European Commission accepts commitments from Amazon to end marketplace and Buy Box probes

 

European Commission accepts commitments from Amazon to end marketplace and Buy Box probes

The European Commission has decided under Article 9 of Regulation 1/2003, to accept commitments offered by Amazon, to address competition concerns in two investigations.

The first concerns the Amazon Marketplace where the Commission had provisionally concluded that Amazon's use of sensitive data from independent retailers violates Article 102 of the TFEU.

The second concerns Amazon Buy Box and Prime where the Commission had provisionally found that the arrangements for the Buy Box and Prime unduly favour Amazon's own retail and connected businesses.

Following consultation on proposed commitments in July 2022 the Commission has now decided to accept revised commitments.

Among the commitments Amazon has agreed that it will: 1) refrain from using non-public data relating to, or derived from, the activities of independent sellers on its marketplace, for its competing retail business; 2) apply non-discriminatory conditions and selection criteria for offers to appear in the Buy Box; 3) set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime; 4) refrain from using any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services.

Amazon must implement the commitments by June 2023. Some are heralding the commitments as a win for Amazon as the Commission rarely reverts to a commitments procedure after the issue of a statement of objections.

Meanwhile, the UK Competition and Markets Authority also launched a parallel abuse of dominance investigation into Amazon’s use of merchant data and the criteria for sellers to appear in its Buy Box.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7777

CMA finds BMW for failure to respond to information request in competition investigation

 

CMA finds BMW for failure to respond to information request in competition investigation

The Competition and Markets Authority (CMA) has imposed a fine on BMW AG for failing, without reasonable excuse, to comply with a formal request for information issued under section 26 of the Competition Act 1998. The CMA has imposed a fixed penalty of £30,000 and a daily penalty of £15,000 (the maximum amounts possible), which it considers to be appropriate and proportionate in this case.

The CMA issued an information request to BMW AG in its ongoing investigation into whether certain vehicle manufacturers and trade associations have breached the Chapter I prohibition of the Competition Act 1998 as a result of anti-competitive practices relating to the use of recycled materials in cars and the associated arrangements for recycling old or written-off vehicles.

The CMA believes that elements of the arrangements were agreed outside but implemented in the UK.  The CMA formally required information from BMW Group, including its parent company BMW AG.

The wider BMW Group failed to respond to the CMA’s information request claiming that the CMA does not have jurisdiction to request information from a non-UK company. The CMA refutes this claim and considers that BMW AG has intentionally failed to provide information that is important to the CMA’s investigation.

The daily penalty will continue until BMW Group provides the requested information, the CMA issues an infringement decision or the case is closed.

Should the Digital Markets, Competition and Consumer Bill be passed in is current form, which is expected early next year, the CMA will be able to impose fines of up to 1% of a company’s global turnover if they fail to comply with information requests.

The case is interesting in a post-Brexit environment where the CMA can no longer rely on the arrangements for cooperation within the European Competition Network which allow EU competition authorities to obtain information from companies located in another Member State.

 

https://www.gov.uk/government/news/bmw-fined-for-failing-to-comply-with-cma-information-request

CAT adds season ticket holders to train operators collective action

 

CAT adds season ticket holders to train operators collective action

The Competition Appeal Tribunal has granted a request by Justin Gutmann to include season ticket holders in his £93 million collective action against two train operators -  South Western Railway and London & South Eastern Railway - for allegedly overcharging commuters travelling outside of London.

The CAT rejected the defendants’ objections to the amendment and warned against over-complicating the class definition in an attempt to try to exclude certain categories of case where loss had been incurred.

The CAT noted that, in view of the wide range of tickets and the wide variety of individual circumstances in which rail tickets are purchased, it would not be productive to seek more elaborate refinement of the class definition at this stage.

Justin Gutmann v London & South Eastern Railway Limited and Justin Gutmann v First MTR South Western Trains Limited and Stagecoach South Western Trains Limited, [2022] CAT 49, ruling on amendment, 10 November 2022

Permission to appeal partially granted in trucks cartel litigation

 

Permission to appeal partially granted in trucks cartel litigation

The Competition Appeal Tribunal (CAT) has granted limited permissions to appeal in challenges brought in the UK trucks cartel litigation (UK Trucks Claim Limited v Fiat Chrysler Automobiles N.V. and Others and Road Haulage Association Limited v Man SE and others).

In June 2022 the CAT granted and refused collective proceedings orders (CPO) in the claims, under section 47B of the Competition Act 1998.

The litigation follows on from the European Commission’s 2016 trucks cartel decision.

The CAT previously ruled that both the UK Trucks Claim (UKTC) and Road Haulage Association (RHA) claims were suitable for collective proceedings, but the RHA opt-in claim was more practical despite more risks from a funding perspective.

UKTC sought permission to appeal the ruling on the basis that the CAT had incorrectly refused the opt-out application or should have accepted it to the extent not covered by the RHA opt-in application.

While the CAT dismissed the majority of the UKTC appeal grounds, it granted permission to appeal based on the assessment of the inclusion of new and used trucks in the RHA class definition, and the argument that if the RHA CPO had been confined to used trucks only, it should be considered whether the UKTC application should be allowed.

The CAT did not say that it had erred in its conclusion but reflected that it had considered multiple applications.  At this relatively new time in the development of the UK class action regime, the CAT considered this merits review by the Court of Appeal.

