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• On May 18, the European Court of Justice ("ECJ") rejected Archer Daniels Midland's ("ADM") appeal in respect of the Amino Acids cartel. The ECJ rejected ADM’s claim that in calculating the fine, the European Commission should have taken account of penalties paid by ADM in other jurisdictions, in particular, the United States and Canada, in respect of the Amino Acids cartel. The ECJ confirmed that, when setting the level of fines, the European Commission does not have to take into account fines paid by a company in other jurisdictions. The ECJ also confirmed that the European Commission may decide at any time to generally raise the level of fines. The European Commission is thus free to exceed the level of fines previously imposed in other cases, and also to change the methodology of calculating the fines. In this context, European Competition Commissioner, Neelie Kroes, has previously announced that she is reviewing the terms of the European Commission’s Notice on Fines.

• On May 31, the European Commission imposed fines of €344.5 million (US$440m) on producers of acrylic glass for price fixing. The European Commission alleged that Arkema (formerly Atofina), Degussa, ICI, Lucite and Quinn Barlo (formerly Barlo) violated the EC Treaty rules’ ban on restrictive business practices (Article 81) by participating in a cartel on the market for acrylic glass. Degussa received full immunity from fines under the Commission’s leniency regime for being first to provide information about the cartel. The Commission alleged that the five companies agreed, fixed and monitored (target) prices for acrylic glass and exchanged commercially important and confidential information in the European Economic Area ("EEA") between 1997 and 2002. Acrylic glass is widely used, inter alia, in cars, DVDs, lenses, household appliances, electronics, baths and showers. Competition Commissioner, Neelie Kroes, said “Cartels are a scourge. I will ensure that cartels will continue to be tracked down, and punished."

• On May 16, European Commission officials confirmed that its investigators had carried out unannounced inspections of 20 energy companies in the EU including companies located in Germany, Italy, France, Belgium and Austria. The Commission suspects that the firms may have violated EC Treaty antitrust rules that prohibit restrictive business practices and/or abuse of a dominant position (Articles 81 and 82 respectively). The Commission has previously announced that the European energy markets requires further liberalization, and certain market characteristics and practices may be subject to antitrust investigation. According to the Financial Times, some analysts view the Commission's investigation as marking an increased emphasis on the Commission's intention to fully liberalize Europe's energy markets, and predicts that energy companies will implement new business practices to preempt any Commission enforcement action.

• On May 23, the South Korean Fair Trade Commission ("KFTC") rejected Microsoft's formal objection to a fine of $34 million, and its request that the KFTC reconsider its decision last December which mandates the unbundling of its media player and messaging service from its Window software. From August 24, Microsoft will be required to sell two versions of its Windows operating system: one with Media Player and instant messaging included; and, one without the programs but that has links to websites that sell similar software. Microsoft said it would continue the appeals process, and issued a press release stating: "Microsoft firmly believes it has complied with Korean competition laws, and has conducted business for the benefit of consumers in Korea."

• On May 20, the Italian Competition Authority imposed fines of €56.9m (US$73m) on eight industrial gas companies. The Authority alleged that the companies implemented a market-sharing agreement between 1991 and 2004 "by way of meetings and contacts during which a balance was maintained in terms of the suppliers' respective client bases: the value of any customers taken away would be compensated by the offer of other customers of equivalent value. The exchange of information also extended to the various companies' pricing policies." The companies fined represent 90% of the Italian market for the production and sale of numerous gases used in the food industry, in electronics, in metallurgy, in mechanical manufacturing and in healthcare (both in hospitals and in home care), including oxygen, nitrogen, carbon dioxide, hydrogen and specialty gases.

• On May 19, the UK's OFT agreed a resolution of its investigation into an agreement between fifty independent schools to exchange information about intended fee levels. Under the terms of the settlement, the schools have admitted that their participation in the exchange of sensitive information through the ‘Sevenoaks Survey’ involved a distortion of competition, and infringed competition law. Each school will pay a nominal penalty of £10,000 which will be collected by the OFT on behalf of the UK Treasury. The schools do not, however, make any admission that the agreement had any effect upon fees. The schools have also agreed to make an ex-gratia payment totaling £3 million into an educational, charitable trust to benefit the pupils who attended the schools between 2001/02 and 2003/04. Vincent Smith, Director of Competition Enforcement at the OFT, said: "This is a fair outcome in a case where the parties have accepted there has been an infringement of competition law, but are also charitable, not-for-profit organizations."

• On May 24, the French Conseil de la Concurrence published undertakings offered by a number of companies in the hi-fi and home cinema industry. Several companies, including Bose, JM Lab, and Triangle have proposed changes to their distribution contracts, which are under scrutiny because of several restrictions on retailers, for example, with respect to internet sales. The undertakings were agreed with the French antitrust agency who became involved after a complaint was filed with the French Ministry of the Economy in 2001.

• On May 10, the European Commission sent on a Statement of Objections to Distrigas, part of the Suez Group, alleging that Distrigas is preventing new suppliers from entering the Belgian gas market, in violation of EC Treaty rules on abuse of a dominant market position (Article 82). The Statement of Objections alleges that a significant proportion of the Belgian gas market is unavailable for competition for long periods because Distrigas, the dominant gas supplier in Belgium, concluded long term gas supply contracts with many of its industrial customers. This practice allegedly distorts competition because a large proportion of other gas sales in Belgium are intra-group sales within the Suez group, and are not accessible to potential new market entrants. Distrigas has four weeks to reply in writing to the Statement of Objections.

• On May 10, the Bundeskartellamt, Germany's Cartel Office, imposed a €250,00 (US$320,000) fine against the German Fuchs group. The Bundeskartellamt alleged that Fuchs, Europe's largest spice drove out smaller rivals from the market by engaging in practices that included contributing to marketing costs, and placing free products with retailers in exchange for exclusive dealing. This practice allegedly continued despite an earlier ruling by the Bundeskartellamt in 2002. On May 11, Spain's Tribunal de Defensa de la Competencia ("TDC") imposed a €13m (US$17m) fine on the Spanish subsidiaries of five major film distribution companies who hold a combined market share totaling 70% of the Spanish market. The TDC alleged that Walt Disney, Sony Pictures, Hispano Foxfilm, United International, and Warner Sogefilms, colluded over their commercial policies with film exhibitors, and engaged in market partitioning in an effort to weaken competition.

• On May 8, Korea's Supreme Court ruled that Korea's Fair Trade Commission can impose sanctions on companies that violate antitrust laws, even if they are incorporated in other countries. This followed the Supreme Court's ruling that upheld a US$4.5m fine against Showa Denko KK for alleged price fixing in the graphite electrode market. The Supreme Court had originally imposed US$8.5 million worth of fines against six graphite electrode producers for fixing prices between 1992 and 1998. None of the producers were domestic companies. The action lodged against the foreign companies was the first extra-territorial application of Korean antitrust law.

Authored by:

Neil Ray
415-774-3269
nray@sheppardmullin.com