Intel wins victory in EU General Court in rebates abuse of dominance case

 

Intel wins victory in EU General Court in rebates abuse of dominance case

The General Court has ruled in Intel’s challenge against the European Commission's 2009 decision fining it a then record EUR1.06 billion for infringement of Article 102 TFEU through exclusivity rebates and other restrictions.

In 2014 the General Court rejected Intel’s appeal but in 2017, on appeal, the Court of Justice set aside the General Court judgment and referred the case back to the General Court.  The General had not properly considered arguments regarding the Commission’s ‘as efficient competitor’ test (AEC).

The General Court has now found that the Commission’s application of the AEC test was vitiated by several errors.  In particular, the Commission had not established according to the correct legal standard the propensity of each of Intel’s rebates to produce the requisite foreclosure effect.

The General Court further found that the Commission had erred in law in its application of the relevant case law.  It had not properly considered the market affected by the disputed practices and the duration of the rebates.

The General Court annulled the part of the Commission’s decision concerning conditional rebates as it related to Intel’s infringement of Article 102.  The General Court was not able to identify which part of the fine related solely to the contested rebates as opposed to naked restrictions on using competitor products also found by the Commission to be restrictive.  The General Court therefore annulled the Commission’s EUR1.06 billion penalty imposed on Intel in its entirety.

The judgment is an important endorsement of effects-based assessment in abuse of dominance cases.  The painstaking analysis by the General Court of the AEC test is useful, in particular in taking into account post-decision evidence.  It remains to be seen whether the Commission will bring an appeal against any aspects of the General Court’s ruling.

Case T‑286/09 RENV Intel Corporation, Inc v European Commission, ECLI:EU:T:2022:19

European Parliament urges early review of foreign subsidies legislation

 

European Parliament urges early review of foreign subsidies legislation

 

Members of the EU Parliament warn that the Commission should assess its proposed new regulation to tackle distortive foreign subsidies within three years.  This is fuelled by concerns that there is currently insufficient data to show how such measures may be affecting the internal market.

The Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) met on 25 January to discuss its draft opinion on the Commission’s suggested amendments to the proposed legislation on foreign subsidies.

The Commission published its draft legislation in May 2021.  The Commission would be able to investigate transactions involving financial contributions by a non-EU state where the target company’s EU turnover is at least EUR500 million and the foreign contribution is at least EU50 million.  This would enable the Commission to examine foreign economic assistance that could harm competition.

The IMCO’s draft opinion says that the Commission should review the economic effects of regulation on the internal market and the number of notified and investigated cases each year.  It has further proposed a provision on cooperation with national public procurement authorities. It recommends that the national authorities should information the Commission of any foreign subsidies that fall below the thresholds for notification and which threaten the internal market.  It also advises that the national authorities should collect and share with the Commission data on contracts bid for and won by foreign entities.

The legislation itself, the IMCO’s amendments and the reservations expressed by the Parliament reflect an increasing intensity in its vigilance to seek long-arm jurisdiction on deals involving third countries which it considers have impacts in the internal market.

https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/IMCO/PA/2022/01-25/1245928EN.pdf

 

 

Scottish Councils are not time-barred from bringing competition law claims against truck manufacturers

 

Scottish Councils are not time-barred from bringing competition law claims against truck manufacturers

The Inner House of the Scottish Court of Session has given an opinion on whether Scottish local authorities are time barred in bringing claims for compensation against the trucks manufacturers who were found by the European Commission to have participated in an unlawful cartel, in breach of Article 101 of the TFEU.

Glasgow City Council’s claim exceeds £10 million.  West Dunbartonshire seeks compensation of about £2 million.  These two cases have been selected as the lead cases.

The truck manufacturers argued that the cases would be time-barred because they had not been brought within five years.  All of the affected transactions were more than five years old when the cases were launched and some were more than 20 years old.  However, the Scottish Commercial Court concluded that the local councils were not aware of the truck manufacturers' cartel until the Commission handed down its July 2016 infringement decision.

The case is interesting because it is the first Scottish case to consider limitation/prescription issues in a case involving a covert competition law infringement.

Glasgow City Council and West Dunbartonshire Council v VFS Financial Services Limited and others [2022] CSIH 1

Payment Systems Regulator imposes £33 million fine for card payment scheme market sharing

 

Payment Systems Regulator imposes £33 million fine for card payment scheme market sharing

 

The Payment Systems Regulator (PSR) has imposed penalties of £33 million on Mastercard, allpay, APS, PFS and Sulion for agreeing not to compete with each other.

