Commission raids ethylene purchasers

The European Commission has confirmed that it has raided ethylene purchasers in a number of Member States on suspicion of infringing Article 101.

Ethylene is used to create plastic polyethylene.

The Commission has not identified the companies that it has raided but US company Celanese and Swiss company Clariant have confirmed that they are being investigated.

The investigation is a further example of the Commission’s focus on potential buy-side cartel activity as opposed to collusion between competing suppliers over prices, markets, terms and conditions of sale.

In a similar respect the Commission’s investigation into German car manufacturers confirmed this week appears to concern buy-side activity in the choice of suppliers and purchase terms.

Antitrust investigations on the purchasing side are relatively unusual but not without precedent. An example is the Commission’s decision of 7 February 2017 finding that between 2009 and 2012, four recycling companies took part in a cartel to fix the purchase prices of scrap lead-acid automotive batteries in Belgium, France, Germany, and the Netherlands.

European Commission press release: Antitrust: Commission confirms unannounced inspections in the ethylene purchasing sector, 26 July 2017

CAT dismisses opt-out collective proceedings against MasterCard

The Competition Appeal Tribunal has rejected an application by Walter Merricks as the putative class representative for a collective proceedings order in a £14 billion opt-out action against MasterCard under section 47B of the Competition Act 1998.  The proposed proceedings would have aggregated follow-on actions for damages arising from the European Commission’s finding that MasterCard's EEA multilateral interchange fees infringed Article 101 TFEU.

The CAT denied certification of the claim on behalf of a proposed class comprising some 46 million individuals who between May 1992 and December 2007 purchased goods or services from businesses selling in the UK that accepted MasterCard cards.

The CAT found that the claimants had not put forwarded a cogent methodology that could be applied to calculate an amount reflecting the consolidated individual claims and there was no plausible way of arriving at a sum that approached an approximation of the loss.

The CAT was critical of Merricks’ approach for calculation of the loss on the basis of a ‘top down’ method which gave a sum for the loss suffered by the class as a whole, rather than seeking to establish the losses suffered by the individual claimants.  The CAT was also sceptical of whether damages could be awarded to a class of potentially 46 million people according to the compensatory principle.

Merricks was not given the opportunity to serve an amended claim form as was allowed in the Gibson Scooter Mobility case. 

The CAT did confirm, however, that had it certified the class action it would have authorised Merricks to serve as the class representative.

The CAT's judgment is important in its assessment of the new provisions relating to funding of collective proceedings and costs under section 47C of the Competition Act.

The ruling indicates that the CAT will scrutinise applications for collective proceedings carefully.  It may mean that similar cases will tend to focus on less ambitious definitions of the class of claimant affected, at least until there has developed a sizeable body of case law establishing how the CAT will approach issues of certification.

Case 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Inc and Others, 21 July 2017

Commission launches infringement proceedings against seven Member States for failure to implement Damages Directive

The European Commission has sent reasoned opinions to Bulgaria, Cyprus, the Czech Republic, Greece, Latvia, Malta and Portugal asking them to take steps to implement Directive 2014/104 on private damages for infringements of competition law.

The Directive states that it is designed to ensure that “anyone who has suffered harm caused by an infringement of competition law…can effectively exercise the right to claim full compensation”.  The broad aim of the Directive is to address the impediments to the effective enforcement of competition law in the majority of Member States and to establish minimum standards and approaches in the procedural rules.

Member states were required to implement the Directive into their national law by 27 December 2016 but Bulgaria, Cyprus, the Czech Republic, Greece, Latvia, Malta and Portugal have failed to notify the Commission of their domestic transposition measures.

These seven member states now have two months to inform the Commission of measures taken to implement the Directive.  If not, the Commission may bring proceedings against them before the Court of Justice.

Private damages actions are already increasingly common in a number of Member States, for example the UK, Germany and the Netherlands have been the more attractive venues for bringing private claims.  Once implemented it is expected that the Directive will have a considerable impact on the laws in Member States where the system for private enforcement is less developed. 

Yet despite the framework for common EU-wide approaches, it is likely to remain the case for some years at least that certain jurisdictions will provide a more attractive venue for bringing a private damages claim than others. 

MEMO/17/1935, 13 July 2017

CAT dismisses claim that rules in online property portal are anti-competitive

The Competition Appeal Tribunal has given judgment on competition issues in a case brought by Agents' Mutual Limited (a mutual owned by its estate agent members) against Gascoigne Halman Limited (t/a Gascoigne Halman).

The competition issues concern the rules for participation in Agents’ Mutual’s online property portal “OntheMarket” and were transferred to the CAT by the High Court.

Gascoigne Halman alleged that certain of the rules infringed the Chapter I prohibition.  These included a rule by which an estate agent may list properties on no more than one other portal (one other portal rule); a rule restricting membership to office-based estate or letting agents (bricks and mortar rule); and a rule requiring members to promote only OntheMarket (exclusivity rule).

