• On January 26, the UK’s Competition Commission concluded that the acquisition by Emap plc (“Emap”) of ABU Building Data Limited (“ABU”) will result in a substantial lessening of competition with the merged entity controlling approximately 70% of the supply of construction project information and contract data. As a result, Emap will be required to sell the ABU business. This is the third merger that has been prohibited under the UK’s Enterprise Act 2002. In the other two cases, the mergers had not been completed. This is, therefore, the first time that the Competition Commission has sought to impose a divestment undertaking.
  • On January 26, Ms. Neelie Kroes, the European Competition Commissioner, outlined her intention to reform the EU’s state aid rules. She criticized the bail-out of large, failing national companies despite the possibility that a failure of government-injected funds in such cases may lead to large scale job losses. “State aid that is given to a lame duck [company] without initiative, without innovation, is only relief for the moment. But it is not a positive instrument for what we really want.” She wants Member States to spread such aid as widely as possible and ensure that risk capital, research and development subsidies are available to a wide range of companies. In particular, she is keen for governments to invest in smaller companies which demonstrate greater growth potential. She also wants to curb richer Member States from providing subsidies to their poorer regions. Her proposals will likely lead to conflict with the larger EU countries who have previously battled with the Commission to ensure the funding of nationally-valued companies, for example, France’s Alstom, UK’s British Energy, or Germany’s Landesbanken (state-owned banks). A formal paper outlining state aid reform is expected by the middle of the year.
  • On January 25, Philip Lowe, the Director General of the European Commission’s Competition Directorate, stated that the European Commission “may have a say” on any takeover of the London Stock Exchange (“LSE”). He announced that the Commission was in contact with the UK’s Office of Fair Trading and the German Bundeskartellamt, about the possibility of a takeover of the LSE. He said that there were issues to examine in the clearing and settlement area, and efficiencies in the trading area. There is concern that the Deutsche Brse bid centers on its ownership in Frankfurt of clearing and settlement as well as equities trading, a vertically integrated structure that is unpopular with the LSE.
  • On January 24, the Italian Government was criticized for making two politicized appointments to oversee the country’s antitrust authority. The antitrust authority, set up in 1990 to protect Italy’s free market economy against anticompetitive practices, is generally regarded as one of the best and least politicized regulatory agencies in a country where politics, business and state administration often blend together. High profile critics of the recent appointments include former European Competition Commissioner, Mario Monti, and Giuliano Amato, a two-time prime minister. Mr. Monti stated that neither of the two appointees, Mr. Guazzaloca and Mr. Pilati, would help further the evolution of the authority into a promoter of strong competition, an area where Italy is still thought to trail the rest of Europe.
  • On January 24, the European Commission cleared WPP’s $1.5 billion purchase of Grey Global. WPP is the world’s second largest advertising company and together with Grey Global provides marketing communications and media buying services. The Commission examined the deal closely in a number of geographic markets, but concluded that the deal would not significantly impede effective competition since there were enough rivals to ensure a competitive market, and media owners held countervailing power. The acquisition narrows the gap between WPP, a London-based firm, and Omnicom Group Inc., the world’s largest advertising company by sales.
  • On January 24, the Dutch competition authority, the Nederlandse Mededingingsautoriteit (“NMa”) imposed fines totaling €135 million on 344 Dutch construction companies for their roles in cartel forming and colluding to overbid on public contracts for roads and waterways. The fines are the result of the second part of an investigation into the country’s construction industry. The NMa said that the individual fines ranged from “several hundred thousand euros to many millions” depending on the size of the companies involved. The fine follows an earlier decision to fine 22 builders €100 million in December 2003.
  • On January 24, Microsoft stated that it would not appeal a ruling by the President of the European Court of First Instance ordering the company to immediately implement antitrust sanctions imposed by the European Commission last year. Microsoft had sought to suspend the sanctions until its main appeal against the European Commission decision had been heard. The company must now offer a version of Windows without Microsoft’s Media Player software, and to disclose software protocols that will allow rivals to design server software that functions smoothly with Windows-driven PCs. However, Microsoft will continue to pursue its main appeal against the merits of the Commission’s antitrust decision. A decision from the European Court of First Instance is not expected for two to three years.
