Competitive Edge: Competition & EU law news - December 2019

By Anthony Rosen, Pauline Kuipers, Morten Nissen, Jose Rivas, Hein Hobbelen

12-2019

Keeping you up to date on Competition & EU law developments in Europe and beyond

Large tech merger provides an early opportunity to test the fitness of the competition regime in 2020

As we look ahead to 2020, Google's proposed acquisition of Fitbit, one of the most well-known fitness trackers, for $2.1 bn will provide an opportunity to test the fitness of the competition regime. Throughout 2019, competition authorities and Governments across the globe have scrutinised Big Tech and examined competition in digital markets. We reflect on the vibrant debate and key themes arising from the interventions.

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Bird & Bird news


Updates from our network

EU
Evaluation of EU competition rules on horizontal agreements: public consultation open

Australia
Australian Government publishes response to ACCC's Digital Platforms Inquiry

Czech Republic
The Chairman of the Office for the Protection of Competition confirms fine imposed on booking.com for entering into prohibited vertical agreements

Denmark
Danish Supreme Court: Road marking consortium was illegal

Finland
The merger between Kesko and Heinon Tukku proposed for prohibition by the Finnish Competition and Consumer Authority

France/Germany
French and German competition authorities focus on potential competitive risks associated with algorithms

Germany
Draft Bill for Amendment of German Act against Restraints of Competition (ARC) published

Hungary
The Hungarian Competition Office imposes record fine on Facebook

Italy
Abuse of dominant position in the air transport market. The Italian Supreme Court reinstates the criteria needed to determine the “relevant market”

Poland
The Polish Office of Competition and Consumer Protection imposes a record-high fine for not providing information requested

Singapore
The Competition and Consumer Commission of Singapore Approves Removal of Emirates' Singapore-Brisbane Capacity Commitments; Public Feedback Sought on Proposed Commercial Cooperation between Singapore Airlines and Malaysia

Spain
The Spanish Competition Authority fines major media companies in Spain with more than €77 million for foreclosing the television advertising market

The Netherlands
Dutch court applies EU competition law notion of undertaking

Dutch competition authority fines company € 1,84 million for removing WhatApp chats during dawn raid

UK
UK Competition Appeal Tribunal dismisses Royal Mail’s appeal and upholds Ofcom’s largest ever fine


EU

Evaluation of EU competition rules on horizontal agreements: public consultation open

On 6 November 2019, the European Commission launched a public consultation on the Horizontal Block Exemption Regulations ("HBERs") – the Research & Development Block Exemption Regulation ("R&D BER") and the Specialisation Block Exemption Regulation ("Specialisation BER"), and the accompanying Guidelines on horizontal cooperation agreements. The HBERs exempt agreements between competitors (so-called horizontal agreements) from the prohibition of Article 101 (1) TFEU which, it can be assumed, almost certainly satisfy the conditions of Article 101(3) TFEU.

In view of the expiration of the HBERs on 31 December 2022, the Commission is seeking feedback from public stakeholders the operation of the HBERs in order to evaluate their effectiveness, efficiency, relevance, coherence and EU added value.

In Commissioner Vestager's words, the ultimate aim of the review is to make "clear when rival companies can work together to produce better results for consumers." This clarification is particularly needed in light of the growth in digitalisation and the emergence of new market players, such as online platforms, acting as both marketplaces and retailers.

In some of the submissions received to date, stakeholders have focused on standard essential patents and FRAND negotiations within patent pools and standard development organisations and on joint purchasing agreements by retail alliances. Stakeholders have also requested clarification on the information exchange rules between competitors.

The public consultation will be open until 12 February 2020. Feedback will be taken into account for further development and fine tuning of the initiative. In principle, feedback will be published. If you want to provide feedback on a no-name basis, we may be able to assist you. Please do not hesitate to reach out to any of our Bird & Bird competition law experts if you would like to explore the options.

Link to the public consultation (here).


Australia

Australian Government publishes response to ACCC's Digital Platforms Inquiry

The Australian Government has now published its eagerly awaited response to the Australian Competition and Consumer Commission's ("ACCC") Final report in its Digital Platforms Inquiry. The Digital Platforms Inquiry was undertaken by the ACCC in order to consider the impact of digital platforms (such as Google and Facebook) on competition in the media and advertising services markets.

