Competitive Edge: Competition & EU law news - March 2019

By Pauline Kuipers, Anne Federle

03-2019

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

Also available as a pdf >

The interplay of data protection and competition law – issues beyond the Facebook case

The recent Facebook decision of the German Federal Cartel Office has triggered a wide-ranging debate on the relationship between competition and data protection law. The Facebook decision deals with one aspect of the interface between these two areas of law. But there are a number of other interesting aspects all of which have significant practical relevance.

Read more >


Updates from our network

EU - EU General Court quashes the Commission's decision on Belgian excess profit rulings
Australia - Australia's first 'gun jumping' case
Belgium -
The Belgian Competition Authority’s new enforcement priorities
Czech Republic -
Czech competition authority launches a consultation on the transposition of the ECN+ directive
Denmark -
Demolition Company fined in bid rigging case
Finland -
Finnish competition authority to assess the effects of the Finnish gambling monopoly
France -
Competition in the audiovisual sector: French government urged to reform the current regulatory framework
France & Germany -
The EU Commission’s prohibition of Siemens' proposed acquisition of Alstom calls politicians into action
Hungary -
The GVH’s gun-jumping practice further crystallized
Italy -
Ryanair and Wizz Air fined in Italy over cabin bag policy
Spain -
Report from the Spanish Competition Authority on recent restrictions imposed on Uber and other ride hailing companies
The Netherlands -
Dutch competition authority publishes horizontal and vertical restraint guidelines and its policy rule on informal opinions
UK -
Provisional findings in the potential merger between two of the UK's biggest supermarkets
Awards & Recognition


EU

EU General Court quashes the Commission's decision on Belgian excess profit rulings

On 14 February 2019, the EU General Court annulled the European Commission's ("EC") State aid decision of 11 January 2016 on Belgian excess profit rulings ("EPR").

Unlike most State tax aid cases, the Belgian EPR case is not about individual aid but about an aid scheme as defined in Article 1(d) of Regulation 2015/785 (i.e., is not about an individual tax ruling but about a government program on the basis of which individual aid awards may be made to undertakings).

In its decision of 11 January 2016, the EC found that the Belgian EPR amounted to a State aid scheme under which the taxpayers that obtained an EPR were considered to have received State aid. Belgium was ordered to recover the alleged unlawful aid in the amount of more than 700 million EUR from about 55 beneficiaries.

Since 2005, the Belgian EPR allowed Belgian entities belonging to a multinational corporate group to exempt from corporate income tax the so-called "excess profit" generated because of the taxpayer's membership of a group (resulting from cost savings and economies of scale) corresponding to the profit that exceeds the profit that a standalone entity operating in similar circumstances would have generated.

The General Court found that as the Belgian tax authorities had a margin of discretion over all of the essential elements of the EPR, allowing them to influence the amount and the characteristics of the tax exemption and the conditions under which the exemption was granted, this precluded the existence of an aid scheme. This was also precluded by the fact that excess profit exemptions did not follow automatically from Belgian tax law, but necessarily depended on the adoption of further implementing measures (i.e. tax rulings) by the Belgian tax authorities. Finally, the General Court, noted that there was not a systematic approach on the part of the Belgian tax authorities and that the taxpayers eligible for an excess profit ruling were not defined in a general and abstract manner. But the Court did not need to examine all the other grounds of appeal and so did not consider the Commission's new theory of selectivity (as specifically applied to tax cases and which underpins all of the tax decisions that are under appeal). This judgment thus has limited predictive value for the pending tax aid cases which are not about aid schemes but about individual aid.

The ball is now in the Commission’s court. The question is whether the Commission will accept the Court's judgment or whether it will appeal it before the Court of Justice. Even if the Commission accepts the judgment, it is, however, not excluded that it would continue an investigation into individual EPRs to determine whether these rulings, while not being part of a State aid scheme, could nevertheless constitute individual State aid. In the meantime, the Belgian tax authorities may retain the alleged aid that has been reimbursed by the relevant taxpayers until the judgment of the General Court cannot longer be appealed, and in the case of an appeal, until the Court of Justice renders a final (favourable) decision.

