JULY – SEPTEMBER 2015 clearygottlieb.com BELGIUM through its monopoly activities by sending all of the This section reviews developments under Book IV of the The contact details had not been obtained as a result of customers an email advertising the launch of Scooore!. Belgian Code of Economic Law (“CEL”) on the Protection competition on the merits, but rather out of its legal of Belgian monopoly. Competitors could not collect similar data on Within the BCA, the potential customers under reasonable financial conditions Competition, which is enforced Competition Authority (“the BCA”). Prosecutor General and its staff by of the prosecutors and within a reasonable period of time, due to the volume (collectively, the “Auditorate”) investigate alleged restrictive and nature of the details in the National Lottery’s database. practices and concentrations, while the Competition College (the “College”) functions as the decision-making body. Prior to September 6, 2013, Belgian competition law was codified in the Act on the Protection of Economic Competition of September 15, 2006 (“APEC”) and enforced by the Belgian Competition Authority, then composed of the Directorate General for Competition and the Competition Council. When relevant, entries in this report will refer to Second, the National Lottery had obtained commercially sensitive information about competitors from some of its retailers, both before and after its product’s launch.

This had reduced market uncertainty about the competitors’ behavior. Both practices had a potentially distortive effect on competition, sufficient to establish an abuse of dominance, although the effect on competition was not proven. the former subbodies of the BCA. The Auditorate dismissed the other claims raised in the Abuse of Dominance complaints, which included the use of the National Lottery National Lottery Fined €1.2 million for Abuse of logo to promote Scooore!, cross-subsidization, and certain Dominance (Case CONC-P/K-13/0013) exclusivity and non-compete clauses in contracts with On September 23, 2015, the BCA imposed a fine on the retailers. The two abusive practices thus consist solely of Belgian National Lottery (the “National Lottery”), as part of the use of data. a settlement concluding the Auditorate’s investigation into various practices of the National Lottery. The National Lottery acknowledged abusing its dominant position in the context of the launch of a new sports betting product, The decision was the first settlement decision involving an abuse of dominance and only the second settlement decision since the procedure was introduced with the Belgian Competition Act in September 2013.

In exchange Scooore!, in early 2013. for acknowledging the infringements, the National Lottery The National Lottery holds a legal monopoly on public received a fine reduction of 10%. lotteries, which does not include sports betting products. reduced due to mitigating circumstances: the absence of Following its 2013 entry into the market of sports betting, a proof that the infringement had restricted competition and number of competitors in this market complained to the the BCA that the National Lottery had leveraged its monopoly proceedings. The total fine was ultimately €1.19 million. National Lottery’s full The fine was further cooperation during the in the public lottery market when launching Scooore!. BCA Imposes Interim Measures Suspending the FEI’s The Auditorate found that while a monopolist’s Exclusivity Clause (Case CONC-V/M-0016) diversification into other markets may be beneficial for On July 27, 2015, the College imposed interim measures those markets, the National Lottery had abused its on the Fédération Equestre Internationale (“FEI”), the dominant position in two ways. First, the National Lottery governing body for equestrian sports, provisionally had made use of customers’ contact details collected © Cleary Gottlieb Steen & Hamilton LLP, 2016.

All rights reserved. This report was prepared as a service to clients and other friends of Cleary Gottlieb to report on recent developments that may be of interest to them. The information in it is therefore general, and should not be considered or relied on as legal advice. Under the rules of certain jurisdictions, this report may constitute Attorney Advertising. .

JULY – SEPTEMBER 2015 clearygottlieb.com suspending the “exclusivity clause” contained in the FEI’s reviewing the facts and terminating the suspension in General Regulations. whole or in part. Global Champions League SPRL and Tops Trading The decision to impose interim measures does not Belgium had constitute a final decision on the merits, which will occur requested interim measures in June 2015 in the context of only after the Auditorate concludes its investigation, unless a were the Auditorate decides to close the investigation or to settle anti-competitive. In particular, the FEI’s exclusivity clause with the FEI. In the meantime, the decision is a signal that (Articles 113(4)-(6) of the General Regulations) prohibits the exclusivity clause is anti-competitive. SPRL complaint athletes and (together, arguing horses that from the “Complainants”) certain FEI participating rules in non-FEI recognized events for a period of six months prior to any FEI recognized event in which they intend to participate. This prevented the Complainants from setting up the Global Champions League (“GCL”), a new equestrian team The FEI has appealed the interim measures before the Court of Appeal of Brussels. FINLAND competition which was not recognized by the FEI, because This section reviews developments concerning the Finnish athletes were effectively prevented from participating in Competition Act, which is enforced by the Finnish both FEI recognized and non-FEI recognized competitions Competition and Consumer Authority ("FCCA"), the Market (the former being relevant for rankings). Court, and the Supreme Administrative Court. The College held that it was not manifestly unreasonable to Policy and Procedure consider that the exclusivity rule constituted a prima facie infringement of Articles IV.1 and IV.2 CEL, as well as 101 and 102 TFEU. This resulted, among other things, from the fact that the FEI combines commercial activities with its status as the regulator for equestrian sports.

The College further held that the infringement could potentially cause a serious and imminent harm that would be difficult to remedy. Without the interim measures, it would be impossible for the GCL to be organized in 2016 and the entire project might be abandoned. Review of Competition Act In September 2015, the Ministry of Employment and the Economy set up a committee to review the Competition Act. The committee's assignment is twofold. The committee shall assess how to amend the Competition Act with a view to, first, implementing the goals of the new Government Program and, second, taking into account the recommendations of the European Competition Network ("ECN"), the uniformity of national and EU competition legislation and amendment proposals based on the The College therefore ordered the suspension of the practice of the FCCA and national courts. The committee's exclusivity clause with respect to the GCL and prohibited term runs until February 2017. the FEI from suspending or sanctioning athletes or horses for participating in a GCL competition. It also ordered the FEI to communicate these measures to its members (national federations), athletes, officials, and organizers through its website. The interim measures will be applicable until the earliest of (i) a BCA decision either closing the investigation, deciding on the merits, or resulting from a settlement, or (ii) a decision of the College In May 2015, Finland's new government set a goal in its Government Program to improve the profitability of farming within the next four years. One of the actions taken to implement this goal is to review the Competition Act and to "take necessary action within the bounds of EU competition law." In practice, the government seeks to use competition law to restrict the market power of other actors in the food production and distribution chain for the benefit of farmers. This is a continuation of an earlier amendment of the 2 .

JULY – SEPTEMBER 2015 Competition Act which provided that any grocery retail chain with at least 30% market share is considered to have clearygottlieb.com FRANCE This section reviews developments under Part IV of the a dominant position. French The second part of the committee's assignment is potentially more significant as it relates generally to competition law and stems from the FCCA's wish to Commercial Code on Free Prices and Competition,which is enforced by the French Competition Authority (the “FCA”) and the Minister of the Economy (the “Minister”). enhance its powers and clarify the Competition Act. The items to be reviewed include, among others, the ECN's recommendations on the power to collect digital evidence by forensic means, commitment procedures, and the power to impose structural remedies as well as the ECN's model leniency program. The right to bring an investigation order under judicial review will also be considered. The predictability and transparency of fines will be reviewed, as the FCCA has not yet published detailed guidelines on how Antitrust Firms Will Now be Able to Settle Cases with the French Competition Authority A new law which came into force on August 6, 2015 allows firms to negotiate the level of fines with the FCA. Firms may now negotiate with the FCA’s investigation services the maximum fine they would accept in return for accepting not to challenge the statement of objections. 1 fines are determined.

Another topic for discussion will be the level of fines imposed on trade associations. Over the The new law replaces the previous no-challenge procedure past few years, a number of trade associations have been before the FCA with a settlement procedure inspired by the fined however the fines have been very low due to the low existing turnover of trade associations. Subsequently, the FCCA is Commission.

Once it has sent a statement of objections, seeking to amend the calculation of fines for trade the FCA may contact firms with a settlement offer. Prior associations. In addition, the FCCA also intends to pursue contacts are not excluded but the settlement will only sanctions for procedural infringements, such as the failure happen after the issuance of a statement of objections.

In to provide information. Furthermore, it aims to define more practice, firms which are interested in a settlement are clearly which documents fall under attorney-client privilege. likely to inform the FCA before that date to indicate that The FCCA will also explore the possibility to supplement they are open to a settlement offer. Formally, the FCA is fines with banning infringing individuals from engaging in responsible for initiating a settlement.

It is free to decide certain commercial activities. Finally, the FCCA plans to whether it wants to discuss a possible settlement and improve the information exchange with other national determines the time period given to firms to accept its offer. authorities such as the police, tax authorities and regional administrative authorities as well as with other Nordic competition authorities. settlement procedure before the European The essential condition for a settlement is that the firm gives up on its right to challenge all objections. The Parliament expressly refused amendments allowing partial The list of amendments under assessment is broad and settlements. Firms cannot parse out which objections they could result in significant changes to the powers of the wish to settle and retain the right to contest others. FCCA, such as structural remedies and business prohibitions on individuals.

These items were not part of the Government Program that resulted in setting up the 1 committee and it remains to be seen how much political support any proposed amendments will ultimately receive. Article L.464-2 III of the Commercial Code at http://www.legifrance.gouv.fr/affichCodeArticle.do;jsessionid=8BB75E09 4D0A959C2A44DE73946DC3C0.tpdila24v_2?idArticle=LEGIARTI0000 31013158&cidTexte=LEGITEXT000005634379&dateTexte=20151101. 3 . JULY – SEPTEMBER 2015 clearygottlieb.com The greatest advantage of the new procedure is that it procedure and has always granted fine reductions agreed allows firms to negotiate the level of fines. Previously, firms upon with the general case-handler. could give up the right to challenge objections in exchange for a 10% fine reduction (with a possible additional reduction of up to 15% if the company offered commitments) however, this percentage of fine reduction was applied to the final amount of the fine which would have otherwise been imposed. As a result, firms did not know the level of the original fine when they declined to The case-handler negotiates fine ranges with each firm separately and secretly. It remains to be seen how the FCA and review courts will consider settlements which are more advantageous for some firms than others, and in particular, whether such discrimination may lead to the reconsideration of the level of fines. challenge the objections, leaving little room for negotiation The Paris Court of Appeal Upheld the Fine Imposed on with the FCA and little certainty as to the final amount of Cegedim by the FCA the fine. On September 24, 2015, the Paris Court of Appeal upheld Under the new settlement procedure, the offer of the FCA consists of a range of fines with a minimum and a maximum for all objections as a whole (partial settlements being impossible).

While the core of objections is defined the FCA’s decision to impose a €5.8 million fine on Cegedim for abuse of a dominant position in the market for medical information companies. databases for pharmaceutical 2 by the statement of objections, firms may discuss the On July 8, 2014, the FCA found that Cegedim held a numerous determinants of the fine with the FCA, in dominant position in the market for medical information particular, the value of sales, the gravity rate, the duration databases. of the infringement as well as the aggravating and Cegedim had implemented a discriminatory policy against mitigating circumstances. Euris, a competitor in the related market of customer The new law also indicates that a firm may offer commitments during the negotiation in order to further From October 2007 until September 2013, relationship management (“CRM”) software. Both Cegedim and Euris appealed the FCA’s decision. reduce the fine. These commitments generally include the In its decision, the FCA explained that pharmaceutical creation or improvement of compliance programs, but they companies use two types of tools to optimize their sales: may also relate to real changes of behaviour within the databases containing medical information, mainly for market, notably in abuse of dominance cases. Such collecting the names and contact details of doctors, and significant commitments could enable firms to obtain CRM software, which uses this type of database to provide greater fine reductions. information on how drugs are prescribed, and by whom. The settlement is actually concluded between firms and the general case-handler (the head of the investigation service) whereas cases are ruled on by the Collège, a specific body within the FCA. Under the settlement procedure, the The FCA found that Cegedim was abusing its dominant position in the market for medical information databases, by refusing to provide its database called OneKey to customers using Euris’ CRM software. general case-handler recommends that the Collège sets a Cegedim challenged the FCA’s decision on the following level of fines within a range negotiated with firms.

