CMA blocks Sainsbury’s/ Asda tie-up

CMA blocks Sainsbury’s/ Asda tie-up



The Competition and Markets Authority (CMA) has blocked the combination between Sainsbury’s and Asda, setting a low threshold for intervention.  This decision suggests that future mergers between the Big Four UK supermarkets chains will face significant competition hurdles at both local and national level.

The CMA’s final report largely confirmed its provisional findings, although the number of concerns in local markets was reduced.  Nevertheless, the CMA concluded on a balance on probabilities that the proposed merger between the UK’s second and third largest grocers would lead to a substantial lessening of competition on a local and national level.  The CMA concluded that the transaction would lead to increased prices, reductions  in the quality of products available and negative effects in online shopping where customers would likely face higher process and fewer delivery options.

In previous grocery retail mergers, the CMA has largely focused on the impact of competition in local markets.  Here the CMA has sustained a national theory of competitive harm which it found could not be remedied by divestiture of stores in those local markets where the parties overlap. 

Further, the CMA did not find that the promise of £1 billion price reductions was sufficient to offset the concerns it had identified and was too vague and difficult to verify. The efficiencies claimed needed to be much bigger and clearly substantiated to have changed the CMA’s conclusions.





https://www.gov.uk/government/news/cma-blocks-merger-between-sainsburys-and-asda

Court of Appeal allows appeal in MasterCard collective damages action

Court of Appeal allows appeal in MasterCard collective damages action

The Court of Appeal has allowed an appeal against a Competition Appeal Tribunal (CAT) ruling that refused an application for a collective proceedings order (CPO) to bring opt-out collective proceedings in a damages claim against MasterCard.  The CPO application was remitted to the CAT for re-hearing.

The CAT did not consider that that the claims were eligible for inclusion in collective proceedings as they did not raise common issues relating to the overcharge passed on to individual consumers.

The Court of Appeal ruled that there was no legal requirement to assess an aggregate award through a calculation of individual loss.  The Court stated that pass-on to consumers generally satisfies the test of commonality necessary for certification.

The Court considered that the CAT had imposed too strict a standard at the certification stage and that the proposed class representative should be required to do no more than demonstrate that he has a real prospect of success.

Further, the Court held that there is no requirement for total damages to be distributed according to the compensatory principle as the CAT had required.

Walter Hugh Merricks CBE v MasterCard Incorporated & Ors [2019] EWCA Civ 674

CMA sends objections to Casio alleging restrictions on online discounting

CMA sends objections to Casio alleging restrictions on online discounting

The Competition and Markets Authority (CMA) has sent a statement of objections to Casio Electronics alleging breach of the Chapter I prohibition and Article 101 TFEU through restrictions on retailers’ freedom to discount digital keyboards and pianos sold online.

The CMA has provisionally found that Casio enforced a policy aimed at limiting the freedom of retailers to set their prices between 2013 and 2018 requiring them to set prices at, or above, a minimum price.

The CMA regards these practices as resale price maintenance (RPM) and states that it treats allegations of online RPM seriously.

The CMA also observes that Casio’s use of “all seeing software” that allowed it to find out more quickly about lower online prices can put pressure on retailers to adhere to a minimum price.

In the last three years, the CMA has fined business for online RPM in a number of sectors including light fittings, bathroom fittings and commercial refrigeration.  Last year the CMA issued 19 warning and three advisory letters about RPM.



https://www.gov.uk/government/news/cma-alleges-piano-supplier-illegally-prevented-price-discounts

European Commission fines General Electric EUR52 million for providing incorrect information during EU merger review

The European Commission has found that GE infringed EU merger control rules when it negligently underestimated the size of its offshore R&D operations during the review of its acquisition of LM Wind under the EU Merger Regulation.



The fine was limited because the errors did not impact on the Commission’s substantive review of the transaction.



The size of the fine is nevertheless significant.  It may have been influenced by the fact that the errors only came to light following information provided by a third party.  GE did not identify the errors itself. GE did pull the notification and refile it 10 days later with the correct information about a 12-megawatt offshore project that the Commission had not been informed about in the original notification.



The Commission can impose a fine of up to 1% of a company’s annual turnover for breaching EU merger control procedural obligations.



This is the second time since adoption of the 2004 Merger Regulation that the Commission has imposed a fine for providing incorrect information.  In 2017 the Commission fined Facebook EUR110 million for incorrectly stating in the review of its acquisition of WhatsApp that it would not be able to link accounts of customers using both Facebook and WhatsApp.  In the latter case the Commission found that Facebook had intentionally concealed the information whereas it refers to GE’s conduct as being “negligent”.



The Commission can fine a company up to 1% of annual turnover for these types of infringements.  GE’s annual turnover is more than USD 120 billion (EUR 107 billion), so it could have been fined up to USD 1.2 billion (EUR 1.07 billion). Commission fines rarely approach the absolute threshold, even where there are substantive violations.  The Commission said it regarded this as a “serious infringement” because it prevented the Commission from having all the information it needed to appraise the transaction.  It is relevant no doubt that GE is a large and well resourced company and a regular participant in EU competition proceedings. The Commission is sending a strong message that even inadvertent errors as part of a merger review procedure will not be tolerated because it is a company’s responsibility to make sure that the information it provides is accurate and complete.

European Commission reports on competition policy in the digital era

European Commission reports on competition policy in the digital era

The European Commission has published a report titled "Competition Policy for the digital era".

The report makes interesting reading, released within days of Vestager’s announcement that the Commission could decide whether to open a full investigation into Amazon’s treatment of merchant data within a matter of months.

The report identifies three key features of the digital economy: extreme returns relative to scale, network externalities, and the role of data.

The writers believe that the basic competition law framework under Article 101/ 102 of the TFEU provides a sound basis for protecting competition in the digital economy.  However, they note that the features of platforms, digital ecosystems and the data economy may need to be adapted when looking at market power and defining relevant markets.

The writers do not go as far as advocating changes to the merger control jurisdictional thresholds but say that the operation of transaction value thresholds as applied in some member states should be monitored.  The report considers that the existing substantive test of significant impediment to effective competition does not require amendment but a new theory of harm may be needed to take into account adverse effects on competition and consumer welfare arising in digital markets.

"Competition Policy for the digital era", a report by Jacques Crémer, Yves-Alexandre de Montjoye and Heike Schweitzer