• On August 30, the Canadian Competition Bureau announced that the Federal Court of Canada imposed fines totaling $1.675 million for a conspiracy to fix prices of nucleotides in Canada. Nucleotides are used as flavor enhancers in soups, sauces, spices and other foods. Ajinomoto Co. Inc. pleaded guilty for its alleged participation in the conspiracy ,and was fined $1.5 million. CJ Corp. also pleaded guilty to the allegations, and was fined $175,000 for its participation. “These international price fixing cartels prey on Canadian businesses and consumers by manipulating prices and competition in our marketplace,” said Denyse MacKenzie, Deputy Commissioner of Competition. “The Competition Bureau will continue its aggressive prosecution of illegal cartel schemes.”

• On August 26, the revised ‘first-in’ Immunity Policy for Cartel Conduct was issued by the Australian Competition and Consumer Commission. The new policy replaces the 2003 leniency policy, and follows a review to ensure that the policy was operating effectively. The policy will confer full amnesty from prosecution and penalty to the first eligible cartel participant to report its involvement in a cartel and cooperate with the ACCC’s investigation and prosecution of other cartel members. The policy will not apply to cartel ringleaders or cartel members who have coerced others into taking part in the cartel. “The changes to the policy will enhance the ACCC’s ability to detect and prosecute cartels by making it easier for cartel participants to seek immunity.

  This, combined with the impending introduction of criminal sanctions for cartel conduct, including jail sentences for executives, and the enhanced Immunity Policy makes the decision about whether or not those involved in cartels should apply for immunity a “no-brainer” said ACCC Chairman, Mr Graeme Samuel.

• On August 25, the French press reported that the French Conseil de la Concurrence had found evidence of price fixing between three French cellular phone operators, France Telecom, Bouygues Telecom and SFR, who are alleged to have held regular meetings to discuss prices. The investigation leak caused the French Finance Minister, Thierry Breton, to deny that the investigation poses a conflict of interest for him because he was the former CEO of France Telecom. He stated that if evidence of price-fixing is found, it would have to be punished, and the investigation involved allegations predating his tenure as CEO of France Telecom. The Conseil de la Concurrence is expected to rule on the case by the end of the year.

• On August 25, the European Commission approved under the EU Merger Regulation the $24 billion acquisition by Johnson & Johnson (J&J) of its competitor Guidant, subject to various conditions. In particular the parties must divest either J&J or Guidant Endoscopic Vessel Harvesting products plus Guidant’s EEA endovascular business and J&J’s EEA Steerable Guidewires business. The Commission’s decision follows an in-depth investigation into the takeover. In light of the commitments given by J&J, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or a significant part of it.

• On August 23, it was reported that South Korea’s antitrust watchdog, the Fair Trade Commission, would reach a final decision in late September/early October on allegations that Microsoft Corp. unfairly used its dominant position to shut out rivals. The FTC has been investigating allegations raised by South Korean Internet portal, Daum Communications Corp., in September 2001, and more recently by RealNetworks, that Microsoft has breached South Korea’s antitrust laws by bundling its media player and instant messenger program with the its Windows operating system.

• On August 22, it was reported that the European Commission had launched a formal investigation into allegations of cartel behavior in the market for methacrylate monomers and derived products (which, are used in a wide range of products including contact lens, electronics and plastics) between some of the Europe’s largest chemical manufacturers. BASF AG, Degussa AG, Lucite International Ltd. and Imperial Chemicals Industries Plc are among the chemical companies believed to have been sent a statement of objections which alleges the exchange of sensitive market information, the forming a cartel to fix prices, allocating customers and passing on additional costs between 1995 and 2000.

  The UK’s Department of Trade and Industry (DTI) published on its website updated documents relating to the US case of Empagran SA v. Hoffman-LaRoche, which deals with the question of whether actions can be brought in the US for damages suffered outside the US. The UK government, and other foreign governments, filed amicus curiae briefs with the Supreme Court and before the Court of Appeals arguing that the US courts should not hear damages claims on facts such as those that arose in this case. The DTI has published on its website copies of its amicus curiae briefs and of both the Supreme Court and the Court of Appeals judgments. It notes that the UK Government will continue to monitor future developments in this case in the coming months.

• On August 18, the Australian Competition and Consumer Commission announced that it had instituted proceedings in Federal Court, Adelaide against Auspine Limited, Geo J Bone & Sons Pty Ltd and Jag Timber Products Pty Ltd for alleged price fixing or attempted price fixing of timber estimating services in South Australia in contravention of the Trade Practices Act 1974. The ACCC alleges that during 2002, Auspine, Bone, and Jag Timber made an arrangement, or alternatively arrived at an understanding, containing, inter alia, provisions that they would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost and, that they would procure or attempt to procure or induce other timber suppliers to make an arrangement, or to arrive at an understanding, containing a provision to the same effect, but including other timber suppliers.

• On August 18, the details of an action brought by Alenia Marconi Systems SpA before the European Court of First Instance (CFI) were published. Alenia Marconi is seeking damages from the European Commission for non-contractual liability as a result of its decision to reject a complaint against Eurocontrol alleging a breach of Article 82 of the EC Treaty in connection with Eurocontrol’s management of contracts for the supply of air-traffic management equipment, and in its provision of assistance to national administrations. Alenia Marconi is seeking damages under Article 288 EC Treaty for the losses that it claims to have suffered in the amount of €72.8 million. It claims that (i) in reaching its decision to reject the complaint, the Commission failed to exercise correctly the supervisory functions that it has in relation to monitoring the application of EC competition law; (ii) the Commission erred in failing to find that Article 82 was applicable to Eurocontrol; (iii) the Commission infringed its duties of supervision of the competition rules and its obligation to examine complaints impartially and diligently; and (iv) the Commission breached Alenia Marconi’s rights of defense and infringed the principle that administrative proceedings should be of a reasonable duration.

• On August 17, the Argentine Executive Power submitted to the National Congress a draft bill for the modification of the Argentine Competition Law 25.156. Under the proposed new scheme, the Secretary of Technical Co-ordination of the Ministry of Economy will have a veto right over certain economic concentrations that require prior approval. In addition, six years after the enactment of the Competition Law 25.156, the National Tribunal for the Defense of Competition is to be created and its members appointed.

• On August 17, it was reported that the Mexican Federal Competition Commission had fined Coca-Cola and six of its bottlers for instituting exclusive contracts with Mexican retailers that resulted in Coke abusing its dominant position, and preventing entry into the soft drinks market. The investigation and fine followed complaints from Pepsi, and a related complaint from Big Cola, a local soft dinks producer. In a written statement, Coca-Cola stated that it plans to use the appeal processes to present arguments that its business practices comply with Mexican competition laws, and to demonstrate that its commercial practices are fair, foster efficiency in the marketplace and promote a free, competitive marketplace.

• On August 2, the European Commission published a report on securities trading, clearing and settlement arrangements for bonds and equities in the 25 EU countries. On the basis of this report, the Commission will work closely with national competition and regulatory authorities to ensure that possible barriers to cross-border competition monitored and if necessary investigated. The arrangements for these services are complex, varying from country to country, and this is the first authoritative analysis of the markets from a competition standpoint at the national and pan-European levels. The report will help the Commission, national authorities and market participants to understand the competitive dynamics in the sector, and, in particular, the current barriers to cross-border transactions. This work will also complement the wider regulatory debate on the optimal organization of EU securities infrastructures.

Authored by:
Neil Ray
415-774-3269
nray@sheppardmullin.com