CAT refuses application for a preliminary ruling to the Court of Justice in MIFs damages action

 

CAT refuses application for a preliminary ruling to the Court of Justice in MIFs damages action

The Competition Appeal Tribunal has refused an application by Visa to make a reference to the Court of Justice of the European Union under Article 267 TFEU for a preliminary ruling.

The application concerns actions by 479 merchants claiming damages for alleged infringements of Article 101/102 of the TFEU and UK law equivalent provisions on account of Visa setting the level of Multilateral Interchange Fees (MIFs) in transactions under its system. The claims are among a large number of similar claims that have been brought by merchants against both Visa and Mastercard.

The question at issue was whether in a claim alleging an infringement of Article 101(1) should each scheme's MIFs be judged against a counterfactual in which the other scheme remains free to compete by setting its own MIFs independently.

The CAT concluded there was no justification, within the terms of Article 267 of the TFEU, to refer the proposed question to the CJEU in order to decide the cases pending before the CAT.

Dune Shoes Ireland Limited & others v Visa Europe Limited & others, [2020] CAT 26, judgment of 22 December 2020

CMA issues further cartel infringement decision to the construction industry

 

The Competition and Markets Authority has found that three suppliers of groundworks products to the UK construction industry, Vp plc, M.G.F. (Trench Construction Systems) Ltd and Mabey Hire Ltd, infringed the Chapter I prohibition and Article 101 TFEU.

The CMA fined Vp £11,235,660 and M.G.F. and its parent company MGF Limited £3,773,910.

This is the fourth occasion in the last two years that the CMA has imposed fines for cartelisation in the construction sector.

The CMA found that the companies shared confidential information on future pricing and commercial strategy with the objective of reducing competition and maintaining or increasing prices.

Mabey Hire Ltd benefited from full immunity from fines under the CMA's Leniency Programme.

Commission publishes text of proposed regulation of digital gatekeepers

 

Commission publishes text of proposed regulation of digital gatekeepers

The European Commission has revealed its proposal for regulation of the digital sector in its Digital Markets Act.

The Digital Markets Act would apply to “gatekeepers” who control at least one “core platform service”.  This will cover search engines, social networking services, certain messaging services, operating systems and online intermediation services.

Only companies of a certain size would designated as gatekeepers.  Once a company meets the thresholds, it will be presumed to occupy that position unless it shows evidence to the contrary.

Gatekeepers would be subject to certain obligations including allowing inter-operability and providing access to information and data.

The new legislation would allow the Commission to conduct market investigations to identify gatekeepers that are not captured by the existing rules or to identify compliance failures.

The Commission would have investigatory powers to request information, conduct dawn raids and impose fines up to 10% of the company's total worldwide annual turnover for breach.

The European Parliament and the Member States will discuss the Commission's proposals in the ordinary legislative procedure.  If adopted, the final text will be directly applicable across the European Union.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2347

Mastercard Milestone Judgment paves the way for competition collective proceedings

 

Mastercard Milestone Judgment paves the way for competition collective proceedings

The Supreme Court has dismissed Mastercard’s appeal against the Court of Appeal’s judgment finding that the Competition Appeal Tribunal (CAT) had erred in refusing an application for a collective proceedings order (CPO) by Mr Walter Merricks (Merricks) in a potential claim for damages.

The Supreme Court held that collective proceedings are a special form of civil procedure. They are designed to provide access to justice where an ordinary individual civil claim would be inadequate.

If quantification issues would not have prevented an individual claim from proceeding to trial, the CAT should not have halted the collective proceedings claim at the certification phase.

The CAT should have asked itself whether the claims were suitable to be brought in collective proceedings as compared to individual proceedings, and suitable for an award of aggregate damages as compared to individual damages.

The CAT was wrong to require Merricks’ proposed method of distributing aggregate damages to take account of the loss suffered by each class member.

The Supreme Court has sent the CPO application back to the CAT and the focus now is on a case which could see damages for some 46 million consumers.   The CAT must now consider whether the claim is more suitable to proceed on a collective basis than individually.  While the case has not yet been given a green light to proceed, the test approved by the Supreme Court represents a lowering of the bar compared to the CAT’s original approach.

This is undeniably a landmark decision. It opens the way to other potential claims that have been in suspense in anticipation of clarification of how claimants should formulate their claims and what supporting evidence is required at the outset.

Mastercard Incorporated and others v Walter Hugh Merricks CBE [2020] UKSC 51

CMA urges mandatory merger notification for tech transactions

 

CMA urges mandatory merger notification for tech transactions

The Competition and Markets Authority has advised the government to implement a new mandatory merger notification regime for transactions involving technology companies that have “strategic market status”.

If implemented, the proposals would add another layer of complexity to UK merger control which, up to now, has operated largely on a voluntary basis.

The CMA expects the new rules would bite on a small number of transactions involving digital platforms.  Its new digital competition unit would prioritise designating those that have an annual UK revenue of over £1 billion.

Questions have been raised about whether the CMA really needs a new tool to intervene in these cases.  It has in the past asserted jurisdiction over deals which generate no UK turnover including Roche/Spark and Sabre/Farelogix.

A practical question arises as to how the UK can exercise effective remedies in cases which, by definition, will involve businesses that operate globally in integrated platforms.  This probably calls for a more coordinated approach to international scrutiny of high profile technology deals which could be subject to multiple and inconsistent reviews. 

