The mere dispatch of a message having an anticompetitive impact is not sufficient evidence to establish that its addressee was aware of its content
In its judgment of 21 January 2016, the Court of Justice of the European Union answered a request for a preliminary ruling submitted by a Lithuanian court concerning proceedings between Eturas, administrator of the computer software ETURAS, a common online travel booking system allowing travel agencies with an operating licence to offer travel bookings for sale on their websites, as well as several travel agencies, and the Competition Council of Lithuania. Indeed, in 2009, the administrator of the E-TURAS software sent a notification message to several travel agencies informing them that the discounts on products sold through that system would henceforth be capped. Following the dissemination of that message, the technical modifications necessary to implement that measure were carried out on the system in question.
The issue was to determine whether the dispatch of such message may constitute sufficient evidence to establish that the operators which used the system were aware, or ought to have been aware, of the content of that message and whether, in the absence of any opposition on their part to such a practice, it may be considered that they had participated in a concerted practice contrary to Article 101 TFEU.
Firstly, the Court recalled that pursuant to Article 2 of Regulation 1/2003, in any national proceedings for the application of Article 101 TFEU, the burden of proving an infringement of Article 101(1) TFEU lies with the party or the authority alleging the infringement in accordance with the domestic principles governing the assessment of evidence and the standard of proof.
Secondly, the Court held that the presumption of innocence principle precludes domestic courts from inferring from the mere dispatch of the message at issue that the travel agencies ought to have been aware of the content of that message, in the absence of any other objective and consistent indicia.
Thirdly, the Court found that the travel agencies could fall outside the presumption of participation in the concerted practice if they had publicly distanced themselves from the practice, if they reported it to the relevant administrative bodies, or if they brought other proof such as a clear and express objection sent to the system administrator or the systematic grant of additional refunds to the clients.
The Court concluded that if it cannot be established that a travel agency was aware of the message, its participation in a concerted practice cannot be inferred from the mere existence of a technical restriction implemented in the system at issue, unless it is established on the basis of other objective and consistent indicia that it tacitly assented to an anticompetitive action.
COMPETITION
MERGERS
29 February
The European Commission clears the acquisition of EMC by Dell
The European Commission gave its green light to the acquisition of EMC by Dell, both suppliers of data storage systems, and specifically external storage systems for companies. Both parties are also active in the sector of virtualization software. The Commission concluded that the merged entity will not have enough capacity to exclude competitors from the external storage systems for companies or the virtualization software markets. Indeed, the active competitors such as Hitachi, HP, IBM, or Citrix and Microsoft operate at a high level competition, which is enough in order for the acquisition not to distort the competition.
26 February 2016
The European Commission opens in-depth investigation into acquisition of Arianespace by Airbus Safran Launchers (ASL)
Arianespace and Airbus, controlled by ASL, are major players in the satellite, launcher and launcher equipment and launch services markets. Arianespace also has a de facto monopoly in the European markets for institutional launches. Part of its launchers, including the Arian launcher, are manufactured by ASL. The Commission fears that the operation may result in less innovation, less customer choice and higher prices in these markets. The Commission has until the 12th of July to take a decision.
25 February
The European Commission authorizes the acquisition of Sirona by Dentsply, subject to conditions
The Commission is concerned that the merged entity between the American dental equipment supplier Sirona and Dentsply, the leading American supplier of computer aided design and manufacturing equipment used in dental surgeries, could drive competitors out of the market. According to the Commission, this could raise prices paid by dentists for the material, and thus increase prices paid by patients. In order to avoid this, the parties proposed a ten-year extension of the license agreements signed with competing suppliers, legal and technical guarantees for the competing suppliers for the period of their license agreements, as well as a fast-track arbitration procedure as a dispute resolution method.
16 February 2016
The Commission approves acquisition of Procter & Gamble “beauty products” business by Coty
The firms are two American manufacturers of beauty products - fragrances, colour cosmetics and skin & body products. Their business is worldwide. According to the European Competition Authority, the two players would remain sufficiently independent in all the concerned markets after this acquisition.
10 February
The Commission approves the acquisition of Office Depot by Staples, subject to conditions
The Commission has approved the acquisition by Staples (United States), a supplier of office products marketed through a number of sales channels such as wholesale, contract sales and online sales, of its rival Office Depot (United States), subject to the divestment of Office Depot's contract distribution business in Europe and entire business in Sweden. The Commission’s in depth-investigation showed that the merger, as notified, would have critically reduced competition in the already concentrated market for international contracts for office supplies, as well as in the markets for national contracts with large business customers in the Netherlands and Sweden, and in the wholesale supply of office products in Sweden.
04 February
The European Commission clears the acquisition of Base by Liberty Global, subject to conditions
The acquisition of the Belgian mobile phone operator Base by the cable operator Telenet controlled by Liberty global, that also provides mobile phone services as virtual mobile operator, has been cleared by the Commission. According to the Commission, a certain number of commitments from both parties to the operation is necessary in order to avoid a significant competition reduction and a price increase in the mobile phone sector. Those commitments are: the sale of the participation of Base in Mobile Vikings, virtual mobile operator, to broadcaster Medialaan; and the transfer of a proportion of Base customers to Medialaan. Moreover, after the conclusion of an agreement with Liberty Global, the Belgian broadcaster already has access to the Base mobile network and can be a competitive player in the extended virtual mobile network.