The General Court’s judgment can be found here


Australia

Australia's first 'gun jumping' case

In July 2018, the Australian Competition and Consumer Commission (“ACCC”) brought its first gun jumping cartel case against Cryosite Limited (“Cryosite”). Gun jumping occurs when parties to a merger or acquisition coordinate their activities prior to the completion of their transaction. This conduct can amount to cartel conduct in Australia, as it often involves agreements between competitors. Gun jumping cases have been brought by competition regulators in other jurisdictions such as the US and the EU, and it seems that the ACCC will follow suit.

In this particular case, the ACCC instituted proceedings against Cryosite alleging that an asset sale agreement between it and its competitor, Cell Care, which related to Cryosite's cord blood and tissue banking business, contained provisions prescribing conduct which amounted to cartel conduct. More specifically, the asset sale agreement contained a provision requiring Cryosite to refer all customer enquiries to Cell Care after the agreement was signed, but before the acquisition was completed. The ACCC alleged that this resulted in Cryosite 'jumping the gun' and, because the parties had not yet formed a single entity, amounted to cartel conduct because it restricted output and allocated customers between competitors.

On 13 February 2019, a decision was handed down by the Federal Court. The Federal Court held, by consent, that Cryosite engaged in cartel conduct in relation to the 'gun jumping' conduct, and it was ordered to pay $1.05 million in penalties. The case serves as a timely reminder for parties to mergers and acquisitions that they must remain independent of each other before the transaction is completed. 


Belgium

The Belgian Competition Authority’s new enforcement priorities

On 1 March 2019, the Belgian Competition Authority (“BCA”) published its annual enforcement priorities, which are largely similar to those of 2018:

  • Telecommunications – the BCA notes that the increased reliance on bundled offers in the telecom retail markets has the effect of increasing consumer loyalty. The BCA indicates that it will safeguard market entry. The inclusion of telecommunications in the BCA's list does not come as a surprise. It reflects the ongoing debate in Belgium regarding the creation of a fourth telecoms operator, to remedy the perceived lack of competition in the market. The BCA's continued attention to the sector can also be seen against the backdrop of European consolidation in the sector.
  • Pharmaceutical sector - the BCA indicates that it will pay attention to all levels of the distribution chain. The focus on pharmaceuticals is not unexpected, given the recent attention of other national competition authorities and the European Commission for the sector. As recently as January 2019, the Commission published an extensive report on the competition enforcement and cooperation concerning the pharmaceutical sector.
  • Public procurement – public tenders are of great importance to the Belgian economy, representing approximately 10-15% of the GDP. It comes as no surprise that the BCA continues to focus on this regulatory area.

The other priority sectors are distribution and retail, services sector and logistics. The BCA indicates that it will try to seek a balance between the enforcement against evident infringements and more complex and innovative cases.

Full text in Dutch available here and in French here.


Czech Republic

Czech competition authority launches a consultation on the transposition of the ECN+ directive

At the beginning of this year, the European Parliament and the Council of Ministers issued Directive (EU) 2019/1 to "empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market" (the "ECN+ Directive").

The public enforcement of Articles 101 and 102 of TFEU is carried out by national competition authorities in parallel to the European Commission. Together, national competition authorities and the Commission form a network of public authorities that apply the Union competition rules in close cooperation (the “European Competition Network”).

The competition authorities and the national courts are obliged to apply Articles 101 and 102 of the TFEU to agreements, to decisions by associations of undertakings, to concerted practices or to the abuse of dominant position which are capable of affecting trade between Member States. In practice, national competition authorities apply national competition law in parallel with Articles 101 and 102 TFEU.

