- On October 5, the German Antitrust Authorities imposed fines for the first time with respect to the provision of false information in connection with a merger notification. The Bundeskartellamt imposed fines of 250,000 against INVISTA Resins & Fibers GmbH, Hattersheim, a subsidiary of the American Koch group based in Kansas, for allegedly submitting incorrect information in the notification of a merger in 2004. The President of the Bundeskartellamt, Ulf Be stated: “The Bundeskartellamt cannot allow the clearance of a merger project in preliminary examination proceedings on the basis of deliberately false information”.
- On October 7, the European Commission cleared under the EU Merger Regulation the proposed acquisition of MCI by Verizon Communications. After carefully examining the transaction, the Commission concluded that the merger would not significantly impede effective competition in the European Economic Area or any substantial part of it. As Verizon is active as a local US ISP, the transaction did not give rise to direct horizontal concerns in the market for global internet connectivity. Its network would nevertheless add to the scope of MCI’s Internet network. The Commission’s assessment of the transaction showed that this overlap between the activities of Verizon and MCI was, however, very limited, and that the combined firm would continue to face several strong and effective competitors. The Commission also examined the vertical effects which would result from the combination of Verizon’s activities at the local loop level in a number of areas in the US with MCI’s upstream global telecommunication or international voice telephony activities. However, the Commission’s investigation showed that the effect of this integration would not materially affect competitors’ ability to provide such services.
- On October 13, the European Commission cleared under the EU Merger Regulation the proposed acquisition by Finnish winter sport hard goods manufacturer Amer Group of the Salomon business segment of Germany’s Adidas-Salomon AG. The Commission’s clearance is conditional upon substantial modifications of the current cooperation agreement between Salomon and the Austrian ski manufacturer Fischer GmbH. In light of these commitments, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it. Competition Commissioner, Neelie Kroes said: “Consolidation in the skiing equipment industry cannot be allowed to lead to higher prices, lower quality or less innovative products. However, the commitments given by Amer will ensure that the merged entity will face sufficient competition pressure in all winter sport equipment markets”.
- On October 13, the Portuguese Competition Authority fined five pharmaceutical companies a total of 16 million for alleged bid-rigging in 36 tenders to supply blood glucose monitoring reagents to 22 hospitals nationwide. The Authority’s investigations revealed that the alleged aim of the cooperation was also to influence the negotiating basis for the price agreed between the state and pharmaceutical companies for the sale of blood glucose monitoring reagents to the public. The investigation was launched following a complaint by one hospital that all five firms had quoted the same price for a particular drug.
- On October 17, the European Association of Euro-Pharmaceutical Companies (“EAEPC”) filed a complaint with the European Commission alleging that Pfizer is breaking EU competition law by implementing a strategy aimed at preventing the export of medicines from Spain to other EU countries. Hans Bh-Sensen, EAEPC President said: “Pfizer’s actions are in clear breach of EU competition rules. We are submitting to the Commission a simple open and shut case. This is a straight-forward case for the Commission to uphold competition in the pharmaceutical sector.” The EAEPC press release states that Pfizer’s actions amount to an alleged dual-pricing system and an export ban, and are part of a long-term Pfizer strategy to partition the EU market for medicines.
- On October 17, the Canadian Competition Bureau issued a series of Responses to Frequently Asked Questions about its Immunity Program. The Bureau’s Immunity Program, first introduced in 2000, encourages parties to admit their participation in offences under the Canadian Competition Act as early as possible. The updated Responses replace the 2003 version of the document, and address in greater detail the process involved in an immunity application as well as the timelines and guidelines for providing information to the Bureau. The Bureau is currently undertaking a broad review of its Immunity Program. It plans to initiate public consultations on a range of topics relevant to the Immunity Program, including: confidentiality, Revocation, leniency, the proffer practice treatment of instigators and restitution.
- On October 17, European Competition Commissioner, Neelie Kroes, stated that the European Commission is examining ways to encourage private-action antitrust lawsuits. A earlier study produced for the Commission showed that there are numerous obstacles which prevent potential plaintiffs from bringing an action for damages. The Commission is currently preparing a Green Paper which will set out a number of possible means to modify the current European framework for antitrust damages claims where that framework is considered to hamper litigation. The Green Paper will outline various alternatives and assess their potential impact on antitrust damages litigation.
