International Antitrust Highlights
-
On June 22, the UK's Office of Fair Trading ("OFT") confirmed that it is conducting both a criminal and civil investigation into alleged price coordination by airlines in relation to fuel surcharges for long haul passenger flights to and from the UK. The OFT's civil investigation is being conducted under the Competition Act 1998, and Article 81 of the EC Treaty, and the criminal investigation under the Enterprise Act 2002. The OFT' emphasized that its investigation is at an early stage, and no assumption should be made that there has been an infringement of competition law.
- On May 31, the European Commission held 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 allegedly participating in a cartel on the market for acrylic glass. Four of these companies (Total/Elf Aquitaine/Arkema, Lucite, ICI and Quinn Barlo) were fined a total of €344,562,500 (approx. US$433 million). Arkema and ICI had their fines increased by 50% as they were repeat cartel offenders. Degussa, also a repeat offender, would have received an increased fine but 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 between 1997 and 2002. Acrylic glass is widely used, inter alia, in cars, DVDs, lenses, household appliances, electronics, baths and showers.
- On May 29, the Italian antitrust authority imposed fines totaling €3.7 million (approx. US$4.7 million) on nine suppliers of antiseptics and disinfectants to the public health system for alleged price-fixing conduct. The Italian antitrust authority alleged that it had obtained copies of printouts that were produced and discussed in meetings among the nine companies "with the aim of market sharing based on generally maintaining the clientele served in the past, as well as dividing up new customers in proportion to market presence." It also alleged that: "[t]he companies' market monitoring activities included preparing charts of target prices for use in tendering." And since, "this was an across-the-board market-sharing and price-fixing arrangement, the Authority judged it a very serious violation."
- On May 30, the Australian Competition and Consumer Commission ("ACCC") accepted court-enforceable undertakings from the Northern Rivers Gestalt Institute Incorporated over an alleged attempt to increase the prices charged by Gestalt institutes across Australia for counseling training services. The ACCC alleged that in December 2005 a director of the Northern Rivers Gestalt Institute sent an email to the directors of eight other Gestalt institutes seeking their agreement to collectively raise fees in contravention of section 45 of the Trade Practices Act 1974, which prohibits price fixing. The Northern Rivers Gestalt Institute co-operated with the ACCC's investigation, admitted the alleged conduct, and offered court-enforceable undertakings to address the ACCC's concerns. ACCC Chairman, Mr. Graeme Samuel, said, "These undertakings demonstrate that all businesses, whether big or small, need to be aware of their obligations under the Act. Businesses need to be aware that, if they seek to fix prices with their competitors, the ACCC will take appropriate action."
- On May 31, South Africa's Competition Commission confirmed that German airline, Lufthansa, agreed to pay an administrative penalty of R8.5 million (US$ 1.2 million), and to ensure that its business complies with South Africa's Competition Act. The Commission alleged that Lufthansa and South African Airlines had allegedly fixed the selling price of air tickets on their flights between Cape Town/Johannesburg and Frankfurt between 1999 and 2002, "through meetings and communications where price changes and the harmonization of fares were discussed."
- On June 20, the European Commissioner for Competition, Neelie Kroes, met Ma Xiuhong, the Chinese Vice-Minister of Commerce in charge of competition, in Brussels, to discuss the draft Anti-Monopoly Law which was recently endorsed by the Chinese State Council. After several years of work, the Chinese State Council approved a draft Anti Monopoly Law on June 7, 2006. The draft law will be submitted to the National People's Congress for discussion, and possible adoption, by the end of 2006 or early 2007. The European Commission has met with representatives of China on several occasions in recent years to discuss how competition policy could be implemented in China, and has closely followed and encouraged the drafting of this law. Ms. Kroes said: “I congratulate the Chinese Government on the recent endorsement of the draft Anti-Monopoly Law. This is an important step towards an effective competition regime, and the work of the Chinese Government is impressive. The Chinese economy will benefit from the implementation of a sound competition policy, as will any company seeking to do business in China.”
- On June 19, an New Zealand-based parallel importer was fined $3,000 in the Auckland District Court for advertising digital cameras at cheaper prices than they were available in store. Etop Limited, and its director Chen Hao Tu (also known as Tony Tu), were found guilty and fined for breaching New Zealand's Fair Trading Act by advertising certain products at one price but selling them for anything up to NZ$60, or 9%, more in-store. The products were advertised in the New Zealand Herald – Weekend Edition, Trade & Exchange, and on Etop’s own website. Customers would only have found out the true cost of the cameras when they came to pay for them. Deborah Battell, Director Fair Trading, said, "The Commission considers Etop’s conduct to be a serious breach of the Fair Trading Act because parallel importers compete purely on the basis of price. Advertising goods at even lower prices and then charging higher prices in-store is misleading and anti-competitive, removing the potential for other businesses to properly compete on price."
- On June 19, the European Commission decided to open a detailed investigation under the EU Merger Regulation into the planned merger between Gaz de France and the Suez group of France. The Commission’s initial market investigation has found that the proposed transaction would raise significant competition concerns at all levels of the gas and electricity supply chain in Belgium, and at all levels of the gas chain in France, given the horizontal overlaps and the vertical relationships between the two companies’ activities. Neelie Kroes stated: "The energy sector is essential for European competitiveness. It is, therefore, crucial that the Commission carefully analyses the competitive impact of this merger, to ensure that it does not crate more barriers to a fully functioning Single Market for energy.”
- On June 14, Coca Cola HBC was fined € 8.6 million (US$11 million) by the Greek Competition Commission for allegedly not rectifying breaches of local competition law. The Commission alleged that the bottler did not change its commercial practices as it had been previously ordered to do by the Commission. Specifically, the Commission stated that Coca Cola HBC had allegedly failed to end exclusivity arrangements for the use of its refrigeration units at final points of sale, thereby allowing retailers to install rival companies' refrigeration units. HBC had also allegedly failed to stop discrimination against wholesalers and retailers that did not deal exclusively with the bottler.
- On June 14, the Australian Competition and Consumer Commission ("ACCC") issued the Merger Review Process Guidelines 2006 which refine and expand upon the processes followed by the ACCC when considering mergers and acquisitions. The key changes include expansion of the types of mergers (including confidential proposals) for which processes are detailed in the guideline, clarification of the processes applied to different types of mergers that the ACCC will review, and clearer indicative timelines for informal reviews. ACCC Chairman, Mr. Graeme Samuel, said: "The key to an effective merger review regime in Australia is the establishment of processes that recognize both the importance of speedy and efficient clearances of the many mergers that do not breach the statutory prohibition on anti-competitive mergers, and the timely and effective resolution or challenge of those that do."
- On June 2, the European Commission cleared the proposed acquisition of the company Arcelor S.A. (Luxembourg) by the Mittal Steel Company N.V. (The Netherlands) under the EU Merger Regulation, subject to certain conditions. The Commission's investigation revealed that the two companies’ activities are largely complementary, both geographically, and from the product range viewpoint. Competition Commissioner Kroes commented, "My job in all mergers notified to the Commission is to make sure that they would not harm competition in the industry, lead to price increases or result in less choice for business customers and final consumers. I am completely satisfied that, through the substantial remedies offered by Mittal, these requirements would be met."
Authored by:
Neil Ray
415-774-3269
nray@sheppardmullin.com
In communicating with us through this blog, you should not provide any confidential information to us concerning any potential or actual legal matter you may have. Before providing any such information to us, you must obtain approval to do so from one of our lawyers.
By choosing to communicate with us without such prior approval, you understand and agree that Sheppard Mullin will have no duty to keep confidential any information you provide.