By Hans Vedder
On June 5 the Court has handed down the eagerly awaited judgment in the Kone case. This is one of the several cases that result from the Commission’s decision finding a cartel in the elevators and escalators sector. The decision concerned a bid rigging cartel involving four well-known firms (Kone, Schindler, Otis and ThyssenKrupp) active in the market for the production, installation and servicing of elevators and escalators. Bid rigging is a practice by which the participants in a tender procedure coordinate their bids in order to determine who wins the tender at what price. They will typically determine the cartel member intended to win and ensure that the other bidders put in a higher price. As most of these products are bought by professional buyers that tend to hang on to their purchasing records, civil damages claims resulted from the Commission’s finding that there was cartel. This means that the customers of the companies involved in the cartel seek to claim the supracompetitive part of the price they paid (the cartel mark-up). In keeping with the need for more damages claims fervently voiced by then Competition Commissioner Neelie Kroes, the Court has had to deal with quite a few cases on this issue already, but many more are to be expected. Kone deals with the question to what extent the cartelists are required to compensate the higher price charged not just by the members of the cartel, but also by other companies in the market (the umbrella effect). Continue reading
In the landmark cases Kendrion, Gascogne and Gascogne Germany the CJEU clarified some important procedural issues related to infringements of the reasonable time requirement. The most important legal question that the CJEU tackled is what is the appropriate remedy for infringements of the right to have the case adjudicated within a reasonable time. The CJEU had two options: the first one was to follow the Baustahlgewebe judgment in which the CJEU had concluded that the proceedings were excessively lengthy and subsequently reduced the fine the Commission had imposed upon the undertakings. The second was to follow the Der Grüne Punkt judgment where the CJEU also concluded that there had been an infringement, but required instead a separate action for damages to be lodged before the General Court. Following this path would, however, mean that the General Court itself would have to assess whether, and to what extent, the parties suffered any harm due to the excessive length of proceedings. In the present cases, the CJEU has opted for the second solution.
This post concerns a bit of a Dutch thing, namely the ‘position’ of the Dutch National Competition Authority ACM on an agreement by electricity producers active on the Dutch market, but it is interesting more generally for those who are interested in the relation between (EU) competition law and other issues like sustainability. The trigger for this position by the ACM is a plan in the national Energieakkoord which is an agreement between organisations representing employers, employees, environmental NGO’s, companies and other social actors that aims to benefit the transition to a more sustainable energy policy and sustainable economic development in the Netherlands. Part of this Akkoord is the deal between four electricity producers to close down five older coal fired power plants (all constructed in the 1980s) in a coordinated manner. This get-together of four competitors to reduce production capacity has obvious competition law implications, so the Netherlands Competition Authority (ACM) was consulted on the compatibility of this plan with Article 101 TFEU and the Netherlands equivalent, Article 6 of the Competition Act. As the title suggests, the ACM considered the plan incompatible with competition law in a very preliminary and barely reasoned finding.
Ink in cartridges for printers is often called ‘black gold’, or qualified as the ‘most expensive liquid in the world’. Manufacturers of printers sell their ink cartridges at (relatively) high prices, whereas they offer their printers for (relatively) low prices. The ‘cheap-appliance-expensive-consumable’-business model is used widely: coffee machines and pods, consoles and games, cars and spare-parts, etc. As a consequence of the relatively high prices on the aftermarket, independent suppliers try to enter such a lucrative aftermarket by offering generic products which are compatible with the machinery offered on the up-stream market. Not surprisingly, this leads to conflicts between those independents and manufacturers of appliances, because of the intellectual property rights over the machinery and consumables (e.g. generic producers offering coffee pads compatible with Nespresso– and Senseo-coffee machines and contesting the IP-rights in question, or – in the alternative – claiming that the refusal to license the IP-right is an abuse of a dominant position) and associated litigation (e.g. the Toshiba/Katun-case over advertisement of generic consumables which referred to the brand of the machinery).