The ECN+ Directive should ensure that national competition authorities have necessary guarantees of independence, resources and enforcement and fining powers to apply Articles 101 and 102 TFEU effectively. The application of national competition law should not lead to a different outcome to the one reached by national competition authorities under EU law. It is therefore essential to equip them with the same guarantees of independence, resources and enforcement and fining tools necessary to ensure that a different outcome is not reached.

The Czech Republic is obliged to transpose the ECN+ Directive into national legislation within two years (by 4 February 2021). The Office for the Protection of Competition, as the central authority of state administration in this area, is therefore launching a consultation and calls all interested parties, in particular competitors, lawyers and academics, to provide their views and opinions on transposition of the ECN+ Directive by 1 April 2019.

Please find more information here (in Czech only).


Denmark

Demolition Company fined in bid rigging case

On 8 February 2019, the City Court of Hillerød concluded that CMP Nedrivning ApS (a Danish demolition company) had violated section 6 of the Danish Competition Act (corresponding to Article 101 TFEU) by coordinating prices with competing demolition companies.

The company was found to be part of bid coordination by exchanging prices with its competitors related to 11 projects during the period of September 2011 to October 2013. The violations include bids regarding both public and private customers. The Court stated that all projects were committed intentionally.

Due to the number of projects where CMP had coordinated prices, and the fact that CMP won all 11 projects, the Court assumed that the company achieved financial gain. Therefore, it was a serious violation even if the total contract sum was relatively small (DKK 11-12 million). The company was fined DKK 5 million (€ 670.175) and two members of the management were fined DKK 125,000 each (€ 16.754). The case is part of a case complex with several demolition companies. In the following months, rulings in the remaining cases in the demolition industry are expected.

The full court decision can be read here (in Danish only).


Finland

Finnish competition authority to assess the effects of the Finnish gambling monopoly

The Finnish Competition and Consumer Authority ("FCCA") has announced that it will carry out an extensive assessment about the effects of the Finnish gambling monopoly. When compared internationally, gambling in Finland is exceptionally common and the Finns are the most avid gamblers in Europe.

According to the FCCA, an integral part of this assessment is whether the existence of the monopoly is still justifiable and how gambling operations should be regulated in Finland. The FCCA points out that with the increasing popularity of online gaming, many other countries e.g. Denmark and Sweden have recently moved from monopolies to license based gambling system. The FCCA might conclude its assessment by the end of this year.


France

Competition in the audiovisual sector: French government urged to reform the current regulatory framework

On 21 February 2019, the French Competition Authority (“FCA”) published its opinion regarding the forthcoming reform of the audiovisual regulatory framework, at the request of the French National Assembly.

The current framework imposes significant obligations on French TV operators, consisting of broadcasting quotas, production quotas (obligation to fund certain types of audiovisual works with no possibility to retain long-term exploitation rights), a ban on (i) targeted TV advertising and (ii) TV advertising in particular economic sectors, and a specific merger control mechanism. In return, TV operators are granted free-of-charge terrestrial frequencies. The rationale of that framework was the preservation of cultural and media pluralism.

In its opinion, the FCA noticed that the French audiovisual sector is significantly disrupted by the digital revolution and the increasing power of "over the top" (“OTT”) players (i.e. Netflix, Amazon Video, Youtube). These players provide affordable video-on-demand services increasingly attractive to consumers, as they offer freedom of choice both in terms of content and distribution mode: consumers decide to watch what they want on any device, where and when they want. As OTT players do not use terrestrial frequencies, they are not required to comply with the above described framework. This allows them to freely and massively invest in the content they want, while ensuring that they retain long-term exploitation rights.

In this context, the FCA concluded that the current regulatory framework is outdated as it does not allow French TV operators to compete effectively with the new players. As a consequence, the FCA urged the French government to reform the audiovisual sector by adopting the following measures:

  • lift the targeted TV advertising ban and a number of sector-based TV advertising bans;
  • gradually reduce the production quotas of independent audiovisual works, and allow TV operators to retain broader exploitation rights on the content they fund;
  • lift the ban on broadcasting films on specific weekdays; and
  • revise the specific merger control system.

