General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

 

General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

The EU General Court rejected a claim by United Parcel Service (UPS) and ASL Aviation Holdings (ASL) in respect of damages that they allegedly suffered as a result of the European Commission's 2013 decision prohibiting the proposed acquisition of TNT Express NV (TNT) by UPS.

The General Court annulled the Commission’s decision in March 2017; upheld by the Court of Justice in January 2019.

UPS claimed compensation of EUR1.742 billion in respect of costs and loss of profits.

The General Court held that the Commission’s failure to communicate changes in the economic model used to support the Commission’s analysis was a sufficiently serious breach intended to confer rights on individuals.  However the General Court did not consider that the Commission’s procedural defect was the direct cause of UPS’s losses.

ASL claimed that the Commission’s decision had deprived it of the agreement with UPS giving rise to loss.  The General Court held that ASL could not found its claim on UPS’s rights of defence.

As a result the General Court dismissed the claims in entirety.

Damages actions have been brought in the past in respect of Commission merger prohibition cases.

In 2008 the General Court rejected a claim for damages by My Travel Group as a result of the Commission's prohibition of the Airtours/First Choice merger.  The General Court referred to the complexity of the case and the margin of discretion afforded to the Commission and found that the breach was not sufficiently serious to give rise to non-contractual liability. 

In 2009 the Court of Justice awarded Schneider damages for its costs incurred in dealing with the Commission’s second investigation of the merger between it and Legrand following the General Court’s annulment of the Commission’s prohibition decision.  However it overruled the General Court’s finding that the Commission was responsible for two thirds of losses allegedly suffered by Schneider because it had to accept a lower sales price.  The Court concluded that this category of loss did not arise directly and exclusively out of the Commission’s breaches.

The cases show that a breach of law by the Commission will not automatically sound in damages.  The claimant will need to show that there is a direct causal link between the breach and the harm suffered and this will be interpreted strictly.

 

T-834/17 United Parcels Service, Inc v European Commission ECLI:EU:T:2022:84

T-540/18 ASL Aviation Holdings DAC and others v European Commission ECLI:EU:T:2022:85

CMA seeks remedies in veterinary merger to avoid Phase 2 investigation

 

CMA seeks remedies in veterinary merger to avoid Phase 2 investigation

The CMA will refer the completed acquisition by CVS Group plc of Quality Pet Care Ltd (trading as The Vet).) to a Phase 2 merger investigation unless acceptable remedies (‘undertakings in lieu of reference’) are offered.

CVS operates over 450 veterinary practices across the UK.  The Vet is a chain of eight small animal veterinary practices in the UK.  The CMA has identified competition law concerns in the local areas of Bristol, Nottingham, Portsmouth, Southampton and Warrington where the merged businesses would account for a significant proportion of veterinary services in each of these five areas.

The parties now have five working days (until 25 February 2022) to offer acceptable undertakings in lieu to the CMA.

The CMA’s approach indicates that it remains concerned to address competition issues whether they arise in national, regional or local markets.  Even though the UK operates a voluntary merger control system where there is no obligation to seek merger clearance in advance, it is a reminder of the competition law risks for merging parties completing a transaction where there are overlaps in local markets.

https://www.gov.uk/government/news/cvs-takeover-of-the-vet-raises-competition-concerns

CMA designates Amazon under Groceries Order

 

CMA designates Amazon under Groceries Order

The Competition and Markets Authority (CMA) has designated Amazon.com, Incorporated (Amazon) under the Groceries (Supply Chain Practices) Market Investigation Order 2009 (the Order).

As a result, Amazon must comply with the Groceries Supply Code of Practice (the Code).

The Code was introduced following the Competition Commission’s groceries market investigation.  It provides terms on which the large grocery retailers deal with their suppliers.  It applies only to "designated retailers” (i.e., those with turnover exceeding £1 billion with respect to the retail supply of groceries in the UK and that have been designated by the CMA).

The CMA considers it appropriate to exercise its discretion to designate Amazon given the size and nature of its grocery retail activities in the UK.

Amazon operates its grocery business through two separate and wholly owned subsidiaries Amazon EU Sarl (which operates Amazon Fresh (comprising an online grocery delivery service and physical stores) and Fresh & Wild Limited (which has seven physical grocery stores in London and offering delivery through Deliveroo).

The £1 billion groceries threshold for designation has been exceeded by the Amazon corporate group of companies.

Once the CMA has designated a grocery retailer, compliance with the Code is managed by the Groceries Code Adjudicator.

Other retailers subject to the Code are Ocado Retail Limited, Asda Stores Limited, Co-operative Group Limited, Marks & Spencer PLC, Wm Morrison Supermarkets PLC, J Sainsbury PLC, Tesco PLC, Waitrose Limited, Aldi Stores Limited, Iceland Foods Limited, Lidl GB Limited, B&M Retail Limited, and TJ Morris Limited (trading as Home Bargains).

https://www.gov.uk/government/news/cma-designates-amazon-as-a-grocery-retailer-to-protect-suppliers

Scania loses appeal against trucks cartel decision

 

Scania loses appeal against trucks cartel decision

The EU General Court has dismissed an appeal by Scania AB, Scania CV AB and Scania Deutschland GmbH (Scania) against the European Commission's 2017 decision finding that Scania had participated in the truck cartel and imposing a fine of EUR880,523,000.