In the EFIM-case, producers of generic ink cartridges (independent suppliers) – associated in the European Federation of Ink and Ink Cartridge Manufacturers (EFIM) – complained to the Commission, mainly because they were denied access to the intellectual property rights by the four, so-called ‘original equipment manufacturers’ (OEMs) of printers: Hewlett‑Packard, Lexmark, Canon and Epson. Without access to those intellectual property rights, producers of generic ink cartridges argued that they could not effectively compete with the OEMs on the (after)market for ink cartridges. EFIM considered that behaviour to foreclose the market for ink cartridges and therefore an abuse of a dominant position, which is prohibited under Art. 102 TFEU.
Infringements of antitrust law can cause serious harm to consumers and businesses in the European Union. Under EU law the victims of infringements of antitrust law can claim compensation for the actual loss, for loss of profit and payment of interest accruing from the moment of time the harm occurred until the moment compensation is paid. Actions for damages for an infringement of national and EU antitrust law are governed by the national law of the Member States. To ensure the effectiveness of the right of the victims to claim damages the European Commission presented on 11 June 2013 a proposal for a directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (COM (2013) 404 final). Continue reading
In some American movies prison dialogues often go like this: Question: ‘What are you in for?’ Answer ‘Lawyer screwed me, I’m innocent!’ In C-681/11 Schenker & Co and others this was more or less the defence a couple of Austrian transport companies came up with after being fined for infringing competition rules. Those companies had received some dubious legal advice which effectively gave them the green light for a price fixing agreement. The case contains some pretty interesting questions on whether undertakings can be fined if they have not culpably infringed competition law. In other words, if companies have taken the necessary precautions to assure themselves that their conduct was legal, can they still be fined because the authorities made a different assessment? The particularly noteworthy feature of this case are the different approaches taken by the CJEU (focussing more on what people should know about the law) and the AG (focussing more on what people can expect from legal experts and authorities).
Two separate insurance companies Allianz and Generali concluded a number of contracts with autorepair shops on the prices and other conditions that would apply for cars insured by these companies repaired by those shops. Moreover, Allianz and Generali also concluded similar contracts with the dealers who operated car repair shops. Finally, they concluded similar agreements with the association of car dealers. In this category of agreement, the prices for car repairs would increase with the number of insurances sold by the dealers. Allianz and Generali, therefore sought to link the number of insurances sold by the dealers to the remuneration for car repairs. This is obviously designed to increase or at least consolidate the market share of Allianz and Generali on the market for car insurances. Apart from this business strategy, the idea behind these agreements was that auto repair shops could start repairing immediately on the basis of the predetermined tariffs, something that is clearly a practical solution to get people back on the road as quickly as possible.
The Hungarian Competition Authority (referred to in the judgment as GVH; HCA hereafter), however, considered these agreements to restrict competition by object on the market for car insurance contracts and the market for car repair services within the meaning of the Hungarian equivalent of Article 101 TFEU. As it happens, this provision closely mimics Article 101 TFEU, in line with the trend towards a spontaneous harmonisation of competition law throughout the EU (see the preamble and explanatory memorandum to the Hungarian competition act referred to in paragraphs 3 and 5 of the judgement). Because the HCA considered that there was no effect on trade, Article 101 TFEU was not applied by the national competition authority. The prohibition decision issued by the HCA was challenged by Allianz, in particular on the grounds that the agreement did not restrict competition by object. the decision by the HCA was partially reversed and then restored upon appeal, against which Allianz appealed to the Hungarian Supreme Court. The Supreme Court then made a preliminary reference essentially asking whether the agreements at hand fall within the object category.
In an interesting case decided today the CJEU held that a number of Slovak banks could not exclude a competitor even if that competitor was allegedly operating illegally on the Slovak market. It’s a notable case, as it tells us something about how the CJEU assesses a situation where competitors are not playing by the rules of the game.