- On October 19, the Italian antitrust authority held that a regulation which requires that the Regions fix a minimum of amount shelving space (normally 20%) in large stores for the exclusive sale of regional agricultural and food products is a breach of domestic and EU competition laws. According to the Italian antitrust authority, the introduction of stringent curbs on the freedom of large supermarket businesses in pursuing their purchasing policies will lead to a reduction in levels of competition between companies in the distribution sector. There will also be a loss of efficiency with serious repercussions on prices and the range of products available in stores. In the agricultural and food sectors, the amendment also risks being counterproductive since the assurance of a market opening will reduce incentives to realize economies of scale in production and distribution, cost reductions, quality control etc. The guaranteed sales channel for local producers is also seen as an unjustified discrimination against the producers of other Regions, whether Italian or foreign, who may have already invested in improving their efficiency and competitive ability, and who could find possible market openings for their products closed off by the law.
- On October 19, the Canadian Competition Bureau issued a draft Information Bulletin on Merger Remedies for public comment. The document states how the Bureau will seek, design and implement remedies to resolve competition concerns arising from a merger, It reflects the Bureaus approach to remedies, for example, with respect to requirements for short divestiture deadlines, no minimum price provisions and, when necessary, crown jewels. Interested parties are invited to provide comments and/or suggestions on the information bulletin by January 20, 2006.
- On October 20, the European Commission fined four Italian tobacco processors a total of 56 million for allegedly colluding over a period of more than six years on the prices paid to growers and other intermediaries and on the allocation of suppliers. Such collusion is outlawed by the EC Treaty’s ban on restrictive business practices (Article 81). The processors concerned were Deltafina, Dimon (which has now changed its name to Mindo), Transcatab and Romana Tabacchi. The Commission also imposed small fines on APTI and UNITAB (respectively the Italian trade associations of processors and tobacco growers) for engaging in collective price negotiations. Neelie Kroes commented: “Cartel culture must be eradicated from all sectors and agriculture is no exception. Last year the Commission fined 5 processors on the Spanish tobacco market. As Italy is the largest producer of raw tobacco in Europe, today’s decision is all the more significant”.
- On October 21, the European Commission published the results of a study which will help it analyze the likely effectiveness of merger remedies under the EU Merger Regulation. The study looked at the design, implementation and effectiveness of 96 remedies imposed in 40 cases under the EU Merger Regulation from 1996 to 2000. The conclusions of the study indicate that care is needed, in particular, in defining the right scope of a divested business, ensuring its interim preservation until divestiture, approving adequate purchasers, and ensuring effective monitoring of the implementation of the remedies. Neelie Kroes said: “The findings of this important study will influence our future action in the field of merger remedies. It demonstrates the Commission’s commitment to evaluate critically and transparently its past policy and practice in order to draw lessons from it. We should only accept remedies that clearly and unambiguously eliminate the identified threats to competition. It is the merging companies, not their customers, who should bear the risks of potentially inadequate remedies”.
- On October 26, the UK’s Office of Fair Trading (“OFT”) referred the completed acquisition by Heinz of the HP Foods Group to the Competition Commission (“CC”). The OFT decided that the UK merger reference test was met in relation to the supply of tomato ketchup and brown sauce, barbecue sauce and tinned baked bean and pasta products to retail customers. Vincent Smith, Director of Competition Enforcement at the OFT, said: “This transaction brings together two of the largest branded sauce suppliers in the UK who compete in a number of product categories. As a result of the merger, retail customers and consumers could suffer from less competition resulting in higher prices for products such as HP brown sauce, tomato ketchup and baked beans”. The OFT has asked the CC to explore these concerns. The CC is expected to report by April 11, 2006.
- On November 2, the UK’s Office of Fair Trading (“OFT”) launched a campaign to promote the benefits of its leniency program to small and medium sized enterprises (“SMEs”) in order to encourage them to reveal anti-competitive practices in their industries. The OFT notes that it has received 88 approaches under its leniency program to date. OFT research reveals that a quarter of SMEs in the UK feel that they have been a victim of anti-competitive practices and a third are aware of such practices in their own industry. Philip Collins, OFT Chairman, said: “November is ‘Come Clean on Cartels’ month. We want to urge businesses, especially SMEs, to make a clean break with any anti-competitive agreements they may be involved in. ‘SME’s form the dominant part of the economy and we want to ensure that they operate in competitive markets”.
- On November 3, the Wall Street Journal reported that Chinese Authorities are preparing to finalize the details of a new Antimonopoly Law which will likely be enacted sometime in early 2006. It reports that, “Beijing is on its way to joining Washington and Brussels as a required stop on the round of antitrust approvals for global merger deals”. Under the current draft, merging parties will have to notify the China’s government and seek approval for any global transaction with a value of more than 200 million yuan ($25 million), and in which one party has at least 1.5 billion yuan ($186 million) in sales or assets in China. Foreign businesses are concerned that the relatively low thresholds in China’s draft law will mean that they will have to seek Chinese approval for deals with little impact on China from authorities with little expertise or training in the application of antirust principles.