European Commission and Germany raid Gazprom

 

European Commission and Germany raid Gazprom

The European Commission and the German Federal Cartel office have confirmed that they have launched unannounced inspection visits on “several companies” operating in the energy sector, including Gazprom.

The antitrust probes relate to suspected abuse of dominance concerns. It is not unusual to see coordinated dawn raids across multiple EU sites in cartel cases but there is no reason why that modus operandi should not occur in an abuse case.

Media reports indicate that the Commission raided the German offices of Gazprom and its subsidiary Wingas founded on concerns around gas price increases and capacity withholding.

The Commission has rejected claims that the investigations are politically motivated.  However it is clear that European antitrust authorities have heightened their vigilance around the ramifications of the war in Ukraine for EU gas prices..

The Commission had an ongoing investigation into Gazprom even before the invasion of Ukraine citing unusual business behaviour.  Concerns have been raised which are reminiscent of the ‘strategic manipulation’ that was alleged in earlier Article 9 commitments cases in the energy sector.   The Commission has hinted at possible capacity withholding where Gazprom is alleged to fill only 16% of its storage facilities compared to 44% for other operators.

Meanwhile, last year Ukraine’s Naftogaz made a complaint to the Commission that Gazprom “sharply reduced” its gas deliveries to exert pressure on Russia’s neighbour.  In response, the Russian deputy prime minister Novak has laid the fault for the price increases at EU policies including Germany’s actions over the Nord Stream 2 gas pipeline.  He has also cautioned that sanctions could further put global energy markets in jeopardy.

Plainly today’s raids represent a ramping up of the Commission’s antitrust scrutiny of EU energy markets.  It would be naïve to suggest that the timing of this is unrelated to recent events in Ukraine and that Gazprom is only incidental to the intensification of regulatory focus. 

What is less clear is whether the actions of the antitrust authorities can make a real difference in geopolitical terms.  It is a familiar complaint that antitrust authorities act too late for their interventions to matter.  There can often be a double-bind problem: intervene too early and you may create economic shocks that make the problem worse; wait until you have more information to take a fully informed decision and it can be too late.  That dilemma becomes less of a quandary as events in Ukraine unfold.  

I would like to hope that the European regulators are able to act with agility when the time comes.  If supplies are in fact withheld, in significant amounts, it may be asked whether the time has come to introduce interim measures?  However, that still faces a practical question of how such measures would be enforced if an order came from the Kremlin to ignore them.  The test may well come down to the ‘realpolitik’ or, putting it differently, whether the EU as a destination for Russian gas is too valuable to lose.

General Court upholds re-adopted air cargo cartel decision but reduces fines

 

General Court upholds re-adopted air cargo cartel decision but reduces fines

The EU General Court has ruled in 13 appeals brought by air cargo carriers against the European Commission’s re-adopted March 2017 decision in the air freight cartel.

The General Court annulled the Commission's original 2010 cartel decision in December 2015.

In March 2017, the Commission re-adopted the cartel decision in largely identical terms to its original decision while addressing procedural defects found by the General Court.

The Court rejected appeals brought by Martinair, KLM, Cargolux, Air France-KLM, Air France, Lufthansa and Singapore Airlines and upheld the penalties that the Commission imposed on these carriers.

However, it annulled the Commission's decision in certain matters relating to the following where it reduced the fines:

• Air Canada and British Airways.  The Commission erred in finding that the airlines participated in the element of the infringement relating to the refusal to pay commission on surcharges.
• Cathay Pacific.  The Commission breached the statute of limitation.

·        Japanese Airlines. The Commission wrongly found Japan Airlines liable in respect of intra-EEA and EU-Switzerland routes.

• Latam Airlines and Lan Cargo. The Commission erred in finding that these carriers participated in the elements of the infringement relating to the security surcharge and the refusal to pay commission on surcharges, amongst other matters.

In relation to SAS Cargo Group the General Court found that the Commission erred in finding an infringement relating to the refusal to pay commission on surcharges and also in relation to routes from Thailand to the EU for part of the period of the infringement.  The court reduced the company’s fine by €4.5 million but then increased it by €4.4 million to take into account turnover on routes within Denmark, Sweden and Norway.

 

Martinair Holland v Commission (T-323/17), SAS Cargo Group and Others v Commission (T-324/17), Koninklijke Luchtvaart Maatschappij (KLM) v Commission (T-325/17), Air Canada v Commission (T-326/17), Cargolux Airlines v Commission (T-334/17), Air France-KLM v Commission (T-337/17), Air France v Commission (T-338/17), Japan Airlines v Commission (T-340/17), British Airways v Commission (T-341/17), Deutsche Lufthansa and Others v Commission (T-342/17), Cathay Pacific Airways v Commission (T-343/17), Latam Airlines Group and Lan Cargo v Commission (T-344/17) and Singapore Airlines and Singapore Airlines Cargo v Commission (T-350/17)

EU antitrust authorities ally to combat shocks arising from the war in Ukraine

 

Antitrust authorities in Europe are investigating increasing prices arising out of Russia’s invasion of Ukraine.  The European Competition Network (ECN) has pledged that it will not enforce the EU competition rules against collaboration between competitors which seeks to combat severe supply chain disruptions caused by the war.

