Damages awarded in first UK trucks cartel competition damages action

 

Damages awarded in first UK trucks cartel competition damages action

The Competition Appeal Tribunal (CAT) has awarded follow-on damages in actions brought by Royal Mail and BT against DAF Trucks.

The CAT has ordered DAF to pay approximately £17.5 million in damages to Royal Mail and BT.  The case is a landmark judgment representing the UK’s first successful follow-on damages claim against a participant in the EU trucks cartel.

The claims are based on the July 2016 settlement decision of the European Commission finding that certain EEA manufacturers of trucks were engaged in a cartel in breach of Article 101 of the TFEU over a 14-year period (broadly, 1997-2011). 

The Commission found anti-competitive conduct which consisted of coordination amongst the participating undertakings in respect of the EEA gross list prices for medium and heavy trucks.

The claimants claimed damages in the form of the increased prices and lease payments that they paid for those trucks which were higher than they would have been without the infringement (the ‘overcharge’).

The CAT found that DAF is liable to be assessed for an overcharge at 5% for both claimants on their value of commerce over the whole of the relevant period.

The CAT rejected certain of DAF’s defences including as to resale pass-on.

The CAT has invited the parties to calculate the damages including interest and tax based on its findings.

The value of the overcharge found by the CAT is quite high given that the value of relevant trucks can range from £60,000 to £300,000 over the period.

The ruling is likely to embolden other trucks cartel claimants whose claims remain to be heard and fuel the growing momentum of competition damages claims in the UK.

 

Royal Mail Group Limited v DAF Trucks Limited and others and BT Group PLC and others v DAF Trucks Limited and others [2023] CAT 6

European Commission consults on draft regulation on foreign subsidies

 

European Commission consults on draft regulation on foreign subsidies

The European Commission has launched a consultation on a draft implementing regulation for the conduct of proceedings under Regulation 2022/2560 on foreign subsidies distorting the internal market (the Foreign Subsidies Regulation).

The Foreign Subsidies Regulation gives the Commission new powers to investigate and impose redress arising from financial contributions granted by third (non-EU) countries to companies engaged in economic activity in the EU. 

It imposes an obligation for companies to notify the Commission of certain concentrations and involvement in public procurement procedures which have foreign financial contribution elements.

The new rules will require merging companies to notify their mergers from 12 October, 2023 provided one of the parties has a turnover of at least EUR500 million and the transaction involves a foreign financial contribution of at least EUR50 million.

Companies will also be obliged to notify their participation in public procurement tenders in cases where the estimated contract value exceeds EUR250 million and the bid involves a foreign financial contribution of at least EUR4 million.

The draft regulations set out the procedural requirements of the new regime. It is hoped that guidance on how the Commission will approach issues of substance will be available soon. The approach in the proposed notification form appears to shift the burden to companies to establish the absence of a subsidy or its distortive effects.

The Regulation will be effective from 12 July 2023 when the Commission will be able to start its own investigations.

The notification obligation for companies will be effective as of 12 October 2023.

The Commission invites responses to the consultation by 6 March 2023.

 

https://ec.europa.eu/commission/presscorner/detail/en/ip_23_591

Financial Conduct Authority issues statement of objections in money transfer price fixing case

 

Financial Conduct Authority issues statement of objections in money transfer price fixing case

The Financial Conduct Authority (FCA) has issued its second known statement of objections alleging that three international money transfer service providers violated competition law when they colluded to set the rates they charged Scottish customers for wiring funds to Pakistan.

A statement of objections gives firms notice that the FCA considers that they have infringed competition law and the opportunity to respond by making written and oral representations.

The FCA’s statement of objections was addressed to the Glasgow branches of Dollar East, Hafiz Bros Travel & Money Transfer and LCC Trans-Sending and accused the companies of price fixing for the conversion of pounds to Pakistani rupees between February and May 2017.

The FCA further maintains that the companies conspired to fix the flat rate transaction fee they charged customers for sending money to Pakistan through the service operated by LCC Trans-Sending’s parent company, Small World Financial Services Group.

