• On April 22, the European Commission launched an investigation into the planned $24 billion acquisition by Johnson & Johnson of Guidant. The Commission’s initial market investigation found that the proposed acquisition may create significant competition problems given the two companies’ horizontal overlaps in markets for medical devices for the treatment of coronary and peripheral artery diseases and for cardiac surgery. The decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days to take a final decision on whether the concentration would significantly impede effective competition within the European Single Market. The Commission is actively cooperating with the U.S. Federal Trade Commission, which is also investigating the merger.
  • On April 21, Norwegian press reported that Microsoft may be investigated for the special deals it concludes with local authorities for software installation in the country’s schools. The SV Party has asked for an examination of Microsoft’s agreements complaining that it is difficult for rival software companies to gain a foothold.
  • On April 21, it was reported that the Irish Competition Authority had visited the office of the Irish Medical Organization (“IMO”) as part of an investigation into alleged price-fixing on fees for insurance medicals. The IMO stated that it is cooperating with the investigation.
  • On April 20, the Japanese Diet passed a bill to amend Japan’s Anti Monopoly Act which significantly expand the antitrust investigation and enforcement authority of Japan’s Fair Trade Commission (“JFTC”) by effecting significant changes in Japanese antitrust law. The amendments increase by as much as 100% the applicable administrative fines for certain types of unreasonable restraints of trade, such as price fixing, bid rigging or conspiracy to limit supply. The amendments introduce a “leniency” or “amnesty” program similar to the programs in place in the US and EU. For example, the proposed Japanese program exempts from administrative fines the first member of a cartel who voluntarily, independently reports its violation, and provides relevant information to the JFTC. The second and the third reporting companies will be exempt from 50% and 30%, respectively, of the relevant fines. The amendments also abolish the JFTC’s current hearing process that permits companies to challenge, in an adversarial hearing before a JFTC examiner, allegations of unlawful conduct. The amendments permit the JFTC to issue cease-and-desist orders to alleged offenders after a much simpler hearing process, and affected companies will be permitted to challenge the allegations only after issuance of the cease-and-desist order. Finally, the amendments expand significantly the JFTC’s criminal investigative powers by authorizing the JFTC to seize documents, with a court-issued warrant, directly from corporate offices or even from the homes of company executives, just as the police do in criminal investigations.
  • On April 18, the European Commission launched an online survey on why there is little cross-border consolidation in the financial sector. The survey will be open until June 15, 2005. The responses received will serve as an input for a report that the Commission will submit to the Ministers of the ECOFIN Council in September. Empirical data shows a low level of cross-border consolidation in the European financial sector. The survey seeks to establish what are the underlying factors and obstacles inhibiting financial companies from exploiting the full range of cross-border opportunities available in the European internal market.
  • On April 13, the French cabinet adopted a bill which will revise relations between supermarket groups and suppliers. The Bill is scheduled to be fast-tracked through the French Parliament in order to take effect at the start of 2006. The legislation aims to solve the problem of back margins or off-invoice rebates which are granted in exchange for promotional services. The legislation will cap back margins at 20% of invoiced net producer prices in an attempt to reduce supermarket prices by 5%. The burden of proof that promotional services have been provided will be reversed from the supplier to the retailer. The existing legislation, known as the Galland law, has been criticized for inflating retail prices, pressurizing suppliers, and allowing high levels of back margins.
  • On April 13, the European Court of First Instance (CFI) held in Verin für Konsumeteninformation v. Commission, that when the European Commission receives a request to access information held on its administrative files, it is required to carry out a concrete, individual assessment of the content of the documents referred to in that request in order to determine whether any exceptions to the information request are applicable, or whether, at least, partial access can be granted. In this case, the Commission refused a request from a German consumer group to access its file relating to a cartel decision against eight Austrian banks to assist the consumer group in its civil damages action in the Austrian courts. The CFI held that only in exceptional cases, and only where the administrative burden entailed by a concrete, individual examination of the documents proves to be particularly heavy, that derogation from the obligation to examine the documents may be permissible. Without ruling definitively on whether the examination required of the Commission in this case was unreasonable, the CFI held that the Commission had not exhaustively considered the various options available to offer the consumer group, at least in respect of part of its request, access to the requested documents.
  • On April 11, it was reported that the Ukraine’s Anti-Monopoly Committee (“AMC”) had started an investigation into the potential collusion between various oil companies in the country’s wholesale diesel and petrol markets. The AMC has requested information from various oil companies which demonstrates that effective competitions exists on these two markets, and that a situation of collective dominance does not exist as between the companies. If the AMC holds that the companies colluded to raise process, they can face a fine of up to 10% of their 2004 earnings.