 

https://assets.publishing.service.gov.uk/media/5fce7567e90e07562f98286c/Digital_Taskforce_-_Advice_--.pdf

 

CMA launches market study into electric vehicles charging

 

CMA launches market study into electric vehicles charging

The Competition and Markets Authority has launched a market study into the supply of charging for electric vehicles (EVs) in the UK. The EV sector is considered critical to achieving the government's commitment to net zero emissions in road transport by 2050.  It is interesting that the CMA has launched this study now as the sector is growing, while still at a nascent stage.

The market study will examine EV charging in a number of contexts including home or off-street, on-street, workplace, hub and destination, and en route charging.

The CMA will focus on two broad themes: 1) how to develop a competitive sector while also attracting private investment to help the sector grow, and 2) how to ensure consumers using EV chargepoints have confidence that they can get the best out of the service.

The CMA invites comments by 5 January 2021 on the scope of the market study and issues.

The CMA must publish its final report on the market study by 1 December 2021.

https://www.gov.uk/government/news/cma-to-examine-electric-vehicle-charging-sector

European Commission issues fine in ‘pay for delay’ pharma investigation after a 9 year probe

 

 

European Commission issues fine in ‘pay for delay’ pharma investigation after a 9 year probe

The European Commission has fined Teva Pharmaceutical Industries Ltd and Cephalon Inc EUR 60.5 million for entering into an unlawful patent settlement, in breach of Article 101 of the TFEU.

The Commission found that Teva agreed to delay for several years the market entry of a cheaper generic version of Cephalon's drug for sleep disorders, modafinil, after expiry of Cephalon's patents.

Teva received cash payments and other side-deals, including a distribution agreement, a licence on Teva modafinil patents, raw materials from Teva, and access to valuable clinical data.

This is the fourth "pay-for-delay" decision that the Commission has adopted.

This one is striking because of the form taken by the payments and value transfers.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2220

Court of Justice confirms application of abuse of dominance rules in copyright licensing cases

 Court of Justice confirms application of abuse of dominance rules in copyright licensing cases

The European Court of Justice (ECJ) has given a preliminary ruling on the issue of whether a remuneration model applied by SABAM, a copyright management company, amounts to an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union.

SABAM adopted ‘Tariff 211’ which allowed it to charge a fee based on the revenue of the event holders’ ticket sales. 

The ECJ ruled that it is for the referring court to assess whether the application of the tariff system at issue, here Tariff 211, in so far as it authorises only certain costs to be deducted from these amounts, is likely to impose unfair prices.

It was for the referring court to assess whether there are methods which make it possible to identify with greater precision the musical works protected by SABAM.

It is not necessarily an abuse of dominance for a copyright management company to calculate its tariffs based on the revenue that music event organisers receive from ticket sales.

SABAM v Weareone.World BVBA and Wecandance NV (Case C-372/19), ECLI:EU:C:2020:959

ComparetheMarket: CMA imposes first price parity penalty

ComparetheMarket:  CMA imposes first price parity penalty

The Competition and Markets Authority (CMA) has found that BGL (Holdings) Limited, BGL Group Limited, BISL Limited and Compare The Market Limited (‘ComparetheMarket’) breached the Chapter I prohibition and Article 101 TFEU by imposing wide ‘most favoured nation’ (MFN) provisions.

Wide MFN clauses ban companies from offering rival comparison sites cheaper rates, while narrow MFN clauses ban them from offering lower prices on their own websites.

The CMA imposed a fine of £17.9 million for the infringement, which it found was in operation between December 2015 and December 2017.

The restrictions were imposed on home insurance providers selling through its price comparison platform.  

This is the first time the CMA has fined a company for using wide MFN clauses.

The Office of Fair Trading has previously accepted commitments from Amazon to remove these clauses from contracts with sellers using its marketplace platform.

https://www.gov.uk/government/news/cma-fines-comparethemarket-17-9m-for-competition-law-breach

CMA opens merger review of Liberty Global-Telefónica JV following European Commission acceptance of Article 9 request

CMA opens merger review of Liberty Global-Telefónica JV following European Commission acceptance of Article 9 request

 

The CMA has launched a first phase merger review following the acceptance by the European Commission of an Article 9 reference request concerning the proposed JV between Liberty Global and Telefónica S.A to merge their UK operating businesses (Virgin Media/Virgin Mobile and O2).

It will be recalled that in 2015, the European Commission rejected the CMA’s request for referral of the Hutchison 3G /Telefonica UK merger.  It concluded that, although the merger would affect retail and wholesale mobile telecoms markets in the UK, the Commission was better placed to deal with the case.

The CMA has confirmed the parties have submitted a fast-track reference request.

The CMA invited comments on the merger and fast track reference request by 26 November.

 

https://www.gov.uk/government/news/european-commission-refers-review-of-virgin-and-o2-deal-to-cma

CMA consults on revised merger assessment guidelines

CMA consults on revised merger assessment guidelines

 

The Competition and Markets Authority is consulting on a revised version of its merger assessment guidelines (CMA129).

The revised guidelines propose a number of material changes as well as streamlining.

They aim aid to provide greater clarity on how the CMA will assess evidence, particularly evidence in fast-moving markets.

The revised guidelines also provide for greater flexibility in assessment of the time horizon for counterfactuals exiting firms, and vertical foreclosure effects.

They also seek to address the recommendations of the Furman and Lear report on digital markets.

The revised guidelines also propose simplifying the need to define markets. This may allow the CMA to find a substantial lessening of competition without necessarily making a separate relevant market definition.

