CAT refuses permission to appeal against rejection of MasterCard collective proceedings

The Competition Appeal Tribunal has dismissed an application for permission to appeal its rejection of an application for a collective proceedings order (CPO) for a £14 billion claim against MasterCard for damages arising out of the European Commission’s 2007 infringement decision on multilateral interchange fees.

On 21 July 2017 the CAT found that the case should not be certified.  It concluded that the class representative had not put forward a reasonable and practicable means for estimating the individual loss which could be used for distribution and that the claims were unsuitable for bringing as collective proceedings.

The CAT ruled that the Consumer Rights Act 2015 did not provide for appeals against decisions of the CAT to grant or reject CPOs and that the Court of Appeal would not have jurisdiction to hear the appeal.  The CAT also ruled that even if the Court of Appeal had jurisdiction, the appeal would not have a reasonable prospect of success.

The CAT considered that although there is a parallel jurisdiction in the ordinary courts for competition law damages claims, only the CAT can hear collective proceedings. The CAT reasoned that the legislature has sought to confine the right of appeal in collective proceedings to decisions on the substantive claims and preclude prolonged litigation in the course of approving the use of collective proceedings.

It will be interesting to see whether the class representative will seek leave directly from the Court of Appeal given the potential ramifications of this judgment.

Case 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Inc and Others, CAT ruling, 28 September 2017

European Commission fines Scania EUR 800 million

The European Commission has imposed a fine of EUR 800 million on Scania.  It has found that Scania infringed EU competition law by colluding for 14 years with five other truck manufacturers on truck pricing and on passing on the costs of technologies to implement new, more stringent emissions standards.

Scania has expressed its intention to appeal the decision.

The decision follows the Commission’s settlement decision on 19 July 2016.  The Commission found that MAN, Volvo/Renault, Daimler, Iveco and DAF infringed Article 101(1) TFEU by colluding for 14 years on the pricing of trucks and on passing on the costs of compliance with stricter emission rules.  The Commission imposed a record fine of EUR 2,926,499,000 being the highest aggregate fine imposed to date for breach of EU competition law.  The Commission stated in its 19 July 2016 press release that its investigation into Scania would continue under the standard (non-settlement) procedure. 

The onslaught of private actions has started.  Road Hauliers Association has announced that it intends to bring a collective action as a representative body (i.e., as an opt-out collective proceeding in the Competition Appeal Tribunal).  Lenaghan International Transport, an Irish freight forwarding company, commenced proceedings in September 2016 in the High Court in Ireland against DAF, Daimler, Fiat Chrysler Automobiles, MAN, Renault, Scania and Volvo.  Bundesverband Güterkraftverkehr Logistik und Entsorgung eV, a German transport and logistics industry association, has stated that it is seeking to bundle as many as 100,000 purchases and rentals in a competition damages action.  Claims brought by members of the UK Freight Transport Association are believed to be in the pipeline.

European Commission - Press release, Antitrust: Commission fines Scania €880 million for participating in trucks cartel, 27 September 2017

Tata Steel and ThyssenKrupp plan to combine European steel activities

Tata Steel and ThyssenKrupp propose to merge their European steel businesses in a deal that would create a number two player in the market, combining the world’s fourth and tenth largest players.

The companies have stated that they have signed a memorandum of understanding and expect to conclude a joint venture agreement in early 2018.  The transaction would be subject to regulatory approvals.  As presently understood, ThyssenKrupp and Tata would hold equal shares in a joint venture consisting of ThyssenKrupp’s European business and Tata’s European flat steel business.

Tata paid £6.7bn to buy Corus in 2007, against competition from CSN of Brazil.  Ten years on from that, how different the world looks?  It may be that the merger represents a concrete step to build a sustainable future for Tata’s European steel activities.  The proposed transaction is expected to deliver annual cost savings of up to 600m euros (£533m; $720m).

The transaction will almost certainly be reviewed by the European Commission and comes against an industry backdrop where the sector faces increasing consolidation, excess supply from Chinese steel-makers and minimal new entry.  The market analysis is likely to be painstaking, examining different product and geographic markets, especially the UK as Tata’s core EU presence.

Court of Justice rules on excessive pricing test

The Court of Justice has ruled on a reference from the Latvian Supreme Court concerning the application of Article 102 TFEU to excessive pricing by collecting societies. The Court ruled that comparing prices in different Member States can be an appropriate way of determining whether prices are excessive.

The case concerns the Latvian collecting society AKKA/LAA which was fined by the Latvian Competition Council for charging excessively high rates for authors’ remuneration.

The Court found that trade between Member States was capable of being affected by the rates set by a collecting society that holds monopoly rights and manages the rights of non-national copyright owners such that Article 101/102 may apply.