Is EU competition law ‘special’? Should it be insulated from other EU policies? Should we Europeans follow the neoliberal teachings of Chicago scholars like Bork who claim that American antitrust policy ‘cannot properly be guided any goal other than consumer welfare’ and that ‘distribution of (…) wealth or the accomplishment of noneconomic goals are the proper subjects of other laws’? These questions are particularly relevant to EU environmental policy, where we have seen an increase in reliance on market based instruments (the emissions trading scheme for instance). The central argument of Suzanne Kingston’s new book ‘Greening EU Competition Law and Policy’ is that EU competition law is not special and that it should take greater account of EU environmental policy and goals.
On November 6th, the Grand Chamber of the CJEU issued a ruling in Case C-199/11 (Europese Gemeenschap v Otis NV and Others). The case concerns the principle of effective judicial protection (laid down in Article 47 of EUCFR) and the private enforcement of competition law. The Brussels Commercial Court referred the issue for a preliminary ruling in the course of a dispute between Otis and the other businesses and the EU, represented by the Commission.
The main controversy in the case was whether the principle of effective judicial protection was adequately safeguarded. The Commission, in this case, played a double role: first as the public enforcer of the EU competition law, and second as the victim of the anticompetitive practices. This meant, in a nutshell, that the Commission was asking for damages in a private suit on the basis of its own previous findings of anticompetitive behavior.
The General Court has finally handed down the judgment in the Greek Lignite (brown coal) case. This is a long-running case resulting from a complaint (dating from 2003) concerning the exploitation of lignite in Greece. As it happens, lignite is the most abundant fuel in Greece, and access to lignite is essential for the production of (relatively) cheap electricity. Greek lignite reserves amount to approximately 4 million tonnes of which about half can be exploited by DEI, the Greek Public Power Company. No such rights have been assigned for the remaining 50% of the lignite reserves, and DEI operates all power plants in Greece that use lignite. The Commission found the exclusive rights for lignite contrary to Article 106(1) in connection with 102 TFEU in what is a broad and teleological reading of the Court’s jurisprudence in this field. The General Court, however, has a rather different reading of this case law, resulting in annulment of the Commission Decision.
Because Greece has liberalised its electricity market, all companies intending to supply electricity to the Greek wholesale market must hand in daily price-quantity offers. By examining these offers along with the forecast demand for electricity, the network operator determines the amount of electricity needed to meet demand. This electricity is then fed into the grid. Renewable electricity receives first priority, following which conventional electricity producers get to feed their electricity into the grid, with the cheapest offer coming first and the rest following in the order of their ascending prices. The price-quantity offer quoted by the last production unit to feed into the grid will determine the market price. In these circumstances, having access to lignite as a fuel for electricity production is required for the production of cheap electricity, which in turn is required to ensure that this electricity will actually be sold on the market.
In its Judgment of 13 September 2012 in case T‑119/09 Protégé International Ltd v European Commission and Pernod Ricard SA, the General Court has backed the Commission’s decision not to pursue a complaint filed by Protégé International Ltd regarding a potential abuse of a dominant position by Pernod Ricard SA in the whisky market, in view of the absence of a sufficient “Community interest” [Decision C (2009) 505 (Case COMP/39414 – International Protégé / Pernod Ricard)].
The GC basically restates the prexisting case law of the CJEU on the Commission’s discretion to pursue or drop cases in view of their “Community interest” and extends it to the post-Regulation 1/2003 enforcement scenario (as expressly mentioned in Recital 18 of that Regulation). Most importantly, the GC expressly shows certain judicial deference towards the Commission’s assessment of the existence (or lack of) “Community interest”, which review will be limited to check that the Commission’s assessment guaranteees that the facts have been accurately stated and that there has been no manifest error or appraisal or misuse of power (on such “marginal review”, see the key contribution by M Jaeger, “Standard of review in Competition Cases Involving Complex Economic Assessments: Towards the Margnialisation of the Marginal Review?” (2011) J of Eur Comp Law & Practice 2(4):295-314].