The CMA is seeking responses by 8 January 2021.

https://www.gov.uk/government/news/consultation-launched-on-cma-merger-assessment-guidelines?=0

European Commission intensifies competition probes into Amazon

European Commission intensifies competition probes into Amazon

The European Commission has issued a statement of objections to Amazon alleging abuse of dominance as a result of Amazon's use of sensitive data from competing retailers.

The Commission maintains that Amazon's use of sensitive business information from independent sellers on its marketplace allows it to avoid the normal risks of retail competition and leverage its dominance as a platform into retail markets.

The Commission has also opened a second investigation into whether Amazon's commercial practices might artificially distort competition because they favour its own offers and downstream services.  The Commission is examining whether the criteria that Amazon uses to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users amount to self-preferencing of Amazon's retail business.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2077

CMA blocks third merger in a year

CMA blocks third merger in a year

The CMA has issued is final report on the completed acquisition of GBST Holdings Limited (GBST) by FNZ (Australia) Bidco Pty Ltd (FNZ).

It finds that FNZ and GBST, two of the four largest suppliers in the supply of retail platform solutions would account for almost 50% of the market.

Market constraints are generally weak with high switching costs, limiting any buyer power.

The CMA has concluded that requiring FNZ to sell the entire GBST business is the only solution that will properly address the loss of competition resulting from the merger.

The decision is the CMA’s third merger prohibition this year. In April, it blocked Sabre’s USD360 million (EUR304.2 million) takeover of airline ticketing software rival Farelogix. A month later, it mandated JD Sports to divest Footasylum.

While merger parties are entitled to complete their merger’s without seeking CMA approval, these cases are a reminder that this is not without risk in cases which raise serious competition issues.

https://www.gov.uk/cma-cases/fnz-gbst-merger-inquiry?utm_source=f4cf4e07-ae36-4395-ac2c-30106a5ebaa8&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

 

 

General Court orders in Facebook interim measures actions

General Court orders in Facebook interim measures actions

The General Court has published orders in Facebook’s challenges against information requests of the European Commission in its competition investigations into Facebook’s data practices.

The General Court has found that, due to the wide-ranging nature of the search terms used, it cannot be ruled out at this stage that the General Court will find that the measures do not comply with Article 18(3) of Regulation 1/2003.

The General Court held that Facebook had established the urgency of the need for interim measures as regards the disclosure of documents containing sensitive personal data.

The General Court decided that it was appropriate to provide for an ‘ad hoc’ procedure for the examination of documents likely to contain sensitive personal data and in the presence of Facebook’s lawyers.

Facebook Ireland Ltd v European Commission (Cases T-451/20 and T-452/20) ECLI:EU:T:2020:515/6, General Court orders of 29 October 2020)

European Commission issues statement of objections in rail predatory pricing case

European Commission issues statement of objections in rail predatory pricing case

The European Commission has sent Czech rail incumbent České dráhy (CD), a statement of objections alleging breach of Article 102 of the TFEU by engaging in predatory pricing in the provision of rail passenger transport services.

The Commission maintains that in 2011 and 2012, two new rail companies started operating commercial trains on the Prague - Ostrava route in competition with CD.

The Commission alleges that CD began to offer its services at prices that did not cover its costs which had as its aim the restriction of competition.

The Commission alleges that between 2011 and 2019 CD engaged in predatory pricing on the Prague - Ostrava route.

The same operator has received attention from the Czech Office for the Protection of Competition which fined it EU 13.5 million in December 2017 for abuse of dominance by submitting a “disproportionately low” bid to the Ministry of Transport during a public procurement procedure.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2017

Green Deal and Competition

Green Deal and Competition

The European Commission has launched a call for contributions on how competition policy can further support the objectives of the European Green Deal.  The European Green Deal aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy.

Although competition policy is not centre stage in the fight against climate change, it can complement that agenda. 

The aim of the consultation is to gather ideas and proposals from interested stakeholders, on how EU state aid, antitrust and merger control rules could better contribute to protecting the environment and the sustainability objectives of the Green Deal.

The consultation will be open until 20 November 2020.  The contributions will inform a conference set for early in 2021.

https://ec.europa.eu/competition/information/green_deal/index_en.html

European Commission consults on Motor Vehicles Block Exemption

European Commission consults on Motor Vehicles Block Exemption

 

The European Commission has launched a public consultation on Regulation 461/2010 (the motor vehicle block exemption) and its accompany Guidelines.  The Commission invites responses by 25 January 2021.

Regulation 461/2010 expires on 31 May 2023.  It requires the Commission to produce an evaluation report on its operation by 31 May 2021.

The Commission is seeking responses to a number of questions on the review criteria (effectiveness, efficiency, relevance, coherence and EU added value), including on:

1.         Whether competition in new motor vehicle distribution, repair and maintenance services, and distribution of spare parts has intensified, weakened or stayed the same since 2010.

2.         Whether the scope of the block exemption (particularly 30% market share threshold and list of hardcore restrictions) is still appropriate and effective.

3.         Whether the objectives of the block exemption (in terms of promotion of competition and removal of restrictions) have been met and the prevalence in practice of the different types of restrictions referred to in the motor vehicle block exemption rules (including whether any indirect means of achieving anti-competitive results have been encountered).

4.         Whether the block exemption (including definitions and particular provisions) has provided clarity and increased legal certainty as to the applicable rules.

5.         What costs have been incurred in complying with the block exemption and whether these have been proportionate to any resultant benefits.