There is grounds: no legal guarantee that the Collège will not impose higher constitute a relevant product market, and if such a market (i) medical information databases do not fines. In practice, however, the Collège of the FCA has never used this faculty to the previous no-challenge 2 Paris Court of Appeal, Case n°2014/17586 of September 24, 2015, available at: http://www.autoritedelaconcurrence.fr/doc/ca14d06.pdf. 4 . JULY – SEPTEMBER 2015 clearygottlieb.com were to exist, it would not be related to the market for CRM existing claim of intellectual property infringement against software for the healthcare industry; (ii) Cegedim does not Euris, the Court explained that even if it were Cegedim’s have a dominant position in the market for medical right to file a complaint due to this alleged intellectual information databases; and (iii) the alleged discrimination property violation, it did not give them the right to violate was not proven, and was justified by an intellectual antitrust rules and set-up a discriminatory practice against property infringement claim brought by Cegedim against Euris’ customers. Euris. Euris appealed the FCA’s decision on the grounds that: With respect to the challenge on market definition, the (i) the FCA should have qualified OneKey as an essential Court of Appeal confirmed the FCA’s decision. The Court facility; and (ii) the FCA should have found that Cegedim indicated that the market for medical information databases was abusively tying the sales of OneKey with the sales of corresponds to the market in which software service its CRM software. providers respond to the demand of pharmaceutical companies for databases compiling contact details of doctors, and that such a product cannot be substituted by other equivalent products. In addition, the Court of Appeal also confirmed that the markets for CRM software in the healthcare industry and medical information databases are related, because the CRM software cannot function without a customer database. On the first ground, the Court of Appeal explained that Euris had no legal interest in that claim. The FCA followed Euris’ initial complaint and sanctioned the refusal to give OneKey access to Euris’ customers on the basis of discrimination, and therefore did not need to qualify OneKey as an essential facility for that purpose. With respect to the second claim, the Court of Appeals found the mere fact that a large proportion of Cegedim’s customers Concerning Cegedim’s position in the market for medical bought its CRM software and OneKey together, was information databases, like the FCA, the Court of Appeal insufficient to prove illegal tying. excluded intra-group/intra-company sales (i.e.

use of their internal medical information database by pharmaceutical Mergers and Acquisitions companies) from its market share analysis and concluded The FCA Clears Acquisition of Comexposium Subject that Cegedim had a 78% market share in the market for to Commitments medical information databases. The Court added that this After the Minister for the Economy conditionally approved strong position is reinforced by the quality of OneKey, the acquisition of joint control of Comexposium by the compared to competitors’ databases, and the very high Chamber of Commerce and Industry of Paris and Unibail in barriers to entry into this market. Subsequently, the Court 2007, the FCA cleared the transfer of Unibail’s shares to of Appeal confirmed that Cegedim held a dominant position Watling Street subject to the previously-imposed 3 in the market for medical information databases. commitments. The Court of Appeal also determined that there was The transaction involved the purchase by Watling Street sufficient evidence to prove that Cegedim had refused to Capital Partners LLP (“Watling Street"), a private equity grant Euris customers access to its database as part of an firm belonging to the Charterhouse group, of 50.1% of the established commercial policy.

As a result, the Court of Appeal considered that Cegedim distorted competition in the market for CRM software in the healthcare industry, and hampered Euris’ development. Lastly, regarding Cegedim’s justification of the discrimination based on an 3 French Competition Authority, Decision n° 15-DCC-82 of July 8, 2015 concerning the acquisition of Unibail by Watling Street Capital Partners LLP available at http://www.autoritedelaconcurrence.fr/pdf/avis/15DCC82decisionversion publication.pdf 5 . JULY – SEPTEMBER 2015 clearygottlieb.com shares in Comexposium from Unibail, a commercial a quasi-monopoly in the market for the management of property investments company. Prior to the transaction, convention and exhibition centers, except for the third Comexposium was jointly controlled by Unibail and the commitment, which would become obsolete once CCIR Chamber of Commerce and Industry of Paris (“CCIR”), and Unibail ceased to hold the majority of Comexposium’s which retained 49.9% of the shares. share capital. Both CCIR, through its subsidiary Viparis, and In the present case, the notifying parties alleged that the Comexposium, are active in the event organization sector, transaction would be pro-competitive because it would end although at different levels. Comexposium specializes in the vertical integration between Viparis and Comexposium. the organization of fairs or trade shows, whereas CCIR’s However, the FCA rejected the argument pointing out that activities consist of managing convention and exhibition CCIR would retain joint control of both undertakings. centers. In addition, both companies offer optional event management services, such as reception or food and beverages services. As a consequence, on July 8, 2015 the FCA declared that the Minister for the Economy’s analysis would remain valid following the transfer of Unibail’s shares to Watling Street, In its competitive analysis, the FCA referred to a prior and that all the prior commitments should continue to decision issued by the Minister for the Economy in 2007, apply. Interestingly, the FCA seemed to overlook the fact when CCIR and Unibail acquired joint control of Viparis and that Comexposium, in which the Minister took the view that the majority-owned transaction raised a number of competition concerns.

The commitment ought to expire. Minister found that the transaction would not only create a quasi-monopoly in the market for the management of exhibition centers, but also create risks of vertical foreclosure, as Viparis and Comexposium would be able to, inter alia, (i) exchange strategic information that would enable discriminatory tactics in favor Comexposium as the organizer of fairs and trade shows; (ii) discriminate against competitors of Comexposium with respect to rental rates, attribution of locations or exhibition dates; and (iii) tie the offer of optional event management services to the offer of site maintenance services. since Comexposium’s by Watling share Street, capital the is now ventilation GERMANY This section reviews competition law developments under the Act against Restraints of Competition of 1957 (the “GWB”), which is enforced by the Federal Cartel Office (“FCO”), the cartel offices of the individual German Länder, and the Federal Ministry of Economics and Technology. The FCO’s decisions can be appealed to the Düsseldorf Court of Appeals (Oberlandesgericht Düsseldorf, “DCA”) and further to the Federal Court of Justice (Bundesgerichtshof, “FCJ”). To address these concerns, CCIR and Unibail had offered Horizontal Agreements a series of commitments, both structural and behavioral, aimed at preventing risks of foreclosure. In particular, the German Federal Constitutional Court Confirms FCJ’s two companies had undertaken to: (i) limit the rental rates Rulings on Fines Imposed After Restructuring paid by exhibitors; (ii) refrain from tying the offer of optional On August 20, 2015, the German Federal Constitutional event management and site maintenance services; and Court refused to hear the complaint brought by Melitta (iii) limit their market shares in the occupation of their own Europa GmbH & Co. KG (“Melitta Europe”) as legal convention centers by their own events to 40–50% (the successor of its former affiliate Melitta Kaffee GmbH “ventilation commitment”). These commitments were scheduled to expire once CCIR and Unibail ceased to hold 6 .

JULY – SEPTEMBER 2015 (“Melitta Kaffee”) against several court decisions confirming fines imposed on Melitta Europe despite its restructuring. 5 4 6 The FCJ upheld a DCA judgment confirming that Melitta Europa as legal successor of Melitta Kaffee is liable for a 7 €55 million fine, which the FCO had imposed on Melitta Kaffee in 2009. The FCJ decided repeatedly that even clearygottlieb.com succession or partial universal legal succession, achieved by splitting up a company (Section 30(2a) of the German Act on Misdemeanors). However, the new law still leaves loopholes therefore the FCO is pushing for broader legislative changes that would bring the German system in line with the EU system. after a company has merged with or into another company, FCJ Confirms Cable Network Operator’s Obligation to and therefore ceases to exists, it is possible to impose a Broadcast Public Broadcasting Programs But Denies fine on the new entity provided that the old company’s General Duty to Pay Feed-In Fees For This Under assets have been transferred to the new company and, Broadcasting and Antitrust Laws (Kabel Deutschland from an economic standpoint, the two companies are and Unitymedia) nearly identical. On June 16, 2015, the FCJ held in two cases that a cable According to the Federal Constitutional Court, the FCJ’s case law stays within the ambit of constitutional principles. In particular, the legal provision allowing the imposition of fines (Section 30(1) of the German Act on Misdemeanors) network operator is obliged to broadcast public broadcasting programs but cannot necessarily charge public broadcasters for this, thereby overturning decisions by the Higher Regional Courts of Munich and Stuttgart. 8 can be interpreted in such a way as to encompass the The two largest German cable network operators, Kabel imposition while Deutschland and Unitymedia, requested feed-in fees remaining comfortably within constitutional boundaries. (Einspeisegebühren) for broadcasting the programs of Furthermore, it would certainly be constitutional to apply public broadcasters in the federal states of Bavaria and the provision where a lay person would view the new Rhineland-Palatinate. Pursuant to a contract in 2008 company and old as the same undertaking. Fining the new between broadcasters company is also congruent with legislative intent, namely to operators, the public broadcasters had paid annual feed-in prevent companies which can only act via management fees of €27 million to the network operators. from escaping sanctions while simultaneously benefiting termination of this agreement at the end of 2012, network from their management’s misdeeds. operators continued to broadcast the public broadcasters’ of fines on successor companies Following the imposition of the fine in this case, the German Act on Misdemeanors was amended. Fines can now also be imposed in the case of universal legal the public and the network After the programs without receiving any feed-in fees. They therefore brought actions against the public broadcasters. Upon appeal, the FCJ held that the public broadcasters are obliged to provide the program signals to the operator due to their public service function, and that the operators are, 4 See German Federal Constitutional Court decision of August 20, 2015, case 1 BvR 980/15, available in German at the Court’s website. 5 See FCJ judgment of January 27, 2015, case KRB 39/14, available in German on the FCJ’s website. distribute them.

However, while the FCJ referred the case 6 See DCA judgment of February 10, 2014, case V-4 Kart 5/11 (OWi), available in German on the DCA’s website, and FCO press release of February 11, 2014, available in English at http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2014/11_02_2014_OLG-Melitta.html. investigation, it held that an operator cannot necessarily 7 See FCJ, decision of January 27, 2015, available in German on the FCJ’s website. under the German Broadcasting Treaty, obliged to back to the lower courts in Munich and Stuttgart for further request feed-in fees for this distribution. 8 See FCJ, decisions of June 16, 2015, cases KZR 3/14 and KZR 83/13. 7 . JULY – SEPTEMBER 2015 clearygottlieb.com According to the FCJ, the public broadcasters have a several services directly related to the marketing of round dominant position in the market for feed-in capacities. timber. The FCO held that this would qualify the federal They are not facing competition from other broadcasters state of Baden-Württemberg as an undertaking for since network operators are obliged to reserve free competition law purposes, given that the activities would capacities (“Must Carry”) only for public broadcasters. focus However, the public broadcasters do not abuse this responsibilities of public administration. dominant position nor do they discriminate in their selection because they do not pay feed-in fees to any of the network operators. The FCJ determined that the fact that public broadcasters pay feed-in fees to providers which use other transmission technologies (satellite or terrestrial) cannot be considered discriminatory because the other providers limit their services to the transmission performance and do not receive any remuneration from end consumers. on economic objectives rather than on the According to the FCO, the agreements between the federal state and the other forest owners would fix prices and restrict sales, and thus qualify as hardcore restrictions. These restrictions could not be exempted under Article 101(3) TFEU (or the German equivalent), because they would not contribute to improving the production or distribution of goods or to promoting technical or economic progress, and, in particular, they were not indispensable. Furthermore, there is no obligation for the network According to the FCO, any benefits provided by the operators to continue the contract or enter into a similar agreements could also be achieved through independent new contract under applicable broadcasting or antitrust cooperation between communal and private forest owners. laws. The FCO determined that an exception could be made for However, the FCJ referred the cases back to the Higher Regional Courts’ to assess whether the notices of termination were void, clarifying that any coordination owners of less than 100 hectares because they were not in a position to market the wood themselves, and as such it was acceptable for them to engage in joint marketing. between the public broadcasters to jointly terminate the The FCO’s decision ends proceedings that started in 2002 contracts with the cable network operators would have with a complaint by the Sawmill Industry’s Association. In infringed Section 1 ARC, rendering the termination of the 2008, the FCO had accepted binding commitments by the contracts void. federal state of Baden-Württemberg and other federal FCO Prohibits Joint Marketing of Round Timber in Baden-Württemberg On July 15, 2015, the FCO largely prohibited the federal state of Baden-Württemberg from jointly marketing wood from its own state forest and at the same time from communal and private forests. 9 Through its state company Forst BW Baden-Württemberg, the federal state of Baden-Württemberg, sold and invoiced wood on behalf of other forest owners and carried out states to not engage in marketing with forest owners with less than 3,000 hectares, although this decision prompted further complaints.

In the case at hand, the FCO decided that these commitments were no longer sufficient to remedy competition concerns, and that new market conditions would constitute a new factual basis, thereby justifying the revocation of the 2008 decision. Interestingly, the FCO provided for interim periods in its decision, saying that it expects the federal state of Baden-Württemberg to appeal the decision, and that it wanted to give the forest owners sufficient time to 9 See FCO press release, available in English at: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2015/15_07_2015_Rundholz.html?nn=3599398. The complete text of the decision is available only in German at the FCO’s website. reorganize their forest management. 8 . JULY – SEPTEMBER 2015 clearygottlieb.com FCO Fines Container Transport Service Providers supplier was also involved, but was granted full immunity in €4.56 Million For Participating in Concerted Practices accordance with the FCO’s leniency program. On August 25, 2015, the FCO imposed fines totaling €4.56 million on seven container transport service providers for participating in concerted practices in the maritime container transport sector. 10 It also fined a number of responsible individuals and an association of companies, the FCDS committee, which represents the interests of container transport service providers in the German sea transport industry. The FCO initiated the investigation ex The German Armed Forces source rubber protection pads and vibration dampers on a continual basis through tenders. The four companies engaged in a pattern of agreements between 2010 and 2014 to determine who should submit the best bid and thus win the tender. The companies further agreed on who would supply the winner and for what price in case cross-supplies were necessary. officio in April 2014 after the FCDS members had jointly The fines, which are final, were reduced because all announced that they would introduce a "Hamburg traffic suppliers cooperated with the FCO. congestion surcharge." criminal offence under the German Criminal Code, This announcement had led to several media reports expressing antitrust concerns. The FCO found that the FCDS members had reached a general understanding to pass on cost increases in the container transport industry to their customers to the widest extent possible. Starting in 2001, the companies regularly discussed and coordinated possible reactions to different cost increases at FCDS general assemblies and at other occasions.