For more information, please refer to the full opinion of the FCA here (in French) or the press release available here (in English).


France & Germany

The EU Commission’s prohibition of Siemens' proposed acquisition of Alstom calls politicians into action

Following an in-depth investigation, the European Commission (“EC”) decided on 6 February 2019 to prohibit Siemens’ proposed acquisition of Alstom. According to the EC the combining of Siemens’ and Alstom’s transport equipment and services in a new company fully controlled by Siemens would have created an undisputed market leader in certain rail signalling markets and a dominant player in the market for high-speed trains (e.g. ICE and TGV). By prohibiting the proposed transaction, the EC aims at protecting competition in the European railway industry and indirectly the European train passengers. In particular, the EC had serious concerns that the transaction would have led to higher prices for customers, less innovation and foreclosure of smaller competitors which finally would in particular affect European train passengers.

While the German Federal Cartel Office supports the EC’s decision, a strong opposition is growing especially from some German and French politicians against the EC’s recent merger control policy related to the above mentioned decision. Germany’s Minister of Economy, Peter Altmaier, supported by the German Chancellor Angela Merkel and the new CDU leader Annegret Kramp-Karrenbauer call for a relaxation of the European merger control law in particular to protect European “global player” companies from powerful competitors outside the European Union. In this respect it is also noteworthy that the German Chancellor Merkel mentioned that the current European framework, inter alia EU competition law, impede the “free development”. In particular, some stakeholders raise the concern that companies need “a certain size to compete successfully” especially with powerful competitors from China and the USA and they have already found a supporting partner in the French Minister of Economy and Finance Bruno Le Maire.

According to the jointly and recently created “Franco-German Manifesto for a European industrial policy fit for the 21st Century” the European competition rules shall be revised in order to enable European companies to compete on a world stage. For this purpose, the idea is brought forward to implement a right of appeal of the European Council to ultimately override decisions of the EC. Against this background, the German government now seems to intend proposing changes to the European competition law during Germany’s EU-Presidency in 2020 which in special cases shall allow the creation of powerful “European industrial champions”.

The announced plans have already been criticized in particular by German economists and opposition politicians.

Political players speaking out in favor of modifying EU merger control sparked a controversial debate about the pros and cons of such legislative intervention. While EU competition law is aiming to safeguard effective competition in geographically relevant product markets – which may well be world-wide markets - , concerns about a perceived lack of reciprocity with regard to market access in some parts of the world gain increasingly weight, namely with regard to China.

From the EU perspective, EU Commissioner Margarethe Vestager commented in the press that the present set of rules represents a strategic choice of having fair competition, that is the present set of rules, they represent a strategic choice […] of having fair competition, that is the right strategic choice for Europe” and that it would make more sense, in her opinion, to use trade and investment barriers against state-subsidized Chinese companies in Europe. As for the other Member States, it would appear that a coalition of 17 of them formed against the Franco-German manifesto. Such coalition, including Belgium, Denmark, Poland, Portugal and Finland, has therefore reportedly warned European Council President Donald Tusk of the growing risk of protectionism raised by the manifesto

It remains to be seen whether this debate will result in actually modifying EU merger control and, if so, whether this will take place on a rather procedural level or touching more on the substance of the EC’s own analytic merger control framework. In any way, modifications being discussed currently would be quite fundamental.

Please find the press release to the EC’ decision here (available in English and French) and the link to the “Franco-German Manifesto for a European industrial policy fit for the 21st Century” (in English) here.