The Australian Government's response to the Digital Platforms Inquiry represents a significant victory for the ACCC in its efforts to address concerns about the market power of digital platforms and the perceived detriments flowing from an inequality of bargaining power between the digital platforms and Australian media and advertising companies.

By committing to implement most of the ACCC's key structural recommendations, the Australian Government has affirmed the importance of the role that competition law will play in shaping the regulatory settings for digital platforms.

The three key competition law initiatives that the Government has committed to are:

Establishing a new Digital Platforms Branch

The Government has committed to provide $27 million over four years in order to establish a Digital Platforms Branch within the ACCC. This Branch will monitor and report on the conduct of digital platforms in the areas of competition and consumer protection and undertake enforcement activity as required. It will also be responsible for conducting inquiries directed to be undertaken by the Treasurer, including an inquiry into the online advertising and ad-tech services supply chain in 2020 (announced as part of the Government's response).

Developing a new industry code

The ACCC has been directed to oversee the development of a new 'voluntary' code of conduct which will govern the relationships between digital platforms and news media businesses. The code, which will be binding on both platforms and businesses who sign up to it, will aim to address issues which affect the level of fairness and transparency in the dealings between digital platforms and Australian media companies. The ACCC is required to provide a progress report to the Government on the status of the code negotiations by May 2020, with a view to finalising the code later in the year – i.e. by no later than November 2020. This is one of the more controversial recommendations in the ACCC's final report and one that the digital platforms have vocally opposed.

Reviewing Australia's merger laws

The Government has also committed to commence a consultation process on the amendments to Australia's merger laws proposed by the ACCC in its Digital Platforms Inquiry – Final Report. The ACCC's recommendation was that section 50(3) of the Competition and Consumer Act 2010 (Cth), which forms part of Australia's merger control regime (and sets out the matters that must be taken into account in determining whether an acquisition is likely to lessen competition), expressly refer to: (a) the likelihood of the acquisition resulting in the removal from the market of a potential competitor; and (b) the nature and significance of the assets, including data and technology, being acquired.


Czech Republic

The Chairman of the Office for the Protection of Competition confirms fine imposed on booking.com for entering into prohibited vertical agreements

Petr Rafaj, the Chairman of the Office for the Protection of Competition, rejected, by his final decision, the appeal brought by the company Booking.com B.V. ("Booking.com") and confirmed the fine amounting to CZK 8,336,000 imposed on the company for entering into prohibited vertical agreements with a number of its providers.

For the period from 1 May 2009 to 30 June 2015, Booking.com concluded a number of prohibited vertical agreements with providers of short-term accommodation services within the territory of the Czech Republic. According to the finding, this conduct led to the distortion of competition in the market for both the mediation of online reservation of short-term accommodation and the provision of short-term accommodation services in the Czech Republic. At the same time, trade between Member States of the European Union in similar markets was also potentially affected by the conduct of Booking.com. The decision was based inter alia on an extensive investigation, during which the Office addressed hundreds of accommodation facilities.

The anticompetitive conduct in question consisted in Booking.com obliging its contractual partners to comply with the so-called broad price and availability parity clauses (i.e. MFN clauses). This required Booking.com to be granted the same or better conditions regarding the regarding the price of accommodation and the amount of available rooms available for booking than those published on the web sites of the accommodation facility or at other on-line of off-line distribution channel of a contractual accommodation facility.

By its conduct, it was found that Booking.com had prevented and distorted competition in the market, which deprived consumers of the ability to obtain better prices and conditions for short term accommodation options. Please find the relevant press release here.


Denmark

Danish Supreme Court: Road marking consortium was illegal

On 27 November 2019, the Danish Supreme Court delivered its judgment in the expected ''Road marking case'', deciding that two undertakings had infringed the Danish Competition Act by submitting joint bids for a project for the Danish Road Directorate in 2014.

In February 2014, the Danish Road Directorate called for tenders regarding road marking in three districts of Denmark; South Denmark, Zealand and the Capital area. The two major road marking undertakings decided to submit a joint bid through a consortium for all three contracts. The consortium was awarded the contract with the overall lowest price for all three contracts.

The Danish Supreme Court found that the members of the consortium were competitors because the two undertakings each had the capacity to submit bids on a separate basis on one or more of the districts.

Furthermore, the Danish Supreme Court found that the consortium agreement had the object of restricting competition. In essence, this was due to the fact that the consortium agreement concerned the provision of individual services through a joint bid based on a prior allocation of the three districts, which ultimately eliminated the competition between the two undertakings. In addition, the consortium agreement did not foster any synergies in the cooperation between the members of the consortium in the performance of the contract.

