Commission publishes draft amendments to Leniency Notice

On 29 September 2006, the Commission adopted draft amendments to its 2002 Notice on Immunity from Fines and Reduction of Fines in Cartel Cases.  The proposed amendments take into account issues which have arisen during the four years of application of the 2002 Notice and are in line with the European Competition Network’s (ECN) Model Leniency Programme announced on the same day.  Member States’ competition authorities will use their best efforts to align their leniency programmes to the ECN Model Leniency Programme.  These developments aim to introduce a ‘one stop shop’ for leniency applications by harmonising the procedures and requirements for leniency applications.  This should make it easier for companies to apply for leniency when it is unclear which Competition Authority will take the case.  The changes to the Commission’s Notice also introduce a marker system and clarify the information an applicant needs to provide to benefit from immunity as well as the conditions for immunity and reduction of fines. They also include a corporate statements procedure.

The ECN Model Leniency Programme sets out the principal elements which should be common in all programmes. It also introduces a model for a uniform summary application system at national level for cases which involve more than three Member States.

Sources: (draft amended EU Leniency Notice)
and (ECN Model Leniency Programme)

ECN has also published a list of member state competition authorities that accept summary applications for leniency (including Ireland).

Source: http://ec.europa.eu/comm/competition/ecn/leniency_programme_nca.pdf 

Commission fines Dutch bitumen cartelists €266.717 million

On 13 September 2006, the Commission announced that it has imposed a total fine of €266.717 million on 14 companies who participated in a cartel to fix prices of road bitumen, which is used to make asphalt.  The cartel fixed the gross price of all road bitumen sold in the Netherlands and agreed the level of rebates for construction companies and other road builders.  The Commission became aware of the cartel when a cartel member blew the whistle on the cartel and applied for lenient treatment. The Commission increased the fines for two companies who had instigated and led the cartel.  One of these had its fine increased further for obstructing the Commission’s investigation.  The Commission repeated that victims of cartels can bring an action for damages in the courts of EU Member States.

The construction sector has been in the spotlight recently – the Dutch Competition Authority (Nma) recently imposed fines for market sharing and bid-rigging in the Dutch asphalt and construction markets and the Office of Fair Trading in the UK has imposed fines on a number of different cartels in the double glazing, flat roofing and car park surfacing markets.

Source:http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1179&format=HTML&aged=0&language=EN&guiLanguage=en 

Court of First Instance partly annuls Commission’s decision in Glaxo parallel trade case

The CFI has partly annulled the Commission's decision prohibiting Glaxo from selling its medicines at different prices according to the place of reimbursement.  The CFI held that, although the Commission was correct to state that GSK’s General Sales Conditions restrict competition by preventing the price and the cost of medicines from falling, it did not sufficiently examine the question whether they might give rise to an economic advantage by contributing to the financing of pharmaceutical innovation.

Glaxo adopted sales conditions which stipulated that its medicines will be sold to Spanish wholesalers at prices differentiated according to the national sickness insurance scheme which will reimburse them. In practice, this meant that medicines intended to be reimbursed in other Member States of the Community will be sold at a higher price than those intended to be reimbursed in Spain. The system was introduced in order to limit parallel trade in medicines between Spain and other Member States where prices for medicines are higher.  The Commission decided that the sales conditions amounted to an anti-competitive agreement and that Glaxo had not proved that the conditions necessary for an exemption were satisfied.

The CFI agreed with the Commission that the sales conditions constituted an agreement, in particular as a number of Spanish wholesalers had expressly agreed to act as Glaxo had requested.  However, the Court did not agree with the Commission’s conclusion that the sales conditions have as their object the restriction of competition because they provide for different prices which aim to limit parallel trade in medicines.  The Court held that the Commission failed to analyse the sales conditions by reference to their legal and economic context and in particular that they failed to take proper account of the specific nature of the pharmaceuticals sector.  Unlike in other economic sectors, the prices of medicines reimbursed by the national sickness insurance schemes are set/controlled by the Member States.  It cannot therefore be presumed that parallel trade tends to reduce prices and increases the welfare of final consumers.  On the other hand, the Court upheld the Commission’s subsidiary conclusion that the sales conditions have as their effect the restriction of competition.

The CFI also found that the Commission did not carry out an adequate examination of whether the sales conditions benefited from an exemption, particularly whether the sales conditions might give rise to an economic advantage by contributing to innovation.