The CAT also granted defendants MAN and DAF permission to appeal against the certification decision on one limited ground relating to the suitability of the RHA’s claim to proceed on a collective basis.

As a result, the CAT stayed the opt-in collective damages claim to allow the competing claimant group to challenge its certification decision.

UK Trucks Claim Limited v Fiat Chrysler Automobiles N.V. and others and DAF Trucks NV and others and Road Haulage Association Limited v MAN SE and others and Daimler AG [2022] CAT 48, ruling (permission to appeal)

Twin antitrust probes into Google’s Play Store

 

Twin antitrust probes into Google’s Play Store

Google has confirmed that the European Commission is investigating its Play Store in an abuse of dominance inquiry.

This confirmation was made in a filing to the US Securities and Exchange Commission. It comes on the heels of the launch by the UK Competition and Markets Authority of a similar probe in June.  The European Commission has not yet confirmed its investigation at this stage, although it is usual for it to announce the opening of a formal investigation.

It appears that the Commission’s investigations relates to Google’s requirement that app developers use its own payment system or they will be removed from the App Store.  A similar theory of harm runs through the statement of objections that the Commission sent to Apple in 2021 concerning the music streaming market.

The CMA’s latest probe into Google’s Play Store is accompanied by its final report in its mobile ecosystem market study.  This found that Apple and Google have a ‘stranglehold’ over certain markets due to their effective duopoly in mobile ecosystems.

Google has also confirmed that it is bringing an appeal to the European Court of Justice against the General Court’s finding that upheld the major part of the Commission’s Google Android decision.

Google also confirmed in its regulatory filing that it is appealing to the European Court of Justice against the General Court’s ruling last month that largely upheld the commission’s Google Android decision.

https://app.quotemedia.com/data/downloadFiling?webmasterId=90423&ref=117011882&type=HTML&symbol=GOOGL&companyName=Alphabet+Inc.&formType=10-Q&formDescription=General+form+for+quarterly+reports+under+Section+13+or+15%28d%29&dateFiled=2022-10-26&CK=1652044

European Commission issues statement of objections in abusive patent filing case

 

European Commission issues statement of objections in abusive patent filing case

The European Commission has sent a statement of objections to Teva alleging that it has abused its dominant position contrary to Article 102 TFEU through conduct that is intended to block or delay competition with its multiple sclerosis drug, Copaxone.

The Commission has made a provisional finding that Teva engaged in abusive practices in the markets for glatiramer acetate which is the active ingredient in Copaxone, in Belgium, Czechia, Germany, Italy, the Netherlands, Poland and Spain.

Teva's basic patent for glatiramer acetate expired in 2015.  The Commission contends that Teva has artificially extended patent protection for Copaxone by strategically filing and withdrawing secondary patent applications (for divisional patents).  According to the Commission this caused competitors to have to bring new legal challenges which delayed their market entry with an alternative.

The exclusionary effect of (patent) filing strategies on competition between incumbents and new entrants was examined in detail by the Commission as early as 2008 in its Pharmaceutical Sector Inquiry.  It is not surprising that owners of patents develop commercial strategies that are aimed at and have the effect of extending the breadth and duration of their IPR protection which affects the ability of new entrants to enter and expand on the market. The question is whether this is abusive.

A dominant company may not use regulatory procedures in such a way as to prevent or make more difficult entry of competition in a market, unless it can as an undertaking engaged in competition on the merits, rely on grounds relating to the defence of legitimate interests or objective justification.

The case has some parallels with the Commission’s finding that AstraZeneca infringed Article 102 TFEU through two practices: (1) making misleading representations before the national patent offices and before the national courts in order to obtain supplementary protection certificates for its Losec drug (which extend patent protection); and (2) filing requests for deregistration of marketing authorisations combined with the withdrawal from the market of Losec capsules with the intent of blocking the entry of generic products or preventing parallel trading. C-457/10 P AstraZeneca v Commission, ECLI:EU:C:2012:770

The Teva case represents an uptick in the Commission’s enforcement strategy against abusive conduct in the context regulatory procedures in the pharma sector.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_6062

 

 

Ofcom launches market study into cloud services

 

Ofcom launches market study into cloud services

Ofcom has launched a market study into the provision of cloud services in the UK.

Cloud services are services related to the provision of remote access to computing resources (compute, storage and networking).

The main suppliers of cloud services in the UK are Amazon Web Services, Microsoft and Google (known and ‘the hyperscalers’).

Cloud services are important to businesses across the economy, especially in telecoms and broadcasting.  Ofcom wants to examine whether there is any feature of the market that could limit competition and harm consumers and intends to focus on the ‘public cloud’.  It will consider whether any feature of the market might favour the hyperscalers and make it more difficult for others to enter and expand.

Ofcom seeks comments including on whether it should make a market investigation reference to the Competition and Markets Authority, by 3 November 2022.

Ofcom expects to publish an interim report for consultation in around six months’ time.

Ofcom says that it is doing this as part of a new programme of work to ensure that digital communications markets are working well for people and businesses in the UK.

 

https://www.ofcom.org.uk/consultations-and-statements/category-3/cloud-services-market-study

EU Guidelines on the application of competition law in the gig economy

 

EU Guidelines on the application of competition law in the gig economy

The European Commission has set out Guidelines on the application of EU competition law to collective agreements. The Guidelines concern the conditions of solo self-employed persons.