Consequently, the Danish Supreme Court concluded that the consortium had infringed Article 6 of the Danish Competition Act and TEUF Article 101(1).

For more information, please refer to the decision from the Danish Supreme Court available in Danish here.


Finland

The merger between Kesko and Heinon Tukku proposed for prohibition by the Finnish Competition and Consumer Authority

On 18 November 2019, the Finnish Competition and Consumer Authority ("FCCA") proposed the Market Court to prohibit the merger between Kesko Oyj and Heinon Tukku Oy, two operators in wholesale services in the foodservice industry. According to the FCCA, the merger would significantly impede effective competition in the sale of daily consumer goods to foodservice customers. Foodservice customers include restaurants, hotels, catering businesses, service stations, and kiosks as well as public sector customers such as schools, kindergartens, and healthcare units.

The merging parties are broadline distributors offering a broad range of products and serving foodservice customers nationally. As foodservice customers procure approximately 70–80 per cent of their purchases from broadline distributors, the competitive constraint imposed by the specialist suppliers and manufacturers was considered to be weak by the FCCA. According to the FCCA, the proposed merger would lead to a dominant position with a market share of up to 60–70 per cent. According to the FCCA, the merging parties had already been competing for the same customers in the same region and their merger would therefore lead to a significant impediment of effective competition. According to the FCCA, the remedies submitted by Kesko were not sufficient to address the relevant competition concerns.

The proposal for prohibition at hand is the fourth since the beginning of merger control in Finland in 1998. All of the mergers which were previously proposed for prohibition were ultimately approved by the Market Court, albeit with stricter conditions than had been proposed to the FCCA.

Recently, it has often been the case that in the second phase of merger investigations, the FCCA applied for extension from the Market Court to review the transaction. In this case, the FCCA applied for the extension twice and, despite the fact that the notifier opposed the second extension, the extension was granted both times. In light of this, we recommend that operators envisaging transactions notifiable under the Competition Act take the length and uncertainty of the Finnish proceedings into account in their transactions.

The public version of the proposal is not yet available; please find an English version of the FCCA's press release here.


France/Germany

French and German competition authorities focus on potential competitive risks associated with algorithms

Last month, the French Competition Authority ("FCA") and the Bundeskartellamt ("BKA") published a joint study on algorithms and their potential implications from a competition law standpoint. This study presents the results of nearly a year and a half of collaborative work between the two authorities, by providing preliminary answers to the question as to whether algorithms may have detrimental effects on competition. It also constitutes an outline for companies to apprehend the algorithms they use and to ensure antitrust compliance (in particular when it comes to pricing algorithms). The study addresses two potential competitive risks when using algorithms:

Algorithms as a potential catalyst for collusion: the study examines three practical scenarios, allowing companies to identify situations where algorithms might be used to enhance collusion: (i) where an algorithm is used as a supporting/monitoring tool to enforce or strengthen an already existing “traditional” anticompetitive agreement; (ii) where an algorithm is provided by a third party to several competitors, as the similarities between the software services provided may lead in some cases to an alignment between competitors (e.g. pricing coordination); and (iii) where companies use distinct algorithms on their own, as successive interactions between such algorithms might facilitate an alignment of the companies' behaviour.

Algorithms as a potential source of market power: the study identifies interdependencies between algorithms and the market power of companies using them, which could lead to the creation of barriers to market entry (e.g. development costs, access to data to be processed by algorithms, etc.). Besides, an abusive behaviour might also result from a refusal to supply a competitor with essential information relating to algorithms, price discrimination through the use of pricing algorithms, or even self-preferencing practices through the use of ranking algorithms.

The study ultimately concludes that, as far as the current legal framework is concerned, no immediate changes are required to address algorithms-related competition issues for the moment. However, given the ever-changing nature of algorithms, in-depth exchange between regulators and digital stakeholders will be key to address these new issues in the future.

For more information, the complete joint study is available here (in English) and the executive summary here (in English).


Germany

Draft Bill for Amendment of German Act against Restraints of Competition (ARC) published

On 7 October 2019, the German Federal Ministry for Economic Affairs and Energy published the draft bill of the so-called digitization law which partly serves to implement the “ECN Plus” Directive into German law.

