General Court dismisses application for injunction to block publication of Euribor decision

The EU’s General Court has rejected an application by Crédit Agricole for an interim injunction in an appeal against a European Commission decision to publish the Commission’s decision in the Euro Interest Rate Derivatives cartel.

The proceedings arise out of the Commission’s 2016 decision (the 2016 Decision) fining JPMorgan Chase, Crédit Agricole and HSBC EUR485 million for their participation in the Euribor cartel.  Crédit Agricole argued that the entirety of the decision should remain unpublished until the conclusion of its appeal against the 2016 Decision.  It argued that publishing the decision before the appeal was concluded would violate the presumption of innocence.

The General Court found that the applicants had failed to show that an interim order was justified in fact and law.  The ruling confirms that the bar for obtaining interim measures is high.

In principle, the publication of the 2016 Decision before conclusion of the appeals can be expected to fuel private follow-on damages actions.  However, in practice domestic courts may stay their actions if there is a realistic prospect that the decision will be overruled in appeal proceedings before the EU Courts.

Case T-419/18 R - Crédit Agricole and Crédit Agricole Corporate and Investment Bank v Commission (ECLI:EU:T:2018:726)

Six to become Five – SSE and N-Power approved

Six to become Five – SSE and N-Power approved

The Competition and Markets Authority has approved the merger between SSE Retail and N-Power without conditions and after a detailed investigation.

The combination will merge SSE Retail and Npower’s supply operations but other SSE activities such as generation and distribution remain separate.  British Gas (owned by Centrica), Scottish Power (owned by Iberdrola), E.On and EDF will remain independent among the larger energy companies.

The CMA launched a second phase probe amid concerns about the potential impact of the merger on customers on standard variable tariffs (SVTs), recalling concerns in its 2014-2016 broader market investigation that households on those tariffs do not tend to shop around.

In its in-depth merger review, however, the CMA found that switching levels between energy providers were at the highest they have been in a decade.  The CMA found that the main constraint on SVT pricing was that any increase would result in customers being engaged and then switching either to the supplier’s own internal lower tariffs or to a competitor.  This increase in switching was also fuelled by the number of internal and external prompts that the customer receives on better offers that may be available.  Of those customers who did switch, the CMA found that they tended not to move between the merging parties.

The clearance also anticipates the introduction of new energy price caps as proposed by Ofgem which will limit the prices that energy companies can charge for typical annual usage to £1,136.  The Money Advice Service has said that deals are available up to £300 cheaper than the cap.

This is the fifth transaction that the CMA has approved unconditionally in the 2017-2018 financial year.  This trend is probably reflective of the relatively low threshold to launch an in-depth review, relative to the strict standard for prohibition.

The extent of change in the energy market, highlighted by the CMA’s merger investigation, is relevant.  However, even with 70 or so energy companies the CMA continues to believe that the market is not working as well as it might for some customers who do not switch.  That is why it looked at SVTs closely, as customers on those tariffs were historically ‘sticky’.  Nevertheless, the clearance is a significant example of the CMA examining a complex transaction in light of the evolving market and regulatory developments.

High Court rules that ABB did not deliberately overcharge BritNed as a result of power cables cartel

The facts really do matter in competition follow-on damages actions, according to the High Court’s ruling in a claim brought by BritNed against ABB arising out of the power cables cartel.

ABB did not dispute its participation in a cartel which was the subject of a European Commission 2014 decision finding an infringement of Article 101 TFEU.  It did, however, deny that BritNed had suffered any loss as a result.

BritNed alleged that it was overcharged for the cable component of the Dutch-UK Interconnector.  The High Court did not accept that claim, finding that there was no deliberate overcharging and that the direct costs for ABB’s tender for the project were honestly and competently compiled.

The High Court did, however, find an overcharge on account of embedded inefficiencies where the cartel was found to have an insulating effect for ABB.  On this reasoning, but for the cartel, ABB would have had to cut costs for the tender.  The High Court also found an overcharge arising from a “cartel saving” where ABB’s common costs were reduced because the cartelists did not have to compete

The High Court rejected BritNed’s claims for loss of profits and compound interest and also ABB’s claims that any damages needed to be assessed by reference to the regulatory cap on BritNed’s earnings.

ABB was ordered to pay approximately €7.5 million for the inbuilt inefficiency and €5.5 million for the efficiency savings arising from participating in the cartel.

BritNed Development Limited v ABB AB and ABB Limited [2018] EWHC 2616 (Ch)

Indian Supreme Court overrules Competition Commission LPG cartel decision

Indian Supreme Court overrules Competition Commission LPG cartel decision

India’s Supreme Court has reversed a decision of the Competition Commission of India (CCI) finding that suppliers of liquid petroleum gas engaged in a bid-rigging cartel where they submitted identical bids on tenders put out by state-owned company, Indian Oil.

The Supreme Court overruled a finding by the former Competition Appellate Tribunal which upheld the CCI’s decision, albeit reducing the fines (amounting to about EUR 25 million at the time of the CCI’s 2012 decision).

The Supreme Court stated that price parallelism is not sufficient to prove concerted action.  It was critical of the quality of the evidence put forward by the CCI, in particular its reliance on a meeting that only 19 members attended and where non-participants in the meeting also submitted the same bids.

Interestingly, the Supreme recognised that buyers and suppliers can influence pricing in a concentrated market such that price parallelism of itself provides insufficient evidence of collusion.

The CCI will need to pay close attention to other plus or minus factors in cases where it relies purely on economic evidence to prove a cartel. 

Remedies in consumer markets

Remedies in consumer markets

The Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA) have published a joint paper on remedies in consumer markets.

The paper follows a work programme by the UK Competition Network (UKCN) and sets out how demand-side issues can produce poor consumer outcomes.  It examines the importance of testing remedies that are designed to address such problems.

The paper provides high-level principles on remedies development including understanding the nature of the problem, being bold, letting the consumer remain in control, leveraging from private sector experience and review of effectiveness. The paper also notes that good analysis is not enough to secure good consumer outcomes.  It recognises challenges and opportunities for the future posed by the digital economy.

Echoing similar themes, the FCA has published a speech by its Executive Director of Strategy and Competition, Chris Woolard setting out how the authority tests its market interventions.

CMA and FCA paper "Helping people get a better deal: Learning lessons about consumer facing remedies"

Speech by Christopher Woolard, Executive Director of Strategy and Competition at the UKCN conference, 1 October 2018.