6.         Whether the objectives of the rules remain relevant, with regard to any changes in the market.

7.         Whether the motor vehicle block is consistent with the vertical block exemption and other EU rules.

8.         Whether the motor vehicle block exemption rules have made it easier for national authorities and courts to apply the rules or whether national rules could have been equally effective.

https://ec.europa.eu/competition/sectors/motor_vehicles/legislation/mvber_review.html

 

 

CMA Article 9 referral request in Liberty Global (Virgin Media) / Telefónica (O2) merger

CMA Article 9 referral request in Liberty Global (Virgin Media) / Telefónica (O2) merger

The Competition and Markets Authority (CMA) has made a request to the European Commission under Article 9 of the EU Merger Regulation to request the transfer of the proposed JV between Liberty Global and Telefónica to merge their UK businesses.

The CMA believes that the case should be transferred to the UK given its potential impact on competition in several retail and wholesale telecommunication markets in the UK.

The CMA considers that any impact on competition will be limited to UK consumers.

In 2015, the European Commission rejected the CMA's request for referral of the Hutchison 3G /Telefonica UK merger.

The European Commission must take its decision on whether or not to refer the case to be investigated by the CMA under the Enterprise Act 2002 by 19 November 2020.

https://www.gov.uk/government/news/cma-requests-review-of-virgin-and-o2-merger

CMA opens competition investigation into drug for treatment of bi-polar disease

CMA opens competition investigation into drug for treatment of bi-polar disease

The Competition and Markets Authority (CMA) has started an investigation into a suspected abuse of dominance by Essential Pharma over its decision to cease supply of Priadel, a medicine for the treatment of bi-polar disease.

The CMA believes that the withdrawal of Priadel could mean that patients need to switch to alternative, more expensive treatments, such as Camcolit.

This is of particular concern due to the increased and ongoing pressure on the NHS given the COVID-19 pandemic.

Following the opening of the CMA’s investigation, Essential Pharma has said that it will continue to supply Priadell to facilitate pricing discussions.  This was after the Department of Health and Social Care asked the CMA to impose interim measures.

The CMA's investigation remains open as the prospect of withdrawal remains unless agreement can be reached on price.

https://www.gov.uk/government/news/cma-to-investigate-the-supply-of-bipolar-drug

Ofgem issues Statement of Objections to PayPoint

Ofgem issues Statement of Objections to PayPoint

Ofgem has issued a statement of objections to PayPoint in its investigation into a suspected infringement of UK and EU competition law.

PayPoint provides over-the-counter (OTC) payment services to prepayment energy customers in the UK.

The statement of objections alleges that PayPoint held a dominant position in the market for OTC payment services for prepayment energy customers for at least the period from April 2009 to October 2018.  It further alleges that PayPoint included exclusivity clauses in most of its contracts with energy suppliers and retailers, excluding its competitors from the market and in breach of Article 102 of the TFEU and/or the Chapter II prohibition.

PayPoint now has an opportunity to respond to the allegations.  The case will then be considered by Ofgem’s enforcement decision panel.

https://www.ofgem.gov.uk/publications-and-updates/investigation-whether-paypoint-plc-has-infringed-requirements-chapter-ii-competition-act-1998-andor-article-102-treaty-functioning-european-union

European Commission imposes fines on car equipment suppliers

European Commission imposes fines on car equipment suppliers

The European Commission has imposed fines of a total EUR18.196 million on Brose and Kiekert for their involvement in cartels relating to supplies of closure systems for BMW and Daimler cars in the EEA.

Magna received full immunity from fines under the 2006 Leniency Notice.  As a result, it escaped fines of around EUR6 million.

The decision was reached under the cartel settlement procedure, leading to a reduction of 10 per cent in the fines imposed.

The case marks another event in the Commission’s long running auto-parts investigation dating back to 2013.

The facts of the case go back some ten years. Imposing fines so long after the event raises questions about the compatibility of the investigation with the principle of good administration which requires investigations to be completed within a reasonable time.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1774

CMA adopts change to leniency guidance in RPM cases

CMA adopts change to leniency guidance in RPM cases

The Competition and Markets Authority (CMA) has adopted an addendum to its Guidance on leniency and no-action applications in cartel cases (OFT1495).

The Guidance sets out how the CMA will exercise its discretion in relation to the grant of Type B leniency in resale price maintenance (RPM) cases (i.e., where the CMA is conducting a pre-existing investigation and the applicant is the first to report and provide evidence (of significant value) of a cartel.

As a result of the change announced on 24 September and applying to new leniency applications made on or after that date, the CMA would not generally expect to grant immunity or discounts on any financial penalty of more than 50% to Type B applicants in RPM cases.

The CMA consulted on this change in the summer and found that in view of the nature of RPM cases, the value that a Type B applicant can add is unlikely to be sufficient to justify immunity or a discount of up to 100% on any financial penalty.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/920538/Addendum_to_OFT1495_FINAL.pdf

FCA opens new competition investigation

FCA opens new competition investigation

Details have been published of a new competition law investigation by the Financial Conduct Authority.

The investigation has been added to a list of public Competition Act 1998 cases in the regulated sectors, which is published on the CMA’s website.

The only information provided is that the FCA is investigating suspected anti-competitive arrangements in the financial services sector under Chapter I of the Competition Act 1998.

The case was opened in September 2020.

The FCA has one other ongoing competition investigation, opened in March 2019.

 

https://www.gov.uk/government/publications/competition-act-1998-cases-in-the-sectors-regulated-by-ukcn-members/competition-act-1998-cases-in-the-regulated-sectors

CMA imposes interim measures in airline Atlantic Joint Business Agreement

CMA imposes interim measures in airline Atlantic Joint Business Agreement

The Competition and Markets Authority (CMA) has refused to accept the proposed 10-year binding commitments offered by the International Consolidated Airlines Group (the parent company of British Airways) and American Airlines to address competition concerns arising from their Atlantic Joint Business Agreement (AJBA).