According to the new Sec. 19a ARC the German Federal Cartel Office ("FCO") may determine by way of a decree that an enterprise has paramount cross-market significance for competition. The new provision refers to multi-sided markets and companies such as Facebook, Google, Amazon which act as intermediaries and have access to data relevant for competition. The new provision further states that the FCO - after having once determined such cross-market significance - is entitled to prohibit certain practices of the respective enterprises (e.g. preferring own offers vis-à-vis offers of competing enterprises) without having to investigate and demonstrate the unfairness of the respective measure. Thus, the burden of proof for justifying the measure lies with the enterprises.

Moreover, the proposal intends to expand the specific German provision regarding abusive behaviour of companies with relative or superior market strength (Sec. 20 ARC) also to big companies in contrast to the status quo which only refers to small and medium enterprises. As regards private enforcement and cartel damage claims a new paragraph shall contain the (refutably) presumption that transactions with enterprises involved in a cartel are affected by the cartel if they fall in the scope of the cartel (regarding products, time and territory).

Furthermore, the second domestic turnover threshold for merger control notification in the sense of Sec. 35 para. 1 no. 2 ARC shall be raised from EUR 5 million to EUR 10 million in order to reduce the number of competitively unproblematic notifications. The proposal also includes several provisions to ensure acceleration of administrative procedures, regarding interim measures, oral instead of written hearings and the inspection of files. Moreover, in future, companies and their representatives shall be obliged to cooperate with the German competition authority as regards requests for information and submission of documents.

For further information please see the draft bill in German here.


Hungary

The Hungarian Competition Office imposes record fine on Facebook

On 6 December 2019, the Hungarian Competition Office ("GVH") found that Facebook’s practice of referring to its services as “free” on its cover page and Help Centre misled Hungarian users. As a consequence, the GVH held that Facebook violated the Hungarian Unfair Commercial Practices Act ("UCPA") (which implements the EU’s Unfair Commercial Practices Directive). The Competition Council imposed a fine of HUF 1.2 billion (approx. EUR 3.6 million) on Facebook for such conduct.

The GVH launched its investigation in October 2016 and delivered its decision on 6 December 2019. The investigation centred on one specific unfair commercial practice: falsely describing goods or services as “free”. In particular, the investigation focused on the accuracy of the following statements: “it’s free and anyone can join” and “it’s free and always will be”.

The GVH found that Facebook’s services were “free” in the sense that Facebook did not charge an actual fee for access to its services. However, the GVH also held that allowing access to one’s data is inherent to using Facebook’s services. The GVH described Facebook’s business model as “a zero price model” where users offer their data in exchange for access to Facebook. The essence of this model is that Facebook attracts users with its content and collects information on users’ interests, behaviour and purchasing habits. Such user information is then used to sell targeted advertising to Facebook clients. The GVH concluded that although Facebook users do not pay for access to Facebook by monetary means, they nevertheless pay for access to Facebook through their data. Due to the presence of such “payment” by the users, the GVH held that Facebook falsely claimed that its services were “free” to use.

The fine on Facebook is the largest ever imposed by the GVH for an infringement of the UCPA in Hungary.

You can find the press release in English here and in Hungarian here. The full text of the GVH decision (Vj-85/2016/189) can be found here.


Italy

Abuse of dominant position in the air transport market. The Italian Supreme Court reinstates the criteria needed to determine the “relevant market”

On 12 November, the Italian Supreme Court brought to an end a multi-jurisdictional dispute which began in 2008, related to the Ryanair’s refusal to grant online travel agencies ("OTAs") the right to intermediate its tickets by accessing its databases and procedures for flight reservations.

On 4 June 2013, the Court of Milan (Court of Milan, Special Section for Enterprises, Judgment No. 7825) stated that Ryanair had abused its dominant position in the downstream market for online travel agencies in breach of article 102 of the Treaty on the Functioning of the European Union, and ordered Ryanair to pay damages to the OTAs.

The ruling by the Court of Milan was, in part, overturned by the Court of Appeal of Milan (Court of Appeal of Milan, Special Section for Enterprises, 12 October 2015, Judgment No. 3900). The Court rejected the assessment according to which Ryanair held a dominant position in the air transport market, arguing that with its limited market share, selling seats on its flights and denying OTAs access to procedures for flight reservations cannot be deemed to be an abuse of a dominant position.