Further, they agreed to introduce or increase several surcharges on the basic freight rate, different incidental charges and mutual settlement rates in cases where an order was carried out on behalf of another FCDS As bid rigging is a 12 proceedings against the natural persons involved were transferred to the Public Prosecutor’s Office in Koblenz. Vertical Agreements FCO Decides That Sports-shoemaker Asics Unlawfully Restricted Online Sales On August 28, 2015, the FCO concluded its proceedings against sporting goods producer, Asics, and decided that certain clauses in the company’s selective distribution agreements unlawfully restrict online sales. 13 The FCO prohibited the use of these clauses. member, and to introduce the "Hamburg traffic congestion According to the FCO, Asics, the market leader for running surcharge." shoes in Germany, has established a selective distribution All companies, individuals, and the FCDS, cooperated with the FCO under its leniency program and settled with the FCO. With the exception of one case, all decisions are final. system for its products. It only accepts retailers that fulfill distinct qualitative criteria. Among other things, Asics prohibits its authorized retailers from using online price comparison websites such as idealo.de or billiger.de. Further, the manufacturer does not allow its resellers to use FCO Fines Armaments Suppliers Asics’s trademarks and brands on third-party websites in In July 2015, the FCO imposed €1.3 million in fines for order to direct customers to their own online stores.

The price-fixing on three suppliers of rubber protection pads FCO found these clauses to constitute excessive resale and vibration dampers for military vehicles. 10 11 11 A fourth See FCO press release of August 25, 2015, available in English at: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2015/25_08_2015_Container.html. See FCO press release of July 16, 2015, available in English at: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2015/16_07_2015_Laufpolster.html?nn=3591568. restrictions, limiting the visibility of small and medium sized 12 Section 298 German Criminal Code. 13 See FCO press release of August 27, 2015, available in English at http://www.bundeskartellamt.de/SharedDocs/Meldung/DE/Pressemitteil ungen/2015/27_08_2015_ASICS.html;jsessionid=359759310B4DDA72 FF33EDACD6FB42F3.1_cid387. 9 . JULY – SEPTEMBER 2015 clearygottlieb.com retailers in the market and impeding their ability to reach that it was “highly likely” that Google did not engage in new customer groups. abusive conduct. In the authority’s view, the manufacturer’s primary aim for this was to restrict price competition in both online and offline sales markets. In August 2014, the FCO confirmed that a complaint against Google submitted by the collecting society, VG The FCO also criticized Asics’s complete ban of sales via Media, did not provide sufficient evidence of abusive third-party online sales platforms such as eBay and conduct to initiate formal proceedings. amazon marketplace, but did not arrive at a final decision complaint concerned Google’s behavior with respect to the with regard to the clause’s legality. Similar clauses have new ancillary copyright for news publishers. Introduced in recently been scrutinized by German courts and, in many August 2013, this right entitles news publishers to prohibit cases, been found to constitute unlawful restrictions of search engines and equivalent services to use their news online sales. 15 VG Media’s The FCO previously looked into the content, except for single words or small extracts comprehensive ban of third-part online sales platforms (snippets). However, the precise scope of an acceptable (e.g., in the case of Asics’s competitor Adidas), however, it snippet has remained unclear and litigation between ultimately abstained from reaching a final decision on this Google and VG Media is still on-going.

Google refused to issue. According to the FCO’s press release, the authority pay for any content that it displays in its search results and wants to initiate further discussion on this subject also at a therefore decided not to purchase any licenses for news European level. publisher content. Instead, Google asked German news Recently, the FCO has conducted several investigations that focus on vertical restrictions of online sales by selective distribution systems. While most affected producers of branded products immediately changed their policies to accommodate to the FCO’s demands, Asics’s publishers for their consent to use their content free of charge—to which the majority of them agreed.

After VG Media had initiated legal proceedings, Google requested the news publishers in VG Media to renew their consent, which all of them eventually did. case has so far been the only one where the FCO rendered Following a decision, prohibiting the use of certain clauses. The investigation in August 2014, Google requested the FCO to FCO’s decision has not yet been published. While Asics take a formal decision pursuant to Section 32c of the GWB. may still appeal the FCO’s decision before the Düsseldorf Court of Appeals, it has changed its selective distribution system. Finds FCO’s informal refusal Google’s to open an According to the FCO, Google acts as a two-sided platform: one side for end consumer search and the other for (search-related) online advertising. As for consumer search, it is questionable whether there is a relevant Unilateral Conduct FCO the De-Snippeting Practice in Compliance with Competition Law On September 8, 2015, the FCO decided not to take any action against Google for discontinuing to display snippets market for antitrust purposes, considering the lack of monetary payment flows. The FCO, however, ultimately left this question open as it found that there were insufficient indications for an abuse in the case at hand.

As of search results of news publishers who had not agreed to Google using their content free of charge. 14 14 e&v=2. A press release is available in English at: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2015/09_09_2015_VG_Media_Google.html?nn=3591286. The FCO held See FCO, decision of September, 8, 2015, case B6-126/14, available in German at: http://www.bundeskartellamt.de/SharedDocs/Entscheidung/DE/Entschei dungen/Missbrauchsaufsicht/2015/B6-126-14.pdf?__blob=publicationFil 15 See FCO’s press release of August 22, 2014, available in English at: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2014/22_08_2014_VG_Media.html?nn=3591568. 10 . JULY – SEPTEMBER 2015 clearygottlieb.com for online advertising, the FCO distinguished between further held that VG Media could not rely on the essential markets for online and offline advertising. The FCO facility doctrine pursuant to Section 19(2)(4) GWB in order considered to further subdivide the market for online to demand that snippets had to be displayed against advertising according to whether the advertisement is payment from Google as part of the search results. The search-related or not, but left the exact market definition FCO pointed out that Google, irrespective of whether a open. In geographic terms, the FCO assumed there are search engine could be considered an infrastructure facility, good arguments for national markets (or along language had not denied VG Media members access to its services, lines). but only reduced the extent to which their content is Given the high usage shares and high user loyalty, the FCO stated that Google likely has a dominant position but ultimately left this question open. The FCO found that even if one assumed Google were dominant, there were insufficient indications of an abuse as Google (i) did not displayed. Moreover, according Section 19(2)(4) GWB, access to the essential facility has to be granted typically only against payment by the company seeking access (and not by the operator of the essential facility, as requested by the claimant). discriminate against VG Media in an unjustified manner, Finally, the FCO held that Google did not act abusively by (ii) was not obligated to purchase VG Media’s licenses, and asking VG Media members to give their consent to allow (iii) did not force news publishers to let it use their content Google to use their content for free.

Such a request cannot free of charge. be considered as an exploitative abuse because Google According to the FCO, the fact that Google discontinued to display snippets of VG Media’s member is not an unlawful discrimination but rather a reasonable reaction to pursue its needed consent to refrain from infringing the new ancillary copyright. While the FCO has not found any reasons to further probe, legitimate interests which outweigh those of VG Media. it points out that it might nonetheless start an investigation, The FCO highlighted that like any other company, search in particular if Google further reduces the extent to which it providers are free to design their product within the limits of displays content from news publishers which do not competition law and therefore, have broad discretion in allowing Google to display snippets for free. terms of how they assemble, rank, and present their search results. By not displaying snippets without the consent of news publishers, Google sought to preserve its legitimate business model—that is based on the free linking of online content (which excludes the idea of having to take any licenses for content)—and to reduce the risk of liability for damages. The FCO deemed these motives justified, in particular given the fact that it remains unclear how courts FCO Finds That Deutsche Post AG Abused Its Dominant Position in Letter Post Services On July 2, 2015, the FCO declared that incumbent postal service provider, Deutsche Post AG (“DPAG”), had abused its dominant position in the market for licensed letter post services by imposing a margin squeeze and granting illegal loyalty rebates. 16 will interpret the new ancillary copyright law for news DPAG owns and manages the only postal network with publishers. nationwide universal coverage in Germany. The FCO also held that the ancillary copyright law does not Despite the liberalization of the postal markets in 2007, DPAG still prescribe an obligation to take a license as every company has a wide margin of discretion as to what products it wants to purchase, and it cannot be forced to purchase products that do not fit into its business model. The FCO 16 See FCO, decision of July 2, 2015, case B9-128/12, and FCO, case report of July 30, 2015, case B9-128/12, both available in German on the FCO’s website; see also FCO, press release of July 7, 2015, available in English on the FCO’s website. 11 .

JULY – SEPTEMBER 2015 clearygottlieb.com holds a dominant position on both the downstream market profitably universal postal coverage, postal law would for end-to-end mail delivery and the upstream market for guarantee compensation to DPAG. partial postal services in Germany. As a dominant postal service provider, DPAG is legally obliged to grant competitors partial service access to its postal network. This means that against a fee, DPAG is obliged to deliver mail that competitors have collected from senders, pre-sorted and brought to DPAG’s sorting centers. prices were subject to the condition that the bulk mailer uses DPAG for more than 90% of its entire mail volume. According to the FCO, such loyalty rebates additionally foreclosed actual and potential competitors and constituted a separate abuse of dominance. The FCO found that DPAG had agreed so-called “target prices” for end-to-end delivery with four bulk mail senders that were lower than the partial services fee DPAG demands from its competitors. In addition, the FCO found that in three cases, the target In particular, DPAG had reduced the standard postal charges by granting volume discounts as well as remuneration for advertising services (i.e., printing DPAG’s logo on mail to be delivered) and for providing DPAG with (undefined) “quality data.” According to the FCO, the remuneration was only granted to the extent necessary to reach the agreed target prices. It did The investigation was triggered by several complaints. After the FCO had initiated its proceedings in 2012, the objected target price agreements were not extended and expired by the end of 2013. However, since DPAG still takes the position that such agreements were admissible, the FCO considered a declaratory decision necessary, but also sufficient to prevent it from renewing such or comparable agreements.

DPAG has appealed the decision to the DCA. 18 not have the economic value DPAG claimed. The FCO FCJ Once Again Overturns Ruling On Price Control further held that the granted volume discounts alone Tests in the Wasserpreise-Calw Case resulted in prices that were below or at least just as high as On July 14, 2015, the FCJ overturned a second ruling by the partial services fee. the Stuttgart Court of Appeals regarding price control tests The FCO held that this pricing practice constituted a margin squeeze that prevented competitors (in particular mail applied by the Cartel Office of Baden-Württemberg (the “Cartel Office”) in the Wasserpreise-Calw case. 19 consolidators) from profitably offering end-to-end delivery Initially, the Cartel Office had found that a local monopolist services to customers and thereby competing with DPAG. water supplier in Calw, a city in Baden-Württemberg, had With reference to the European Court of Justice’s charged excessive prices, and consequently ordered it to 17 the reduce its prices and refund customers the overcharge. To indispensability of the relevant upstream input is not a calculate the overcharge, the Cartel Office examined necessary criterion to demonstrate likely negative effects. relevant price factors to determine a reasonable reference In any event, contrary to DPAG’s claim, the FCO held that price.

The Stuttgart Court of Appeal held that the Cartel DPAG’s postal network would still be indispensable. Office should have applied other price control tests, namely TeliaSonera judgment, the FCO held that Finally, the FCO found that the pricing practice in question 18 See FCO case report of July 30, 2015, case B9-128/12, p. 4, available in German on the FCO’s website. 19 was not necessary to guarantee universal postal coverage FCJ decision of July 14, 2015, case KVR 77/13 – Wasserpreise Calw II, available in German at: http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?G ericht=bgh&Art=en&Datum=Aktuell&Sort=3&Seite=13&nr=72263&pos= 394&anz=471&Blank=1.pdf. A press release is available in German at: http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?G ericht=bgh&Art=pm&Datum=2015&Sort=3&nr=71668&pos=0&anz=122. on geographically uniform prices.

Even if DPAG ended up in a situation in which it would not be able to provide 17 Konkurrensverket v. TeliaSonera Sverige AB (Case C-52/09) EU:C:2011:83, para. 72. 12 .