Hungary

The GVH’s gun-jumping practice further crystallized

The Hungarian Competition Authority (the “GVH”) further crystallized its assessment of gun jumping offenses in its decision imposing a fine on ETS Efficient Technical Solutions GmbH (“ETS”) for its failure to notify the acquisition of TGS Engineering Kft. (“TGS”) prior to its implementation (see case Vj/023/2018, dated 13 December 2018 recently published by the GVH).

ETS signed an SPA to acquire TGS in March 2018. The SPA did not include provisions that would have made the closing of the transaction conditional upon the acknowledgement by, or approval of, the GVH. ETS paid the purchase price and thereby became the 100% owner of TGS before ETS notified the concentration to the GVH on 5 June 2018. The GVH acknowledged the concentration on 7 June 2018, but initiated a separate procedure alleging the breach of the implementation ban (i.e., Article 29(1) of the Hungarian Competition Act).

The GVH concluded and confirmed that:

(i) the implementation ban relate to the acquisition of control rights, irrespective of whether those are in fact exercised (see also Vj/44/2017);

(ii) the absence of the registration with the Court of Registry of the acquisition of ownership does not exclude the breach of the implementation ban (with reference to GVH’s general notice No. 6/2017);

(iii) as a general rule, the director or manager of an undertaking may not in fact be in control of that undertaking, but the undertaking or person is in control, which appoints or recalls the director or manager and defines his or her duties and competences;

(iv) only the acquirer may be the subject of an investigation into an alleged gun jumping breach and thus subject of a fine (see also for example Vj/13/2017, Vj/44/2017);

(v) the breach of the implementation ban is a severe violation and therefore a fine cannot be omitted.

In this specific case, the GVH considered the following mitigating factors when defining the amount of the fine: (i) the early implementation could not have caused harm on the market, (ii) there were no circumstances indicating that ETS had actually intervened into TGS’s market behaviour, (iii) ETS voluntarily notified the concentration following its implementation, (iv) ETS and its group have not previously committed a similar violation.

Based on the above, the GVH established the violation of the implementation ban and imposed a fine on ETS of HUF 4.4 million (appx. EUR 14,000). For the entire decision in Hungarian see Vj/023/2018.


Italy

Ryanair and Wizz Air fined in Italy over cabin bag policy

On 21 February 2019, the Italian Competition Authority ("AGCM") concluded two proceedings - launched in September and October 2018 - against the low cost airlines Ryanair and Wizz Air,.

The two investigations showed that, from 1 November 2018 onwards, passengers of the two companies were only allowed to carry only one small bag to be placed under the seat. The overhead lockers previously devoted to transporting large carry-on luggage were, from that date, used by Ryanair and Wizz Air for the new paid service.

The investigations highlighted that the consumption habit of almost all passengers is to travel with large carry-on luggage with them, that carry-on luggage constitutes an essential element of the air transport service and that carrying it along without incurring any additional cost must always be permitted. In fact, according to European air transport legislation, foreseeable and inevitable supplements must be included in the basic price of the service presented at first contact and therefore cannot be deducted from it simultaneously requesting additional sums.

In this context, the AGCM noted that, by requesting a supplement for large carry-on luggage, varying between €5 and €25 (depending on whether the purchase is made at the time of booking, at check-in or at the gate), the two companies increased the price of the ticket in a non-transparent manner, removing from the tariff an essential, foreseeable and inevitable service to passengers.

According to the AGCM, the conducts investigated had the effect of marketing deception on consumers behavior, given that the price to be paid at the end of the booking process was almost always higher than the tariff presented at the beginning of it. Moreover, consumers were likely to experience a misalignment in the booking process when comparing the prices of other companies which include carry-on luggage in their fares.

As a result, the AGCM’s investigation concluded that the changes made by the two airlines to their rules for transportation of large carry-on luggage, i.e. the cabin bags, led to deceiving consumers about the actual price ticket, as the latter no longer included an essential element of the air transport contract – i.e. the "large carry-on luggage” - in the basic fare. The changes made were therefore to be regarded as an unfair commercial practice in breach of Articles 20, 21, para. 1, lett. b) and d) and 22 of the Italian Consumer Code.

