International Highlights
On May 22, the European Commission (EC) approved the proposed acquisition of the music publishing business of Bertelsmann Music Group (BMG) of Germany by the US-based Universal. The EC held that the proposed merger, as initially notified, raised serious doubts as regards adverse effects on competition in the market for music publishing rights for online applications. However, following an in-depth investigation, the EC held that its concerns would be removed by the remedies package proposed by the parties concerning the divestiture of a number of publishing catalogues. In the light of these commitments, the EC concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. EC Competition Commissioner, Neelie Kroes, stated, "Digital music has the potential to change the face of the music industry in Europe. I am satisfied that the significant remedies will keep these markets competitive and ensure that consumers will not be harmed by the merger".
On May 18, 2007, British Airways (BA) announced that it has made a £350 million (approx. US$700 million) provision in its accounts in relation to potential government fines which could result from antitrust investigations in the US, Europe, Australia, Canada, New Zealand and South Africa relating to cargo fuel surcharges, and in the USA and the UK in relation to long haul passenger fuel surcharges. The provision also relates to civil claims in the USA, Australia and Canada. BA stated that antitrust investigations by the US Department of Justice, the European Commission, and the UK Office of Fair Trading, into potential anticompetitive activity on long haul passenger and cargo fuel surcharges are continuing. However, it has completed the information gathering required by these authorities. BA confirmed that it has a "long-standing, clear and comprehensive competition compliance policy" but that it had "become apparent that there have been breaches of this policy in relation to discussions about these surcharges with competitors". BA also stated that the £350 million provision represented the company's best estimate of the amount that could be required to settle all known claims in relation to these matters.
On May 16, the New Zealand High Court granted New Zealand's Commerce Commission leave to serve proceedings against three European companies for an alleged global cartel that affected the New Zealand electricity industry. The alleged cartel supplied gas insulated switchgear, which is used to control the flow of electricity in substations. The allegations are against French companies Alstom Holdings SA and Schneider Electric Industries SA, and German company Siemens AG. In a Statement of Claim filed in the Auckland High Court on April 20, 2007, the Commission alleges that between 1988 and 2004 the companies gave effect and conspired to give effect in New Zealand to a global cartel for the supply of gas insulated switchgear. Earlier this year, the European Commission fined the defendants and other companies over €750 million for conduct allegedly based on the same cartel agreement. It is alleged that the defendants implemented the price-fixing and bid-rigging cartel through their wholly-owned subsidiaries in New Zealand. Because the defendants in this case are all based overseas, the Commission was required to seek and obtain leave from the Court to serve the proceedings abroad.
On May 30, the Italian antitrust agency fined eight chipboard manufacturers a total of €31 million for allegedly participating in a cartel which fixed prices, and engaged in other collusive market practices. The antitrust agency stated that the alleged conspirators controlled approximately 80% of the total market, and that the level of the fine was commensurate to the serious nature of the offence. A ninth company, was also alleged to be part of the conspiracy but received amnesty from the fines under the Italian antitrust agency's new leniency program.
On May 28, the Irish Competition Authority agreed settlement terms with the Irish Medical Organization (IMO) in relation to legal proceedings initiated in the Irish High Court by the Competition Authority. In February 2005, the Competition Authority began an investigation into allegations of price-fixing by the IMO in relation to the provision of Private Medical Attendant Reports (PMARs) to life assurance companies. It was further alleged that the IMO threatened to withdraw these services if the life assurance companies did not pay a proposed increase in fees. Arising from that investigation, the Competition Authority initiated proceedings in the High Court against the IMO on July 3, 2006, alleging that the IMO’s conduct had as its object the prevention, restriction or distortion of competition in the market for medical information provided to life insurance companies and/or had as its effect the prevention, restriction or distortion of competition in the market for medical information provided to life insurance companies and the downstream market for life insurance. The Settlement Agreement is in full and final settlement of all claims arising out of the alleged facts and matters pleaded in these proceedings but, does not constitute any admission of a breach of Section 4 of the Competition Act 2002 or of any of the alleged facts. Dr Stanley Wong, Member and Director of the Monopolies Division of the Competition Authority stated, “The terms and subject matter of this settlement have much wider reaching implications than simply affecting the cost of medical reports to insurance companies. It further demonstrates the continuing commitment of the [Irish] Competition Authority to take enforcement action where appropriate against co-ordination by individual undertakings or their representative bodies with respect to price and other dimensions of competition in any sector of the Irish economy”.
On June 1, competition authorities from around the world agreed to work on a new set of recommendations on key substantive merger issues, produce guidance in the area of unilateral conduct, and promote further co-operation in anti-cartel enforcement. The decisions were made at the International Competition Network’s (ICN) 6th Annual Conference which was held in Moscow, Russia. The ICN was created in October 2001 by 16 competition agencies from around the world. It now includes 100 member agencies from 88 jurisdictions. The ICN is a project-oriented and consensus-based organization, with members from developed and developing economies. Its Recommended Practices provide benchmarks which form a baseline for competition enforcement and advocacy practices worldwide. “I’m very proud of how much the ICN has accomplished over the past year, and the path ahead promises to be equally exciting,” said Sheridan Scott, Chairperson of the ICN Steering Group. “We will continue our efforts in several areas, and we are also adding a new emphasis on outreach and implementation of the excellent work the ICN generates”.
On May 28, the Mexican antitrust agency, the Comisión Federal de Competencia (CFC) fined Coca-Cola Export and its bottlers approximately $1 million for alleged anticompetitive behavior. The agency's investigation was prompted by a complaint from Pepsi Cola Mexico. The CFC held that Coca-Cola and its bottlers should no longer use exclusive contracts and discounts with distribution and retailing companies. The agency focused its concerns, in particular, on the supply of refrigerators branded with the Coca-Cola label to small retailers.
On May 31, the Australian Federal Court rejected the Australian Competition and Consumer (ACCC) Commission Complaint alleging that 15 petrol retailers engaged in price-fixing in the Geelong petrol market between 1999 and 2000 in contravention of the Trade Practices Act 1974. A number of respondents made admissions prior to the trial, and some did not contest the allegations. Mr. Graeme Samuel, ACCC Chairman, stated, "There was no dispute by many of the respondents in the Geelong proceedings that they communicated about petrol prices. What was disputed in court was whether those communications amounted to an 'arrangement or understanding' being reached between the parties as to how they would price their petrol. The decision highlights the difficulty of witnesses' exact recall to events of some years previously. Witnesses were required to give exact rendition of events, conversations and their effect on prices." Mr. Graeme added that while disappointed with the judgment, it would not deter the ACCC from investigating allegations of price collusion in the petrol and related markets.
On May 2, the French Conseil de la Concurrence issued a press release announcing that it had fined a number of companies for their alleged participation in illegal market sharing and information exchanges with respect to public building projects. Due to the serious nature of the alleged collusion, the fines were set at 5% of annual turnover for most of the companies involved which is the maximum allowed under French law. The fines by the Conseil de la Concurrence follow a decision of the Court of Paris of February 2007 which confirmed an earlier judgment by the Paris County Court in October 2006.
On May 8, the European Commission confirmed that it issued a Statement of Objections to a number of companies regarding their alleged role in a cartel for chloroprene rubber which is mainly used for the production of technical rubber parts, for adhesives in the shoe and furniture industries and in the production of diving equipment. The EC did not name the companies that are affected by the investigation.
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