JULY – SEPTEMBER 2015 clearygottlieb.com a comparison of the prices under scrutiny with those As to the facts of the case at hand, the FCJ held that a charged on similar markets with effective competition (the relevance margin (as opposed to a safety margin to be comparable market principle). 20 On May 15, 2012, the FCJ applied for uncertainties in the assessment) is needed to annulled this first ruling and referred the case back to the differentiate reasonable deviations in pricing from what Stuttgart Court of Appeals. 21 In its decision, the FCJ held could be considered excessive. Yet, it held that this that the comparable market principle was only one of many relevance margin may be as low as 3% (or lower) in legitimate tests to be applied in determining excessive monopolistic markets. pricing. On September 5, 2013, the Stuttgart Court of Appeals again ruled on the test and annulled the decision, referring it back to the Cartel Office. 22 However, on further Mergers and Acquisitions Monopolies Commission Opposes EDEKA’s Proposed appeal by the Cartel Office, the FCJ annulled the second Acquisition of Kaiser’s Tengelmann ruling by the Stuttgart Court of Appeals on procedural On grounds. (Monopolkommission), the German government’s advisory The FCJ held that a court may only annul those parts of an administrative decision that it considers to be ultra vires as long as the administrative decision is divisible in fact and law. In the case at hand, the FCJ found that the Stuttgart Court of Appeals should not have fully annulled the Cartel Office’s decision but rather investigated the facts of the case to determine the appropriate price level to be charged In an obiter dictum, the FCJ further elaborated on the tests to be applied to determine the appropriate price level to be charged, underscoring that the comparable market principle is only one of numerous tests applicable in excessive pricing mix-and-match cases. approach It of further economic held that theories a was permissible to take account of special market conditions. August 3, 2015 the Monopolies Commission body on competition issues, published a special report on the proposed acquisition of Kaiser’s Tengelmann supermarket chain (“Tengelmann”) by its competitor, EDEKA. 23 The Monopolies Commission made a recommendation to the Federal Minister for Economic Affairs not to grant (even with commitments) the ministerial authorization requested by EDEKA and Tengelmann. On March 31, 2015, the FCO had blocked the proposed acquisition of 450 Tengelmann branches by EDEKA because it would significantly impede effective competition in several already highly concentrated regional food retail markets. 24 On April 29, 2015, the parties applied for a ministerial authorization, an exceptional instrument by which the Federal Minister for Economic Affairs can overrule an FCO prohibition decision if the negative effect on competition caused by the transaction is outweighed by benefits to the economy as a whole, or the transaction is 20 21 22 Stuttgart Court of Appeals decision of August 25, 2011, case 201 Kart 2/11, available in German at: http://lrbw.juris.de/cgi-bin/laender_rechtsprechung/document.py?Gericht =bw&nr=14702. See National Competition Report July – September 2012, p. 9. The FCJ decision, case KVR 51/11 – Wasserpreise Calw, available in German at: http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?G ericht=bgh&Art=en&Datum=Aktuell&Sort=12288&Seite=0&nr=61242&p os=27&anz=656&Blank=1.pdf. Stuttgart Court of Appeals decision of September 5, 2013, case 201 Kart 1/12, available in German at: http://lrbw.juris.de/cgi-bin/laender_rechtsprechung/document.py?Gericht =bw&nr=17800. justified by an overriding public interest. 25 23 See Monopolies Commission press release of August 3, 2015, available only in German at: http://www.monopolkommission.de/images/PDF/SG/presse_s70.pdf 24 See FCO case summary from March 31, 2015, case B2-96/14, available at http://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Fallberic hte/Fusionskontrolle/2015/B2-96-14.html?nn=3591568. 25 Section 42 GWB. 13 .

JULY – SEPTEMBER 2015 clearygottlieb.com The Monopolies Commission found that the competitive investigation, the FCO found that the acquisition would not restraints caused by the transaction on both the retail and strengthen DRK-B NO’s dominant position in the supply of procurement markets in the food retail sector would be red blood cell concentrate within the relevant geographic substantial. market of Berlin and Brandenburg. The acquisition of Tengelmann would strengthen and secure EDEKA’s leading market position in the German food retail market. Further, EDEKA’s buyer power vis-à-vis branded goods manufacturers would be enhanced if Tengelmann were eliminated as an independent purchaser. The FCO distinguished between regional markets for the production and sale of red blood cell concentrate, 27 platelet concentrate, and plasma for clinical application, where both Charité BDS and DRK-B NO are active. As for platelet concentrate, plasma for clinical application and out-patient The Monopolies Commission stated that there is not red blood cell concentrate, the (potential) markets in the enough evidence that these negative competitive effects relevant geographic market are de minimis (defined as total would outweigh the possibility of securing roughly 5,700 sales of less than €15 million), and therefore under the full-time jobs, or other public welfare benefits, and GWB cannot be prohibited. commitments would not change its assessment. In the case of a complete acquisition of all of Tengelmann’s 450 branches by EDEKA, restructuring measures would be necessary and due to considerable synergies in production, logistics, and administration, result in job cuts. In particular, the acquisition would lead to duplicate locations of EDEKA’s subsidiaries in certain locations, providing incentives to close branches. 28 Regarding the sale of red blood cell concentrates—the largest market concerned—DRK-B NO holds a share of over 80% and Charité BDS has sales of less than 10%. However, the FCO held that the acquisition of Charité BDS would not render the joint venture dominant (as it is currently only active in the distribution of concentrate and plasma), nor strengthen the dominant position of DRK-B NO as a controlling parent company. According to the Further, the Monopolies Commission held that there is FCO, Charité BDS’s sales are modest and apart from insufficient evidence that an acquisition by EDEKA would emergency supply to other hospitals, its sales are primarily secure more jobs than an (partial) acquisition by one or to the Charité. more alternative acquirer(s) (e.g., REWE), which would post-transaction Therefore Charité BDS will not compete lead to less substantial competitive restraints. actively against DRK-B NO for the supply of other hospitals Although the non-binding deadline of four months from the application expired August 2015, the final decision of the Minister is still awaited. or doctors. This is not expected to change Further, Charité BDS’s production does not even fully cover Charité’s requirements which as a public body has to issue invitations to tender blood products. Consequently, the FCO concluded that DRK-B NO’s FCO Clears Participation of German Red Cross in indirect share in Charité BDS would not give it an Charité Blood Donation Service advantage On June 30, 2015, the FCO cleared the proposed demand. when competing for Charité’s additional acquisition of the Charité Blood Donation Service (“Charité dungen/Fusionskontrolle/2015/B3-60-15.pdf?__blob=publicationFile&v= 2. BDS”) by a joint venture of Charité—Universitätsmedizin Berlin (“Charité”) and DRK-Blutspendedienst Nord-Ost gemeinnützige GmbH (“DRK-B NO”). 26 26 27 The FCO further considered whether the market for red blood cell concentrate would have to be sub-divided into an in- and out- patient market, but ultimately left this question open for lack of relevance to the present case. 28 See GWB Section 36(1) sentence 2 no. 2. Following an See FCO decision of June 30, 2015, case B 3 – 60/15 available in German at: http://www.bundeskartellamt.de/SharedDocs/Entscheidung/DE/Entschei 14 .

JULY – SEPTEMBER 2015 clearygottlieb.com FCO Takes Stand on the Treatment of Platform Markets focus of Verivox and competitor Check24, the FCO in Recent Merger Decision determination that coordinated effects would be unlikely, On July 24, 2015, the FCO unconditionally approved the acquisition of Verivox by ProSiebenSat.1 Media AG. 29 two companies on several hypothetical “markets” of more Verivox is a leading online comparison website with a strong focus on electricity and gas markets. despite high barriers to entry and combined shares of these Verivox’s than 95%. FCO Clears Merger Between Automotive Spare Parts business model is the mediation of contracts between Wholesalers Subject to Conditions consumers gas On August 13, 2015, the FCO cleared the acquisition of suppliers) in return for a fee paid by the suppliers. Trost Auto Service Technik SE (“Trost”) by Wessels & ProSiebenSat.1 is one of two major providers of television Müller SE (“W&M”) subject to conditions after an in-depth advertising space in Germany. investigation. While ultimately leaving the exact market definition open, The parties are active in the market for the sale of the FCO provided important insight as to its understanding automotive spare parts to independent car repair shops. and legal assessment of platform markets. The FCO found this market constituted a separate market and suppliers (e.g., electricity and According to the FCO, platform markets are typically two-sided markets, but differ from other two-sided markets (e.g., advertising based online search markets) as remuneration requires both user groups (i.e., consumers and suppliers) to have a contract. Therefore both sides of the platform should generally be considered as being parts of one coherent market. 30 from the market for automotive spare parts for OEMs, given that independent repair shops do not exclusively work for one specific car manufacturer and hence need to be provided with a wide range of spare parts for all brands and types of vehicles. Further, the FCO distinguished between a spare parts market for passenger cars and for utility vehicles. The FCO found the geographic market to be regional in scope because due to their limited storage The FCO found it unlikely that preferable access to capacities, the independent repair shops rely on quick and television commercial time for Verivox post-merger would regular delivery of spare parts through wholesalers’ local increase the likelihood for Verivox to become the only branches. platform serving the market, partly because offering Verivox more favorable conditions for television advertising would result in missed earnings from other advertisers and also due to the multi-homing strategy of suppliers and sufficient competing offerings by other platform providers. The FCO held that the acquisition of Trost’s local branches by W&M would cause a significant impediment to effective competition between wholesalers in the regional markets of Frankfurt, Magdeburg. Darmstadt, Heilbronn, Braunschweig and W&M would have become the undisputed Finally, the FCO found that platform markets are generally leader in most of the affected markets (with market shares less prone to coordinated effects due to the need to exceeding 40%) and the transaction would remove Trost as coordinate multiple parameters on two sides of the one of W&M’s most important competitors. Moreover, the coherent unique FCO held that the merger would further strengthen W&M’s characteristic of the platform market, as well as the different platform market. Based on this access to supply and procurement markets where W&M is 29 30 See FCO Activity Report on case B8-67/15, decision of July 24, 2015, available in German at: http://www.bundeskartellamt.de/SharedDocs/Entscheidung/DE/Fallberic hte/Fusionskontrolle/2015/B8-67-15.pdf?__blob=publicationFile&v=2. See FCO decision of August 13, 2015, case B9-48/15; a case summary in German is available at: http://www.bundeskartellamt.de/SharedDocs/Entscheidung/DE/Fallberic hte/Fusionskontrolle/2015/B9-48-15.pdf?__blob=publicationFile&v=3. 15 .

JULY – SEPTEMBER 2015 already today cooperating with Stahlgruber/PV, its strongest competitor in Germany, through the purchasing group “Auto Teile Ring.” Finally, according to the FCO, internet traders are not a significant competitive force clearygottlieb.com The DCAs did not grant Tönnies leave for appeal to the FCJ therefore the decision is binding. Policy and Procedure because they mainly target retailers and consumers and Monopolies Commission Publishes Special Report on cannot provide just-in-time deliveries. Competition in the Railway Sector The merger was cleared subject to the condition that the parties divest one or more of their local branches to an independent third party, thereby removing overlaps in all regional markets except for Stuttgart where the incremental increase in market shares is low. Further, WM committed to exit the purchasing group “Auto Teile Ring.” DCA Confirms the FCO’s Decision to Block the Acquisition of a Slaughterhouse Operator By a Competitor On July 1, 2015, the DCA rejected meat producer’s Tönnies Holding GmbH & Co. KG’s (“Tönnies”) appeal against the FCO’s decision to block its acquisition of competing slaughterhouse operator, Heinz Tummel GmbH 31 On July 22, 2015, the Monopolies Commission published its fifth Special Report on competition on railway markets (the “Report”) bill 33 32 reviewing the pending railway regulation and giving policy recommendations. The Report concludes that Deutsche Bahn AG (“DB”)’s business divisions should be unbundled. The Report identifies access to rail infrastructure as the main impediment for competition in the railway sector. In Germany, DB acts as both the most important provider of rail infrastructure and the biggest transportation provider for the segments of passenger transport (both long-distance and regional services) and rail cargo. The Monopolies Commission stresses that the only way to The FCO had prohibited the establish undistorted competition in the German railway takeover as it would have strengthened Tönnies’s dominant sector is to completely unbundle the infrastructure and position in the German market for the purchase of cull sows transport divisions of DB. and for the distribution of sow meat to meat processors. adapt laws for the financial and organizational separation of & Co.

KG (“Tummel”). In its decision, the DCA largely agreed with the FCO’s reasoning. The court found that Tönnies alone already holds high market shares on the affected markets that are characterized by only a few large players, in addition to a The Report recommends to rail infrastructure and transport divisions in the short term and to disintegrate and privatize the globally active transport and logistics divisions DB Schenker Logistics and DB Schenker Rail GmbH as a first step. number of medium-sized companies. Further to Tönnies’s Other policy recommendations focus on the regulation of lead over its competitors in terms of market shares, the prices for the use of the rail infrastructure and other Tönnies also possesses far superior financial strength and access conditions. The Report also emphasizes that the is also the only completely vertically integrated producer. legislator should strengthen the Federal Network Agency’s In the court’s opinion, the merger would have further powers to obtain information and to monitor in particular the strengthened Tönnies’s position while at the same time terms of use of rail infrastructure and service facilities. further weakening its competitors’ position. 32 31 See DCA decision of July 1, 2015, available in German only at: https://www.justiz.nrw.de/nrwe/olgs/duesseldorf/j2015/V_2_Kart_1_2_1 3_OWi_Urteil_20150529.html. See the Monopolies Commission’s Special Report, available in German at: http://www.monopolkommission.de/images/PDF/SG/s69_volltext.pdf; press release available in English at the Monopolies Commission’s website: http://www.monopolkommission.de /images/PDF/SG/press_s69_eng.pdf. 33 Gesetz zur Neuordnung der Regulierung im Eisenbahnbereich, Draft of January 21, 2015. 16 .