The AGCM respectively fined Ryanair and Wizz Air with an amount of 3 million EUR and 1 million EUR.

For more information, please see the Decisions of the AGCM in Italian:

PS11237

PS11272


Spain

Report from the Spanish Competition Authority on recent restrictions imposed on Uber and other ride hailing companies

Under its advocacy role, the Spanish Competition Authority (the "CNMC") published on 17 January 2019 a report on recent regional and local regulations imposed on private-hire driver licences (known as "VTCs") that ride hailing apps - such as Uber - for operating in Spain.

As in other countries, taxi drivers argued that ride-hailing companies unfairly compete with them by offering the same services without the more burdensome applicable taxi regulation (including taxi licenses). Consequently, taxi drivers are intensively demanding the implementation of more restrictive regulations on the operation of VTCs.

For example, Barcelona´s taxi drivers have recently succeeded in making the Catalonian regional government approve a set of restrictions applicable to VTCs. The most relevant one is that VTCs need to be hired 15 minutes in advance. Immediately after the announcement of this new regulation, the biggest ride-hailing apps in Spain, Uber and Cabify, decided to stop operating in Barcelona.

Against this background, the CNMC is firmly focusing on the impact on competition of new VTC regulations enacted by some regions and local entities.

In its report, the CNMC concluded that restrictions imposed on VTCs are not compatible with competition law as they do not respect the principles of necessity and proportionality. Consequently, it recommended the following measures to prevent negative effects on competition:

  • a review of the operating conditions in which VTC services operate, avoiding unjustified discrimination between VTC and taxi licenses;
  • the elimination of proportionality ratio of 1 VTC license every 30 taxis; and
  • the adoption of an adequate regulatory framework with more flexibility for the taxis and where VTCs can temporarily provide services in other regions.

More recently, the CNMC's president addressed a letter to all the regional authorities responsible for transport and economy, alerting them about the detrimental effects that VTC regulations are causing to consumers.

Meanwhile, Cabify has announced its return to Barcelona on the basis of a new business model that would allow it to avoid the 15-minute waiting period imposed by newly adopted regulation in Catalonia. This model consists broadly of applying said waiting period only after the moment in which the users sign a one-year renewable transport contract while registering on the app.

For more information, please find the CNMC complete report here (in Spanish).


The Netherlands

Dutch competition authority publishes horizontal and vertical restraint guidelines and its policy rule on informal opinions

On 26 February 2019, the Dutch Authority for Consumers & Markets ("ACM") published both new (horizontal) guidelines on cooperation between competitors (Leidraad: samenwerking tussen concurrenten "Horizontal restraints guidelines") and (vertical) guidelines on agreements between suppliers and customers (Leidraad: afspraken tussen leveranciers en afnemers "Vertical restraints guidelines"). In addition, the ACM also published a new policy rule which sets out its approach on informal opinions (ACM Werkwijze informele zienswijzen "Policy rule on informal opinions").

The new Horizontal restraints guidelines replace the older ACM guidelines of 2013. In the new guidelines, the ACM sets out the general legal framework for cooperation and specifically sets out under which circumstances certain forms of cooperation by competitors are allowed. Compared to the previous guidelines, ACM now also describes its approach with respect to purchasing cartels and agreements on employment conditions such as no-poaching agreements. Please find the Horizontal restraints guidelines (in Dutch) here.

The new Vertical restraints guidelines broadly follow the EU Vertical Block Exemption Regulation ("VBER") and its accompanying European Commission guidelines. ACM discusses the generally-accepted hardcore restrictions such as vertical price fixing, market division and certain online restrictions. These guidelines replace the former strategy and priority policy by the ACM on vertical agreements of 2015. At that time the ACM took the view that in the absence of market power, vertical agreements tend to benefit consumer welfare more often than not. The new guidelines seem to mark a departure by the ACM from this more passive enforcement approach with respect to vertical agreements. You can find the new Vertical restraints guidelines (in Dutch) here.