The Supreme Court, in confirming the judgment of the Court of Milan, reaffirmed the criteria needed to correctly determine the "relevant market" in order to assess Ryanair's abuse of its dominant position. In particular, the Supreme Court specified that for the passenger transport sector 'any connection between city pairs or airports, in application of the city-pair method, or the origin-destination pairs method, constitutes a distinct relevant market. Thus, the Court of Appeal, taking into account the entire European market, erred in its assessment of whether Ryanair was in a dominant position.

The Court of Appeal of Milano is now called to judge again if Ryanair’s practices led to an abuse of its dominant position resulting in discriminatory behavior.

For more information please find the Court’s decision in Italian here.


Poland

The Polish Office of Competition and Consumer Protection imposes a record-high fine for not providing information requested

On 7 November 2019, the Polish Office of Competition and Consumer Protection ("UOKiK") imposed a PLN 172 million (EUR 40 million) fine on Engie Energy Management Holding Switzerland AG ("Company") for not providing requested information.

The fine was imposed due to the lack of response to requests for information that UOKiK sent to the Company in relation to the investigation that UOKiK initiated on 30 April 2018 regarding an alleged breach of Polish merger control rules that consisted of six companies allegedly establishing, without UOKiK’s clearance, a joint venture company financing the implementation of Nord Stream 2 ("Transaction").

The requests for information sent to the Company on 28 November 2018 and 8 January 2019 concerned various types of gas fuel agreements that companies belonging to Engie Group have concluded with Gazprom Export LLC (e.g. transmission, distribution, sales, supply, or storage agreements).

The Company refused to provide such information arguing that UOKiK’s requests for information did not specify their purpose and that the gas fuel agreements do not concern the subject matter of the investigation of the alleged Transaction that UOKiK undertakes.

In such a situation, UOKiK could impose a fine of up to EUR 50 million. In considering the amount of the fine, UOKiK takes into account the circumstances of the infringement, aggravating or mitigating circumstances, and also the fact that the fine should have preventive, repressive and disciplinary functions.

In its decision, UOKiK argues that the Company intentionally refused to provide the requested information and that the refusal had a negative effect on the course and completion date of UOKiK’s ongoing investigation. In particular, UOKiK argues that the requested information is necessary for assessing the market effects of the alleged Transaction as it concerned the natural gas market, which the alleged Transaction may have affected. UOKiK also emphasized the significance of sanctions that may be imposed in its ongoing investigations.

The Company confirmed its plan to appeal against the decision.

The decision no. DKK-217/2019 is available in Polish at UOKiK’s website.


Singapore

The Competition and Consumer Commission of Singapore Approves Removal of Emirates' Singapore-Brisbane Capacity Commitments; Public Feedback Sought on Proposed Commercial Cooperation between Singapore Airlines and Malaysia

Feedback Sought on Singapore Airlines and Malaysia Airlines Cooperation

On 30 October 2019, Singapore Airlines and Malaysia Airlines notified the Competition and Consumer Commission of Singapore (''CCCS'') of a proposed commercial cooperation between the parties covering scheduling, pricing, and sales and marketing. The proposed commercial cooperation would extend to: (i) SilkAir and Scoot Tigerair (being wholly owned subsidiaries of Singapore Airlines); and (ii) FlyFirefly (being the sister company of Malaysia Airlines).

The parties submitted that they provide overlapping direct and indirect routes between Singapore and Malaysia but the competitive analysis should focus on overlapping direct routes:

(i) between Singapore and Kuala Lumpur; and

(ii) between Singapore and Kuching.

The parties also submitted that there is unlikely to be any adverse effect on competition due to intense competition from low cost carriers, alternative modes of transportation and low barriers to entry by potential competitors.

The parties submitted that the proposed commercial cooperation would result in significant efficiencies, as well as consumer and economic benefits from enhanced service offerings, improved connectivity between the countries benefiting their aviation and tourism industries, potential scheduling benefits and time savings, and more competitive fares from the reduction of double marginalisation and better fare combinability.

The public consultation is being conducted from 27 November to 18 December 2019.

Emirates' Application to Vary Voluntary Commitment Approved

On 14 November 2019, the CCCS approved an application by Emirates to remove its capacity commitments for the Singapore-Brisbane route that were originally provided in 2013 for the approval of its alliance with Qantas Airways Ltd ("Alliance").