04 February
The acquisition of SanDisk by Western Digital is not detrimental to competition according to the European Commission
The acquisition of SanDisk by its competitor Western Digital has been cleared by the European Commission. These American producers of storage devices are both active on the market for flash memory storage solutions, in particular Solid-State Discs (SSD) for companies, and the Commission has taken the view that the merger will not have a negative effect on competition, given that the other market operators, such as Toshiba, Micron and Samsung, will put sufficient competitive pressure. The Commission’s position was also favourable regarding the vertical relation between SanDisk’s activities in the flash memory production sector and the downstream markets for flash memory storage solutions for companies. Indeed, SanDisk’s low activity on the production market and the presence of other competitors guarantee according to the Commission that the acquisition will not create any distortion in competition at the level of the production of flash memory, SSD and other flash memory storage solutions.
STATE AIDS
18 February 2016
In a German case, the Court highlighted the conditions whereby aid should be regarded as State aid, in particular when the beneficiary has public service obligations (case C-446/14)
An association for the disposal of dead animals benefited from several public service aids in order to fulfil its obligations. The Commission considered that the aids were incompatible with European State aid law. Germany lodged an appeal before the General Court against this decision. The General Court dismissed the complaint and Germany brought an appeal before the Court of Justice. The Court recalled the conditions whereby aid should be regarded as State aid, in particular when the beneficiary fulfils public service obligations. They approve in this case the General Court’s analysis of the requirements and affirm that the aids granted by Germany are State aid incompatible with European Union law.
11 February
The European Commission has opened a thorough investigation of Spanish State aids granted to Correos
After receiving two complaints, the European Commission decided to open a thorough investigation in order to verify whether the Spanish public postal operator Correos benefited from an overcompensation between 2004 and 2010 for the universal public service provision. Indeed, the Commission has doubts whether the achieved profitability level by Correos thanks to the received benefits exceed the reasonable benefit allowed by the European competition rules regarding public service compensation. The Commission’s investigation will also look into fiscal waivers, capital increases and compensation for the distribution of printed electoral tracts – Correos also benefited from these measures since 2004. However, the special social security contribution regime applicable to Correos’ employees is not a State aid according to the Commission. Moreover, the special retirement regime applicable to the employees is, according to the Commission, a State aid that preceded Spain’s entry into the European Union, which is why it is unnecessary to recover it.
5 February 2016
The Belgian Minister of Finance, Johan Van Overtveldt, announces that the Belgian government has appealed the European Commission’s decision, which concludes that the Belgian "Excess Profit" tax scheme is illegal under EU state aid rules.
On 11 January 2016, the Commission ordered Belgium to recover within the next two months the aid granted to the enterprises which benefitted from this “Excess Profit” tax scheme. The sum to be recovered was estimated at about €700 million - €500 million from European enterprises (see newsletter no. 22). The government then noted that the amount would probably be higher and decided to appeal the Commission’s decision. Luxembourg has already decided to appeal a similar decision of the Commission about a tax ruling granted to Fiat Finance and Trade, like the Netherlands concerning Starbucks.
4 February 2016
In cases (not joined) T-620/11 and T-287/11, the General Court dismisses the appeal by the applicants GFKL Financial Services AG and Heitkamp BauHolding GmbH.
The applicants appealed the Commission’s decision to classify the Sanierungsklausel provided under German corporation tax law as State aid. The applicants are two firms in financial difficulty which wanted to benefit from the Sanierungsklausel. They raised several arguments (failure to state reasons, the selective nature of the measure, violation of the principle of the protection of legitimate expectation etc.), which are all dismissed by the General Court. Furthermore, in parallel, the Commission raised a plea of inadmissibility based on the applicants’ lack of legal interest and standing but this was also dismissed by the General Court.
ANTIDUMPING
An online public consultation is open in order to analyze the possible impact on European legislation of the expiry of certain provisions of the Protocol on the Accession of the People's Republic of China to the WTO Certain provisions of the Protocol on the People’s Republic of China’s Accession to the WTO expire on 11 December 2016, in particular the one providing the possibility for certain Member States of the WTO not to consider China as a market economy under antidumping procedures. European legislation uses this possibility, and therefore imposes the use of a “similar country’s” prices in order to estimate the dumping level of the products coming from China. The expiry of those provisions of the Protocol on China’s Accession to the WTO could affect the possibility for the EU to automatically apply this method.
The Commission’s services study the different available options in order to implement the expiry of the provisions in question. This analysis is particularly important as, for the time being, China has not been able to prove that it is a market economy with regard to the criteria established by European antidumping legislation.
For this reason, the European Commission opened an online public consultation in order to collect stakeholders’ input as to how to respond to the abovementioned expiry. Indeed, if an amendment of Regulations 1225/2009 and 597/2009 seems necessary, this could result in lower antidumping duties, which could be insufficient to counter the negative effects of dumping in the industries concerned. It is expected that the public consultation will close on 20 April 2016. Fidal is at your service to assist you in answering this consultation.