JULY – SEPTEMBER 2015 clearygottlieb.com FCJ Further Strengthens Customer’s Right of Access in contrast to a prohibition decision, a commitment decision to the File in Cartel Proceedings does not have any binding effect in civil proceedings under On July 14, 2015, the FCJ 34 upheld a 2014 Higher 35 German law. In the FCJ’s view, such access in a pre-trial by which the setting affords the opportunity to gather proof without Frankfurt Court had quashed a decision by the Hessian having to launch an unsubstantiated action and bear the Regional Court of Frankfurt judgment federal state cartel authority for energy and water (“the associated cost risk. Further, the FCJ held that in contrast Authority”), which in proceedings against a drinking water to the CJEU’s case law on access to the European supplier had rejected access to the file requested by a Commission’s files, customer of this supplier. to identify individual documents to be revealed given that In 2009, the Authority initiated proceedings against the 36 a third party applicant is not required he is normally not aware of the file’s specific content. drinking water supplier, accusing the supplier of an abuse The customer’s interest needs to be weighed against the of its dominant position and of overcharging prices by 39%. authority’s interest to minimize efforts and expenses when In September 2013, following the supplier’s offer to reduce granting access and, in particular, the drinking water prices by 20%, the Authority reached a settlement with the supplier’s interest in the protection of business secrets. supplier and subsequently issued a commitment decision. While such opposing interests cannot per se hinder access The customer requested access to the file in order to to the file, they might well call for the implementation of gather information for a potential civil damages claim only a protective measures such as the partial disclosure of few days after the settlement was concluded. documents (in this respect, the FCJ refers to measures The FCJ affirmed the Frankfurt Court’s finding that although the customer—as a third party—had no specific right of access to the file stemming from a potential admission to the cartel proceedings, the GWB, or the German Federal Freedom of Information Act, he had indeed a right to a lawful discretionary decision by the Authority. The Authority is required to exercise its discretion—which it had not done before—by balancing the customer’s interests against its own interests as well as those of the parties involved in the cartel proceedings. foreseen in the new EU Damages Directive for the absolute protection of leniency statements) 37 or the redaction of sensitive information. Sectoral Investigations Publication of FCO´s Report on Divestitures in the Rolled Asphalt Industry On July 17, 2015, the FCO published a report on the status of the divestiture and dissolution proceedings it had initiated following a sector inquiry into the market for rolled asphalt. 38 The report provides an overview of the The FCJ confirmed that the customer’s intention to launch a civil damages action constitutes a legitimate interest. 36 See Commission v. EnBW Energie Baden-Württemberg AG (Case C-365/12 P) EU:C:2014:112, paras.

101 et seq. 37 See Article 6(6) of the Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union. 38 See FCO report of July 17, 2015, available in German at: http://www.bundeskartellamt.de/SharedDocs/Publikation/DE/Sektorunte rsuchungen/Sektoruntersuchung_Walzasphalt_Bericht_Entflechtungen. pdf?__blob=publicationFile&v=3; press release available on the FCO’s website: http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteil ungen/2015/17_07_2015_Walzasphalt.html. Getting access to the file would be pivotal for him because 34 See FCJ decision of July 14, 2015, case KVR 55/14, available in German at: http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?G ericht=bgh&Art=en&nr=72306&pos=0&anz=1. 35 See Higher Regional Court of Frankfurt decision of September 9, 2014, case 11 W 3/14 (Kart), available in German at: http://www.lareda.hessenrecht.hessen.de/jportal/portal/t/g76/page/bslar edaprod.psml?doc.hl=1&doc.id=KORE222472014&documentnumber=2 &numberofresults=4&showdoccase=1&doc.part=L&paramfromHL=true# focuspoint. 17 . JULY – SEPTEMBER 2015 clearygottlieb.com objective, the progress and the results of the proceedings, identified as well as the criteria applied in the assessment of the information individual cases. competitors. In 25 cases, the FCO closed the proceedings Upon completion of its inquiry in 2012, the FCO concluded that the rolled asphalt sector was characterized by a dense network of corporate links between competitors. Reciprocal shareholdings were a common feature of the industry. Approximately 50% of all asphalt plants were set up as joint ventures (“JVs”): The four major suppliers, Werhahn, STRABAG, EUROVIA, and KEMNA, accounted for a combined market share of approximately 60% and held stakes in 405 of the 550 asphalt plants, of which 60% were JVs. and terminated and numerous anticompetitive without eliminating links. exchanges contracts of between This was possible due to the positive effects resulting from the restructuring of other JVs. In the eight remaining cases unbundling measures were either non-existent or unsatisfactory and therefore have yet to be completed. The improved market structure should notably benefit small regional road constructors by improving their choice of suppliers. GREECE This section reviews competition law developments under the Greek Competition Act (Law 3959/11)703/1977(the The FCO had investigated 130 JVs and applied the “Competition Act”), enforced by the Hellenic Competition rebuttable presumption that the JV agreement was Commission (“HCC”). restrictive (under s.1 GWB) if the JV and at least two of its shareholders operated in the same product and geographical market.

More than half of the investigated rolled asphalt JVs fell into this category and the four major competitors held stakes in nearly all of them. Even where all conditions of the presumption were not formally met, the FCO found that, under certain circumstances, some of the JVs increased the likelihood of coordinated behavior. This was the case, for instance, where only one of the shareholders was active in the same market as the JV and another shareholder held a non-controlling stake in another company operating in the same market, or where it could Decision of the Hellenic Competition Commission no. 612/2015 Rejecting Complaints on Horizontal Collusion Among the Five Tobacco Companies in Greece In July 2015, the Hellenic Competition Commission issued its Decision no.

612/2015, rejecting the complaints made by a number of tobacco wholesalers and their associations regarding alleged horizontal collusion among the five tobacco companies (Philipp Morris), in Greece, BRITISH i.e. PAPASTRATOS AMERICAN TOBACCO, KARELIAS, ATHANASIOU (distributor of Japan Tobacco) and IMPERIAL TOBACCO. be evidenced that the shareholders and the JV in fact Towards the end of the year 2012, the market leader, exchanged competitively sensitive information. The FCO PAPASTRATOS, announced a change in its distribution requested system the companies concerned to self-assess whereby the collaborations infringements to an end (e.g., to dissolve JVs) within 15 wholesalers in the area of Athens and Piraeus were months. terminated, and a handful of wholesalers were appointed proceedings relating to 104 JVs with the aim of introducing more effective competition in the rolled asphalt market by dissolving anticompetitive company interlocks.

Ninety-six proceedings have been completed thus far and the corporate links were eliminated in 71 cases. The FCO approximately commercial compliance with competition law and to bring any As a consequence of its findings, the FCO opened between longstanding 100 tobacco as exclusive distributors within this area. This represented the biggest market for tobacco products within in the Greek territory. Within a span of a few weeks, the other four tobacco companies, also terminated their long standing collaboration with the same 100 wholesalers in this area, and concluded distribution agreements (some companies 18 . JULY – SEPTEMBER 2015 clearygottlieb.com concluded exclusive and some non-exclusive) with a small exposed the tobacco companies to considerable financial number of common wholesalers (different from those of risks. PAPASTRATOS). A small number of common distributors were also appointed by them in the big cities of Patras and Thessaloniki. According to the complaints, these actions were attributable to collusion. Moreover, the HCC found that the establishment of the new network neither aimed to, nor resulted in, the imposition of similar prices or credit policies from the tobacco companies to the distributors, or from the distributors to the retail Upon examination of the evidence, the HCC concluded that points (kiosks, etc.). In addition, the HCC did not find that no collusion had taken place between the tobacco similar terms were used by the tobacco companies in their companies.

Since then, however, each tobacco company new distribution has submitted agreements with the new distributors which marketing, and distribution of their products. There were have raised certain competition concerns. agreements concerning the supply, The HCC no terms on exchange of information regarding production applied its recent “Commitments Procedure” and requested volumes, prices etc. In fact, the agreements entered into that the tobacco companies amend certain terms of their by each of the four companies and the common distributors distribution agreements.

Following these amendments, the contained significant differences. HCC decided not to open an investigation. In terms of the commitments, the HCC examined the As regards horizontal collusion, the HCC examined the possible restrictions on competition arising from the new aforementioned wholesalers’ allegations and the evidence distribution agreements entered into by each of the four collected during dawn raids at the tobacco companies’ companies with the common distributors, i.e. restrictions of offices. It came to the conclusion that only isolated and a vertical nature, and whether the commitments procedure sporadic evidence existed which was not sufficient to established by virtue of its Decision 588/2014 could apply establish the existence of coordination among the tobacco to them. companies. Following a preliminary examination of the agreements On the contrary, it found that the selection of the same submitted by the tobacco companies, the HCC concluded distributors by the four tobacco companies could constitute that a reasonable business reaction to the decision of the Concerns were raised regarding customer and territorial market leader, PAPASTRATOS, to change and modernize limitations on distributors, as well as the opportunity of its distribution network. other The appointment of the same distributors for their networks had an economic reasoning in that none of the four tobacco companies held a sufficient market share capable of sustaining a dedicated distribution network.

The tobacco companies had called on interested wholesalers to submit a business plan. The same distributors were chosen from the wider pool because of their business plans, evidenced by the fact that other tobacco companies had selected to use their services, thereby demonstrating confidence in their economic soundness. This was important because the previous regime, whereby all tobacco companies collaborated with all wholesalers, was considered ineffective and also some terms tobacco could indeed companies to restrict competition. exchange sensitive information. To address the aforementioned concerns, the HCC requested that the four tobacco companies propose commitments with the aim of ensuring that exclusive distributors would be able to perform passive sales outside their territory and also to sell to all customers therein (wholesalers, authorized distributors and retailers). As far as the non-exclusive distributors, it wanted to ensure that they would be able to perform both active and passive sales to any customer (wholesaler, authorized distributor or retailer). For both categories, it wished to make certain that 19 .

JULY – SEPTEMBER 2015 clearygottlieb.com any exchange of information between the company and its The TAR Lazio found that the ICA had wrongly considered distributors would exclude sensitive information about the F’s turnover for the purposes of the application of the 10% company’s competitors. turnover cap. The commitments were found to sufficiently address the concerns raised by the HCC and accepted as binding. Although not part of the complaint, the companies also agreed to amend existing agreements with their distributors in other areas of Greece i.e., regions outside of Athens, 41 It maintained that the 10% turnover cap had to be calculated taking into account the turnover of the mother company (MF), which in this case had been directly responsible for the infringement, even if the infringing assets had been subsequently transferred to a subsidiary (F). The Council of State partially annulled the judgment as Patras, and Thessaloniki. regards the quantification of the fine. It determined that the ITALY ICA was correct to refer to F’s turnover for the purpose of This section reviews developments under the Competition Law of October 10, 1990, No 287, which is enforced by the Italian Competition Authority (“ICA”), the decisions of which are appealable to the Regional Administrative Tribunal of Latium (“TAR Lazio”) and thereafter to the Last-Instance calculating the 10% turnover cap, considering this compliant both with Italian competition law and the Commission’s guidelines on the method of setting fines. 42 The Council of State determined that only taking into account only the turnover of the legal entity that transferred the infringing assets (which, in the case at hand, was Administrative Court (the “Council of State”). significantly lower than that of the subsidiary, to which the Policy and Procedure infringing assets had been transferred), would encourage The Council of State Partially Annuls a TAR Lazio Judgment Concerning the Calculation of the 10% the fine, all business activity related to the infringement must be considered irrespective of any formal restructuring Turnover Cap Applicable to Antitrust Fines On July 2, 2015, the Council of State partially annulled a judgment by the TAR Lazio, which had reduced the sanction imposed by the IICA on Metalmeccanica Fracasso S.p.A. (“MF”) for its direct participation in a cartel. elusive behavior. It further asserted that when calculating 39 reference to MF’s sales in the market affected by the cartel 40 However, in calculating the 10% turnover cap, the ICA made reference to the turnover of the legal entity which was the recipient of the infringing assets transferred in December 2007, Fracasso S.p.A.

(“F”), a wholly owned subsidiary of MF. The Council of State’s approach differs from EU case law and decisional practice, according to which the 10% ceiling applies to the consolidated turnover of the group to which The ICA had calculated the amount of the fine with during the last year of the infringement (i.e., in 2006). or change in legal ownership of the infringing assets. the infringing company belongs (i.e. it is calculated against the total turnover of all companies constituting the economic entity acting as an single “undertaking” for antitrust purposes). The consolidated turnover achieved at the global level is an indicator of the overall size and economic capacity of the undertaking. Anchoring the maximum threshold amount to this value results in an effective deterrent,, preventing the “screen” of the formal 41 39 Council of State, Judgment No.

3291 of July 2, 2015. 40 Intesa nel mercato delle barriere stradali (Case I723), ICA decision of September 28, 2012. TAR Lazio, Judgment No. 8674/2013. 42 In particular, Article 15 of the Competition Law of October 10, 1990, No. 287; European Commission, Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003, OJ 2006 C 210/02. 20 .