Collective bargaining between employees and employers is outside the scope of EU competition law.

However, the self-employed are considered to be "undertakings" under EU law and an agreement between them risks being in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The Commission's Guidelines set out the circumstances in which solo self-employed are comparable to workers and therefore not subject to Article 101 of the TFEU.

The Commission also sets out the conditions where it will not intervene against collective agreements that aim to correct a clear imbalance in the bargaining power of solo self-employed persons and the other contracting party and which, by their nature and purpose, aim to improve working conditions.

The Commission has stated that it renew its guidelines on collective agreements for the self-employed by 2030.

https://ec.europa.eu/commission/presscorner/detail/en/IP_22_5796

Digital Regulation Cooperation Forum

 

Digital Regulation Cooperation Forum

The Competition and Markets Authority (CMA) has published terms of reference of the Digital Regulation Cooperation Forum (DRCF).

The DRCF was launched by the CMA, the Information Commissioner’s Office (ICO) and Ofcom in July 2020. The Financial Conduct Authority joined in April 2021.

The Secretary of State for Culture, Media and Sport has written to the DCRF setting out the role of the DRCF in delivering the government's vision of a strategic, pro-innovation approach to digital regulation.

The terms of reference of the DRCF set out that it has the goal of promoting greater coherence, working collaboratively to jointly address complex problems, and working together to build capabilities. It is a voluntary cooperation forum to facilitate engagement between the members and does not provide formal advice or direction to its members.

The DCRF is one of a growing number of bodies and initiatives set up to promote wider cross-sector engagement on competition and economic issues in a digital landscape. Digital transformation is supporting all sectors of the economy

The International Telecommunication Union (ITU) has identified how collaborative regulation represents a fundamental change in the way that governments develop regulatory frameworks and rules.

In 2016 at the General Symposium for Regulators ITU presented the concept of collaborative or fifth generation (G5) regulation under the generations of regulation model

G5 involves a new system of cross-sectoral regulation involving harmonised rules with holistic and collaborative approaches as well as high level principles. A collaborative approach recognises the interplay between digital infrastructure, services and content across industries. While there are some ‘quick wins’ that can be achieved with some ease, other institutional constraints will need to be considered and demand more reflection and time.

https://www.gov.uk/government/publications/drcf-terms-of-reference/terms-of-reference

 

CMA review of liner shipping block exemption

 

CMA review of liner shipping block exemption

The Competition and Markets Authority is reviewing the retained EU Liner Shipping Consortia Block Exemption Regulation (Commission Regulation 906/2009) (Shipping Block Exemption).

The Competition (Amendment etc.) (EU Exit) Regulations 2019 preserved the existing EU block exemption regulations as retained law.  These regulations also allowed the Secretary of State to renew or replace the retained EU block exemptions.

The UK’s review of block exemptions can occur in parallel with the EU review or expiration of the underlying block exemptions or it can occur independently.

The Shipping Block Exemption provides an automatic exemption for agreements between liner shipping companies allowing for joint services to be provided through consortia.  It does not allow liner shipping companies to agree to fix prices, otherwise limit capacity or sales, or allocate markets or customers.

The Shipping Block Exemption is due to expire on 25 April 2024. Meanwhile the European Commission has launched a review on whether the EU block exemption continues to be fit for purpose. 

In carrying out its own review the CMA will consider whether the Shipping Block Exemption serves the interests of UK businesses and consumers taking account of the features of the UK market. Not least, this takes place against a background of global supply chain disruptions. 

The CMA is expected to consult further on the UK Shipping Block Exemption in retained form in 2023.

Meanwhile the CMA is undertaking reviews of a number of other EU block exemptions existing as retained EU law in the UK. This includes a review of the retained Vertical Block Exemption Regulation (November 2021) and the retained Horizontal Block Exemption Regulations (June 2022). The CMA also consulted, in July 2022, on its proposed recommendation on the retained Motor Vehicle Block Exemption Regulation.

https://www.gov.uk/cma-cases/liner-shipping-consortia-block-exemption-regulation

Competition Appeal Tribunal upholds appeal in first ever MFN infringement case

 

Competition Appeal Tribunal upholds appeal in first ever MFN infringement case

 

The Competition Appeal Tribunal has ruled in favour of BGL (Holdings) Limited, BGL Group Limited, BISL Limited and Compare the Market Limited (Compare The Market) in its challenge to the decision of the Competition and Markets Authority (CMA) imposing penalties on Compare The Market of around £18 million for breach of Article 101 TFEU and the Chapter I prohibition.

The CMA found that Compare The Market had imposed wide “most favoured nation” (MFN clauses in its agreements with home insurers providers in relation to the use of its price comparison website (PCW).  

The CAT found that the CMA had made errors in defining the relevant market as a single market.  The CAT considered that the CMA should have defined two separate markets identifying the two sides of the platform relating to the supply of customer introduction services to home insurance providers and the supply of home intermediation services to consumers.

The CAT also found material errors in the CMA’s analysis of the effect on competition; in particular the CMA had failed to assess the significance of other channels for the purchase of home insurance by consumers.

The CAT was unable to test much of the evidence relied on by the CMA stating that much of it was anecdotal.  It was not convinced that MFNs had a potential anti-competitive effect on promotional discounts.

The CAT upheld the appeal and set aside the CMA's decision.

