• On December 30, the UK’s Office of Fair Trading (“OFT”) announced the clearance of the proposed acquisition by BSkyB Broadband Services Limited (“Sky”) of Easynet Group Plc (“Easynet”) and the merger of NTL Incorporated (“ntl”) and Telewest Global, Inc (“Telewest”). Both cases relate to the emergence of Digital Subscriber Line (“DSL”) as an alternative means to provide ‘triple-play’ (pay-TV, internet and telecommunications) services. Sky’s acquisition of Easynet will enable it to offer triple-play services, in which it currently has no offering, in competition with other providers. Third parties raised concerns about the potential for Sky blocking the supply of pay-TV content to its emerging DSL rivals given its market power in premium content provision and its significant buyer power in non-premium content. However, the OFT found that Sky already has the potential to do this, and the merger does not materially alter its incentives in this area. Telewest and ntl are now the only two cable operators but, as their local networks do not overlap, they do not compete in providing services over cable and the potential for them to do so is minimal. Where they do overlap (in wholesale telecommunications services and narrowband internet) outside their local cable networks they will still face a number of other significant competitors.
  • On December 21, the European Commission fined four companies €75.86 million for allegedly operating a cartel in the rubber chemicals market, in clear violation of EC Treaty competition rules which forbid cartels and other restrictive business practices (Article 81). Three companies allegedly agreed to exchange information about prices and/or raise prices of certain rubber chemicals in the European Economic Area and world-wide markets at least from 1996 to 2001. A fourth company allegedly joined the cartel in 1999 and 2000. The level of the fines confirms the Commission’s determination to crack down hard on firms that take part in cartels. This is the fifth Commission decision in 2005 against hard core cartels. EC Competition Commissioner, Neelie Kroes, said “Cartels are a scourge. I will ensure that cartels will continue to be tracked down, prosecuted and punished. With this latest decision, I am sending a very strong message to company boards that cartels will not be tolerated, and to shareholders that they should look carefully at how their companies are being run.”
  • On December 21, the Australian Competition and Consumer Commission instituted proceedings in the Federal Court, Melbourne, against Visy Industries Holdings Pty Ltd, Visy Industries Australia Pty Ltd and Visy Board Pty Ltd. Proceedings were also been taken against the Chairman of the Visy Group, the Chief Executive Officer of the Visy Group, and the former General Manager of Visy Board, for allegedly being knowingly concerned in or party to the contravening conduct by the Visy respondents. The ACCC alleges that the above respondents engaged in conduct in the corrugated fiberboard container industry that was anti-competitive, including engaging in price-fixing and market sharing, in contravention of section 45 of Australia’s Trade Practices Act 1974. The ACCC alleges that between 2000 and late 2004, the Visy respondents entered into and gave effect to anti-competitive arrangements with its principal competitor Amcor Ltd in the supply, throughout Australia, of corrugated fiberboard containers. Amcor Ltd and its former senior executives have to date received immunity from legal proceedings by the ACCC after the company came forward with information about the alleged conduct under the ACCC’s 2003 Leniency Policy.
  • On December 20, France’s Conseil de la concurrence imposed fines totaling €14.4 million euros (approx. $17.2 million) on Buena Vista Home Entertainment Inc. (“BVHE”), and three French retailers, Carrefour SA, Casino Guichard-Perrachon SA and Selection Disc Organisation SA, for allegedly fixing home video prices between 1995 and 1998. The French antitrust authority held that BVHE had allegedly initiated a vertical collusion with retailers Casino and Carrefour, as well as with wholesale company SDO, which aimed at setting the retail price of Disney home videos artificially high. The French antitrust authority emphasized that that such conduct was a “particularly serious” offence, and imposed the following individual fines: Buena Vista Home Entertainment was fined €3.1 million euros ($3.7 million), Carrefour €5.7 million euros ($6.8 million), Casino €3.2 million euros ($3.8 million) and SDO €2.4 million euros ($2.9 million).
  • On December 20, the European Commission approved the acquisition by US oil and chemical services company, Koch Industries Inc. (“Koch”) over Georgia-Pacific Corporation (“Georgia-Pacific”). Although both companies are active in the production of pulp, the EC held that they would have a small combined market share on the global pulp market, and there was no horizontal overlap between the activities of the two companies within the European Economic Area. The Commission also examined the vertical relationship between Koch and Georgia-Pacific, since Koch supplies Georgia-Pacific with pulp, which is necessary to produce packaging, paper and tissue paper products. The EC also ruled out possible vertical concerns, as Koch has a small market share of pulp supply, and there are a number of alternative producers who could supply any of the various potential downstream product markets.
