Indian Competition Commission revises leniency regime

The Competition Commission of India (CCI) aims to boost applications for leniency by confirming that up to four applicants may benefit from reduced penalties. Individuals may also benefit from leniency.

The CCI’s original leniency policy which was implemented in 2009 only granted reductions to the first three applicants.

The CCI has now confirmed that companies who approach the agency after the first three and provide “significant” information may benefit from reductions in the penalty of up to 30%.

The CCI granted leniency for the first time in January 2017 when it granted leniency to three companies and an individual who were involved in the railway electrics cartel.

Under the previous regime, it was uncertain whether fourth and later applicants and individuals could benefit from leniency. While the CCI has confirmed that individuals may benefit from leniency, it is not clear whether this will be extended to individuals who were not mentioned in the company’s application for leniency.

Further amendments to the policy allow the CCI to disclose leniency information with the approval of the CCI’s decision-making arm.  There is some uncertainty as to how this policy will operate and how it will affect the incentives on applicants to come forward with information. A more measured approach would have been to require companies to provide confidential and non-confidential versions of their applicants which would allow the CCI to disclose certain of the underlying information to other defendants and in its published decision.

CMA fines Ping £1.45 million for banning online sales of golf clubs

The Competition and Markets Authority (CMA) has found that Ping European Limited (Ping) has violated competition law by banning two UK retailers from selling its golf clubs online.  Ping has been ordered to end the sales bans and not to impose the same or equivalent terms on other retailers.

The £1.45 million penalty imposed on Ping is intended to serve as a warning to other manufacturers.  The CMA was satisfied that Ping was pursuing a genuine commercial aim of promoting bricks and mortar sales from its stores but it considered that this could be achieved through less restrictive means.  The level of fine imposed on Ping reflected the CMA’s finding that the website sales ban was imposed in the context of this genuine aim.

Restrictions on online sales by distributors continue to attract competition law scrutiny.  The starting point is that, in principle, every distributor should be allowed to use the internet to sell its products.

One thorny issue relates to the differentiation between "luxury" and everyday goods and whether certain restrictions on online selling may be permissible in the case of the former.  While the EU vertical restraints block exemption exempts selective distribution "regardless of the nature of the product concerned", the accompanying vertical restraints Guidelines state that, where the characteristics of the product do not require selective distribution, or do not require the applied criteria, such as for instance the requirement for distributors to have one or more brick and mortar shops or to provide specific services, such a system does not generally bring about efficiency enhancing effects to offset what the Commission describes as "a significant reduction in intra-brand competition" (paragraph 176).

While certain luxury or branded products might be candidates for efficiency and other justifications for restrictions which would be hardcore in other contexts, the competition authorities are reluctant to allow such restrictions on the mere assertion of the need for a personalised sales service.  The coming years will test whether the strict stance seen in cases like this is sufficiently malleable to address the challenges of the online age.

See, further, CMA press release of 24 August 2017.

CMA closes Unilever abuse of dominance investigation

The Competition and Markets Authority has confirmed that it will not pursue an investigation into whether Unilever’s ice cream promotions breach competition law.

The CMA had launched an investigation into whether Unilever’s promotions offered to retailers between January 2013 and February 2017 excluded rivals.  Unilever offered impulse ice cream (i.e. ice cream products bought for immediate consumption rather than being eaten at home) for free or at a discount if the retailer bought a minimum number of single-wrapped products.

The CMA found no evidence that competitors were adversely affected or that the promotions affected how retail customers bought impulse ice cream.  Unilever’s offers were without distinction as to whether retailers bought more or less popular brands and were made in February and March of each year and not in the summer months where consumption was higher.  Retailers’ acceptance of the bulk discounting offers represented no more than 10% of Unilever’s 2016 sales.

The CMA found that the conduct met the threshold for opening an investigation but it closed the case upon finding that there were “no grounds for action”.

The CMA’s decision may prove to be helpful guidance for future cases and in determining when dominant companies are able to offer discounts on packaged bundles: clearly they can do so without infringing competition law but the boundaries between permissible and impermissible conduct are not always straightforward to draw.

European Commission issues further statement of objections to Visa

The European Commission has sent a supplementary statement of objections to Visa Inc and Visa International in relation to inter-regional interchange fees.

This new statement of objections follows one adopted against Visa in 2012.

The Commission maintains that inter-regional fees – i.e. those charged on payments made with cards issued outside the EEA for purchases made in the EEA – are an important part of the fees within the Visa scheme.

This supplementary Statement of Objections focuses on practices not already covered by the commitments offered by Visa Europe in 2014, namely the inter-regional fees applied on transactions with consumer debit cards. 

The Commission is further examining the implications of the fact that in June 2016, Visa Europe became a subsidiary of Visa Inc. and ceased to exist as a separate undertaking.  It can be expected that this corporate restructuring may make it simpler for the Commission to take enforcement action.

Commission news MEX-17-2341, 3 August 2017