European Commission fines Qualcomm EUR 997 million for abuse of dominance

The European Commission has fined Qualcomm EUR 997 million, finding that its exclusivity arrangements with Apple infringed Article 102 TFEU.

The Commission has found that Qualcomm holds a dominant position in the worldwide market for 4G baseband chipsets.  It found that Qualcomm had abused that position for five years by agreeing to make significant payments to Apple, amounting to billions of dollars, on the condition that it would exclusively use Qualcomm chipsets in iPhone and iPad devices.

The Commission concluded that Qualcomm’s practices left rivals with no chance of competing for this significant part of Apple’s business.  It appears that the Commission placed considerable weight on documentary evidence suggesting that Apple would have been willing to switch to rivals absent the arrangements.

The fine represents 4.9% of Qualcomm’s 2017 turnover and is the third largest fine that the Commission has ever imposed on a single company.

European Commission dawn raids in paper sector

European Commission dawn raids in paper sector

The European Commission has confirmed that it has carried out a third dawn raid into the kraft paper and industrial packaging sector.

On 16 January the EU enforcer raided the Brussels office of RISI, a subsidiary of Euromoney Institutional Investor.

The Commission carried out raids in March 2016 and March 2017 as part of its competition investigations into the same sector.  At the time it did not say which companies were raided. Mondi has, however, confirmed a raid of its Austrian premises.

The Commission has not investigated the paper and bags market for over ten years. It appears that the current probe concerns horizontal cartelisation.

The latest raid on a market intelligence provider may suggest that the Commission is focusing on the role of RISI as a platform for exchange of sensitive pricing information.

European Commission probe into cross-border access to pay-TV

European Commission probe into cross-border access to pay-TV

The European Commission has extended its competition investigation into cross-border pay-TV services to a subsidiary of NBCUniversal.

The 12 January 2018 update is the latest development in an investigation where the Commission opened formal proceedings in January 2014 in relation to licensing agreements between some of the major US film studios and the biggest European pay-TV broadcasters (including Sky UK, Canal Plus of France, Sky Italia, Sky Deutschland and DTS).

The Commission is concerned that the agreements may be restricting broadcasters from providing cross-border services such as by preventing subscribers from other member states from accessing the services.

In July 2015, the Commission sent a statement of objections to Sky UK and six US studios (Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros).  Although the Commission has sent a supplementary statement of objections to a subsidiary of NBCUniversal to reflect changes in its corporate structure, the substantive scope of the Commission’s investigation remains unchanged.

The Commission has closed the proceedings opened in January 2014 against Paramount Pictures and accepted binding commitments from Paramount in relation to allegations in the 2015 statement of objections. That decision is subject to appeal (Case T-873/16 - Groupe Canal + v European Commission (OJ 2017 C38/50)).

Cases on the interaction between territorial exclusivity and competition law raise policy issues that are not new, but which have not been addressed head-on or in a co-ordinated way by the Commission.

TV has traditionally been organised on national lines but set against the EU vision of a single market.  Case law has developed in piecemeal fashion.

Rights-holders and satellite broadcasters will need to adapt to the inability to strictly enforce territorial divisions, against a background of uncertainty while important cases remain to be decided. This has a knock-on impact on the commercial value of rights. The implications are not confined to pay-TV, with potential ramifications across the audio-visual sector where packaged rights are sold (sports, film, tv, music).

Banks seek exemption from Hong Kong Competition Ordinance

Fourteen banks – including JP Morgan, Standard Chartered, HSBC, Citigroup and Bank of China – have applied to the Hong Kong Competition Commission to seek confirmation that their Code of Banking Practice is compatible with the Competition Ordinance.

The Competition Ordinance came into effect in December 2015 and prohibits restrictive agreements through its First Conduct Rule.

If the application is successful, the Hong Kong Competition Commission will issue a decision exempting the Code from enforcement.

The Code is voluntary but non-compliance could, in principle, lead to enforcement action from the Hong Kong Monetary Authority.

The banks maintain that the Code has neither the object or effect of harming competition in Hong Kong.  However, it has been acknowledged that there are some elements which could be regarded as giving rise to competition issues to the extent that they could restrict the independence of banks to determine their own charges.