On 21 March the European Commission and the antitrust authorities of the member states issued a joint memorandum condemning what was described as Russia’s “unprecedented military aggression”.  The statement recognised that companies may need to cooperate to ensure supply chain continuity or to mitigate the shocks of EU sanctions.

The authorities in Austria, Italy, Germany, Ireland and Albania are investigating or monitoring national fuel markets but said that they would not intervene in the face of temporary measures that were “strictly necessary” to address the severe perturbations in the supply chains.

The coordinated response of the authorities reflects a similar approach to the temporary relaxation of antitrust laws during the height of the coronavirus pandemic.  This is the third asymmetric shock that has been experienced in 15 years.  Its effects will be felt disproportionately and unequally across the bloc depending on the exposure of the various states to Russian supply chains and their economic health before the war broke out.

However, some authorities have expressed caution that the situation is not a free pass to breach competition law.  This again echoes the approach during the 2008 economic crisis that although it was not ‘business as usual’ from an antitrust perspective, this did not mean that distortions of competition would go unchecked.

Italy’s Competition Authority has sent requests for information to the main national oil companies following a few days of “extraordinary” prices increases in diesel and gasoline.

Ireland’s Competition and Consumer Protection Commission has sent a letter to an undisclosed trade association warning of potential antitrust violations that could arise from statements about future fuel price hikes.

Meanwhile the European Commission has an open antitrust investigation against Gazprom and is consulting on a new temporary crisis framework under the state aid regime.

https://www.bwb.gv.at/fileadmin/user_upload/PDFs/202203_joint-statement_ecn_ukraine-war.pdf

UK and EU competition authorities launch dual probes into Meta and Google

 

Jedi Blue Returns

UK and EU competition authorities launch dual probes into Meta and Google

The UK Competition and Markets Authority (CMA) and the European Commission have opened twin investigations into an online advertising arrangement that was revealed in a pending US antitrust investigation.

On 11 March the CMA and the Commission announced their investigations into the agreement referred to in Google’s internal documents as “Jedi Blue”.

The investigations concern ‘header bidding’ which is a type of advertising auction allowing publishers to bid on multiple ad exchanges at the same time.  The investigations will consider whether a September 2018 agreement about Meta’s use of Google’s advertising auction was an attempt to curtail expansion of header bidding. 

The two agencies will work together during their own investigations.  It is not known whether Meta and Google have agreed to waive confidentiality restrictions to allow the two agencies to share documents.

The European Commission’s investigation is under both Article 101 and 102 TFEU which is comparatively rare in its Big Tech probes.

The CMA is investigating under the UK equivalent of Article 101 (Chapter I of the UK Competition Act 1998) although it has a wider investigation into whether Google has abused its dominant position in header bidding more generally.

The agreement first came to light as a result of investigations by US state attorneys general, lead by Texas and who are taking action against Google under US antitrust law.

The case highlights the reality that in antitrust probes into Big Tech, the borderless internet presents challenges for global enforcement.  However, complainants and investigated companies should be alert to the fact that documents provided to one authority may well spark probes in another jurisdiction.

 

Sources:

 

EU

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1703

 

UK

 

https://www.gov.uk/government/news/cma-investigates-google-and-meta-over-ad-tech-concerns

Ukraine’s Antimonopoly Committee relocates to Lviv

 

The Antimonopoly Committee of Ukraine has moved from Kiev to Lviv after the imposition of martial law.

As of 8 March, the national competition enforcer suspended all its merger reviews, antitrust investigations and state aid cases that had not been resolved by 24 February.

Companies do not have to comply with existing information request deadlines during this period, but they must still file merger notifications.

The changes are expected to last until the end of martial law.

Anecdotally, local antitrust lawyers are expecting the agency to ‘function’ in this period of relocation but quite what means remains to be seen.

The agency is also reported to be trialling a new electronic submission system.

The local law provides for “tacit consent” in merger reviews.  This provides a rule for automatic clearance if the agency does not start a detailed phase 2 review within 45 days of notification.  It is not clear how this will operate in the current situation.  For now, though, merger notifications are still required.

High Court rules that Gemalto’s smart card chips competition damages claim is out of time

 

High Court rules that Gemalto’s smart card chips competition damages claim is out of time

The High has handed down a judgment in an action by Gemalto seeking competition law damages from Infineon and Renesas for harm allegedly suffered as a result of the smart card chips cartel.  The Court ruled that the claim, brought in July 2019, was time-barred.

