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