Emirates cited capacity under-utilisation, falling revenues and rising costs in relation to the route and its intention to withdraw from the route in support of its application.

Qantas maintains its commitment to provide at least 3,290 seats per week for the duration of the Alliance, and both Emirates and Qantas will maintain their commitment to provide a total base seat capacity of 8,246 seats per week for the Singapore-Melbourne route.


Spain

The Spanish Competition Authority fines major media companies in Spain with more than €77 million for foreclosing the television advertising market

On 12 November 2019, the Spanish Competition Authority ("CNMC") imposed a total fine of EUR 77.2 million on Mediaset and Atresmedia, the largest media companies in Spain, for including clauses in their contracts with advertisers and media agencies that foreclosed the access of competitors to the television advertising market.

In particular, the CNMC identified three practices that breached Articles 1 of the Spanish Competition Act ("LDC") and 101 TFEU:

(1) bundling the acquisition of television spots in their channels with the highest audience shares with all their other channels. The advertisers' freedom to design an advertisement campaign was further diminished by imposing the so-called simulcast (i.e. the simultaneous broadcasting of the advertising content on all the channels of each company);

(2) establishing minimum advertising quotas that committed advertisers to devote a significant percentage of their funds for a general advertising campaign to the contracting of television advertising with Mediaset and Atresmedia. The anticompetitive effects were reinforced by the fact that both media companies set mutually compatible quotas, reducing the competition between them; and

(3) paying additional premiums to media agencies which acted as intermediaries with advertisers in the form of conditional and retroactive rebates with the objective of increasing the allocation of advertising to Mediaset and Atresmedia's channels.

Interestingly, the CNMC did not reach the conclusion that these practices were the result of an agreement or concerted practice between the two media companies. Instead, the CNMC found that each company independently infringed article 1LDC/101 TFUE by entering into the agreements with the advertising companies. Nevertheless, the cumulative negative effects of the conduct of both companies (their joint share in the television advertising market accounts for more than 85%) was taken into account.

The CNMC concluded that, as a result of these practices, other independent channels faced problems to compete under equal conditions with the comparable channels -in terms of audience shares- owned by Mediaset and Atresmedia. The CNMC opined that, in the long term, these practices would foreclose competitors in the television advertising market by hampering the ability of third-party channels to make their programs profitable.

For more information, please find the CNMC's final decision here (in Spanish).


The Netherlands

Dutch court applies EU competition law notion of undertaking

On 26 November 2019 the Court of Appeal of Arnhem ("Court of Appeal") applied the EU competition law notion of an ‘undertaking’ in a cartel damage claim procedure between TenneT and entities belonging to the Alstom group of companies.

The Court of Appeal ruled that one of these entities formed a single undertaking with its 48% shareholder Alstom. Therefore, this entity could be held liable under Dutch civil law for the competition law infringement of its 48% parent company which was fined in 2007 by the European Commission ("Commission") for participating in the Gas Insulated Switchgear cartel. While this subsidiary was not held liable or even included in the Commission’s investigation leading to this cartel fine.

The Court of Appeal based its decision on a broad application of the reasoning of the European Court of Justice in its Skanska judgment (see: link) of 14 March 2019. The Court of Appeal considered that it follows from the Skanska judgment that the determination of the entity which is held liable for damages resulting from a cartel infringement is governed by EU law. Furthermore, by applying EU law principles, the subsidiary should be considered to be part of the same ‘undertaking’ as its Alstom parent which was held liable by the Commission for the cartel infringement.

The Court of Appeal dismissed the argument that the reasoning in the Skanska judgment should be limited to cases of ‘economic continuity’, and not in a case of holding parent companies liable for their subsidiaries or even less so as in this civil procedure where a subsidiary is held liable for the conduct of its parent company. It remains to be seen whether this interpretation of the Skanska judgment will be upheld in the event of an appeal to the Dutch Supreme Court.

Please find the judgment of the Court of Appeal here (in Dutch only).


Dutch competition authority fines company € 1,84 million for removing WhatApp chats during dawn raid

On 10 December 2019 , the Authority for Consumers & Markets ("ACM") imposed a fine of € 1,84 million on a company for the failure to comply with the duty to cooperate as laid down in Article 5:20(1) of the Dutch General Administrative Law Act ("GALA").