JULY – SEPTEMBER 2015 clearygottlieb.com articulation in distinct companies, each with its own legal held that the ICA was not entitled to impose an increase for personality, from clouding an accurate perception of the delay in payment, as any delay could only start running undertaking’s real economic dimension. from the expiry of the deadline set in the decision The Council of State Annuls Two Judgments by the re-determining the fines for the payment of the latter. 46 45 and September 4, 2015, 47 the Council of TAR Lazio on the ICA’s Powers to Re-determine Fines On August 14 and Impose Penalties for Delay in Fine Payment State reversed the judgments by the TAR Lazio, stating On September 12, 2012, following two judgments by the that, if a fine is not annulled but only re-determined, delay TAR Lazio confirming the existence of an infringement of in payment can be sanctioned from the expiry of the competition law, but ordering the ICA to re-determine the deadline for payment set in the original decision. It also original and found that, if the second decision reduces the fine, the Albini&Pitigliani S.p.A. for their participation in a cartel, the basis for the calculation of the penalty for late payment is ICA re-determined the fines by deducting from the fine the amount as re-determined. According to the Council of calculation fines on circumstance S.p.A. previously State, the fact that the fine amount is re-determined does not mean that the companies are allowed to delay payment the ICA, remained unchanged because, notwithstanding for the part of the fine still due according to the final the above-mentioned deduction, the final amount continued decision.

On the other hand, delay in payment of the part to exceed the 10% statutory cap. Furthermore, the ICA of the fine annulled has no legal consequences, as nothing applied fine increases for delay in the fine payment is due for that portion of the original fine. 43 aggravating Italsempione The amount of the fines, as re-determined by included. an imposed because it considered that the deadline for their payment was the one set forth in the original administrative decisions imposing them. Pending the TAR judgments, the companies had not yet paid the fines. The Council of State further stated that the 10% turnover cap is an upper limit aimed exclusively at correcting excessive fines in their final amount, and thus the last step in their quantification. When re-determining fines, it Both companies challenged the ICA’s new decisions before appears “preferable” to deduct aggravating circumstances the TAR Lazio, contesting the re-determined amount of the from the basic amount of the fine (rather than from the final fines and the imposition of fine increases.

The TAR Lazio capped amount) with the consequence that the final upheld the appeals stating that the ICA had failed to follow re-determined amount can lawfully remain unchanged the order set in the TAR judgments, according to which the compared to the original amount. aggravating factor should have been deducted from the final amount of the fine, which did not emerge expressly capped at the 10% turnover in the first decision. 44 It also 43 Logistica internazionale-Albini & Pitigliani/Rideterminazione sanzione (Case I722C), ICA decision of September 12, 2012; Logistica internazionale-Italsempione/Rideterminazione sanzione (Case I722D), ICA decision of September 12, 2012. 44 In particular, the TAR Lazio held that the original ICA decision did not expressly mention the application of the 10% cap, and thus the final amount of the original fine simply resulted from the application of the aggravating and mitigating circumstances to the basic amount (in contrast with the view taken by the ICA in its decision re-determining the fine). The re-determination should have therefore been applied to this amount. However, on this specific issue, the companies asked the Council of State to refer the case to the ECJ for a preliminary ruling on the compatibility of this practice taking 45 TAR Lazio, Judgment No. 3718 of April 11, 2013, annulling the decision re-determining the fine for Albini&Pitigliani S.p.A.; TAR Lazio, Judgment No.

876 of January 24, 2013, annulling the imposition of the fine increase on Albini&Pitigliani S.p.A.; TAR Lazio, Judgment No. 3724 of April 11, 2013, annulling the decision re-determining the fine and the imposition of the fine increase on Italsempione S.p.A. 46 Council of State, Judgment No. 3944 of August 14, 2015, ICA v. Italsempione S.p.A. 47 Council of State, Judgment No.

4114 of September 4, 2015, ICA v. Albini&Pitigliani S.p.A. 21 . JULY – SEPTEMBER 2015 clearygottlieb.com into consideration the principle of proportionality enshrined confirming the existence of the infringement and reinstating in Article 49(3) of the Charter of Fundamental Rights of the the fine. European Union. The Council of State accepted the request and consequently ordered suspension of the proceedings and transmission of the case documents to the ECJ. 54 In all three cases, the ICA ordered the payment of penalties for delay in payment of the main fines and, on the basis of a principle stated by the Italian Supreme Court in Judgment No. 23318/2009, considered the delay to run from the The TAR Lazio Annuls Three Decisions of the ICA expiration of the deadline set in the decisions imposing the Applying an Increase in Antitrust Fines for Delay in original fines. According to the Supreme Court’s judgment, Payment fining powers exclusively belong to public administrative On July 13 48 and August 17, 2015, 50 49 the TAR Lazio bodies, and fine revisions by administrative courts do not of the ICA ordering three constitute exercise of such power. In the judgments under companies to pay a penalty for delay in payment of their examination, the TAR Lazio set aside these new ICA antitrust fines pursuant to Article 27, paragraph 6, of Law decisions imposing the penalties. No.

689/1981. In two of these cases, the original fines had maintained that a fine increase for delay in payment, annulled three decisions been reduced by the TAR Lazio, 51 and then again increased on appeal by the Council of State. 52 The TAR Lazio considering its sanctioning nature, can only be imposed The when the delay is attributable to the company concerned— companies concerned then paid the difference between the a condition which was not satisfied for the companies in amount imposed by the TAR Lazio (which they had already this case. The companies involved could not have known paid) and the higher amount subsequently set by the the final amount of the fines, nor of their very existence Council of State.

In the third case, the company concerned (and consequently pay them), before the conclusion of the had not paid the original fine, which had been annulled by appeal judgments (in the first two cases) or before the 53 but paid it only when the ICA adoption of the new ICA decision re-determining the fine re-determined its amount according to the indications according to the criteria fixed by the Council of State (in the provided by the Council of State in its appeal judgment third case). the TAR Lazio, According to the TAR Lazio, the Supreme Court’s judgment was not a relevant precedent because it referred to the different case in which the fine had been reduced (not increased) on appeal, and nothing had been paid by the 48 undertaking in regards to pending litigation. Furthermore, Boat Boero Attiva Marine & Protecting Coating Genova SpA v Italian Competition Authority (Judgment 9352/15) and PPG Italia Sales & Services Srl v Italian Competition Authority (Judgment 9353/15). the TAR Lazio found that the Supreme Court’s view on 49 Piombifera Bresciana Srl v Italian Competition Authority (Judgment 10843/15). of the new Italian Code of Administrative Procedure, 50 Respectively, ICA, Note No. 52809 of December 5, 2012 for Boat Boero Attiva Marine & Protecting Coating Genova SpA; Secretarial Office of the ICA, Communication No.

52806 of September 5, 2012, for PPG Italia Sales & Services Srl; ICA, Payment Solicit No. 34724 of June 28, 2013, for Piombifera Bresciana S.r.l. fining powers had been superseded by the entry into force 55 which confers to administrative courts a wider jurisdiction 51 TAR Lazio, Judgment No. 14157 of December 29, 2007. 52 TAR Lazio, Judgment No.

4403 of May 16, 2012. 54 Riciclaggio delle batterie esauste-Rideterminazione sanzione (Case I697B), ICA decision of November 30, 2011; and Council of State, Judgment No. 3013 of May 20, 2011. 55 Legislative Decree No. 104 of July 2, 2010, Articles 7, 34 and 134. Council of State, Judgment No.

3189 of May 29, 2012. 53 which in certain circumstances can also extend to the 22 . JULY – SEPTEMBER 2015 clearygottlieb.com merits of the case, including the imposition of pecuniary consortium representing plastic packaging manufacturers sanctions. and users. Accordingly, the judgments of the Council of State The ICA initiated proceedings following a complaint by re-determining the fines (in the first two cases) or the new Aliplast, a company specializing in the collection, recycling ICA decision re-determining the fine according to the and recovery of plastic packaging. Aliplast had created an criteria set out by the Council of State (in the third case), autonomous system for managing its own packaging waste replaced the ICA’s original administrative decisions, the (the “Sistema P.A.R.I.”), with the exception of a small consequence being that any delay for payment could run portion that still needed to be processed through CONAI’s only from the expiration of the deadline for payment fixed in infrastructure. In its complaint, Aliplast reported that the the last relevant decision (in the present cases, the two consortia were abusively hampering the entry of Sistema judgments of the Council of State or the new ICA decision P.A.R.I. into the market for the management of plastic based on the Council of State’s judgment). packaging special waste by creating obstacles to Sistema P.A.R.I.’s recognition by the Ministry of the Environment. Abuse of Dominance In fact, autonomous systems need to be duly authorized by The ICA Accepts Commitments Offered by Two the Ministry of the Environment in the context of an Consortiums Active in the Management of Plastic administrative procedure featuring CONAI as an advisor. Packaging Waste with Respect to Potentially Exclusionary Conduct With a decision of September 3, 2015, 56 the ICA accepted commitments offered by CONAI and COREPLA, two consortia active in the management of packaging special waste (i.e., waste produced by non-domestic users).

The ICA thereby closed the proceedings which it had initiated on the basis of Article 102 TFEU. The case is noteworthy because the illegal conduct identified by the ICA comprised, inter alia, abuse by the dominant undertaking of its role in an administrative procedure necessary for allowing a competitor to enter the market. This type of conduct has recently gained the attention of competition authorities as a novel means for an incumbent to abuse its position in the market. CONAI is a consortium (mandated by law) which brings together packaging manufacturers and users, with a view to financing and organizing the collection and recycling of packaging waste. With respect to plastic packaging, CONAI carries out its activities through COREPLA, a In its decision to open an investigation, the ICA found that CONAI had seemingly enacted the exclusionary strategy reported by Aliplast in three ways. First, CONAI had abused its advisory position by raising a number of objections with the exclusive purpose of hindering Sistema P.A.R.I.’s authorization. Second, CONAI had refused to quantify the fee owed to it by Aliplast for its residual recycling activities. According to the ICA, this refusal to deal was instrumental because an agreement with Aliplast on this matter was an essential condition for recognition. Third, CONAI had disseminated disparaging remarks concerning Sistema P.A.R.I., which could negatively influence consumers. CONAI and COREPLA offered a number of commitments which the ICA considered sufficient to address its concerns.

First, the consortia committed to appointing an independent monitoring trustee to advise the Ministry of the Environment in the context of the recognition procedure. Second, the consortia committed to begin negotiations with the autonomous systems in order to determine the fee for the portion of their packaging activities that continued to be handled by CONAI. Third, they committed to publishing on 56 Conai-Gestione rifiuti da imballaggi in plastica (Case A476). CONAI’s website detailed information regarding the 23 . JULY – SEPTEMBER 2015 clearygottlieb.com autonomous systems, and to avoid influencing users on the a leniency application. legitimacy of such systems. issued in respect of five (former) employees of Kühne and Burg for their involvement in the cartel. NETHERLANDS The ACM applied its “simplified settlement procedure.” This section reviews developments under the Competition Act of January 1, 1998 (the “Competition Act”), 57 which is enforced by the Netherlands Authority for Consumers and Market (Autoriteit Consument & Markt, “ACM”). Individual decisions have been 58 undertakings involved in exchange of their written acknowledgement of the facts and legal assessment as found by the ACM. The procedure typically speeds up the process and results in a shorter simplified decision. Decisions First ACM Cartel Settlement Decision in Natural During the Annual Conference on Developments in Competition Law in October 2015, Chris Fonteijn, the Vinegar Case On June 25, 2015, the ACM issued its decisions on the natural vinegar cartel—its first-ever cartel settlement decisions modelled on European Commission practice. This procedure entails a fine reduction of 10% for the 59 The ACM found that two manufactures of natural vinegar, Carl Kühne KG (GmbH & Co.) and Kühne GmbH (together “Kühne”), as well as De Burg B.V., Burg Groep B.V., Burg chairman of the board of the ACM, said that both the ACM and undertakings under investigation benefit from the simplified settlement procedure because it offers efficiency gains to all parties by way of a swift handling of the decision. 60 Judgments Beheer B.V., and Groenland Invest B.V. (together “Burg”), had participated in a cartel from October 2001 until July 2012. Trade and Industry Appeals Tribunal allows ACM to Use Evidence From Wiretaps From Other Government Agencies in Cartel Investigations Kühne and Burg, the two most important suppliers of The Dutch Trade and Industry Appeals Tribunal (“CBb”) industrial natural vinegar in the Netherlands, agreed to decided, in two separate judgments of July 9, 2015, that maintain the status quo regarding seven customers, and to the ACM is entitled to use evidence obtained through this end, made an arrangement as to the price they would wiretaps by other government agencies, in its own cartel offer to each other’s customers. Additionally, in case of investigations and fining decisions, even though it lacks this customers’ unexpected volume shifts, Kühne and Burg investigative tool itself. 61 agreed to compensate each other. During the course of an anti-corruption investigation in The ACM found these practices to be in breach of Article 6 South Limburg in 2007, the Public Prosecutor contacted of the Dutch Competition Act and of Article 101(1) TFEU. the ACM (at that time NMa) because it had uncovered On that basis, it imposed a €1.8 million fine on Burg. evidence Kühne however obtained 100% reduction and escaped a suspicion of the existence of pricing agreements between €4.6 million fine because it was the first undertaking to file construction companies. 57 Decisions of the ACM are available at : www.acm.nl, case-law is available at: www.rechtspraak.nl. 60 58 The ACM is the successor of the Netherlands’ Competition Authority (Nederlandse Mededingingsautoriteit, “NMa”) as of April 1, 2013. The speech of Mr Fonteijn is available at: https://www.acm.nl/nl/publicaties/publicatie/14807/Speech-Chris-Fonteij n-Congres-Ontwikkelingen-Mededingingsrecht-2015/ (last visited October 31.

