Conservative party plans to move to a WTO-inspired regime for controlling state subsidies

Conservative party plans to move to a WTO-inspired regime for controlling state subsidies

The Conservative party has released its proposals to replace the EU state aid regime with one based on World Trade Organisation (WTO) rules on the restriction of harmful state subsidies.

The plans released on 29 November appear to represent a major shift from the previous UK policy.  Under that policy, the UK framework would replicate the existing EU state aid rules, with only technical modifications to correct deficiencies with the transposed EU law to ensure the regime operates effectively in a domestic context after exit.   This raises a question as to how different a WTO-inspired approach would be in practice? 

There are some differences between the formal scope of WTO rules on subsidies and EU state aid rules, but they do cover similar concepts.   Over the years, a large body of case law has developed on the state aid regime, with comparatively less on WTO rules.  While state aid rules effectively apply an ex ante approach to legality - in that state aid generally needs to be notified to and approved by the Commission before it can be put into effect - the general starting point under WTO rules is that a subsidy is permitted unless challenged.

The only clear point of distinction is that WTO rules apply only to goods, whereas the state aid regime also applies to services.   It is not clear that the plans would necessarily exempt services.

The proposals are not clear on how Northern Ireland would be treated.  Presumably it would have to follow EU state aid rules if a hard border on the island of Ireland is to be avoided.

It seems that the thrust of the proposals is to allow for quick implementation of short-term measures to rescue a failing company before restructuring.  If that is indeed the driver, then it would be possible within the existing EU state aid regime.  This begs the question as to how far a UK government would depart from that regime, at least in the immediate stages post-withdrawal.

Saudi Arabia clears Uber-Careem deal with conditions

Saudi Arabia clears Uber-Careem deal with conditions

The Saudi General Authority for Competition has cleared Uber’s USD3.1 billion acquisition of Careem, a Middle eastern ride-hailing business, subject to commitments.

Careem will become a wholly owned subsidiary of Uber but will be maintained as a brand.

The commitments require Uber to commit to a maximum rate for taxi rides which the Authority will monitor.  It must also maintain quality of service and work on innovation and improvement.  Uber must allow drivers to work for competitors, which will allow rivals to access Careem’s mapping data so that passengers may view their own data on the application. Prices must be applied to all customers without discrimination.

The transaction was subject to merger review in a number of Middle East countries, yet with differing results.  It was blocked by the Qatar Competition Protection and Anti-monopoly Committee but approved unconditionally in the UAE and Jordan.

Competition authorities in Pakistan and Egypt have raised antitrust concerns about the local impacts of the deal.

Secretary of State consults on undertakings in Advent International/Cobham merger

Secretary of State consults on undertakings in Advent International/Cobham merger

The Business Secretary has published undertakings to address national security concerns raised by the proposed acquisition of UK defence company Cobham plc by funds managed by Advent International Corporation (Advent) and the Blackstone Group.

With the acquisition of control by Advent and the Blackstone Group being effected via a single agreement and being inter-conditional, the CMA considered the two transactions as forming part of one single relevant merger situation

The Secretary of State identified national security concerns relating to the risks affecting security of information and security of supply.

The Secretary of State considers that she has the power to refer the transaction for a Phase 2 review by the CMA but is minded to accept undertakings. These include continuation and strengthening of existing security arrangements; requiring Cobham's new owners to honour the terms of existing contracts, notify the Ministry of Defence in advance if there is a material change to Cobham's ability to supply key services, and refrain from withdrawing from any specified service for a set period; and also requiring the new owners to give the Ministry of Defence prior notice of plans to sell the whole, or elements of, Cobham’s business.

Comments on the undertakings are invited by 17 December 2019.

Royal Mail fails in appeal against Ofcom’s abuse of dominance decision

The Competition Appeal Tribunal (CAT) has upheld Ofcom's 2018 decision fining Royal Mail GBP 50 million for abuse of dominance through discrimination against postal operators that competed with Royal Mail in bulk delivery.

The CAT rejected Royal Mail’s arguments that the case raised novel issues for the application of Article 102(c) TFEU in relation to prices that were not paid or charged.

The CAT further rejected submissions from Royal Mail that Ofcom erred in law in concluding that transactions entered into by Royal Mail and its customers were equivalent in material respects and that the price differential could not be objectively justified.

Royal Mail also failed in its argument that the conduct was objectively justified by reference to the need to preserve the viability of the universal service under economically acceptable conditions.

The decision of the CAT was unanimous and illustrates the hurdles that need to be overcome in successfully appealing a decision of a specialist economic regulator.

The Royal Mail plc v Office of Communications [2019] CAT 27

European Commission opens investigation into alleged collusion among supermarkets

European Commission opens investigation into alleged collusion among supermarkets

The European Commission has launched an investigation into whether French grocery chains Casino Guichard-Perrachon (Casino) and Les Mousquetaires (Intermarche) have colluded in breach of Article 101 TFEU.

The investigation follows dawn raids of the companies by the Commission in 2017 and 2019. 

Casino and Intermarche are two of the largest chains of grocery retailers in France.  For the past five years they operated a joint venture alliance for the procurement of their branded products.

The Commission’s investigation was prompted by concerns that the parties went beyond the purpose of the joint venture and strayed into coordination of their pricing policies and distribution networks.

Joint procurement alliances are increasingly common across the EU grocery sector. The case may well yield useful insights for the assessment of similar practices in other EU markets.