EU & Competition Update - December 2009


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Introduction

Dear readers,

As the year draws rapidly to a close, it is our pleasure to bring you the final news of the decade in EU competition law.

That makes auspicious timing for the announcement of the replacement of Neelie Kroes, the formidable head of the European Commission's Competition Directorate General, by Joaquin Almunia. He will succeed one of the most high-profile occupants of the post, and we wish him well. Mrs Kroes, as the new digital agenda Commissioner, will surely continue to play an important role in the competition and regulatory sphere – her new remit will of course overlap significantly with her previous work.

Importantly, 1 December also witnessed the coming into force of the Treaty of Lisbon. We feature a review in this edition of its impact on competition law practitioners, not the least of which is its highly inconvenient renumbering of Articles 81 and 82 to 101 and 102. Researching Article 101 case law in the new year promises to be a thankless task!

We also bring you the latest on Intel's antitrust woes, which now not only include the biggest ever fine imposed by the European Commission, but also a hefty payout as part of its settlement with AMD – which does not appear even to be a comprehensive settlement.

A pair of recent cases, Akzo Nobel in the ECJ and Cooper in the English courts, offer an interesting juxtaposition of arguments on liability of a parent and a subsidiary, respectively, arising from breaches of competition law. The ECJ's judgment is GlaxoSmithKline is also reviewed, in particular its important statements on exemption under (what used to be) Article 81(3).

On the UK front, we also review the progress of the OFT in the construction sector, a sector which rather unfortunately appears to have incurred not one but two recent cartel findings. From a broader perspective, we bring you a review of the EETS Decision, which we anticipate will bring significant beneficial effects for the development of the internal market, in creating a single pan-European system of road toll payment.

Finally, 2009 saw the only overtly Christmas-themed antitrust finding of which we are aware. A Danish court's judgment against the infamous "Juletraesdyrkerforening" (Christmas tree growers' association) cartel emphasises the point that any business can be on the wrong end of a competition law challenge. A summary of the case is available (in Danish) by clicking here – we await your emails on the substitutability, or otherwise, of 'Nordmann firs'.

Best wishes for the holiday season.

Howard Cartlidge
howard.cartlidge@olswang.com

Entry into force of the Treaty of Lisbon on 1 December 2009 – impact on EU Competition rules

Following the ratification of the Lisbon Treaty by the Czech Republic on 3 November 2009, it has now been ratified by all EU Member States and entered into force on 1 December 2009.
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ECJ ruling in GlaxoSmithKline, on parallel imports of pharmaceuticals in Spain

The European Court of Justice has upheld a finding of infringement of Article 101(1) (formerly Article 81) by GSK's dual pricing agreement in Spain, intended to restrict parallel trade of its pharmaceuticals. The ECJ also confirmed that an agreement must have appreciable objective advantages for exemption under Article 81(3) - an assessment of such advantages should have taken into account the nature and specific features of the pharmaceutical sector. However, the ECJ found that the lower court erred in requiring proof of harm suffered by final consumers as a prerequisite for a finding of anti-competitive object.
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European Commission publishes Intel abuse decision, Intel settles with AMD

In May 2009 the European Commission fined Intel over €1billion for abuse of a dominant position on the x86 CPU market, through its pricing practices of: (i) 'conditional rebates'; and (ii) 'naked restrictions'. Intel has also (partially) settled the complaints of its competitor, AMD, for $1.25 billion.
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Parental responsibility: ECJ judgment in Akzo Nobel confirms that parent companies are liable for cartel behaviour of subsidiaries

The European Court of Justice has confirmed that parent companies are presumed to be liable for cartel infringements committed by a 100% owned subsidiary. The presumption is rebuttable, but parent companies are very unlikely to escape cartel fines by claiming their subsidiaries operate independently.
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European Commission gives green light to the European Electronic Toll Service (EETS)

The European Commission has adopted a decision setting out the technical, procedural and legal specifications for EETS, after almost five years of intense discussions. EETS will enable private and commercial road users to pay tolls throughout the European Union using a single interoperable device and one service contract.
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English High Court damages claim in Cooper gives guidance on staying of actions pending parallel proceedings, and liability of subsidiaries

This recent judgment establishes that a company can be sued in follow-on damages from a competition law infringement finding, even where the finding was made against its parent company. It also indicates limits on the ability of a cartelist to frustrate damages actions by starting proceedings in another jurisdiction.
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Office of Fair Trading fines over 100 construction companies for bid-rigging, and construction recruitment agencies for price-fixing and collective boycott

In its largest cartel investigation to date, the OFT has fined 103 construction companies for engaging in "cover pricing", a form of bid-rigging. Separately, the OFT has fined six recruitment agencies for fixing fee rates and withdrawing from or refraining from entering into contracts with an intermediary company for the supply of candidates to construction companies in the UK.
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The information contained in this update is intended as a general review of the subjects featured and detailed specialist advice should always be taken before taking or refraining from taking any action.