The Competition Commission has invited comments by 15 February 2018.

Disney-Fox and the future of Sky

Disney-Fox and the future of Sky

Walt Disney Company’s proposed purchase of 21st Century Fox has been viewed as a deal that will reshape the media landscape.  Yet despite potentially addressing the concerns that have been identified in the CMA’s public interest review of Fox’s bid to acquire the interests in Sky that it does not already own, this latest development may not make not much difference to the course of that review as matters presently stand.

Disney will acquire 21st Century Fox’s interests in Sky and Tata Sky, among other assets.  Fox has said that it expects to complete the acquisition of the Sky shares that it does not own by 30 June 2018.

Meanwhile, the CMA’s public interest review of the Fox-Sky transaction is due to report by the statutory deadline of 6 March 2018.  The CMA plans to issue its provisional findings in January.

As to plurality, the theories of harm identified by the CMA are a reduction in the range of viewpoints available to and consumed by the public; and an increase in the influence of the Murdoch Family Trust on public opinion and the political agenda.

In relation to broadcasting standards, the CMA has identified a theory of harm that there will not be a genuine commitment to broadcasting standards after the transaction.

The CMA’s review is far advanced.  It remains to be seen to what extent it will consider the Disney deal, which is itself subject to regulatory approval.  The CMA operates on the basis of what is known or reasonably likely and not on what may happen at some future date, even though this does not always match real-world realities.

That said, there do not seem to be insuperable regulatory hurdles for the Disney transaction and it should allay any residual public interest concerns with the Fox-Sky combination. 

Disclosure order in trucks cartel damages action

The High Court will order DAF to give the Royal Mail disclosure of information from the European Commission’s trucks cartel file.

Royal Mail is seeking £270 million in damages representing the overcharge it allegedly paid as a result of a cartel between major European truck manufacturers spanning 14 years.  The claim is one of many in progress and in the pipeline which have been filed in the UK and in other Member States.  The Settlement Decision (addressed to undertakings in the MAN, Volvo/Renault, Daimler, Iveco and DAF groups) and the Infringement Decision (addressed to the Scania undertaking) concern the same anti-competitive conduct – which consisted of:

a.       coordination amongst the participating undertakings in respect of the EEA gross list prices for medium trucks (weighing between 6 to 16 tonnes) and heavy trucks (weighting 16+ tonnes) (

b.       coordination amongst the participating undertakings in respect of the timing of introduction of new emissions standards on affected trucks and the extent to which the costs associated with the introduction of these standards would be passed on.

The Settlement Decision by its nature is relatively limited in terms of the detail of the infringements and operation of the cartel. 

Mrs Justice Rose has ordered DAF to disclose evidence in two stages.  The first is due by 28 February 2018 and consists only of evidence about DAF that is redacted for confidentiality and for privileged or leniency material.  The second, containing evidence about other participants in the cartel, is due by “the end of April”.  Other participants will be able to redact confidential, privileged or leniency material.

FCA issues first statement of objections to asset managers

 

FCA issues first statement of objections to asset managers

 

The Financial Conduct Authority (FCA) announced on 29 November that it has issued a statement of objections to four asset management firms alleging infringements of the Chapter I prohibition and/ or Article 101 TFEU.

This is the first time that the FCA has issued a statement of objections in relation to suspected competition law breaches since it obtained concurrent competition enforcement powers in April 2015.  The FCA stated in the annual concurrency report (published in April 2017) that it had opened one Competition Act investigation in March 2016 and another in March 2017

The FCA takes the provisional view that four firms - Artemis Investment Management LLP, Hargreave Hale Ltd., Newton Investment Management Limited/The Bank of New York Mellon Corporation and River and Mercantile Asset Management LLP/River and Mercantile Group PLC - exchanged sensitive information through disclosure of the price they intended to pay in relation to one or more Initial Public Offerings and one placing before the prices were set.  According to the FCA, these practices enabled firms to know each other’s strategies during the placing when they should have been acting in competition.

Any person who can materially assist the investigation may request a non-confidential version of the statement of objections by contacting the FCA no later than 12 January 2018, explaining how they can assist.