  • On January 24, it was reported that Belgium’s Economic Minster, Mr. Marc Verwilghen, asked the country’s antitrust authority to investigate the pricing policies of TUI AG and Thomas Cook, Europe’s top tour operators, for evidence of price fixing. The request followed a report that noted that there had been an almost simultaneous price increase from fuel surcharges during May 2004.
  • On January 23, the Brazilian antitrust authority, the Conselho Administrativo de Desa Econica (“CADE”) announced a new set of criteria for the investigation of merger cases. Under the new procedures, CADE will only investigate those mergers between companies with an annual joint turnover higher than $400 million in the national market, and whose joint market share exceeds 20%. Previously, CADE investigated merger case involving companies with annual joint turnover higher than $400 million, though not necessarily limited to the national market. The changes are aimed at simplifying procedures of CADE.
  • On January 21, the Spanish Government published guidelines for the reform of the Spanish competition law system. The guidelines cover the introduction of new policies such as leniency programs and the formation of a new regulator, the Comisi Nacional de Defensa Competencia, which will be given a higher degree of independence than existing regulators, and have a greater range of responsibilities, including the taking-over of merger decisions. However, the Spanish Government proposes to maintain a veto over decisions affecting certain key areas. The consultative process on the guidelines closes at the end of March.
  • On January 19, Japan and Canada reached an agreement on a draft cooperation arrangement over anticompetitive activities. The agreement covers notification, cooperation, coordination, requests for enforcement activities, and consideration of important requests. When finally concluded, the agreement is expected to strengthen the enforcement of both countries’ antitrust laws for international anticompetitive activities, develop cooperation between the authorities in each country, and prevent conflict regarding extraterritorial execution of jurisdiction of both parties’ competition laws.
  • On January 19, Czech press reported that the Czech Anti-Monopoly Office (“UOHS”) imposed fines totaling the equivalent of $65 million, which included a large fine ($19 million) on six Czech financial companies. The UOHS has investigated both domestic and international companies and targeted large strategic sectors, including telecoms, financial services, heating, steelworks and cable television.
  • On January 19, the European Commission fined Akzo Nobel, Atofina (now known as Arkema) and Hoechst a total of € 216.91 million for operating a cartel in the market for Monochloroacetic Acid (“MCAA”) which is a chemical intermediate used in the manufacture of detergents, adhesives textile auxiliaries, and thickeners used in foods, pharmaceuticals and cosmetics. From at least 1984 to 1999, the producers of MCAA allocated volume quotas and customers, agreed to price increases, exchanged information on sales volumes and prices to monitor the cartel, and agreed on a compensation mechanism to ensure implementation of the cartel arrangements. The participants met regularly and engaged in other contracts to agree and implement the activities of the cartel. The Commission considered the infringement to be very serious due to its nature. In fixing the amount of the fine, the Commission took account of the value of the European market for the product, the duration of the infringement, the individual weight of the companies in the infringement, their overall size, and the fact that Atofina and Hoechst had previously been sanctioned for similar infringements. The Commission also had regard to the cooperation given under the Commission’s Leniency Notice by some of the companies involved. Clariant received full immunity for being the first to provide evidence of the existence of the cartel to the Commission. Atofina and Akzo were granted reductions of 40% and 25% respectively for the information they provided.
  • On January 15, the Financial Times reported that Ian Norris, the former chief executive of British Engineering Company, Morgan Crucible, had been arrested by London police to face extradition to the U.S. to face various charges of price-fixing. Morgan Crucible, a U.K. maker of carbon and ceramic components, and its North Carolina-based subsidiary, Morganite Inc., agreed in 2002 to pay $11 million to settle charges by the U.S. Department of Justice of conspiring to fix the price of carbon products between January 1990 and May 2000. However, a federal grand jury in Philadelphia indicted Mr. Norris, who resigned from Morgan Crucible in October 2002, and three other executives last year with obstructing the price-fixing investigation. The Financial Times said that the case indicated the DOJ’s willingness to use new treaty arrangements between the U.K. and U.S. to secure the extradition of suspects.