The General Court found that the Commission did not infringe the presumption of innocence through its adoption of a "hybrid" procedure.  The now familiar procedure first involved a settlement decision against the other defendants followed by a mainstream infringement procedure against Scania, the only non-settling defendant.

The General Court rejected Scania’s challenges in relation to the existence of a single and continuous infringement of Article 101 TFEU.  It was irrelevant that certain of Scania’s employees who participated in cartel meetings at a lower level were not aware of meetings held by top management.  The General Court ruled that in order to establish a single and continuous infringement the Commission must show only that the various patterns of conduct are part of an “overall plan designed to achieve a single anti-competitive objective”.  It is not necessary to demonstrate that each such element breaches Article 101 TFEU.

The General Court upheld the Commission’s finding that the information exchanges of concern amounted to infringements which were restrictive by object.  Scania was found to have participated in all elements of the infringement and the Commission was correct to impute liability for the whole infringement to that entity.

It remains to be seen whether Scania will appeal the decision.  If it does, it will face an uphill battle given the General Court’s emphatic rejection of its claims.  The judgment will no doubt fuel the growing number of private antitrust damages claims against the truck manufacturers including in England and Wales.  For now, at least, the General Court’s vindication of the Commission’s decision will make a follow-on claim against Scania so much more straightforward.

 

Case T-799/17, Scania AB and others v European Commission, ECLI:EU:T:2022:48

Intel wins victory in EU General Court in rebates abuse of dominance case

 

Intel wins victory in EU General Court in rebates abuse of dominance case

The General Court has ruled in Intel’s challenge against the European Commission's 2009 decision fining it a then record EUR1.06 billion for infringement of Article 102 TFEU through exclusivity rebates and other restrictions.

In 2014 the General Court rejected Intel’s appeal but in 2017, on appeal, the Court of Justice set aside the General Court judgment and referred the case back to the General Court.  The General had not properly considered arguments regarding the Commission’s ‘as efficient competitor’ test (AEC).

The General Court has now found that the Commission’s application of the AEC test was vitiated by several errors.  In particular, the Commission had not established according to the correct legal standard the propensity of each of Intel’s rebates to produce the requisite foreclosure effect.

The General Court further found that the Commission had erred in law in its application of the relevant case law.  It had not properly considered the market affected by the disputed practices and the duration of the rebates.

The General Court annulled the part of the Commission’s decision concerning conditional rebates as it related to Intel’s infringement of Article 102.  The General Court was not able to identify which part of the fine related solely to the contested rebates as opposed to naked restrictions on using competitor products also found by the Commission to be restrictive.  The General Court therefore annulled the Commission’s EUR1.06 billion penalty imposed on Intel in its entirety.

The judgment is an important endorsement of effects-based assessment in abuse of dominance cases.  The painstaking analysis by the General Court of the AEC test is useful, in particular in taking into account post-decision evidence.  It remains to be seen whether the Commission will bring an appeal against any aspects of the General Court’s ruling.

Case T‑286/09 RENV Intel Corporation, Inc v European Commission, ECLI:EU:T:2022:19

European Parliament urges early review of foreign subsidies legislation

 

European Parliament urges early review of foreign subsidies legislation

 

Members of the EU Parliament warn that the Commission should assess its proposed new regulation to tackle distortive foreign subsidies within three years.  This is fuelled by concerns that there is currently insufficient data to show how such measures may be affecting the internal market.

The Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) met on 25 January to discuss its draft opinion on the Commission’s suggested amendments to the proposed legislation on foreign subsidies.

The Commission published its draft legislation in May 2021.  The Commission would be able to investigate transactions involving financial contributions by a non-EU state where the target company’s EU turnover is at least EUR500 million and the foreign contribution is at least EU50 million.  This would enable the Commission to examine foreign economic assistance that could harm competition.

The IMCO’s draft opinion says that the Commission should review the economic effects of regulation on the internal market and the number of notified and investigated cases each year.  It has further proposed a provision on cooperation with national public procurement authorities. It recommends that the national authorities should information the Commission of any foreign subsidies that fall below the thresholds for notification and which threaten the internal market.  It also advises that the national authorities should collect and share with the Commission data on contracts bid for and won by foreign entities.

The legislation itself, the IMCO’s amendments and the reservations expressed by the Parliament reflect an increasing intensity in its vigilance to seek long-arm jurisdiction on deals involving third countries which it considers have impacts in the internal market.

https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/IMCO/PA/2022/01-25/1245928EN.pdf

 

 

Scottish Councils are not time-barred from bringing competition law claims against truck manufacturers

 

Scottish Councils are not time-barred from bringing competition law claims against truck manufacturers

The Inner House of the Scottish Court of Session has given an opinion on whether Scottish local authorities are time barred in bringing claims for compensation against the trucks manufacturers who were found by the European Commission to have participated in an unlawful cartel, in breach of Article 101 of the TFEU.

Glasgow City Council’s claim exceeds £10 million.  West Dunbartonshire seeks compensation of about £2 million.  These two cases have been selected as the lead cases.

The truck manufacturers argued that the cases would be time-barred because they had not been brought within five years.  All of the affected transactions were more than five years old when the cases were launched and some were more than 20 years old.  However, the Scottish Commercial Court concluded that the local councils were not aware of the truck manufacturers' cartel until the Commission handed down its July 2016 infringement decision.

The case is interesting because it is the first Scottish case to consider limitation/prescription issues in a case involving a covert competition law infringement.

Glasgow City Council and West Dunbartonshire Council v VFS Financial Services Limited and others [2022] CSIH 1