  • On April 7, the Australian Competition and Consumer Commission (“ACCC”) announced that it had succeeded in imposing penalties totaling AUS $95,000 on RM Hall Pty Ltd and its directors, Peter Hall and John Hall, for engaging in an alleged resale price maintenance scheme in relation to Florence Sculture D’Arte Armani figurines supplied by the company to a number of dealers throughout Australia. The penalties were imposed by Justice Mansfield of the Federal Court, Adelaide, following ACCC legal action. In 2003, RM Hall allegedly entered into approximately 120 dealership agreements for the supply of the Armani figurines. Fourteen dealers were issued with catalogues which, together with the dealership agreements, contained statements of price such that the dealers were alleged to have understood that they could not sell, or advertise, the figurines below that price.
  • On April 7, the UK’s OFT cleared the way for a new afternoon or evening newspaper to be distributed to London commuters. The OFT investigated the exclusive rights of Associated Newspapers Ltd (“ANL”), publishers of the London free morning newspaper the ‘Metro’ and paid-for afternoon/evening newspaper the ‘Evening Standard’, to distribute the ‘Metro’ via London Underground, Network Rail and various train operating companies’ (TOC) stations in and around London. The OFT had concerns that, by excluding rivals’ newspapers from stations 24 hours a day, despite the fact that the ‘Metro’ is only distributed in the morning, the exclusivity granted by these agreements went beyond what could be objectively justified. ANL offered to give up its rights to the afternoon/evening distribution slots, allowing London Underground, Network Rail and the relevant TOCs to re-tender those rights. ANL has also agreed that it will allow third party access to its distribution racks in stations, and make reasonable room for third party branding.
  • On April 6, the South Korean Fair Trade Commission, fined a group of construction firm about $71 million for allegedly price fixing in the heavy excavation equipment and wheel loader markets during 2001 and 2004. The FTC had initiated the investigation after one of the companies involved in the alleged cartel volunteered information to the antitrust authority under its leniency program.
  • On April 5, the Greek Competition Commission fined a Greek supermarkets’ association, SESME, and seven of its members for alleged adhering to price-fixing policies during 2001. SESME is expected to appeal the fine.
  • On April 5, the UK’s Office of Fair Trading (“OFT”) referred the $1.3 billion classified directory advertising services market to the UK Competition Commission for an antitrust investigation. The OFT is concerned that competition in the market is not operating effectively, and the referral follows a seven month OFT study of the market which revealed that Yellow Pages and Thomson Local directories account for over 90% of the supply in the UK, and that there are high barriers to entry due to strong branding and network effects.
  • On April 4, the South Korean Fair Trade Commission (“SKFTC”) reformed its cartel leniency program. “The measure is expected to destabilize existing cartels, and raise the level of fear of getting caught so that companies will give up trying to form illicit alliances,” said Hur Seon, chief of the Competition Bureau at the SKFTC. The first member of an alleged cartel to voluntarily approach the SKFTC, and provide valuable information regarding the alleged cartel’s behavior will not be fined. The second company to provide information will be eligible for a 30% discount on fines levied, while those that come forward afterwards will be eligible for up to a 15% discount if they make a positive contribution to the SKFTC’s investigation. The reform addresses criticism of the previous rules which permitted cartels to approach the commission as a group, admit to any illegal activities, and receive collective punishment, with any fines levied on the cartel as a whole. The FTC has also introduced an Amnesty Plus system that will further act as a inducement to discourage cartel activities. Mr. Seon stated that, “The Amnesty Plus gives companies implicated in cartel activity and facing stiff fines a means to reduce fines or receive a full pardon if it provides detailed information on past price riggings.” The amended South Korean cartel policy conforms with similar leniency programs in the United States, European Union and Canada.
  • On April 4, the UK’s Competition Appeals Tribunal (“CAT”) published its decision which ordered the UK’s Office of Fair Trading (“OFT”) to reconsider its decision not to refer the proposed merger between Phoenix Healthcare Distribution and East Anglia Pharmaceuticals. The merged entity would be the second largest full-line wholesale supplier of prescription-only medicines in East Anglia, reducing the number of competitors from four to three. The CAT concluded although the OFT had conducted a full inquiry, it had made findings of primary fact about the logistics and economics of a third party’s complaint’s (“UniChem”) distribution system, its past pattern of success in East Anglia and its service levels, based on information supplied largely by the merging parties, without checking or discussing the facts with UniChem. UniChem disputed many of the facts relied on by the OFT and as a result, the CAT held that material matters in the OFT decision were insufficiently supported by the evidence. On this basis, the CAT stated that it had no alternative but to quash the decision, and remit the matter to the OFT to reconsider its decision.