CMA objections and settlements in roofing materials investigation

CMA objections and settlements in roofing materials investigation

The Competition and Markets Authority (CMA) has issued supplementary statements of objection alleging that three suppliers of roofing materials have engaged in a market sharing cartel in breach of the Chapter I prohibition and Article 101 TFEU.

The further objections supplement allegations issued in March 2019.

The CMA provisionally concludes that there were four individual cartel arrangements rather than one single and continuous infringement (SCI) embracing each party’s involvement in the cartel.  The change in formulation of the charges perhaps reflects the CMA’s desire to frame its case in a way that would be less likely to withstand a challenge given the difficulties in establishing an SCI.

Associated Lead Mills and BLM British Lead have settled with the CMA and agreed to pay fines exceeding £11 million.  Calder Industrial Materials has made no admission of liability and the CMA's investigation into the latter continues.

CMA extends deadline for Amazon-Deliveroo phase 2 merger investigation

CMA extends deadline for Amazon-Deliveroo phase 2 merger investigation



The Competition and Markets Authority (CMA) has extended the period for its second phase review of the acquisition by Amazon of a minority stake and certain rights in Roofoods Ltd (trading as Deliveroo).

The reference was made on 27 December 2019.

On 17 April 2020 the CMA announced its provisional findings that the merger would not be expected to result in a substantial lessening of competition in either the markets for online groceries or online restaurant delivery platforms.  It found that as a result of the outbreak of COVID-19, Deliveroo is likely to exit the market absent the additional funding made available to it through the transaction.

The CMA was required to deliver its final report today (11 June 2020). However, it has decided to extend the reference period by eight weeks until 6 August 2020.  The CMA states that it needs to take full account of representations received in relations to its provisional findings as well as the impact of COVID-19 in its assessment.

European Commission consults on tougher market investigation tool

European Commission consults on tougher market investigation tool



The European Commission is consulting on views on a possible new tool to address structural competition issues.  On 2 June 2020 it published an inception impact assessment which is accompanied by a questionnaire.

The backdrop to the proposal includes the Commission’s identification of structural problems particularly in light of digitisation and digitally-enabled markets.  The new tool would enable the Commission to identify gaps in existing competition tools and intervene to address structural problems.  There would be no finding of infringement or penalties imposed.

The Commission is consulting on whether the tool should be used only to address concerns arising from unilateral conduct by a dominant firm.  The Commission also invites views on and whether the tool should be limited to certain sectors such as digital markets which it says can be prone to abuse due to structural features such as high entry barriers.

The Commission invites views on the inception impact assessment by 30 June 2020.

The online questionnaire will be open until 8 September 2020.

Subject to the results of the consultation, the Commission aims to prepare a legislative proposal by the end of 2020.



https://ec.europa.eu/commission/presscorner/detail/en/ip_20_977

General Court annuls European Commission prohibition of Hutchison 3G UK/ Telefonica UK merger

General Court annuls European Commission prohibition of Hutchison 3G UK/ Telefonica UK merger

In a breath-taking judgment, the General Court has upheld an appeal by CK Telecoms UK Investments to challenge the European Commission's 2016 EU Merger Regulation decision prohibiting the proposed acquisition of Telefónica Europe Plc (O2) by Hutchison 3G UK (Three).

The Commission found that the merger would have removed an important competitor on the UK mobile market, reducing the number of operators from four to three.  The merged company would have occupied around 40% of the retail market.

The General Court considered the Commission’s application of the ‘significant impediment to effective competition’ (SIEC) test.  It found that the mere effect of reducing competitive pressure on the remaining players in an oligopolistic market is not of itself sufficient to demonstrate a SIEC based on non-coordinated effects.

The General Court found that the Commission had committed a number of errors in finding that Three was an ‘important competitive force’ on the retail market.  Although the parties were close competitors in some segments of the market this was not sufficient to prove the elimination of important competitive constraints to establish a SIEC.

The General Court also found errors in the Commission’s analysis of the effects of the merger on the network-sharing agreements and infrastructure provision in the UK.

This may well be one of the most significant merger control decisions that the General Court has issued in the last fifteen years.  The Commission will need to take a root and branch look at how it appraises mergers in oligopolistic markets and where it bases its theory of harm on non-coordinated effects falling short of creation or strengthening of a dominant position.  It is expected that the Commission will appeal the judgment given its wide implications.

CK Telecoms UK Investments Ltd v European Commission (T-399/16), ECLI:EU:T:2020:217)

European Commission sends Air Canada-Transat to Phase II

European Commission sends Air Canada-Transat to Phase II

The European Commission has launched second phase proceedings in its review of the proposed acquisition of Transat by Air Canada.

The Commission is assessing whether the transaction “would lead to higher prices, reduced quality or less choice for travellers flying over the Atlantic”.

The Commission has acknowledged that the aviation sector is facing challenging times due to the impact of coronavirus.  While the launch of a phase II investigation does not seal the fate of the deal, the Commission will have to take a long hard look at the scope for competition on a sustainable basis.  It has said that “a return to normal and healthy market conditions must be based on markets that remain competitive.”

The merging airlines compete between 33 city pairs, 29 of which are direct routes and four are indirect. 10 European countries are affected: Belgium, Croatia, France, Greece, Ireland, Italy, Netherlands, Portugal, Spain and the UK.

The Commission has until 30 September to issue a final decision. 

Future EU-UK relationship: UK draft texts and the level playing field

Future EU-UK relationship: UK draft texts and the level playing field

The government has published its draft legal texts to support its policy paper, The future relationship with the EU, which was published on 27 February 2020.

The EU stated its position on18 March 2020 in a draft agreement on the new partnership

The government is aiming for a Canada-style free trade agreement (FTA).

The UK’s proposal provides for zero tariffs and zero quotas on goods; however, this is not the position in any of the existing EU FTAs cited as comparators.  The proposal includes quite weak level playing field provisions, including on state aid.

This is in a marked contrast with the position of the EU which contemplates an overall governance framework on all areas of economic and security co-operation and where the Court of Justice of the EU would be the sole arbiter of EU law.  It foresees strong and enforceable level playing field commitments, including in the area of state aid.

https://www.gov.uk/government/publications/our-approach-to-the-future-relationship-with-the-eu

Court of Appeal rules against recovery of costs in successful antitrust appeal

Court of Appeal rules against recovery of costs in successful antitrust appeal

The Court of Appeal has found that it is not in the public interest for the Competition and Markets Authority (CMA) to pay the costs of a successful party in an appeal against a CMA decision.

The Court made its ruling in appeals by Pfizer and Flynn against the decision of the CMA fining them for abuse of dominance by charging excessive prices for phenytoin sodium capsules.

The CAT concluded that it was appropriate to award the parties a proportion of their costs to reflect their overall success.

The Court found that the CAT had erred in applying BT v Ofcom (a regulatory case where BT successfully challenged an Ofcom decision, but the CAT did not order Ofcom to pay costs).  The CAT had given no weight to the position of the CMA as a public authority carrying out public interest functions.

The Court found that the starting point is that no order for costs should be made against a regulator who has brought or defended proceedings in the CAT acting purely in its regulatory capacity.

The CAT decided not to remit the costs matter to the CAT and made no order as to costs in respect of the CAT proceedings.

Flynn Pharma Ltd and Flynn Pharma Holdings Ltd v Competition and Markets Authority [2020] EWCA Civ 617