  • On December 20, the European Commission published a Green Paper on how to facilitate actions for damages caused by violations of EC Treaty competition rules’ ban on restrictive business practices and abuse of dominant market positions (Articles 81 and 82 respectively). Violations of these rules, in particular, by price fixing cartels, can cause considerable damage to companies and consumers. However, numerous obstacles currently hinder actions for damages by injured parties in national courts. The Green Paper identifies certain of these obstacles, such as access to evidence and the quantification of damages, and presents various options for debate for their removal. The options set out in the Green Paper would seek to ensure that companies and consumers were compensated for their losses, while avoiding vexatious claims. EC Competition Commissioner, Neelie Kroes, said: “Businesses and individuals who suffer losses because of illegal activities such as cartels have a right to compensation. Currently, this right is all too often theoretical because of obstacles to exercising this right in practice. This Green Paper sets out options for making that right a reality, and so making companies that break the competition rules pay for the harm that they do.”
  • On December 19, the European Commission published a Staff Discussion Paper on the application of EC Treaty competition rules on the abuse of a dominant market position (Article 82). The Discussion Paper is designed to promote a debate as to how EU markets are best protected from dominant companies’ exclusionary conduct, conduct which risks weakening competition on a market. The paper suggests a framework for the continued rigorous enforcement of Article 82, building on the economic analysis carried out in recent cases, and setting out one possible methodology for the assessment of some of the most common abusive practices, such as tying, and rebates and discounts. Other forms of abuse, such as discriminatory and exploitative conduct, will be the subject of further work by the Commission in 2006. The Commission is inviting comments on the present discussion paper by March 31, 2006.
  • On December 13, the European Commission revised its rules for access to the Commission’s files by parties involved in its merger and antitrust cases in order to increase the transparency of competition procedures. It underlined the Commission’s commitment to due process and parties’ rights of defense. Access to the file is an important procedural step in all contentious antitrust and merger cases. It allows the companies that receive Statements of Objections i.e. the Commission’s explanation as to why it has reached the preliminary view that the addressees may have broken the competition rules, to see all of the evidence, whether it is incriminating or exonerating, in the Commission’s file. A party can then understand the facts which led the Commission to send a Statement of Objections, and draw the Commission’s attention to elements of the file which the party believes have not been given sufficient weight. This is a fundamental procedural safeguard which ensures the rights of defense of companies.
  • On December 12, the Italian Competition Authority, announced it had imposed a €2 million fine on ANIA, the Associazione Nazionale delle Imprese Assicurative (National Association of Insurance Companies), for allegedly encouraging the use of uniform cost parameters in determining payments for auto insurance claims. The Italian antitrust authority imposed a further €200,000 fine on ANAI for also allegedly fixing a scale of fees with various car insurance adjusters associations. An authority spokeswoman said the practices prevented car insurance companies from competing with each other on the costs of settling auto claims.
  • On December 8, the Canadian Competition Bureau announced that Nippon Carbon Co. Ltd. (“NCK”) pleaded guilty and was fined $100,000 by the Federal Court of Canada for aiding and abetting an international conspiracy to fix the price of graphite electrodes used in steel production. “NCK aided price-fixing arrangements which lessened competition for graphite electrodes in Canada,” said Denyse MacKenzie, Senior Deputy Commissioner of Competition. “The Competition Bureau will continue to pursue individuals and businesses involved in price-fixing cartels as a top enforcement priority.” NCK is the seventh party to be convicted in Canada for participating in the graphite electrodes cartel. UCAR Inc., SGL Carbon Aktiengesellschaft, Tokai Carbon Co., Mitsubishi Corp. and two former UCAR executives, Robert P. Krass and Robert J. Hart, were previously fined a total of nearly $25 million for their roles in the international conspiracy.
  • On December 1, the French Competition Conseil, the Conseil de la concurrence, imposed fines totaling €534 million (approx. $633 million) on three cellular phone networks for allegedly sharing strategic information on new subscriptions and cancellations, and agreeing to stabilize their market shares based on jointly-defined targets. The French antitrust authority held that since the French mobile market is difficult to penetrate and comprises only three operators, information sharing of this kind is likely to distort competition by reducing uncertainties over competitors’ strategies and diminishing each company’s commercial independence. The alleged agreement to maintain market shares allegedly led price increases. The French authorities held that a large fine was justified due to the particularly serious nature of the practices, and the substantial damage to the France’s telecommunications market.