BGL (Holdings) Limited and others v Competition and Markets Authority [2022] CAT 36

CAT issues Practice Direction on the conduct of collective proceedings following certification

 

CAT issues Practice Direction on the conduct of collective proceedings following certification

 

The Competition Appeal Tribunal (“Tribunal”) has issued Practice Direction 3/2022 relating to the conduct of collective proceedings after certification.

This practice direction follows the Tribunal’s May 2022 ruling on case management in Le Patourel v BT Group (“Le Patourel”).  Le Patourel decided that the same CAT tribunal would both deal with case management issues and hear the trial.  In the event that there is a collective settlement proposal, this would be dealt with by a separately constituted tribunal (a "settlement tribunal").

This approach differs from the usual approach in paragraph 6.7 of the CAT's Guide to Proceedings 2015 (which envisages the appointment of a "trial tribunal" to take over the conduct of proceedings from the "case management tribunal" that heard and decided the CPO application).

The most likely situation in which another tribunal may need to be constituted is if a collective settlement is proposed. In that event, the parties should notify the Registrar of the proposed collective settlement and request the constitution of a settlement tribunal to consider the proposed settlement and give or make any appropriate directions or orders.

This ensures that the trial tribunal can be kept apart from the consideration of any settlement and ready to continue to trial if necessary.

https://www.catribunal.org.uk/sites/default/files/2022-08/01Aug2022_Practice%20Direction_ConductofCollectiveProceedingsAfterCertification_0.pdf

Le Patourel v. BT Group [2022] CAT 21

CMA approves the Strategic Plan under the Private Healthcare Market Investigation Order

 

CMA approves the Strategic Plan under the Private Healthcare Market Investigation Order

The Competition and Markets Authority has approved the Strategic Plan of the Private Healthcare Information Network (PHIN) required by the Private Healthcare Market Investigation Order 2014.

The Order aims to address the adverse effects on competition that the CMA identified in its final report on the private healthcare market investigation.  The markets for private healthcare provision and private healthcare insurance were the subject of a market investigation reference in the UK (2012-2014).  The CMA’s final report concluded that certain features of the markets for privately-funded healthcare services were leading to adverse effects on competition.  The CMA introduced a number of remedies (including transparency remedies about private hospitals’ performance for patients and reduction in the incentives offered to referring clinicians). 

The Order requires the establishment of an industry information organisation to make private healthcare information (about private healthcare facilities and consultants) available via an independent public website.

The PHIN was approved for these purposes in 2014.  PHIN is required to submit to the CMA a five year plan, developed and approved by its members setting out how it proposes to collect the information specified in this Order and the basis on which it may licence access to the information.

The PHIN Strategic Plan outlines how the sector will deliver the remainder of the requirements of the Order.  The CMA states that it will monitor progress closely and stands ready to take enforcement action if hospitals or consultants fail to meet the standards and timescales set out.

3Since the final report, many of the competition and consumer welfare concerns identified by the CMA as problematic if they were “extensively and rigidly applied” have worsened and been applied by all the major private medical insurers (PMIs).  The consultants have attempted to have the issues looked at afresh by the CMA, using a variety of legal tools.  These attempts have met administrative priority objections.  However, while the original MIR was limited to a dataset on market dynamics prevailing up to 2012 there does not appear to be appetite on the part of the CMA to conduct another root and branch investigation.

https://www.gov.uk/cma-cases/private-healthcare-market-investigation

CMA and Ofcom publish joint statement on online safety and competition

 

CMA and Ofcom publish joint statement on online safety and competition

 

Digital transformation is supporting all sectors of the economy.  The Competition and Markets Authority (CMA) and Ofcom have published a joint statement setting out their common views on the relationship between online safety and competition in digital markets.

The statement explores the interaction between interventions to support competition and how initiatives by the CMA and sector regulator Ofcom can benefit consumers.

1.     Why safety and competition concerns arise online and why these issues can sometimes interact in digital markets.

2.     The implications for policy design.

3.     How the CMA and Ofcom will take account of these interactions as they continue to collaborate

This statement forms part of the work programme, designed by the Digital Regulators Co-operation Forum (DRCF) to support wider cooperation among digital regulators.

The International Telecommunication Union (ITU) has long identified how collaborative regulation represents a fundamental change in the way that governments and regulators develop regulatory frameworks and rules.  In 2016 at the General Symposium for Regulators ITU presented the concept of collaborative or fifth generation (G5) regulation under the generations of regulation model.  G5 involves a new system of cross-sectoral regulation involving harmonised rules with holistic and collaborative approaches as well as high level principles.

 

https://www.gov.uk/government/publications/cma-ofcom-joint-statement-on-online-safety-and-competition

CMA opens market study into road fuel sector

 

CMA opens market study into road fuel sector

The Competition and Markets Authority (CMA) has launched a market study into the supply of road fuel in the UK.

The Secretary of State instructed the CMA to undertake an urgent review of the fuel market on 11 June amid concerns about potentially unfair pricing of fuel across the country.  The CMA reports rising pump prices over the last 12 months, particularly in 2022.  However the 5p per litre cut in fuel duty announced in the Spring Statement appears to have been passed on.

The market study will examine why refining spreads are so high, how long they are likely to continue and whether there are measures the UK could or should take to address them.

The CMA invites evidence and views on the issues that it intends to examine during the market study by 1 August 2022.