Instead, the CMA will continue its open competition investigation into the arrangements and has imposed interim measures which extend by three additional years commitments accepted by the European Commission in 2010 and which would otherwise expire in July 2020.

This is the first time that the CMA has imposed interim measures in a competition investigation since its incorporation in 2014.

The CMA has identified competition concerns on five routes between London and each of Boston, Chicago, Dallas, Miami and Philadelphia.

https://www.gov.uk/government/news/cma-acts-to-protect-competition-on-uk-us-airline-routes

UK review of competition policy

UK review of competition policy

John Penrose MP has been appointed to lead a root and branch review of competition policy in the UK.

The Government considers that promoting competition will be particularly important in the context of recovery from COVID-19.

Work is also ongoing in relation to digital competition. The Government has accepted the Furman Review recommendations and the Digital Markets Task Force is due to report by the end of 2020.

John Penrose MP has been asked to deliver, by the end of 2020, a short independent report building on and adding to these developments.

The report should consider how the UK’s competition regime can best:

1.     Play a central role in meeting the challenges of the post COVID-19 economy and in driving the recovery

2.     Contribute to the government’s aim of levelling up across all nations and regions of the UK?

3.     Increase consumer trust

4.     Support UK disruptors

5.     Make best use of data, technology and digital skills which are vital to the modern economy

https://www.gov.uk/government/publications/terms-of-reference-for-john-penrose-mp-report-on-competition-policy/terms-of-reference-john-penrose-mp-report-on-competition-policy

UK plans for new subsidy control regime

UK plans for new subsidy control regime

On 9 September the Business Secretary outlined plans for the UK’s new subsidy control regime, expected to take effect on 1 January 2021.

The announcement heralds the expectation and default position that the UK would follow World Trade Organisation (WTO) subsidy rules and other international commitments, replacing the EU state aid laws.  He indicated that clear guidance on WTO rules will be published before the end of the year.

The announcement is not unexpected.  It will come as a disappointment to any expectation that the UK regime for subsidy control would follow the EU model at the end of the transition period.

There will be public consultation on the design of the new regime in the coming months.  The form that would take remains to be fleshed out.  At the very least it should have an independent regulator and reflect competition law principles. 

https://www.gov.uk/government/news/government-sets-out-plans-for-new-approach-to-subsidy-control

CMA fines Amazon for failure to comply with information requests in Deliveroo merger investigation

CMA fines Amazon for failure to comply with information requests in Deliveroo merger investigation

 

The Competition and Markets Authority (CMA) has imposed total penalties of £55,000 on Amazon.com, Inc (Amazon) for failing, without reasonable excuse, to comply with requirements imposed in information notices in the context of the acquisition by Amazon of certain rights and a 16% minority stake in Roofoods Ltd (Deliveroo).

189 documents were provided between a few days and more than two months late, and only after follow-up by the CMA.

The CMA imposed separate penalties of £25,000 and £30,000 to reflect the different fact patterns of the breaches.  The penalties, each of which is subject to the statutory maximum of £30,000, were imposed under section 110 of the Enterprise Act 2002.

The CMA concluded that the breaches indicated behaviour by Amazon which amounted to failure to adopt an adequate approach in responding to the CMA's information notices and that this adversely affected the conduct of the CMA's investigation.

https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry

CMA closes fourth abuse of dominance investigation into pricing of hand sanitiser

CMA closes fourth abuse of dominance investigation into pricing of hand sanitiser

The Competition and Markets Authority (CMA) has closed the final abuse of dominance investigation it started in June 2020 into suspected unfair and excessive pricing of hand sanitiser by four pharmacies and convenience stores.

The CMA closed three of the investigations in July.

The CMA closed the fourth investigation having had regard to its prioritisation principles.

The CMA considers that it is unlikely that the suppliers’ prices infringe competition law.  It concludes that further investigation to reach a definitive view would deliver limited, if any, consumer benefits.

The CMA’s decision to close the case does not prevent it from opening an investigation in the future if it were to receive new evidence that changed its assessment.

https://assets.publishing.service.gov.uk/media/5f50df3f8fa8f535b650435c/3_September_2020_case_closure_statement.pdf

CMA secures director disqualification in pharmaceutical cartel proceedings

 

 

CMA secures director disqualification in pharmaceutical cartel proceedings

The Competition and Markets Authority has secured a competition disqualification undertaking by Mr Robin Davies, director of Alissa Healthcare Research Limited.

The disqualification undertaking relates to his involvement in breaches of UK and EU competition law in relation to the exchange of commercially sensitive information in connection with the drug nortriptyline.  Alissa and King Pharma admitted to the illegal conduct and received fines of £174,912 and £75,573, respectively.  Lexon did not settle and was fined £1.2 million.

The Company Directors Disqualification Act empowers the CMA to ask the court to disqualify a director from holding company directorships or performing certain roles for a specified period, if the director’s company has breached competition law.

Davies undertakes not to act as a director of any UK company for two years as of 24 November 2020.

Davies is the 18th director to agree to a director disqualification undertaking.

Separately, but arising out of the same competition law investigation the CMA has applied to the High Court to seek the disqualification of Mr Pritesh Sonpal, a director of Lexon (UK) Limited.