Source: Case T-168/01, GlaxoSmithKline Services Unlimited v Commission of the European Communities, Judgment of the Court of First Instance dated 27 September 2006

European Court dismisses appeal by Unilever against "freezer exclusivity" judgment

On 28 September 2006, the European Court of Justice published an order dismissing an appeal by Unilever Bestfoods (Ireland) Ltd (formerly Van den Bergh Foods Ltd) against the Court of First Instance’s decision upholding the Commission’s findings that the supply of freezer cabinets to retailers, on the condition that they were not used for third party products, infringed both Articles 81 and 82 of the EC Treaty. In its appeal Unilever had requested the Court to set aside the CFI judgment and annul the Commission decision.

The ECJ order found however that each of the claims made by Unilever were either inadmissible or manifestly unfounded. The order brings to a close long running litigation relating to Unilever’s practice of supplying retailers with freezer cabinets, in which it retained ownership, for no direct charge on the condition that the cabinets be used exclusively for the sale of HB ice-cream products.

Source: Case C-552/03, Unilever Bestfoods (Ireland) Ltd v Commission, Order of the ECJ dated 28 September 2006

European Council repeals liner shipping conferences block exemption

On 25 September 2006 Regulation 1419/2006, which repeals Regulation 4056/86 and amends Regulation 1/2003, was published by the Commission.  Regulation 4056/86 provided for a block exemption from Article 81(1) of the EC Treaty for liner shipping conferences on routes to and from the EU.

Source: http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_269/l_26920060928en00010003.pdf

Commission consults on impact of information exchanges

On 29 September 2006 the Commission launched a consultation on the potential impact of information exchanges between liner carriers.  The consultation paper is an interim step in the preparation of guidelines on the application of EC competition rules to maritime transport.
Source:http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1283&format=HTML&aged=0&language=EN&guiLanguage=en"

Microsoft launches appeal against Commission fine

Microsoft has launched an appeal against the €280.5 million fine imposed by the Commission for its failure to comply with the Commission’s 2004 order that it provide rivals with information about its Windows operating system. Microsoft has described the imposition of the fine as "unprecedented" and claimed that the Commission had not been clear about its demands and about how Microsoft should present the requested information to it. The imposition of the €280.5 million fine had followed the record €497million fine imposed on Microsoft in 2004 for abusing its dominant position.
 Source:http://www.rte.ie/business/2006/1003/microsoft.html

Court of First Instance upholds restrictions on parallel imports outside the EU

On 27 September 2006, the Court of First Instance adjudicated on the worldwide selling arrangements of the construction company, Caterpillar. The Court confirmed the legality of arrangements for the sale of spare parts for the company’s construction equipment, which were designed to control parallel imports of its parts from one continent to another.

The ruling arose from an appeal of a Commission decision not to investigate a 2003 complaint relating to a situation whereby retailers based in the EU, and purchasing from the USA, had to identify the end users and the geographic area in which the product would end up. In siding with the Commission, the Court held that the agreement was not likely to have more than an insignificant effect on both competition and trade in the EC.
Source: http://www.ashurst.com/doc.aspx?id_Content=2645 

UK Court upholds Competition ruling in price-fixing of toys case

The London Court of Appeal has rejected appeals by Argos, Littlewoods and JJB Sports in separate rulings of the British Competition Appeal Tribunal (CAT) in cases relating to the price-fixing of toys, games and replica football kit cases. The appeals, which were on a point of law, were the first appeals to the Court of Appeal decisions under the UK Competition Act 1998. Earlier the Office of Fair Trade (OFT) had imposing fines on the retailers for being part of a concerted practice whereby retailers had coordinated their behaviour through information exchanged via manufactures. The CAT had rejected appeals of the OFT decisions.

The ruling effectively now means that even unilateral disclosure of future pricing intentions can constitute a concerted practice in the UK, where it is evident that the information was intended to be passed on directly or indirectly to another competitor. The Court of Appeal however qualified this by saying that where bilateral discussions are limited to actual or likely retail prices, profit margins and wholesale prices, or to terms of sale are conducted on a bilateral basis, then they are unlikely to infringe competition law. The Courts judgment shows how careful companies must be in transmitting pricing information, especially where their suppliers, manufacturers or distributors who receive this information may have contact with the company’s competitors.

Source:http://www.twobirds.com/english/publications/articles/Court_upholds_CAT_decision_price-fixing_toys.cfm?back=#