the fine (i.e. waive the right to appeal). The ACM can then simplify the procedure and take an abridged decision which saves time and costs. Parties who cooperate in settling the case in this manner are eligible for a 10% reduction of the fine. The Settlement Guidelines seek to clarify when and how the ACM applies the simplified settlement procedure. Please find the ACM Settlement Guidelines (in Dutch) here.

UK

UK Competition & Market Authority ("CMA") updates its guidance for competition director disqualification orders

In the event of a UK competition law infringement, the CMA can seek a Competition Disqualification Order ("CDO") for up to 15 years against (i) any director of company who has committed a breach of competition law and (ii) if the court considers that the individual's conduct as a director makes him/her unfit to be concerned in the management of a company.

It is a power which to date has only been used twice, firstly in 2016 and then again in 2018 in the context of the CMA's investigation into anticompetitive arrangements between estate agents. The updated guidance came into effect from 6 February 2019 and streamlines the process leading up to a CDO.

The CMA will decide whether or not to investigate a director based on the circumstances of each case, the evidence and the public interest in the director disqualification. There will no longer be a staged analysis. Instead the CMA lists non-exhaustive factors it will consider including, the conduct of the director during the investigation, any previous breaches of competition law and the nature and extent of the director's responsibility or involvement. It has also diluted a director's ability to make oral representations. The CMA can also now apply for a CDO before the expiry of the period of a company to appeal an infringement.

Whilst the CMA will not apply for a CDO against current or former directors of a company which has benefitted from leniency, it may consider applying for a CDO if the director failed to cooperate in the leniency process or throughout an investigation.

A link to the full guidance document is available here.