 

https://www.gov.uk/cma-cases/suppliers-of-antidepressants-director-disqualification

Supreme Court hands Unwired Planet victory in FRAND dispute

Supreme Court hands Unwired Planet victory in FRAND dispute

In a long awaited judgment, the Supreme Court has confirmed that Unwired Planet (Unwired) did not abuse its dominant position when seeking an injunction against the use by Huawei of its standard essential patents (SEPs).

The Court found that Unwired had been willing to grant a licence to Huawei and ZTE on fair, reasonable and non-discriminatory (FRAND) terms.

The Court also confirmed that Unwired did not act abusively when it sought an injunction when the putative licensees objected to its licensing terms.

The Court defeated Huawei’s antitrust claims, including the argument that Unwired had acted in a discriminatory manner by offering Huawei royalty rates that were higher than those offered to Samsung.

The ruling marks the end of a dispute going back to 2014 and will be welcomed by SEP holders.  The analysis revolved mostly around contract law and industry practice.  Parties seeking to rely on competition arguments in defence to claims of IPR infringement will need to consider their position carefully in light of the judgment.

[2020] UKSC 37 On appeals from: [2018] EWCA Civ 2344 and [2019] EWCA Civ 38

https://www.supremecourt.uk/cases/docs/uksc-2018-0214-judgment.pdf

Royal Mail ordered to continue freepost service to medical testing company

Royal Mail ordered to continue freepost service to medical testing company

 

The High Court has granted an interim injunction ordering Royal Mail to continue providing a freepost service to Preventx, a medical testing provider.  It found that Royal Mail’s contractual terms could amount to an abuse of a dominant position, including through the imposition of an unreasonably short notice period for migrating to new terms.

Preventx had not set out an arguable case in its application for an injunction as regards its allegations of unfair trading terms and limitation of the market.

The High Court granted an injunction to restrain Royal Mail until trial or further order from: 1) refusing to continue to provide its Freepost Standard service to Preventx for returns of test samples for so long as it cannot offer its Tracked returns service and 2)  refusing to process and deliver test samples returned to Preventx bearing labels for the Freepost Standard service.

The Court found that Royal Mail’s £3.50 offer to process returned test samples is “substantially higher” than the current rate and is “in effect a coercive threat to persuade Preventx” to use the tracked service.

Preventx Limited v Royal Mail Group Limited [2020] EWHC 2276 (Ch)

Google and Facebook sued in class action in crypto-advertising

Google and Facebook sued in class action in crypto-advertising

A class action has been launched against Google and Facebook in Australia alleging that they breached competition law through a ban on all crypto-advertising.

The action is brought by JPB Liberty CEO Andrew Hamilton in the Australian Federal Court. Reports state that the class comprising crypto industry members and investors has incurred $600 million in damages claims, potentially increasing to $300 billion.  In addition to damages, the action seeks an order that Facebook and Google provide free advertising to the class members

JPB Liberty was established to pursue litigation “against those who attack the Cryptocosm [companies powered by blockchain technologies] unlawfully”.

The lawsuit has an interesting parallel in Europe where in August 2019 the European Commission opened a preliminary investigation into Facebook’s Libra over concerns with its data collection practices.  However, it appears that Facebook has more limited plans for Libra.  Also in 2019 the Australian Competition and Consumer Commission released its digital platform inquiry report finding that Google and Facebook have substantial market power in multiple segments of their markets.  This echoed concerns of the UK Competition and Markets Authority in its own probe into the sector

https://res.cloudinary.com/gcr-usa/image/upload/v1597398251/First_Statement_of_Claim_13_Aug_2020_dtehqg.pdf

CMA fines Pentland and JD Sports for breach of Initial Enforcement Order

CMA fines Pentland and JD Sports for breach of Initial Enforcement Order

 

The Competition and Markets Authority has fined Pentland Group Limited (Pentland) and JD Sports Fashion plc (JD Sports) for their failure to comply with an initial enforcement order (IEO) in the context of the completed acquisition by JD Sports of Footasylum plc.

The breaches arose from the service of a break notice by Footasylum to close its Wolverhampton store.  Specifically, the parties failed to comply with the IEO by not procuring that, except with the CMA's prior written consent or in the ordinary course of business for the separate operation of the Pentland business and the Footasylum business.

The CMA did not consider that the impact of COVID-19 on the parties’ financial resources was sufficiently material to impact the level of the penalty.  However, given the significant short-term impact of COVID-19, the CMA has deferred the deadline for the payment of the penalty for nine months.

https://assets.publishing.service.gov.uk/media/5f2975608fa8f57acc8d8231/IEO_breach_-_Final_-_web_version_---_pdf_a.pdf

CMA clears Amazon’s acquisition of minority stake in Deliveroo

CMA clears Amazon’s acquisition of minority stake in Deliveroo

The Competition and Markets Authority (CMA) has cleared the acquisition by Amazon of a minority (16%) shareholding in Roofoods Ltd (Deliveroo).

The unconditional clearance follows a phase 2 investigation.  The CMA concludes that the acquisition would not be expected to result in a substantial lessening of competition in the supply of online restaurant platforms or online convenience grocery in the UK.

The CMA found that absent the transaction Amazon would be likely to re-enter the online restaurant platform market in the UK, but it would not in any event substantially lessen competition.

The CMA also concluded that Amazon’s investment in Deliveroo is unlikely to discourage Deliveroo from competing on online convenience grocery services, nor would it remove the strategic benefit to Amazon of developing its own competing service.