The CMA must announce within six months whether or not it is intending to make a market investigation reference following its market study.

The CMA must publish its final report on the market study within 12 months.  It intends to publish an update on its initial findings in the autumn of 2022.

The CMA is not the only national competition authority to probe the fuel sector.  The launch of the study coincides with the 7 July publication by the Austrian Federal Competition Authority on its fuel market inquiry report. The authority found increases in refining margins but not that these were due to a lack of competition.  It will take account of feedback on its report when it makes recommendations to the government when the consultation on the report concludes on 27 July.

UK:

https://www.gov.uk/government/news/review-finds-cause-for-concern-in-some-parts-of-road-fuel-market

Austria

https://www.bwb.gv.at/fileadmin/user_upload/Bericht_BU_Kraftstoffe_2022_final.pdf

European Parliament adopts Digital Markets Act

 

European Parliament adopts Digital Markets Act

On 5 July 2022 the European Parliament formally adopted the Regulation on contestable and fair markets in the digital sector (Digital Markets Act (DMA))

The DMA was proposed by the European Commission in December 2020.  The legislation is aimed at tackling the effects of practices by certain platforms acting as digital gatekeepers in the single market.  It provides for a system of ex ante regulation and market investigations.

The entities designated as gatekeepers must allow:

1)     Third parties to interoperate with their own services

2)     Business users to access the data they generate in the gatekeeper's platform, to promote their own offers and conclude contracts with their customers outside the gatekeeper's platforms.

Gatekeepers will be prohibited from:

1)     Ranking their own services or products more favourably (self-preferencing) than third parties on their platforms

2)     Preventing users from easily uninstalling pre-loaded software or using third party apps and app stores

3)     Processing users’ personal data for targeted advertising without explicit consent.

Fines of up to 10% of a gatekeeper's total worldwide turnover may be imposed by the Commission (20% for recidivism).

Once formally adopted by the Council, expected later in July, the DMA will be published in the EU Official Journal and enter into force 20 days later.

The obligations under the DMA will take effect 6 months after its entry into force.

Enforcement will be key to the success of the DMA. The Commission is known to be on a huge recruitment drive. This is not simply a question of increased numbers of staff but having the right skills and expertise, legal, policy economics and business, in what is a dynamic area.

 

https://www.europarl.europa.eu/doceo/document/TA-9-2022-0270_EN.html

 

EU reaches political accord over new regulation aimed to control foreign subsidies

 

EU reaches political accord over new regulation aimed to control foreign subsidies

The Council and the European Parliament have reached a provisional political agreement on a regulation on foreign subsidies distorting the internal market (the Regulation).

The Regulation was initially proposed by the European Commission in May 2021 and seeks to remedy market distortions by subsidies granted by non-EU states to companies operating in the EU internal market.

The European Commission will have the power to investigate financial contributions granted by public bodies of a third country to undertakings involved in economic activity in the EU.

There will be a requirement for prior authorisation in respect of concentrations (where the acquired company, one of the merging parties or the joint venture generates an EU turnover of at least EUR500 million and the transaction involves a foreign financial contribution of at least EUR50 million) and public procurement tenders (where the estimated contract value is at least EUR250 million).  There will also be a general market investigation tool for other market situations and below threshold mergers and public procurement procedures.

The agreement is subject to approval by the Council and the European Parliament.

The Regulation will enter into force on the 20th day following its publication in the Official Journal and will become directly applicable across the EU six months after its entry into force. The notification obligations will apply 9 months following entry into force.

Although the final text of the regulation is not yet settled the basic structure has been provisionally agreed.  Overall, and when viewed against the intensification of EU regulation in the area of FDI this contributes to a multi-layered approval procedure for mergers and other economic activity involving public support from a third country, including the UK.

https://www.consilium.europa.eu/en/press/press-releases/2022/06/30/foreign-subsidies-regulation-political-agreement/

PSR announces market reviews into scheme and processing fees and cross-border interchange fees

 

PSR announces market reviews into scheme and processing fees and cross-border interchange fees

 

The Payment Systems Regulator (PSR) has published draft terms of reference for proposed market reviews into card scheme and processing fees (MR22/1.1) and UK-EEA consumer cross-border interchange fees (MR22/2.1).

The reviews will focus on Mastercard and Visa. The PSR has invited comments on both sets of draft terms of reference by 2 August 2022 and plans to issue final terms of reference in Autumn 2022.

The reviews have been launched against concerns about the increases in both categories of fees.  The PSR is seeking to understanding whether the markets connected with scheme and processing fees are working well.  Its reviews will examine the structure and types of scheme and processing fees and will build on the PSR’s market review into card-acquiring services

The PSR observes increases in cross-border interchange fees for some card transactions between the UK and the EEA where the cardholder is not present.  It finds that Visa and Mastercard have increased these fees five-fold since the UK’s departure from the EU.

https://www.psr.org.uk/news-updates/latest-news/news/psr-sets-out-the-details-for-its-work-on-card-fees/

Court of Justice upholds optical disks drives cartel fines but annuls decision in part

 

Court of Justice upholds optical disks drives cartel fines but annuls decision in part

The European Court of Justice has ruled on four separate appeals by Sony, Sony Optiaric, Quanta Storage, and Toshiba Samsung Storage Technology against the General Court judgments that upheld the European Commission's 2015 decision and fines imposed in relation to the optical disk drive cartel.

