CMA launches market study into price comparison tools

The Competition and Markets Authority (CMA) has launched a market study into digital comparison tools (DCTs) used by consumers to compare products and services from different business.  The CMA will consider how to maximise the potential benefits of DCTs for consumers and reduce barriers to using them.

Market studies are examinations into the reasons why particular markets may not be working well taking account of regulation and other economic drivers as well as business and consumer behaviour.  Consumers’ reluctance to switching has long been a theme in the CMA’s investigations, which partly explains the focus of this study.

This is only the third time that the CMA has launched a market study since the Enterprise and Regulatory Reform Act 2013 introduced stricter procedural requirements.  The first market study (issued in April 2014) related to the supply of personal current account services and led to the retail banking market investigation.  The second (issued in January 2016) relates to the supply of legal services in England and Wales.

The CMA has invited evidence and views, including on whether it should make a market investigation reference, by 24 October 2016.  The CMA must announce within six months whether or not it is intending to make a market investigation reference and must publish its final report on the market study within 12 months.

CMA press release, Market Study Notice and Statement of Scope of Market Study, 29 September 2016

Refuge collection an essential facility, says European Commission

The European Commission has fined a waste management company EUR6 million for abuse of a dominant position in restricting competition in recycling and waste collection services after refusing access to its infrastructure.

The Commission announced in a press release on 20 September that Altstoff Recycling Austria (ARA) had prevented rivals from accessing its network which the authority considered was an essential facility.

The decision is noteworthy in a number of respects.  Firstly, although the facts of the case were confined to Austria the Commission dealt with the case itself because it was familiar with the market and competition issues.

Secondly, the classification of ARA’s infrastructure as an essential facility is based on the Commission’s conclusion that the system was not duplicable because it was not economic to set up a rival system.  The full decision when available may shed light on the Commission’s reasoning in this respect.

Thirdly, the case is not a commitments decision under Article 9 of Regulation 1/2003 which has been a popular route for the Commission to close abuse of dominance investigations without concluding that there has been an infringement.  However, it is an example of a pragmatic solution where ARA agreed to a structural remedy to divest part of its household collection infrastructure.

Finally, the Commission reduced ARA’s fine by 30 per cent due to its cooperation with the investigation and structural concession.  The fine is still sizeable for a not-for-profit company and shows that the Commission is serious about enforcing competition law in markets that are not directly consumer facing but are nevertheless important to the economy.

Commission press release IP/16/3116.

General Court upholds Thomson Reuters commitments

The General Court has rejected a challenge to commitments agreements between Thomson Reuters and the European Commission where competitor Morningstar claimed that the settlement failed adequately to address the competition issues raised by Thomson Reuters’ licensing of real-time financial information.
In 2012 the Commission accepted commitments from Thomson Reuters to remove contractual provisions which hindered the ability of its customers to switch to competitors.  This followed the Commission’s preliminary view that Thomson Reuters could be abusing a dominant position in the provision of consolidated real-time data.
Morningstar appealed the commitments decision made under Article 9 of Regulation 1/2003 which allows the Commission to accept binding commitments in order to resolve an investigation under Article 101/102 TFEU and without concluding that there has been an infringement.
Morningstar claimed that the cost of switching would be borne by customers and it was not aware of any Thomson Reuters customers switching to rivals since the commitments had been put in place.
The General Court upheld the Commission’s decision, ruling that the correct test was whether the commitments had been sufficient to address the issues that were raised in the Commission’s investigation. The fact that other commitments could have been accepted or might even have been more favourable to competition did not justify annulment of the decision. The Court agreed with the Commission that the commitments were not intended to eliminate all the costs of switching, but they did represent a genuine improvement of the situation.
The judgment is perhaps not surprising in light of the Alrosa case which clarified a number of issues relating to the Commission’s powers under Article 9 (albeit in that case a third party challenged the intrusive nature of the commitments).  The Commission is not obliged to consider and seek different solutions, provided that the commitments address the concerns identified to the undertaking in the preliminary assessment.
CaseT-76/14 Morningstar, Inc. v Commission
Case C-441/07 P Commission v Alrosa Company Limited

General Court dismisses ‘pay-for-delay’ appeals

The General Court has dismissed appeals by Lundbeck and several other producers of generic drugs against a 2013 decision of the European Commission finding that they had infringed Article 101(1) TFEU by agreeing to prevent the entry of a rival generic antidepressant.  The Court also upheld fines of around EUR150 million imposed on the companies.

The Court concluded that the Commission had correctly found that Lundbeck and the generic producers were potential competitors at the time that the agreements were entered into.

The Court also upheld the Commission’s findings that patent settlements and commitments by the generic producers not to introduce generic rivals to citalopram in 2002 in return for tens of millions of euros represented restrictions of competition by object. 

The Court found that Lundbeck had not demonstrated that the restrictions were objectively necessary to protect its intellectual property rights. The Court also rejected arguments related to Article 101(3) and the scope of patent protection.

The judgment sits uneasily with the Commission’s 2013 decision where it acknowledged that not all so-called reverse-payment settlements are problematic.  The judgment seems to imply that as soon as there is a value transfer there is a restriction by object.  The Court concluded that the Commission satisfied the test in Cartes Bancaires for determining when there is a restriction by object by looking at the economic and legal context of the arrangements. However, it did not say that the case law required an assessment of the type of agreements in a specific sector.  It is expected that the judgments will be appealed.

Judgments of 8 September 2016:

Case T-472/13 – Lundbeck v Commission.

Case T-471/13 – Xelia Pharmaceuticals and Alpharma v Commission

Case T-460/13 - Sun Pharmaceutical Industries and Ranbaxy (UK) v Commission

Case T-467/13 - Arrow Group and Arrow Generics v Commission

Case T-469/13 – Generics (UK) v Commission

Case T-470/13 – Merck v Commission

CMA publishes final report on Private Healthcare Remittal

The Competition and Markets Authority (CMA) has confirmed its provisional decision in its remittal investigation not to require HCA International to divest one of its hospitals.  The decision comes four years after the Competition Commission started a market investigation into private healthcare in April 2012, which reported in April 2014.
In its Private Healthcare Market Investigation final report the CMA required HCA to sell 1 or 2 of its hospitals in London.  Following an appeal to the Competition Appeal Tribunal (CAT), the CMA acknowledged errors in its analysis and asked the CAT to remit parts of the findings affected by the errors back to the CMA.  The CMA has now decided that extra remedies beyond those imposed in its 2014 Private Healthcare Market Investigation Order including a divestiture of hospitals by HCA in London’s private healthcare market would not be proportionate.
The 2014 Order includes measures that (i) enable the CMA to review transactions between NHS Trusts and private hospital operators to operate private patient units based on a competition test; (ii) prohibit and restrict certain clinician incentives; and (iii) require the collection and publication of information on the performance of private healthcare facilities and consultants and on consultants' fees.
However, this may not be quite the end of the CMA’s investigation into the sector.  On 25 July 2016 the Court of Appeal gave its judgment rejecting a challenge by the Federation of Independent Practitioners Organisations (FIPO) against certain aspects of the CMA’s final report.  The Court necessarily based its judgment on the facts and evidence available to the CMA at the time of its final report. The fee information remedy requiring the publication of consultants’ fees has been suspended during the FIPO appeal.  Even though the appeal has been unsuccessful the CMA will need to be satisfied that implementation of the fee information remedy is appropriate in the present economic circumstances.


CMA press release, 5 September 2016
https://www.gov.uk/government/news/cma-publishes-final-report-on-private-healthcare-remittal