The decision focuses on Amazon’s 16% interest in Deliveroo amounting to material influence.  If Amazon were to acquire a more significant interest amounting to a stepping up in the level of control, this would trigger a new relevant merger situation and would invite further scrutiny by the CMA.

https://www.gov.uk/government/news/cma-clears-amazons-16-investment-in-deliveroo

CMA consults on leniency in RPM cases

CMA consults on leniency in RPM cases

The Competition and Markets Authority is consulting on amendments to its Type B leniency in cases involving resale price maintenance (RPM).

The proposed changes would apply where the applicant is the first to report and provide significant added value evidence of a cartel when the CMA is already investigating the case.  In such cases the CMA has a discretion to grant immunity or up to a 100% reduction in the fine.

The CMA believes that applying the policy in RPM cases is likely to be too generous and may limit deterrence.  It maintains that there are limits to what an applicant can add in an RPM case where it already has information in its possession and because there will only ever be two parties in any RPM case.

The CMA intends to amend its guidance to state that it would not generally expect to grant immunity or discounts of more than 50% to Type B applicants in RPM cases.

The CMA invites comments on this proposal by 28 August 2020.

 

https://www.gov.uk/government/consultations/type-b-leniency-in-rpm-cases-draft-addendum-to-oft1495?utm_source=45489bff-c62d-4ebe-89ac-bcdc30be27ed&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Hong Kong’s first cartel settlement

Hong Kong’s Competition Tribunal has approved a settlement between the Competition Commission, two construction firms and an individual.  The defendants admitted liability for price fixing and customer allocation at a public housing estate.

The case is noteworthy in two respects.  It is the first case where the Competition Commission has brought proceedings against an individual.

The Tribunal’s decision is also the first case to be settled without a full hearing since the Competition Ordinance came into force in December 2015. The requests for settlement were examined according to the approach under the Securities and Futures Ordinance, or ‘Carecraft’ procedure.  This dates from a time when Hong Kong was still under British rule.  It allows for early resolution where the defendant agrees to a statement of facts and sanctions.

The case follows a similar one in May 2019 involving 10 decorator firms.  It was a matter of speculation whether the Competition Commission’s success in that case might incentivise a settlement in near-identical facts.

European Commission launched sector inquiry into the Internet of Things

European Commission launched sector inquiry into the Internet of Things

The Commission has announced its latest sector inquiry into the Internet of Things (IoT).

The sector inquiry will cover products such as wearable devices (e.g. smart watches or fitness trackers) and connected consumer devices used in the smart home context, such as fridges, washing machines, smart TVs, smart speakers and lighting systems.

The inquiry has been expected for some time where the digital sector remains a policy focus for the Commission.  Questionnaires have already been received by interested parties.

The Commission has launched specific behavioural investigations arising out of previous sector inquiries and they have also led to legislation.  The Commission’s 2017 e-commerce probe was the catalyst for its geo-blocking probes and legislation banning unjustified geo-blocking.

The Commission expects to publish a preliminary report on the replies for consultation in the spring of 2021 with a final report in the summer of 2022.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1326

General Court annuls European Commission state aid decision in Apple tax case

General Court annuls European Commission state aid decision in Apple tax case

The General Court has annulled a decision of the European Commission on the Irish tax authorities’ rulings in favour of Apple.  The Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU.

The Commission’s decision concerned two tax rulings issued by the Irish tax authorities in favour of Apple Sales International (ASI) and Apple Operations Europe (AOE), both companies incorporated in Ireland but not tax resident there.

The General Court considered that the Commission should have shown that income that was taxed represented the value of the activities actually carried out by the Irish branches themselves, in view of the functions actually performed by the Irish branches of ASI and AOE and the decisions taken and implemented outside those limbs of the business.

Further, the Commission did not prove that the contested tax rulings were the result of discretion exercised by the Irish tax authorities.

The Commission is expected to appeal.

Joined Cases T-778/16 Ireland v Commission and T-892/16 Apple Sales International and Apple Operations Europe v Commission, ECLI:EU:T:2020:338

CMA closes investigations into excessive pricing of sanitisers

CMA closes investigations into excessive pricing of sanitisers

The Competition and Markets Authority (CMA) has abandoned a series of investigations into excessive pricing for hand sanitiser during the pandemic barely one month from launching its probes.

The CMA announced closure of probes into two convenience stores and one pharmacy but it has an ongoing investigation into whether another pharmacy charged excessive prices for hand sanitiser.

The CMA has not disclosed the identities of the companies concerned.  It has stated that on the evidence available a competition law breach was unlikely and continuing the investigations “would deliver limited, if any, consumer benefits”.

Excessive pricing cases are always challenging for a competition authority.  It may be that despite the early case closure the opening of the investigations has had some deterrent effect.

https://assets.publishing.service.gov.uk/media/5f0c5a7d3a6f40037ed4848c/Closure_Statement_.pdf

Taboola-Outbrain merger faces Phase II investigation

Taboola-Outbrain merger faces Phase II investigation

The Competition and Markets Authority (CMA) has launched a Phase II review into the merger of digital advertising platform operators Taboola and Outbrain.

The probe coincides with CMA recommendations on how to promote competition in the sector following its separate market study.

The CMA has stated that the merging parties did not offer remedies to address the concerns it had raised about the impact on competition in the UK online advertising sector.

Taboola and Outbrain employ algorithms to display personalised recommended content in publishers’ websites and operate on a pay-per-click basis.  The publishers receive a share of revenue each time a user clicks on an ad.

Taboola has claimed that the company offers “a more robust competitor to Facebook and Google”.  The CMA finds that the merged entity would control 80 per cent of the content-recommendation market.