The appeals raise similar points of legal principle.

The Court of Justice set aside all of the judgments of the General Court.  It partially annulled the Commission’s decision finding that the General Court was incorrect to conclude that the Commission has not breached the companies’ rights of defence.  The Court was not satisfied that the Commission had properly stated its reasons for the decision that the parties had participated in a single and continuous infringement.

However the Court upheld the fines imposed by the Commission as none of the elements raised by the parties as to their participation in the cartel, or public policy, justified it in exercising the discretion to reduce the amount of the penalty.

The judgment is a reminder that infringements against companies should be set out in the statement objections in order to protect the rights of the defence.

Sony Corporation and Sony Electronics v Commission, Sony Optiarc and Sony Optiarc America v Commission, Quanta Storage, Inc v Commission and Toshiba Samsung Storage Technology Corp and Toshiba Samsung Storage Technology Korea Corp v Commission (Cases C‑697/19 P to C‑700/19 P) (T-762/15)

https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-06/cp220101en.pdf

Competition Appeal Tribunal grants one of two collective proceedings orders in trucks cartel damages case

 

Competition Appeal Tribunal grants one of two collective proceedings orders in trucks cartel damages case

 

In a much awaited judgment, the Competition Appeal Tribunal (CAT) has granted one and refused a second collective proceedings order (CPO) application in relation to the two collective damages actions brought against truck manufacturers.

The claims were brought by UK Trucks Claim Limited (UKTC) and Road Haulage Association Limited (RHA), under section 47B of the Competition Act 1998, as follow on actions arising from the European Commission’s truck cartel decision issued in July 2016.

The UKTC application was for an opt-out claim, with a class size of approximately 38,000. The RHA application was for an opt-in claim, with a class size of approximately 17,500.

It was noted by the CAT that the UKTC claim would capture more claims by small operators.

The CAT identified a number of concerns relating to the identification of common issues but was satisfied that there was overarching wrongdoing and all potential class members had purchased or leased a new or used truck.

The CAT refused to accept that the EURO emissions part of the UKTC claim was a common issue and found that this element was not suitable for opt-out collective proceedings.  Trucks registered outside the UK were excluded from the class.  It also ruled that compound interest was unsuitable for determination as a common issue in opt-out collective proceedings.

The CAT found that both applications were suitable but it could not approve the two applications.  Even though there was no legislative presumption in favour of opt-in or opt-out proceedings, the CAT granted the RHA application as it had the advantage of being opt-in.  In the CAT’s view, opt-in proceedings had the benefit of giving access to a wider dataset, despite presenting a greater risk to litigation funding.

The CAT’s ruling is a welcome decision in bringing clarity to the status of these two sets of claims.  It will no doubt provide further momentum for the growth of collective competition proceedings in England and Wales.

UK Trucks Claim Limited v Stellantis N.V. (formerly Fiat Chrysler Automobiles N.V.) and others and Road Haulage Association Limited v Man SE and others [2022] CAT 25

Marcus Bokkerink is confirmed as preferred candidate for CMA Chair

 

 

 

 

The Department for Business, Energy and Industrial Strategy (BEIS) has announced that the preferred candidate for Chair of the Competition and Markets Authority (CMA) is Marcus Bokkerink.

 

Mr Bokkerink is a former Managing Director and Senior Partner of Boston Consulting Group (BCG).

Since is retirement in 2020 he has focused on investing in start-up and challenger businesses.

He has also worked as a Senior Advisor to BCG and a strategic advisor to a small number of corporates.

He is chair of the Development Board of Pembroke College, Cambridge.

The appointment sits well with the CMA’s priorities for enforcement in cases involving innovation and hi-tech.  For example, the CMA has ongoing investigations into Google, Meta and Apple.  It also has two market studies in this area examining music streaming and mobile ecosystems in anticipation of tougher powers from the government to support the Digital Markets Unit which currently exists in a shadow form.

Having a chair with business experience should inspire confidence amongst businesses and consumers.

https://www.gov.uk/government/news/marcus-bokkerink-confirmed-as-the-preferred-candidate-for-chair-of-the-competition-and-markets-authority

Supreme Court says that CMA should pay appellant’s costs in Flynn-Pfizer appeal

 

Supreme Court says that CMA should pay appellant’s costs in Flynn-Pfizer appeal

 

The Supreme Court has ruled on costs relating to the appeals by Pfizer and Flynn against the decision of the Competition and Markets Authority (CMA) that imposed penalties on Pfizer and Flynn for charging unfair and excessive prices for phenytoin drugs.

The Competition Appeal Tribunal (CAT) in its June 2018 judgment found that the CMA’s conclusions on abuse of dominance were in error and it remitted this issue to the CMA for reconsideration.

The starting point in assessing costs in the CAT is that an unsuccessful party will pay the successful party’s costs.  While the costs rules in the CAT are flexible, the CAT ordered that the CMA pay Pfizer and Flynn a proportion of their costs of their appeal.

Allowing the appeal by the CMA, the Court of Appeal held that the CAT had erred in not taking the starting point that costs should not generally be awarded against a public body.

The Supreme Court disagreed with the Court of Appeal and found that the CAT was within its powers to take as a starting point the principle that "costs follow the event". 

Therefore, the Supreme Court allowed the appeals by Pfizer and Flynn and reinstated the CAT's costs ruling.