2015). 61 59 ACM, Case 14.0705.27 (Natuurazijn) decisions of June 25, 2015. Trade and Industry Appeals Tribunal Judgments of 9 July 2015, ECLI:NL:CBB:2015:193 and ECLI:NL:CBB:2015:192. via wiretapping that raised a reasonable The Public Prosecutor shared 24 . JULY – SEPTEMBER 2015 clearygottlieb.com these recordings with the ACM which, in December 2008, assume it had been gathered legally. Lastly, the CBb held launched a cartel investigation in the construction sector. that even though the ACM may not tap phones itself, it may In March 2012, the ACM imposed fines totalling €3 million use the recordings received from other bodies that possess on two companies and their executives for pricing this investigative tool. agreements which involved the submission of cover bids for tenders in construction contracts during the period of March to December 2008. Interestingly, on the same day, the CBb handed down another judgment, which though differing demonstrated the same analysis as above. 63 in facts This second On June 13, 2013, the Rotterdam District Court (the case concerned wiretap recordings from the information “District Court”) overturned the ACM’s decisions on and investigation service of the Ministry of Housing, Spatial 62 The District Court found that the recordings were Planning and the Environment (VROM-IOD) collected criminal records and that sharing such records with third during an investigation into violations of environmental law. parties needed to be justified by “necessity in view of an These wiretap recordings gave rise to a reasonable important public interest.” Since it was unclear if the Public suspicion of pricing agreements in the waste-collection Prosecutor had considered this in the public interest, the sector and were therefore shared with the ACM. District Court held that the ACM was not allowed to use the November 2011, the ACM imposed fines on seven recordings as evidence. companies totalling €3 million. appeal. On higher appeal, the CBb agreed with the District Court finding that the recordings constituted criminal records. In The CBb referred both cases back to the District Court for a substantive assessment of the appeal. However, unlike the District Court, the CBb held that the District Court Strictly Interprets the Notion of “Public requirement of an important public interest (in this instance, Undertaking” the economic well-being of the country) had been met. The In an August 19, 2015 judgment, the The Hague District CBb also held that while a Public Prosecutor’s written Court (the “District Court”) rendered the first interpretation motivation on sharing the wiretap recordings facilitates the of the notion of “public undertaking” as laid down in assessment as to whether there was “necessity in view of Articles 25j and 25g of the Dutch Competition Act and an important public interest,” the lack of such a written introduced on July 1, 2012 by the Public Enterprises statement cannot be construed as denying that this Market Activities Act (Wet Markt en Overheid). requirement had been met. Furthermore, the CBb dismissed the claim that Article 8 ECHR protecting the right to privacy had been violated; the phones had been tapped with the approval of a judge and the Public Prosecutor was legally entitled to provide recordings to the ACM, as there was no other way in which the ACM could have reasonably obtained this information since price agreements are not usually made in writing. Additionally, the CBb held that by considering the principles of due process in its fining 64 De Koornmolen (the “applicant”), a swimming pool in the municipality of Zuidplas (the “municipality”), had initiated a civil procedure before the District Court claiming that the municipality violated the prohibition of favoring public undertakings over other undertakings when it granted operating subsidies to two competing swimming pools that had been denied to the applicant, resulting in a distortion of competition. decisions, the ACM had fulfilled its duty to assess the legality of the evidence it received and was entitled to 63 Trade and Industry Appeals Tribunal, Judgment of 9 July 2015, ECLI:NL:CBB:2015:192. 62 64 The Hague District Court, Judgment of 19 August 2015, ECLI:NL:RBDHA:2015:9797. Rotterdam District Court, Judgment of 13 June 2013, ECLI:NL:RBROT:2013:CA3079. 25 .

JULY – SEPTEMBER 2015 clearygottlieb.com First of all, the District Court noted that the applicant failed Acquisition, to contest the municipality’s decision via administrative or Broadcasting Rights judicial appeal procedure. As a result, the District Court On July 23, 2015, the CNMC imposed a €10 million fine on relied on the binding force of the municipality’s decision. It Telefónica de España, S.A.U. (“Telefónica”) and a was undisputed that the foundation operating one of the €5.5 million fine on DTS Distribuidora de Televisión Digital, competing swimming pools was a public undertaking. S.A.

(“DTS”), for engaging in anticompetitive practices in However, with regard to the foundation operating the other relation to the acquisition, resale, and exploitation of competing swimming pool, the answer was not as football broadcasting rights for the 2012–2013 and 2014– clear-cut; it required an assessment of whether the 2015 seasons, thereby infringing Article 1 of the LDC and municipality was able to “determine the policy” of the this Article 101 of the TFEU. particular undertaking. According to Article 25g(2) of the Dutch Competition Act, a governmental body is only able to determine the policy of a public undertaking if: (i) it has a majority of the voting rights; (ii) it appoints the majority of Resale and Exploitation of Football In August 2012, Telefónica and DTS concluded two agreements for the commercialization of the Canal+ Champions League and Canal+ Liga channels. the management; (iii) the undertaking is a subsidiary of With regard to the Canal+ Champions League agreement, undertakings falling under (i) or (ii); and lastly, (iv) in other the CNMC found that DTS informed Telefónica, before its cases laid down by general administrative measure. competitors, Even though in the case at hand, none of the above options were applicable, De Koormolen argued that the articles of association of the other competing swimming pool could not be amended, nor certain contracts entered into, without the municipality’s approval, and that the municipality was involved in the undertaking’s financial reporting. However, according to the District Court, the list of Article 25g(2) is exhaustive and must be interpreted strictly. Accordingly, the District Court rejected the its intention to commercialize the Champions League broadcasting rights exclusively to a single telecoms operator.

As a result, Telefónica had more time than any other potential buyer to consider and evaluate the possibility of acquiring these rights, and to plan its commercial strategy. Furthermore, according to the CNMC, DTS drafted the terms and conditions of the auction to favor Telefónica and limit competition between pay-TV operators. As regards the Canal+ Liga agreement, the CNMC established that DTS designed its Liga wholesale offer in a applicants claims. way that favored Telefónica. In addition, as in the Canal+ SPAIN Champions League agreement, Telefónica was informed of This section reviews developments under the Laws for the Defense of Competition of 1989 and 2007(“LDC”), which are enforced by the regional and national competition authorities, Spanish Courts, and, as of 2013, by the National of Markets and Competition Commission (“CNMC”),which comprises the CNMC Council (“CNMCC”) and the Competition Directorate (“CD”). Anticompetitive Practices DTS’s commercial strategy before its competitors. DTS informed Telefónica downstream retail prices. of its own Canal+ Also, Liga This conferred an advantage upon Telefónica, enabling it to design a commercial and promotional strategy before the start of the football season, in contrast to its competitors. The CNMC found that DTS favored Telefónica over other pay-TV operators by granting Telefónica preferential treatment for the acquisition of Canal+ Champions League The CNMC Fined DTS and Telefónica €15.5 Million for and Canal+ Liga broadcasting rights. In exchange, Their Agreements and Concerted Action Relating to the 26 .

JULY – SEPTEMBER 2015 clearygottlieb.com Telefónica did not compete with DTS in the upstream In its decision, the CNMC found that the exchanging of market for the acquisition and resale to pay-TV operators of information during the period of February 2006 to August broadcasting rights. 2013, which took place in three different exchange forums Taking into account the Supreme Court judgment of January 29, 2015, 65 the CNMC concluded that the infringement should be deemed “very serious,” which justifies the imposition of a fine of up to 10% of the total It is noteworthy that these fines were imposed on Telefónica and DTS only three months after the CNMC’s conditional approval of the acquisition of DTS by Telefónica. In its authorization decision, the Commission imposed on Telefonica the obligation to enable all its pay-TV competitors to acquire up to a maximum of 50% of the merged entity’s premium sports channels, including Canal+ Champions League and Canal+ Liga. CNMC Imposed Its Highest concerned three different areas—business management, after-sales, and marketing—amounted to a single and continuous infringement of Article 1 of the Spanish Competition Act and of Article 101 TFEU. The CNMC established that the anticompetitive exchanges turnover of the participating undertakings. The and Fine of information began in the so-called “Brands Club,” a forum where business management information was exchanged. In particular, the participants started sharing commercially sensitive information on their distribution strategy, the market performance of their brands, and the margins obtained by the dealers of their respective networks. The participants in this forum later extended the scope of the information exchange to after-sales services and activities, and finally to marketing. Ever for Anticompetitive Practices in the Car Manufacturing and Distribution Sector On July 23, 2015, the CNMC imposed a €171 million fine— the largest fine it had ever imposed—on 21 car manufacturers and distributors, and 2 consultancies, for a The CNMC characterized the conduct as a restriction of competition by object, and qualified it as a very serious infringement due to its nation-wide geographic scope and the high combined market shares of the participants in the cartel. cartel in the Spanish car manufacturing and distribution Twenty-one car manufacturers and distributors were fined sector.

The CNMC found that the companies exchanged for participating in the cartel. Due to the differences in the current and future strategic and commercially sensitive degree and the duration of their participation, the fines information relating to business management, after-sales ranged from 0.10% and 1.30% of their total turnover in the services, and marketing. affected market. As leniency applicants, SEAT, as well as Following a leniency application in June 2013, made by SEAT, S.A.

(“SEAT”), the CNMC carried out several dawn raids throughout July, which culminated in the opening of Volkswagen Audi España, S.A. and Porsche Ibérica, S.A., (which belong to the same business group), were exempt from their total fine of €39,443 million. infringement proceedings under Article 1 of the Spanish The CNMC also found that two consultancies took part in Competition Act. the infringement, because even if they were not active in the relevant market, they acted as cartel facilitators. By collecting disaggregated commercially sensitive information 65 Case 2872/2013, Judgment of the Supreme Court of January 29, 2015. According to this judgment, the 5/10 per cent upper limits for fines set out in Article 63(1) LDC do not constitute a capped ceiling, applicable ex post once the fine has been calculated, but rather, they act as the upper limit of a range or scale within which the fine must be determined based on the gravity and the duration of the specific infringement. and elaborating in monthly, quarterly, and annual reports, they acted as intermediaries in the exchange of information, and contributed to sustaining the conduct over time. The key role they played was deemed an 27 .

JULY – SEPTEMBER 2015 clearygottlieb.com aggravating circumstance in the calculation of their fines, Ringier and Tamedia each hold a 50% stake in JobCloud. which were set at 2% of their total turnover in 2014. In conjunction with Jobscout24.ch, JobScout24 also operates an Internet portal for employment ads. JobCloud SWITZERLAND already has a strong position and there were indications This section reviews competition law developments under the Federal Act of 1995 on Cartels and Other Restraints of Competition (the “Competition Act”) amended as of April 1, 2004, which is enforced by the Federal Competition that the contemplated concentration might strengthen the (possibly already dominant) position of JobCloud. As a result, the FCC decided to conduct a phase II examination of the effects on competition of the proposed concentration. Commission (“FCC”). The FCC’s decisions are appealable The Swiss merger control regime features a very high to the Federal Administrative Tribunal (the “Tribunal”). standard of assessment compared with other jurisdictions, which is sometimes called the "dominance-plus test". Merger Control According to this test, the FCC can either prohibit or The FCC Clears the Acquisition of Ricardo by Tamedia authorize a concentration subject to conditions and as well as the Acquisition of JobScout 24 by JobCloud, obligations, (only) if the investigation indicates that the a Joint Venture Company Held By Tamedia and Ringier concentration creates or strengthens a dominant position, On June 9 2015, the FCC announced that it had opened an is capable of eliminating effective competition, and causes in-depth investigation into the purchase of Ricardo by harmful effects that cannot be outweighed by any 66 there improvement in competition in another market. On August were indications that this acquisition might create or 25, 2015, the FCC announced that it had cleared the strengthen a dominant position in the area of job abovementioned concentrations.

According to the FCC's advertisements. press release, Tamedia. According to the FCC's press release, In addition, there were indications that Tamedia/Ricardo and Ringier might be 68 while Tamedia and JobCould have been collectively found to hold a dominant position in the area of dominant in German-speaking Switzerland in the field of employment advertising, the contemplated transactions are car sales ads. Since 2008, Ricardo has belonged to the not capable of eliminating effective competition and South African media group, Naspers, operating the online subsequently may not be prohibited. platforms ricardo.ch and ricardoshops.ch, the car sales platform autoricardo.ch platform, as well as the classified ads platform olx.ch. The Revised Notice Regarding the Competition Law On June 16 2015, the FCC announced that it would conduct an in-depth investigation into the purchase of JobCloud by JobScout24.