The PSR’s investigation started in 2017 and concerned pre-paid cards used by local authorities. These cards are used to distribute welfare payments to vulnerable consumers, including the homeless and victims of domestic abuse.

Two market sharing cartels were identified by the PSR.  The first was an arrangement for the National Prepaid Cards Network allowing public sector bodies to coordinate the prepaid card acquisition process.  The parties agreed not to target or poach each other's public sector customers and to exclusively allocate customers who were not signed up.  The arrangements lasted from 2012 to 2018.

The second cartel was between APS and PFS covering the period 2014 to 2016.  The PSR found that APS and PFS would not target each other's customers at contract renewal.

Mastercard received the highest individual fine of £31.5 million.  However, this fine is quite low in relative terms taking into account the entity’s turnover and the fact that one of the violations lasted for 6 years.

PFS applied for leniency to the Competition and Markets Authority in 2018, and received a reduction in the fine to £900,000.

Mastercard, allpay and PFS received a 20% discount for entering into a settlement prior to the issue of the PSR’s statement of objections.

APS and Sulion received a 10% discount for settling after the statement of objections.

When the final decision is released this may be instructive in terms of the PSR’s approach to calculation of the fines.

After over four years of investigation the decision represents a landmark for the PSR as its first competition law infringement decision culminating in a fine.

https://www.psr.org.uk/news-updates/latest-news/news/the-psr-fines-five-companies-more-than-33-million-for-cartel-behaviour-in-the-prepaid-cards-market/

CMA secures 4 year director disqualification order in pharma investigation

 

CMA secures 4 year director disqualification order in pharma investigation

The Competition and Markets Authority has obtained a disqualification undertaking from Mr Pritesh Sonpal, a director of Lexon (UK) Limited (Lexon).  This follows the CMA’s cartel infringement decision concerning the supply of nortriptyline tablets which are used in the treatment of depression.

The CMA found that pharmaceutical wholesaler Lexon had violated Article 101 of the TFEU and the Chapter I prohibition of the Competition Act 1998 by participating in an illegal information exchange.

The undertaking bans Mr Pritesh Sonpal from acting as a director or receiver of a company, or an insolvency practitioner for a period of four years.

The latest order follows the increasing use of disqualification orders by the CMA following earlier criticism that the powers were not being pursued with vigour.  Since the UK competition authority was given the director disqualification power in 2003, the CMA has obtained disqualification undertakings from more than 20 individuals. The majority have been obtained since 2016.

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

CMA updates mergers guidance to reflect the National Security and Investment Act 2021

 

CMA updates mergers guidance to reflect the National Security and Investment Act 2021

The Competition and Markets Authority (CMA) has issued an updated version of its mergers guidance (CMA2) to take into account the coming into force of the National Security and Investment Act 2021 (NSIA 2021) on 4 January 2022.

The NSIA 2021 introduces a new national security and investment regime within the Department for Business, Energy and Industrial Strategy (BEIS).  This replaces the powers of the Secretary of State to intervene in mergers on national security grounds under the Enterprise Act 2002.

The following changes, reflected in CMA2, are of note:

•                  The scope of public interest interventions, under section 42 of the Enterprise Act, no longer refers to "national security" as one of the public interest considerations that the Secretary of State may take into account when issuing a public interest intervention notice (PIIN).

•                  Defence mergers can no longer give rise to a special merger situations, allowing intervention under section 59 of the Enterprise Act.

•                  The CMA may share confidential information with the Secretary of State and the Investment Security Unit (ISU) in BEIS to facilitate coordination, as may be appropriate, in cases being investigated in parallel under the Enterprise Act and NSIA 2022.

•                  The CMA and the ISU expect to coordinate to manage interactions between these different regimes.

The previous statutory framework continues to apply in all cases where a formal Phase 1 or Phase 2 investigation has started and cases where the Secretary of State has issued a PIIN.  It will also apply in cases where a trigger event occurs prior to 4 January 2022 and in relation to which the Secretary of State issues a PIIN after 4 January 2022.  The revised guidance will be applied to all other mergers from 4 January 2022 onwards.

Although the substantive provisions of the NSIA 2021 come into force on 4 January 2022 it contains retroactive powers to call in for review as of that date (or potentially up to five years thereafter) any qualifying transaction completed between 12 November 2020 and the commencement date.  

The new NSIA 2021 means that it is essential for investors to review its potential application and the interface with mainstream merger control for all transactions completed from 12 November 2020 which could potentially raise national security concerns.