The Supreme Court did not accept the claim that imposing a cost order on the CMA in these circumstances would have a chilling effect on its enforcement.

The implications of the judgment may be felt beyond cases involving challenges to CMA decisions.  There is a potential read across to decisions of the sector regulators on the application of their concurrent competition and sector regulatory powers.

Flynn Pharma Limited v CMA and Pfizer Inc and another v CMA [2022] UKSC 14

CAT allows collective proceedings order in competition damages claim against Qualcomm

 

CAT allows collective proceedings order in competition damages claim against Qualcomm

 

The Competition Appeal Tribunal (CAT) has allowed an application to commence collective proceedings under section 47B of the Competition Act 1998 by the Consumer's Association (Which?) against Qualcomm Incorporated (Qualcomm).

The claim alleges that Qualcomm abused its dominant position in the markets for patent licensing and chipsets to overcharge phone manufacturers including Apple and Samsung for technology licences.

The CAT heard objections in relation to the modelling of pass-on charges but considered that the regression analysis was sufficiently based on fact for a collective proceedings order (CPO) to be granted.

The CAT dismissed the argument that the CPO was not sufficiently supported by a cost-benefit analysis.  The damages of £16-17 per class member were small but not so small as to be insignificant, especially in the current economic climate.

The CAT concluded that the Consumers Association (Which?) meets the authorisation condition, and the claims meet the eligibility condition.

The CAT therefore made the CPO on an opt-out basis allowing the £480 million claim to proceed.

The case is another example of a growing body of cases being brought before the CAT which are not standard follow on cases.  No opt-out collective claim was certified in the first five or so years since the Consumer Rights Act 2015 – but there are now four opt-out collective proceedings certified in 2022.

1266/7/7/16 Walter Hugh Merricks CBE v Mastercard Incorporated and Others

1381/7/7/21 Le Patourel v BT Group Plc and British Telecommunications Plc

1304/7/7/19 Gutmann v First MTR South Western Trains Limited and Another and 1305/7/7/19 Justin Gutmann v London & South Eastern Railway Limited

Case 1382/7/7/21 Consumers' Association v Qualcomm Incorporated

Healthcare Act 2022 Competition Issues

 

Healthcare Act 2022 Competition Issues

 

The Health and Care Act 2022 (Act) has been published following Royal Assent on 28 April. This represents a significant rolling back of the competition law provisions which were present in previous legislation.

The Act repeals competition law provisions that were introduced by the Health and Social Care Act 2012.

The Act provides for the functions of the health regulator, Monitor (now operating as NHS Improvement) to be transferred to NHS England.

Although NHS England will be obliged to assist the Competition and Markets Authority (CMA) and provide it with regulatory information, the regulator’s concurrent competition law powers are removed.

The Act also removes the role of the CMA in reviewing mergers between certain NHS entities and the CMA will no longer have a role in relation to contested licence conditions.

The Act also revokes the Procurement, Patient Choice and Competition Regulations 2013, which governed the commissioning of health care services for the purposes of the NHS.  The Chief Executive of NHS England has stated that competitive tendering can create “frictional cost and dislocation”.

The Act makes provision for new regulations on procurement and on patient choice to be made.

https://www.legislation.gov.uk/ukpga/2022/31/pdfs/ukpga_20220031_en.pdf

The Queen’s speech and retained EU Law

 

The Queen’s speech and retained EU Law

 

The Queen's Speech was delivered on 10 May 2022.  Among the draft bills tabled for the 2022-2023 session that have attracted comparatively less attention is the proposed Retained EU Law Bill (or, in populist parlance, ‘the Brexit Freedoms Bill’).

The starting point is that section 5 of the EU (Withdrawal) Act 2018 gives retained EU law supremacy over conflicting UK law passed or made before the end of the transition period to 1 January 2021.

The proposed legislation will provide new powers to amend, repeal or replace retained EU law by reducing "the need to always use primary legislation to do so", and modernise the UK's approach to making regulations.   It may be asked what is going to be added as the government already has a range of powers to amend retained EU law.  Using secondary legislation to unravel retained EU law would be subject to much less scrutiny.

It is now proposed to remove the supremacy of retained EU law over UK law.  This will ensure that EU-derived law no longer takes priority over Acts of the UK Parliament.   The notion of the supremacy of EU law post-Brexit was always a difficult concept given that the supremacy of EU law was itself a product of EU membership.  To talk of continued EU law supremacy post withdrawal requires a new way of thinking.

The Bill is expected to be ready in the summer of 2022.

https://www.gov.uk/government/speeches/queens-speech-2022

European Commission raises objections to Apple alleging abuse of dominance in Apple Pay

 

European Commission raises objections to Apple alleging abuse of dominance in Apple Pay

The European Commission has issued a statement of objections to Apple alleging abuse of dominance in the markets for mobile wallets on iOS devices, arising from its practices regarding Apple Pay.

The Commission maintains that Apple has limited access to the technology used for contactless payments over mobile devices in stores (Near-Field Communication (NFC) or "tap and go").  According to the Commission Apple’s practices are restricting competition and innovation in the mobile wallets market on the Apple operating system, iOS.

The Commission finds that Apple Pay is the only mobile wallet solution that may access the necessary NFC input on iOS.   The Commission considers that this has a restrictive effect on competitors and constrains consumer choice in relation to mobile wallets on iPhones.