Finally, the ACM also published a Policy rule on informal opinions. The policy rule sets out seven criteria on which basis the ACM would consider and grant a request by a party for an informal opinion. However, even if these criteria are met, the ACM is free to decide not to provide an informal opinion on the basis of its prioritization policy. Please find the Policy rule on informal opinions (in Dutch) here.

For more detailed information concerning the recently published ACM guidelines, please find a blog on this topic by our colleague Mariska van de Sanden here.


UK

Provisional findings in the potential merger between two of the UK's biggest supermarkets

Sainsbury's and Asda are the second and third largest grocery retailers in the UK respectively, and represent two of the four largest online retailers of delivered goods in the UK. Their networks include supermarkets, convenience stores and petrol filling stations. Both parties also retail general merchandise items such as clothing, electricals and toys.

The proposed merger was announced on 30 April 2018 and would involve Sainsbury's acquiring the entire issued share capital of Asda. Following a request, the CMA agreed to proceed to a second stage in-depth investigation using the fast-track procedure. This procedure is available when it is clear early on that the nature of the proposed merger will necessitate an in-depth investigation, and allows the merging parties to bypass part of the first stage initial investigation and move straight to the second stage. The CMA has now issued its provisional findings in the second stage. The investigation is worth reporting on at this stage because of the procedural issues raised and because of its impact for future mergers in the retail sector.

In the first instance, the parties applied to the UK Competition Appeals Tribunal (“CAT”) mid-investigation claiming that the deadlines set by the CMA were unreasonable. These deadlines concerned the timeframe for the main party hearings and the period for responding to the CMA's working papers. In its judgment, the CAT noted that these were "exceptional circumstances" and ultimately granted the merging parties' application. It is worth noting the CAT's recommendation to give "urgent consideration" to revising the statutory deadlines to provide greater flexibility in cases involving large and complex mergers such as this one. The CAT also emphasised that amending these deadlines may become increasingly necessary post-Brexit when more mergers currently within the exclusive jurisdiction of the EU Commission will also become subject to the UK's merger regime.

Following the CAT’s judgement, the CMA issued its provisional findings on 21 February 2018, concluding that it expected the merger on balance to result in a substantial lessening of competition (“SLC”). As part of its investigation, the CMA assessed the impact of the merger at both national level and in local areas, looking in particular at the extent of SLCs in relation to: (i) in-store groceries, (ii) online delivered groceries, (iii) general merchandise, (iv) fuel and (v) buyer power and the effect that the power of the merged entity would have in distorting competition and ultimately affecting prices and quality for customers. The majority of SLCs identified were at the local level such as the supply of groceries in convenience stores, but some SLCs were identified at the national level such as the supply of groceries in Asda and Sainsbury's main supermarkets and online deliveries.

The CMA also published a notice of possible remedies both structural and behavioural, that Asda and Sainsbury's could adopt to address the concerns raised. The parties (and other interested parties) have until 13 March 2019 to respond to the CMA's provisional findings. It is not yet clear whether the parties will choose to adopt any of the remedies proposed or alternatively will drop the transaction altogether.

The provisional findings by the CMA will be of interest to those involved in the retail supply of groceries in the UK as well as consumers. Further evidence, the parties’ responses and the possible adoption of the recommended remedies may influence the CMA's ultimate decision as to whether to clear or block this transaction. It would however be unusual for the CMA to depart entirely from these provisional findings when it publishes its final report in April.


Awards & Recognition

Congratulations to partner Morten Nissen from our Danish office, who received the prestigious International Law Office and Lexology Client Choice Award for Competition & Antitrust. The award celebrates outstanding client care and the ability to add value to clients' business, with winners selected on the basis of corporate counsel feedback.