On the question of excessive/unfair pricing the Court said that it was appropriate to compare rates with those in neighbouring Member States, provided that these are selected in line with objective and verifiable criteria and comparisons are made consistently. 

There is no minimum threshold above which a rate might be deemed “appreciably higher” but this in an indication of abuse which the dominant company has the burden of justifying the differential.  The Court’s recognition that ability to pay is a relevant factor suggests that in some markets country comparisons might not be appropriate.

The judgment is in line with the United Brands test where the Court considered that charging a price that was excessive because it had no reasonable relationship to the economic value of the product supplied would be an abuse.  It follows the opinion of Advocate General Wahl, although it does not go as far as Wahl who said that the authorities must be “almost sure” that there can be no other rational economic explanation for higher prices before finding an abuse.

Case C-177/16 Biedrība ‘Autortiesību un komunicēšanās konsultāciju aģentūra – Latvijas Autoru apvienība’ v Konkurences padome, ECLI:EU:C:2017:286

CMA launches market investigation into investment consultants

CMA launches market investigation into investment consultants

The Competition and Markets Authority (CMA) has launched a market investigation into investment consultancy and fiduciary management services following a reference from the Financial Conduct Authority (FCA). 

The FCA’s reference follows its own market study into asset management.  The FCA concluded that it has reasonable grounds to suspect that there are features of the sector which prevent, restrict or distort competition.  The FCA found that buyers of investment consultancy may not be best placed to judge quality or value for money; that the largest firms hold a large share of the market; barriers to expansion for smaller firms; and potential conflicts of interest relating to cross-selling of other services.

The FCA has the power to investigate markets both under its competition powers (market studies under the Enterprise Act 2002) and also under its regulatory powers (under the Financial Services and Markets Act 2000). This gives the FCA flexibility and means that markets can be investigated outside the confines of the relatively tight competition regime (meaning the FCA has more flexibility and can investigate broader issues than the CMA).  However, only the CMA may conduct a full ‘second phase’ market investigation under the Enterprise Act.

The CMA issued requests for information today to the main market players.  An issues statement will be published shortly, where the CMA will invite submissions from interested parties.

The CMA is due to report on its investigation by March 2019, although the timetable may be extended by a further 6 months.

An enduring regulatory trend of the last twenty years or so has been the series of market investigations and similar probes into the financial services sector.  These have covered such areas as: SME banking, store cards and insurance, PPI, home credit, most recently, personal current accounts, audit services, pay day lending and retail banking.  The latest market investigation into the asset management sector where 12 of the largest consultants advise on around £1.6 trillion of assets echoes many familiar themes.

CMA press release, 14 September 2017.  Available at:  https://www.gov.uk/government/news/cma-launches-market-investigation-into-investment-consultants

Court of Justice sets aside General Court judgment in Intel loyalty rebates case

In a victory for Intel, the Court of Justice has set aside a General Court judgment dismissing its appeal against the European Commission’s 2009 decision fining Intel for breach of Article 102 TFEU.

The Court of Justice has referred the case back to the General Court to reconsider whether the Commission correctly applied the “as efficient competitor” (AEC) test to Intel’s loyalty rebates.  The AEC test played a significant role in the Commission’s assessment of the foreclosure effect of Intel’s rebate scheme on competitors.

The Court of Justice found that if, in a decision finding loyalty rebates to be abusive, the Commission concludes that the scheme restricts competition, the reviewing Court must examine all arguments that challenge the Commission’s findings on the potential for the rebates to give rise to foreclosure.  

The Court of Justice rejected Intel’s contention that the General Court misapplied the qualified effects doctrine to establish jurisdiction.  The qualified effects doctrine allows for the application of EU competition when it is foreseeable that the conduct in question will have an immediate and substantial effect in the EU.   The Court of Justice ruled that the General Court had correctly applied this test.

The Court of Justice upheld Intel’s argument that the Commission should have recorded a meeting with an executive of another company.  According to the Court, there was no valid distinction between “formal” interviews, covered by Article 19(1) of Regulation 1/2003 and Article 3 of Regulation 773/2004, and “informal" interviews”.   However, the Court did not consider that the failure to make a recording infringed Intel’s rights of defence such that it was capable of leading to annulment of the Commission’s decision.

The message from the Court of Justice is that the Commission cannot rely on a formalistic approach to the analysis of loyalty rebates under Article 102.  It provides some reassurance of the importance of an effects-based approach, backed up by robust economic evidence and analysis.

Case C-413/14 P - Intel Corporation Inc.v European Commission (ECLI:EU:C:2017:632)