Parts of the territory of some EU-Member States are situated overseas. Does EU-Competition law apply there? Some recent French precedents answer this question. According to Art. 52 TEU the EU-treaties apply to the 27 Member States mentioned therefore. EU-law applies, in principle, to the whole territory of those Member States including the overseas parts of their territory. In Art. 355 TFEU, the territorial scope of the EU-treaties is further specified. There are more or less three ‘categories’ or ‘degrees’ of territorial scope with regard to the overseas (for a more extensive and general description see Kochenov’s article).
- First, the Outermost Regions, where EU-law applies, with the possibility for temporary exceptions to the acquis of the EU; although the term ‘temporary’ is perhaps not the right word, since the derogations are constantly extended. The Outermost Regions consist of the French départements d’outre-mer, the Spanish Canary Islands and the Portuguese Azores and Madeira.
- Secondly, the Overseas Countries and Territories (OCT) , where EU-law applies, with the possibility for more permanent exceptions to the acquis of the Union. On the OCTs a special regime of EU-law is applicable: the association regime (of Part IV of the TFEU). The OCTs are listed in Annex II to the TFEU and consist of Danish Greenland, the French territoires and collectivités d’outre-mer, the Caribbean part of the Netherlands and most of 12 British Overseas Territories.
- And thirdly, custom made regimes for specific parts of some Member States, such as the Channel Islands and Åland Islands. In addition some custom made regimes can be found in the accessions treaties, such as Gibraltar and the Spanish territories Ceuta and Mellila, which are situated on the African continent.
In a grand chamber judgment in case C‑209/10, Post Danmark, the European Court of Justice (ECJ) handed down a preliminary ruling on the interpretation of abuse of a dominant position (Art. 102 TFEU). The case was referred to the ECJ by a Danish judge in a dispute between Post Danmark and Konkurrencerådet, the Danish competition authority.
I have three remarks concerning this judgment:
- first, it seems to me that the ECJ does not embrace the average incremental costs instead of average variable costs as the relevant economic parameter for analysing a per se abuse;
- secondly, the ECJ requires the Danish judge to apply the as-efficient-competitor-test and seems to take it further than a mere price/cost-test to decide on the question whether the pricing practices of Post Danmark were anti-competitive in effect; he must take into account all relevant circumstances;
- lastly, when the Danish judge takes into account all those circumstances, it seems that the ECJ prescribes an ex nunc appreciation, which might be a restriction of procedural autonomy.
In the Danish market for the distribution of unaddressed mail (direct mail of brochures, guides, newspapers, etc.) the two largest players are Post Danmark and Forbruger-Kontakt (FK). This market is fully liberalised. Next to that, Post Danmark is the universal postal service provider. It uses its distribution network for both the universal postal service and the distribution of unaddressed mail. In 2003, in the Danish market for the distribution of unaddressed mail Post Danmark had a market share of 44 % which increased to 55 % in 2004. According to the Danish competition authority Post Danmark held a dominant position in that market because of such high market shares and because it could maintain its distribution network covering the whole country because of it being the universal postal service provider, regardless of its activities on the market for unaddressed mail.
What happens to the allocation of respective competences of the Commission and national competition authorities in if an international cartel is implemented both in the EU and the Czech Republic before accession to the EU but action is taken after accession? A number of undertakings had formed a worldwide cartel on the market for gas insulated switchgear and those companies were fined by the Commission and the Czech competition authority. The Commission decision concerned the implementation of the cartel within the EU, while the Czech competition authority concerned the implementation of the cartel within the Czech Republic before accession. However, the decisions were dated after the date of accession of the Czech Republic and after the entry into force of Regulation 1/2003. Does this preclude the Czech competition authority from fining the undertakings in question for the implementation of the cartel in Czech territory? The Court does not think so. The Court first holds that
the provisions of Article 81 EC and Article 3(1) of Regulation No 1/2003 must be interpreted as meaning that, in the context of a proceeding initiated after 1 May 2004, they do not apply to a cartel which produced effects, in the territory of a Member State with acceded to the Union on 1 May 2004, during periods prior to that date.