The Commission finds that the practices have been continuing since 2015 when Apple Pay was first launched.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_2764

Subsidy Control Act 2022 receives Royal Assent

 

 

Subsidy Control Act 2022 receives Royal Assent

On 28 April 2022 the much awaited Subsidy Control Bill (the Bill) received Royal Assent and became the Subsidy Control Act 2022.   The new regime is expected to come into force in Autumn 2022.

The Bill was published on 30 June 2021 and is intended to create a legal framework for a UK subsidy control regime that meets the UK's international commitments.  These include the subsidies chapter of the UK-EU Trade and Co-operation Agreement (TCA).

Since 1 January 2021 public authorities have been subject to two parallel commitments in relation to subsidy control:

1)    The (limited) continued application of EU State aid rules under the Northern Ireland Protocol to the UK-EU Withdrawal Agreement: applies to aid measures which could affect trade in goods and electricity between NI and the EU

2)    The new TCA rules on subsidy control: have force of law within the UK by virtue of section 29 of the European Union (Future Relationship) Act 2020

The new regime under the Subsidy Control Act reflects the following elements:

1)    Public authorities will be responsible for self-assessing that subsidies they intend to grant comply with the statutory subsidy control principles and requirements

2)    Certain types of subsidy will be prohibited, or only permitted subject to specified conditions.

3)    A Subsidy Advice Unit (SAU) will be set up within the Competition and Markets Authority (CMA).  Its functions include monitoring and oversight, and providing pre-award and post-award advice.

4)    The Secretary of State will, in secondary legislation, designate some types of subsidy as "subsidies of interest" or "subsidies of particular interest". Public authorities can ask the SAU to provide advice on subsidies of interest (voluntary referral) and must ask the SAU to provide advice on subsidies of particular interest (mandatory referral).

5)    There are transparency requirements relating to the award of subsidies/ making a subsidy scheme.

6)    The Competition Appeal Tribunal will hear appeals by interested parties (or the Secretary of State) against subsidy decisions, using judicial review principles.

The government has announced that it will be publishing guidance to support public authorities in advance of the new rules coming in to force.

 

https://www.gov.uk/government/news/new-subsidy-control-system-will-support-uk-jobs-boost-the-economy-and-strengthen-the-union

CMA opens investigation into education software solutions

 

 

 

 

The Competition and Markets Authority has launched an investigation into suspected competition law breaches concerning the renewal of school management information systems contracts by Education Software Solutions Ltd Group (ESS).

School management information systems are required in UK state schools.  They administer student information including safeguarding and student attendance,

ESS requires customers to move from one year to three year contracts.  The CMA has questioned whether this allows customers to consider their options.  The long procurement process may also make it difficult for alternative providers to compete.

The CMA is also considering the pricing of ESS packages and its bundling practices.  The CMA also states that will consider interim measures while the investigation is ongoing,

The CMA’s initial investigation will take place between April and August 2022.

https://www.gov.uk/government/news/cma-to-investigate-ess-s-move-to-three-year-contracts-for-schools

Government publishes response to consultation on reform of competition and consumer policy

 

Government publishes response to consultation on reform of competition and consumer policy

 

The Department for Business, Energy and Industrial Strategy (BEIS) has published the government's response to the July 2021 consultation on reforming competition and consumer policy.

The government has decided to implement a number of reforms.  My ‘top 10’ are the following:

(1)   Requiring the Competition and Markets Authority (CMA) to produce regular reports on the state of competition.

(2)   Introducing a statutory duty of expedition for the CMA in relation to its competition and consumer law functions including in relation to the new digital markets regime.

(3)   Improving procedures for market inquiries including more opportunity for binding commitments to be accepted, greater flexibility to define the scope of market investigations, and removing the requirement to consult on a market investigation reference within the first six months of a market study.

(4)   More flexible and versatile remedies in market investigations.  The CMA will be able to require businesses to amend remedies in a 10-year period following its finding of an adverse effect of competition.

(5)   Reforms to the merger regime including:

a.     The turnover threshold for qualifying mergers will be increased to £100 million and there will be a safe harbour for mergers between small business (with UK turnover below £10 million).

b.     A new threshold to enable the CMA to investigate mergers where at least one party has a UK share of supply of 33% and has UK turnover of more than £350 million will also be introduced.

c.      Allowing commitments to be given earlier during Phase 2 and introducing an automatic fast-track referral procedure.

(6)   Competition Act investigations:  Reforms will include adjusting the territorial scope of the Chapter I prohibition, granting the CMA new evidence gathering powers, changing the standard of review for interim measures, introducing a new statutory framework for confidentiality rings and reducing the turnover threshold for immunity from financial penalties for breaches of the Chapter II prohibition.

(7)   Administrative penalties:  Tougher financial penalties for failure to comply with an investigation and new civil penalties for non-compliance with CMA orders, undertakings or commitments.

(8)   Stronger powers and tools for international co-operation will also be introduced.

(9)   Algorithms:  The CMA will have new powers to test and verify whether the use of algorithms by companies complies with competition law.

(10)                   Giving the Competition Appeal Tribunal (CAT) the ability to grant declaratory relief and returning to the courts and CAT the discretion to award exemplary damages for breaches of competition law.

The government has decided at this time not to amend the standard of review for competition appeals.

 

https://www.gov.uk/government/news/new-rules-to-protect-consumers-hard-earned-cash