The CMA has 24 weeks until 24 December 2020 to issue its final decision on whether to approve or prohibit the merger.

https://www.gov.uk/cma-cases/taboola-outbrain-merger-inquiry

CMA fines Spire and consultant ophthalmologists for price-fixing

CMA fines Spire and consultant ophthalmologists for price-fixing

The Competition and Markets Authority has imposed fines totalling over £1.2 million on Spire Healthcare Group and 6 ophthalmologists for their participation in price fixing of consultation fees in violation of Chapter I of the Competition Act 1998.

The penalties include a 20% settlement discount to reflect the parties’ admissions and cooperation with the CMA.  The leniency applicant consultant who brought the matters to the attention of the CMA received total immunity from fines.

Spire and the consultants admitted that they agreed to fix fees for initial private consultations for self-pay patients at £200. The arrangement lasted from at least 29 August 2017 to 3 July 2019 (28 June 2020 for one consultant).

The CMA imposed fines totalling over £1.2 million on Spire.  Six of the consultants received fines of £2,978, £1,186, £2,312, £2,193, £3,859, £642.

https://www.gov.uk/cma-cases/privately-funded-healthcare-services

CMA fines musical instrument makers for resale price maintenance

CMA fines musical instrument makers for resale price maintenance

The Competition and Markets Authority (CMA) has fined Roland (U.K.) Limited £4 million for infringing Article 101 TFEU/Chapter I of the Competition Act 1998 by engaging in resale price maintenance (RPM) in the supply of electronic drums.

In a separate infringement decision, it has fined Korg (UK) Limited £1.5 million for RPM in the supply of synthesizers and hi-tech equipment.

The CMA issued a statement of objections to the retailer GAK and Yamaha Music Europe alleging RPM.  Yamaha will receive full immunity while GAK has settled with the CMA and agreed to pay a maximum fine of £278,945.

The CMA has also published an open letter to suppliers and retailers in the musical instruments sector as part of its initiatives to crack down on infringements in the sector.  The guidance builds on case studies and experience in other investigations involving Fender and Casio.  The CMA has also developed an online pricing tool to help it detect online unlawful pricing activity.

https://www.gov.uk/government/news/musical-instrument-firms-to-pay-millions-after-breaking-competition-law

Expansion to UK public interest merger review

Expansion to UK public interest merger review

The Department for Business, Energy and Industrial Strategy (BEIS) has announced two measures to enhance the merger public interest review provisions of the Enterprise Act 2002.  The measures are designed to strengthen the resilience and national security of the UK.

There will be a new specified public interest consideration relating to public health emergencies. This will come into force on 23 June 2020.  The provision would allow the government to review and block mergers that would otherwise threaten its ability to deal with public health emergencies.

There will also be revised thresholds for mergers relating to artificial intelligence, advanced materials and cryptographic authentication.  These will allow public interest intervention on national security grounds. The statutory instrument on this provision will be laid on 22 June 2020 but will not come into force until it has been debated and approved by both Houses of Parliament.

https://www.gov.uk/government/news/new-protections-for-uk-businesses-key-to-national-security-and-fight-against-coronavirus

CMA opens abuse of dominance investigation into pricing of hand sanitiser

CMA opens abuse of dominance investigation into pricing of hand sanitiser

The Competition and Markets Authority (CMA) has opened an investigation into suspected excessive and unfair pricing by pharmacies and convenience stores of hand sanitiser products in the outbreak of the COVID-19 pandemic and in breach of the chapter II prohibition.

The investigation follows the CMA’s setting up of a taskforce in March 2020 to monitor competition problems stemming from responses to the public health emergency.  It has received complaints that prices for some products have increased unjustifiably with the largest being a median rise of just less than 400%.

The investigation is at an early stage and the CMA has not yet issued a statement of objections.  The pattern of conduct at issue has prompted investigations by other EU competition authorities and more probes are expected to be in the pipeline.  Not all will result in a formal finding of infringement.

The CMA expects to conduct its initial fact-finding and review during June and July 2020. 

https://www.gov.uk/cma-cases/hand-sanitiser-products-suspected-excessive-and-unfair-pricing

Supreme Court confirms that Visa and Mastercard’s interchange fees infringe Article 101(1) TFEU

Supreme Court confirms that Visa and Mastercard’s interchange fees infringe Article 101(1) TFEU

The Supreme Court has given judgment on appeals by Mastercard and Visa against the Court of Appeal’s judgment holding that the setting of multilateral interchange fees (MIFs) within the Mastercard and Visa payment card systems infringes Article 101 TFEU.

The Court of Appeal judgment concerned actions where various retailers claimed damages from Mastercard or Visa (Sainsbury's v Visa; Asda Stores Limited and others (AAM) v Mastercard and Sainsbury's v Mastercard).

The Supreme Court confirmed a number of findings which are worthy of a much more thoughtful examination than here.  I will be returning to the detail at a later stage.  The Supreme Court held that the Court of Appeal correctly found that it was bound by the European Commission’s 2007 infringement decision insofar as the defendant’s’ MIFs breach Article 101(1) TFEU.

As to Article 101(3), the Supreme Court considered that the fair share of the benefits must be received by the consumers in the same market as that affected by the restriction of competition.

However, the Supreme Court departed from the Court of Appeal in relation to the precision needed in the quantification of mitigation of loss.

The Supreme Court allowed the AAM cross-appeal against the decision to remit the case to the Competition Appeal Tribunal for consideration of the Article 101(3) issues; such arguments should have been dismissed.  As a result, the action should proceed to the stage of quantification of damages.

Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC and others and Sainsbury’s Supermarkets Ltd and others v Mastercard Incorporated and others [2020] UKSC 24