Gascoigne Halman also alleged that the arrangements were part of a collective boycott of Zoopla and/or Rightmove, again in breach of the Chapter I prohibition.

The CAT rejected all of Gascoigne Halman’s claims.  It found that the one other portal rule was objectively necessary to the rules which bind members of Agents’ Mutual.  It dismissed the claim that the bricks and mortar rule and the exclusivity rule were restrictive by object and Gascoigne Halman did not advance its case by arguing effects.  The CAT found no evidence that the rules were part of a collective boycott of Zoopla/ Rightmove.

Case 1262/5/7/16 (T) Agents' Mutual Ltd v Gascoigne Halman Ltd (t/a Gascoigne Halman) [2017] CAT 15

European Commission fines Google for abuse of search engine dominance

The European Commission has fined Google EUR 2.4 billion for abuse of dominance by promoting its own comparison shopping service ahead of those of its rivals.

The penalty is the largest that has been imposed on a single company for breach of EU competition law, doubling that handed down to Intel for abusive discounting practices in 2009.

The focus of the Commission’s antitrust concern is the prominent display, within Google's web search results, of links to Google's own specialised web search services (e.g. Google Shopping) relative to links to competing specialised web search services.

The theory of competitive harm is controversial.  First, it is clear that a dominant company may compete on the merits and is entitled to differentiate itself from its competitors provided that this is not based on “methods different from those which condition normal competition”.

 This implies that a dominant company may, in principle, compete on marketing elements such as displaying responsive search results and even those that favour its own services.  It can be asked why Google cannot show what it considers to be its own directly responsive results, since that is precisely what a search engine does and is a core value proposition. 

Second, any obligation on a dominant company to deal with its competitors has traditionally been confined to the situation where the firm controls essential facilities or access is otherwise indispensable to compete.  Moreover, even where access to an essential facility has been mandated in previous cases this indicates that such access need not be on identical terms to that granted to the dominant firm itself, provided that access allows for the provision of a commercially viable service.

The key issue for competition, then, is what Google should or should not be permitted to do in terms of differentiating itself.  Putting it another way: should third parties be entitled to an equal position in Google’s search results?  Even if that is accepted, how is that to be achieved in a way that allows consumers to make an informed choice and without destroying Google’s and other parties’ incentives to innovate?  These are the issues at the heart of the Google case.

The search engine case is not the only abuse of dominance investigation that the Commission is pursuing against Google.  The Commission is also investigating Google’s practices in relation to its Android operating system, alleging that it is limiting the development of alternatives by requiring smartphone and tablet manufacturers to pre-install its own applications.  Another case relates to the effect of exclusivity arrangements allegedly preventing advertisers from moving their online advertising campaigns to rivals.

The Commission’s focus on Google (and Microsoft before it) has prompted the often recurring question as to whether US companies are receiving rather more EU competition law scrutiny than their European rivals.  However, Vestager has made clear her views that Google is a ‘good company’ and that it makes no difference from the EU competition law perspective whether a company is American or European.

It is expected that Google will appeal the decision.

Commission fines car lighting system producers

The European Commission has fined Automotive Lighting and Hella EUR27 million for their participation in a cartel relating to car lighting systems. 

The decision was reached under the cartel settlement procedure, resulting in a reduction of 10% in fines.

Valeo received full immunity from fines under the 2016 Leniency Notice.  

The Commission found that for over three years the companies co-ordinated prices and other trading conditions for the supply of vehicle lighting systems.  They also coordinated price increase on spare parts and co-ordinated how long after mass production they would end contractual availability of the relevant spare parts.

The Commission has already found competition law infringements in several auto parts markets.  The latest decision is the first involving replacement parts for cars that are out of production.

European Commission investigates Nike, Universal Studios and Sanrio

 

European Commission investigates Nike, Universal Studios and Sanrio

The European Commission has opened separate antitrust investigations into the distribution and licensing arrangements of Nike, Universal Studios and Sanrio.

The Commission suspects that the companies’ practices may unlawfully restrict distributors from selling cross-border and over the internet within the EU single market.

The products under investigation include clothes, shoes, phones, bags and toys on which an image, logo or text is applied during the manufacturing process.  The manufacturers can only include an image or text if they have a licensing agreement with the owner of the underlying intellectual property rights.

Nike is the licensor of rights for Barcelona Football Club, Universal owns the rights for “Despicable Me” and “Minions” and Sanrio owns the rights for “Hello Kitty”.

A Commission spokesman has said that the investigation has not been prompted by complaints.

The practices of concern raise similar issues to those in the Commission’s e-commerce sector inquiry which highlighted the antitrust issues arising in selective distribution agreements.  However, it appears that the investigations are separate from the sector inquiry.

Last week the Commission opened a similar inquiry into the distribution agreements of Guess, the US clothing manufacturer.

The investigations show that the Commission has a continued appetite to open enforcement proceedings in cases involving vertical restraints. The latest investigations will revisit the interplay between restrictions on competition and limitations that are inherent in licensing agreements and show the Commission’s vigilance to tackle impediments to cross-border trade.