ACM found that during an on-site investigation at the premises of the company relating to a possible infringement of Article 6(1) of the Dutch Competition Act and/or Article 101(1) Treaty on the Functioning of the European Union ("TFEU") several employees deleted files or data (WhatsApp messages, group chats) and/or removed themselves from WhatApp group chats. As a result, ACM was unable to assess whether the deleted data was relevant for the investigation and possible evidence was destroyed. According to ACM this constituted a serious infringement of the duty to cooperate pursuant to Article 5:20(2) GALA (for which a fine of up to 1% of the annual turnover may be imposed). ACM considers it to be the responsibility of the investigated company that its employees provide ACM with all cooperation that the authority may reasonably require in the exercise of its investigative powers (such as laid down in Article 5:17 GALA).

Although not specifically mentioned in the decision, it is clear that ACM adopted this decision in accordance with the ACM Guidelines on the simplified procedure for the settlement of penalty cases (Richtsnoeren vereenvoudigde afdoening van boetezaken ACM). The company issued a written statement to the ACM in which it recognised the facts and legal assessment of the case, accepted the infringement, provided additional (self-incriminating) proof, accepted a simplified procedure, accepted the method of fining and of the amount of the fine to be imposed and confirmed that it was given sufficient opportunity to state its views. In return, the company was offered a 20% discount on the amount of the fine resulting in an imposed fine of € 1,84 million.

Please find the decision of the ACM here (in Dutch only).

Try our compliance tools, which provide essential information to help prepare and guide you through a dawn raid by antitrust authorities. Explore them here:


UK

UK Competition Appeal Tribunal dismisses Royal Mail’s appeal and upholds Ofcom’s largest ever fine

On 12 November 2019, the Competition Appeal Tribunal ("Tribunal") upheld Ofcom’s decision against Royal Mail Plc (Royal Mail), finding Royal Mail’s pricing strategy in relation to bulk mail delivery services to be discriminatory and an abuse of dominance.

Royal Mail first announced the introduction of differential prices for bulk mail operators through contract change notices in January 2014. Whistl UK Limited (Whistl), one of Royal Mail’s major competitors in the UK postal sector, relied heavily on Royal Mail’s final delivery service for sending bulk business mail, such as gas and utility bills and bank statements. Whistl (formerly TNT Post) had planned to set up its own final delivery service in competition with Royal Mail, but alleged the new differential prices made its end-to-end operations and future plans uneconomic. Soon after Ofcom opened an investigation, Royal Mail suspended and then formally withdrew the new prices.

In August 2018, after a four year investigation, Ofcom found Royal Mail’s pricing scheme infringed the Chapter II prohibition under the Competition Act 1998 and issued its largest ever fine of £50m. Royal Mail appealed the decision, arguing that, among other things, the new prices were never applied in practice, were not improperly discriminatory, did not cause a competitive disadvantage, and in any case were objectively justified. Royal Mail also objected to an aspect of Ofcom’s procedure and to the principle and size of the penalty. The Tribunal unanimously dismissed Royal Mail’s arguments on all six grounds, finding that Royal Mail had abused its dominant position by pursuing a deliberately discriminatory pricing strategy to limit nascent competition from its only significant competitor in the delivery market, Whistl. Despite the price increases never being implemented, the Tribunal was not persuaded that Royal Mail’s contract change notices were merely preparatory. They were a formal, definitive and public step necessary for the adoption of the new prices and were intended to, and did, cause customers to make appropriate changes to their activities.

The Tribunal’s judgment is significant as it provides detailed guidance on whether conduct is an abuse of dominance and holds that it is not necessary to carry out an ‘as efficient competitor’ test before finding such pricing conduct to be abusive.

Royal Mail is currently considering seeking permission to appeal and Whistl is considering whether to seek damages.

Click here for a link to the full judgment.


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EU State aid seminar with high-level EU Commission speaker held in Brussels

On November 28th our Brussels office hosted the second annual seminar in collaboration with the European University Institute (EUI) in the context of the Florence Competition Programme.

The half-day seminar entitled EU State Aid Policy: the Forecast for the next Five Years featured high-level experts in the State aid arena including keynote speaker Nicola Pesaresi, Head of the State aid Unit on Energy and Environment (DG Competition).

Our Brussels Competition partner José Rivas opened the seminar with Giorgio Monti from the EUI, and Hein Hobbelen presented his observations on State aid policy in the broadband sector in the new Commission term.

The programme, list of speakers, photos from the seminar and all the speakers' PowerPoint presentations are available on the event webpage.