The case concerns a follow-on action based on the European Commission's September 2014 decision on the smart card chips cartel.

The defendants alleged that the claim was time-barred as it had been brought more than six years after the date on which the cause of action accrued under section 32(1)(b) of the Limitation Act 1980.

Section 31(1)(b) provides that where any fact relevant to the right of action has been deliberately concealed by the defendant, the period of limitation shall not begin to run until the claimant has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

The High Court accepted the defendant’s argument that although the case involved concealment, the limitation period time started running at the latest by April 2013 when the Commission announced that it had sent a statement of objections to suspected participants in the cartel.  At that point Gemalto had sufficient information to formulate a reasonable belief as to the essential elements of a claim for damages and without waiting for the Commission to issue and infringement decision.

To rely on section 32(1)(b) it is important to distinguish between essential facts that give rise to a cause of action and the supporting evidence.

So far as section 32(1)(b) is concerned, competition claims are not to be treated differently to any other type of claim.  In Arcadia Group Brands Ltd & 11 ors v Visa Inc & ors [2015] EWCA Civ 883, the Court emphasised that section 32 must be read narrowly in terms of what facts are needed to trigger the limitation period.  A “fact relevant to a plaintiff's right of action” for these purposes is a fact without which a cause of action would be incomplete.  

In terms of the prospects of success of relying on section 32(1)(b) in future cases, I express some caution given that this provision is to be construed narrowly but it remains complex, difficult to interpret and arguably lacking in consistency.  Competing interests are at stake (on the one hand the need for finality and, on the other hand, the public interest in ensuring that claims can be vindicated).  These interests tend to be irreconcilable except on a pragmatic basis.  This represents a significant ‘unknown’ in terms of how this point would be answered in future cases.

Gemalto Holding BV and another v Infineon Technologies AG and others [2022] EWHC 156 (Ch)

nternational Competition Network suspends Russia’s Federal Antimonopoly Service

 

International Competition Network suspends Russia’s Federal Antimonopoly Service

 

In a stop press development since my post yesterday, the International Competition Network (ICN) has now suspended the Russian Federal Antimonopoly Service (FAS) from participating in all its upcoming events.

This follows submissions from the competition authorities in Latvia, Lithuania, Estonia and the Netherlands in the aftermath of Russian’s invasion of Ukraine.

ICN’s chair has described how the invasion threatens the values the network is founded on, namely to “facilitate cooperation and convergence” between the world’s competition authorities.  At the same time it was made clear that the position would be reviewed if the situation changes.

The chair of the Competition Council of Latvia has commended the ICN’s statement as important in sending a strong signal of the international community’s zero tolerance for what is considered as a flagrant breach of human rights.

The chair of the Lithuanian authority said that the suspension was the “bare minimum” that the ICN can do.  There was regret that the justification put forward by the ICN based on the threat to ICN collaboration at events did not hit the mark and that instead there should be a more direct condemnation of what Russia had done.

Meanwhile, Poland’s Office of Competition and Consumer Protection has joined the other authorities and in urging UNCTAD and the Organization for Economic Co-operation and Development’s Competition Committee to suspend the FAS participation in their events.

I can speak anecdotally of reflections by Russian competition lawyers who condemn the action being taken in the name of the Russian Federation.  For reasons of anonymity and security they do not wish to be named.

Andrea Coscelli, the chief executive of the UK’s Competition and Markets Authority has gone on the record today supporting the ICN announcement.

European Antitrust Agencies unite to urge suspension of Russia from International Competition Network

 

European Antitrust Agencies unite to urge suspension of Russia from International Competition Network

 

A week after Russia invaded Ukraine, competition authorities in Latvia, Lithuania, Estonia and the Netherlands have urged the International Competition Network (ICN) to suspend Russia’s Federal Antimonopoly Service (FAS) from taking part in its future events “in any form”.

The Dutch competition authority has stated today that the Russian actions infringe fundamental values protected by competition policy, i.e., the well-being of citizens, businesses and society as a whole.  They say that the invasion is a blatant transgression of the fundamental values on which market functioning depends and as such is something that the antitrust community cannot ignore.

The Lithuania Competition Council has applauded other agencies for supporting its own plea for suspension and says that it will boycott future events if the ICN does not take swift action. 

The Estonian Competition Authority said there is “no place” for Russian participation in events which are designed to foster good relations between countries with similar values.  A significant showcase event is the upcoming May ICN conference but there are other ongoing events such as webinars and video-conferences..

The ICN’s steering group chaired by Andreas Mundt, who leads Germany’s Federal Cartel Office, is charged with making a final decision on suspension of members.

The Latvia’s Competition Council cannot understand the ICN’s “wait and see” position where a number of sports bodies have spoken out and taken a stand against what it describes as the “unimaginable aggression” that has unfolded over the past week.