Since 1 April 2015, the FCA has had concurrent competition law enforcement powers, including powers under the Competition Act 1998 and the Enterprise Act 2002 in relation to the provision of financial services.

The FCA has launched five investigations into potential competition law breaches since it gained concurrent competition powers.  However, the FCA has only ever proceeded to the statement of objections state in one other case that concluded with fines in 2019.

The FCA notes that the alleged infringements meant that customers in Glasgow may have been overcharged for the relevant transactions.  It may be that the FCA is using a relatively localised case to reinforce the message that competition law applies across and within the UK.

https://www.fca.org.uk/news/press-releases/fca-issues-statement-objections-3-money-transfer-firms#:~:text=A%20statement%20of%20objections%20gives,the%20law%20has%20been%20broken

CMA intends to launch a market study into house-building

 

CMA intends to launch a market study into house-building

The Competition and Markets Authority has informed the Secretary of State at the Department for Levelling Up, Housing and Communities, that it intends to launch a market study into the housebuilding sector.

Market studies are industry wide probes where there are concerns that markets may not be working as well as they should but where the problem does not appear to be related to unlawful action by individual companies.  However, they can result in remedies that are intrusive, including changes in legislation or a wider market investigation.

The CMA has been conducting consumer work in relation to unfair practices connected with leasehold homes.  It expects that the promotion of competition in the accommodation sector will be a focus area over the next year.

The CMA considers that a market study into the housebuilding sector will be core to securing the right environment for delivering homes to people in need.

The proposed market study is aligned with the CMA’s goal to "consistently focus action on the core areas of consumer spending and time" as set out in the CMA's draft Annual Plan 2023/24.

The CMA’s focus for its market study is not surprising against the backdrop of the cost-living crisis and its work on consumer protection.   It also aligns with the government's support for the CMA's consideration of a market study in the housebuilding sector set out in the Secretary of State’s letters of May and November 2022.

It is expected that a formal proposal to launch a market study will be put to the CMA Board in the coming weeks.  Meanwhile, builders and providers to the housebuilding sector and other interest groups including advisers to consumers will want to follow these developments to determine where their interests lie and how they can engage with the study.

https://www.gov.uk/government/publications/letter-from-sarah-cardell-to-rt-hon-michael-gove-mp-on-homebuilding

European Commission adopts whistleblowing procedure in merger control and state aid cases

 

European Commission adopts whistleblowing procedure in merger control and state aid cases

Knowledge from insiders can be useful to regulators and investigators seeking to root out and prove unlawful practices. 

On 9 January 2023, the European Commission announced that it has extended its anonymous antitrust whistleblower tool to include mergers and state aid matters (see its Commission Daily News MEX/23/103).

The tool was originally introduced in 2017 to allow any person to make an anonymous report to the Commission about cartels and other antitrust infringements. The Commission finds that since its launch, the procedure has allowed it to detect unlawful practices earlier and it has contributed to the success of the Commission’s investigations. The Commission reports that it tends to receive about 100 messages a year through this tool.

The Commission believes that the expanded scope of the tool will bring synergies in its enforcement armoury.  The expanded scope covers merger-related infringements, such as "gun jumping" (implementation of a notifiable merger before clearance by the Commission) and unlawful state aid.

The tool provides a mechanism for persons with knowledge of competition law infringements to send an anonymous message to the Commission. The messaging system is specifically encrypted and will allow for the Commission to ask for clarifications. It is run through a third party service provider which acts as an intermediary between the disclosing party and the Commission.

Whistleblowers are protected in the EU by DIRECTIVE (EU) 2019/1937 of 23 October 2019 whereby a person may not be punished or lose protection for reporting their concerns directly to the Commission.

Some observers remain sceptical about the quality and reliability of the information that such a tool can provide. Concerns have been raised that disgruntled employees and competitors may use the tool to report matters where they have an ‘axe to grind’. These are all factors that the Commission will weigh in the balance when assessing the reliability of the information. For now, at least, this development represents another risk factor for businesses to consider when determining their risk of the authority finding out about business practices which might otherwise go undetected.

https://competition-policy.ec.europa.eu/cartels/whistle-blower_en

 

 

 

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