According to the FCC's press release, 67 there were indications that this acquisition would create or strengthen a dominant position in the area of job advertisements. Policy and Procedure JobCloud operates several Internet portals in the field of job ads, such as jobs.ch and jobup.ch. Treatment of Vertical Agreements in the Motor Vehicle Trade – Selected Aspects On June 29, 2015, the FCC reviewed the Notice of October 21, 2002 regarding the Competition Law Treatment of Vertical Agreements in the Motor Vehicle Trade ("MVT-NOT") and its guidelines ("Guidelines to the MVT-NOT"). According to the FCC, the revision takes into account the case law of the FCC, new developments in the market 66 67 A version in German or French available at: https://www.news.admin.ch /message/index.html?lang=fr&msg-id= 57683. and with regard to the technology, and A version in German or French available at: https://www.news.admin.ch /message/index.html?lang=fr&msg-id=57582. 68 A version in German of French available at: https://www.news.admin.ch /message/index.html?lang=fr&msg-id=58426. 28 . JULY – SEPTEMBER 2015 clearygottlieb.com modifications in European and Swiss competition laws. which agreements will be seen by the FCC as a Contrary to the situation in EU law, the revised MVT-NOT qualitatively serious impediment to effective competition. ("revised MVT-NOT"), which will come into force on The following agreements are examples of agreements that January 1, 2016, will still regulate the sale of new motor will be deemed as qualitatively serious impediments to vehicles, maintenance and repair services, and the effective competition: distribution of spare parts (primary and secondary markets). ï‚¡ Agreements between motor vehicle dealers and authorized distributors, The cartel prohibition under Swiss law is based on Art. 5 of • the Cartel Act. According to this provision, agreements that distributors to final consumers, either (a) because appreciably restrict competition are prohibited, unless they are justified on grounds of economic efficiency. they By contrast, are agreements that eliminate competition that limit the sales of motor vehicles by authorised provide that the remuneration of the authorised distributor is varied in accordance with the vehicle's destination or the final consumer's prohibited and cannot be justified on grounds of economic place of residence, or (b) because premium efficiency. schemes or other arrangements of a financial The FCC has released a number of Notices on specific nature or about the product delivery are made subjects, which have de facto force of law, but do not bind dependent on the vehicle's final destination (Art. courts. Among other Notices, the FCC has released the 15 (1) revised MVT-NOT); Notice of 28 June 2010 on the Competition Law Treatment • of Vertical Agreements ("Vert-NOT").

This Notice, which is motor vehicles to additionally offer repair and of significant practical relevance, borrows heavily from the maintenance services or the supply of spare parts 2010 EU block exemption regulation and the respective (Art. 16 (b) revised MVT-NOT). guidelines. The current (and the revised) MVT-NOT lists competition restrictions that are not part of the more general Vert-NOT. According to Art. 13 of the revised MVT-NOT, the that commit the authorized distributor of new ï‚¡ Agreements between motor vehicle dealers and authorized repairers, • not to undertake repair services, or grant the legal MVT-NOT has primacy over the Vert-NOT.

However, as supplier warranty, cost-free maintenance or any long as the revised MVT-NOT does not state otherwise, the services in the context of a product recall on all 69 Therefore, the vehicles of the affected brand sold in Switzerland regulations of the revised MVT-NOT have to be read within or in the EEA. (The provision of these services the context of the Vert-NOT and more particularly in can therefore not be made dependent on the connection with selective distribution systems. purchase location (Art. 15 (2) revised MVT-NOT)); rules of the Vert-NOT are applicable. The MVT-NOT regulates the admissibility of vertical agreements between different market participants regarding the distribution of motor vehicles, the provision of repair and maintenance services for motor vehicles, and the distribution of spare parts.

It indicates, in particular, • that oblige authorized repairers to sell new motor vehicles or spare parts (Art. 16 (a) revised MVT-NOT). In the context of the distribution and purchase of spare parts, the revised MVT-NOT qualifies as qualitatively serious impediments to effective competition: 69 See consideration VI revised MVT-NOT. 29 . JULY – SEPTEMBER 2015 ï‚¡ clearygottlieb.com be allowed to do so, the suppliers have to prove that the spare parts are also obliged to provide repair and feasibility and proper execution of repair and maintenance maintenance services (Art. 16 (d) revised MVT-NOT); ï‚¡ Agreements by which the authorized distributors of work could be endangered by the admission of new Agreements that limit the sale of spare parts by members of a selective distribution system to 71 The motor vehicle supplier's obligation to contract with genuine spare part dealers who fulfil the qualitative criteria independent repairers (Art. 16 (f) revised MVT-NOT); ï‚¡ repairers in their network. Agreements that limit the sale of spare parts by the spare part producer to members of a selective distribution system, independent market actors or the final consumers (Art. 16 (g) revised MVT-NOT); of the selective distribution system has been deleted in the revised MVT-NOT. UNITED KINGDOM This section reviews developments under the Competition ï‚¡ Agreements that limit the free choice of the members of a distribution system to purchase original or equivalent Act 1998, and the Enterprise Act 2002, which are enforced by the Competition and Markets Authority (the “CMA”). spare parts from a manufacturer or a distributor of these goods, and to use these parts for the repair or CMA Adopts Infringement Decision on Information maintenance of motor vehicles.

(However, the motor Sharing and Price Fixing in the Ophthalmology Sector vehicle supplier may prescribe the use of original spare On August 20, 2015, the Competition and Markets parts provided by him for any work in the context of a Authority (“CMA”) issued a final infringement decision in warranty, free client service or a product recall (Art. 16 which it imposed fines against the Consultant Eye Surgeons Partnership (“CESP”) Limited for anti-competitive (h) revised MVT-NOT)). information exchange and price fixing in the ophthalmology Finally, a qualitatively serious impediment to effective competition exists in the event of restrictions on so-called multi-brand sales. In effect, members of a distribution system must be allowed to sell vehicles and spare parts of sector. CESP is the largest organization of consultant eye surgeons in the United Kingdom, representing around 200 consultants grouped into 37 limited liability partnerships (“LLPs”). other brands and provide repair and maintenance services Based on a complaint submitted in mid-2013, the Office of also with regard to vehicles of other brands. Fair Trading (“OFT”) initiated a probe into the alleged The new guidelines do not contain any notable substantive modifications in comparison to the current MVT-NOT. However, particular attention must be paid to the following aspect: while under the current Guidelines to the MVT-NOT, motor vehicle suppliers are permitted to base their selective distribution system on qualitative criteria behavior.

In May 2015, CESP expressed to the CMA its willingness to cooperate with the investigations, and entered into settlement discussions. In July 2015, a settlement and agreement was signed the CMA subsequently addressed its statement of objection to CESP. only, which consequently gives repairers a right to be part 70 the In its final decision, the CMA identifies three infringements: revised MVT-NOT gives suppliers the right to select their First, CESP circulated among its members information members exceptionally on quantitative criteria as well. To concerning their respective price lists to be adopted of the garage network if they fulfil these criteria, towards insurers for the most common ophthalmic 70 So-called obligation to contract; see paragraph 6 of the current Guidelines to the MVT-NOT. 71 Paragraph 26 of the revised Guidelines to the MVT-NOT. 30 . JULY – SEPTEMBER 2015 clearygottlieb.com procedures. This allowed the different LLPs to predict with instigated in June, 2014, following a reference by the Gas certainty their respective pricing policies and resist and Electricity Markets Authority. downward pressure on prices exerted by insurers. Moreover, this price-setting policy prevented the passing on of cost savings to insurers, and ultimately consumers. Secondly, CESP coordinated the reaction of all LLPs against a particular insurer’s initiative aimed at reducing 73 The CMA found that in the wholesale gas market, the scope to exercise unilateral market power was low and the lack of price transparency did not create a barrier to entry. It did not find any features which could lead to an AEC. price for ophthalmic procedures and increasing the pool of In the electricity market, the CMA found that no single fee-assured that generator of electricity could exercise sufficient unilateral members delist this insurer and charge its’ insured patients market power to raise wholesale spot prices and earn higher self-pay fees. excessive profits. consultants. CESP recommended Finally, CESP facilitated the It also concluded that there was no exchange of commercially sensitive information among systemic technical inefficiency arising from market rules LLPs concerning a proposal presented by a private hospital concerning self-dispatch (the process by which individual group, and ultimately recommended they reject it. operators optimize output to meet overall demand). Dismissing CESP’s arguments, the CMA held that these The CMA did find, however, that the absence of locational actions could not be considered as objectively necessary to pricing for losses arising from the current regulatory regime enter the relevant market, and therefore fell within the may constitute an AEC. scope of Article 101(1). With respect to the assessment of possible efficiencies which could have exempted CESP from liability under Article 101(3), the CMA found that CESP had not been able to provide sufficient evidence in support of its claims. of GBP 500,000. However, this amount was reduced to GBP 382,500 in consideration of the cooperation offered by CESP during the investigation, the efficiencies for the CMA resulting from the conclusion of the settlement agreement, as well as the adoption by CESP of a comprehensive antitrust compliance program. CMA Provisional Findings in the Energy Market Investigation On July 7, 2015, the Competition & Markets Authority (“CMA”) issued a report of provisional findings concerning its investigation into the supply or acquisition of gas and 72 reserve scarcity pricing system, the CMA did not find evidence that these would be problematic. As to the Capacity Market, the CMA provisionally considered that a capacity mechanism was likely to increase investment In light of these findings, the CMA imposed on CESP a fine electricity in Great Britain. As regards imbalanced price reforms, and the move to a 72 The investigation was CMA Summary of provisional findings report (7.7.15): http://assets.digital.cabinetoffice.gov.uk/media/559ad883e5274a155c00 001b/EMI_PFs_Summary.pdf. incentives and would thus be procompetitive. The CMA found that the current Contracts for Difference (“CfD”) allocation process could constitute an AEC, as a large proportion of the available CfD budget was allocated outside the competitive process and better monitoring of the division of technologies into pots was necessary. The CMA also considered, and on the basis of its investigation, dismissed, three ways in which vertical integration could represent a distortion of competition: (i) favoring vertically integrated supplies to the detriment of independent generators; (ii) refusal to supply to independent suppliers; and (iii) raising barriers to entry by 73 Gas and Electricity Markets Authority’s terms of reference (26.6.14): http://assets.digital.cabinet-office.gov.uk/media/53ccfb08ed915d106e00 000d/Energy_Terms_of_reference.pdf. 31 .

JULY – SEPTEMBER 2015 clearygottlieb.com preventing new suppliers from securing sufficient wholesale energy. The CMA provisionally concluded that competition is adversely affected by some features of the gas and electricity markets, including: ï‚¡ The lack of quality differentiation of gas and electricity in the domestic retail energy markets; ï‚¡ Difficulties in switching between suppliers caused by information barriers; ï‚¡ Technical constraints imposed by prepayment meters; ï‚¡ Unilateral market power held by energy suppliers due inter alia to weak customer engagement/responsiveness; ï‚¡ A regulatory framework that reduced retail suppliers’ ability to innovate and design new tariff structures; ï‚¡ In the electricity market, the CMA provisionally found the absence of a plan for moving domestic customers to half-hourly settlements represented. The CMA found a lack of robustness and transparency in regulatory decision-making, particularly relating to financial reporting, communication on the forecast and impacts of policies over bills, Ofgem’s statutory objectives, and the absence of a formal mechanism which could address disagreements between Department of Energy & Climate Change (“DECC”) and Ofgem. Moreover, the CMA found an AEC in the wholesale and retail gas and electricity markets, insofar as innovation is limited, and energy markets cannot keep up with regulatory developments. The CMA’s report was accompanied by a notice of possible remedies. Stakeholders have been invited to comment on the provisional report and the notice of possible remedies until August 5, 2015. 32 . JULY – SEPTEMBER 2015 clearygottlieb.com Office Locations NEW YORK MILAN One Liberty Plaza New York, NY 10006-1470 T: +1 212 225 2000 F: +1 212 225 3999 Via San Paolo 7 20121 Milan, Italy T: +39 02 72 60 81 F: +39 02 86 98 44 40 WASHINGTON HONG KONG 2000 Pennsylvania Avenue, NW Washington, DC 20006-1801 T: +1 202 974 1500 F: +1 202 974 1999 Cleary Gottlieb Steen & Hamilton (Hong Kong) 37th Floor, Hysan Place 500 Hennessy Road Causeway Bay Hong Kong T: +852 2521 4122 F: +852 2845 9026 PARIS 12, rue de Tilsitt 75008 Paris, France T: +33 1 40 74 68 00 F: +33 1 40 74 68 88 BRUSSELS Rue de la Loi 57 1040 Brussels, Belgium T: +32 2 287 2000 F: +32 2 231 1661 LONDON City Place House 55 Basinghall Street London EC2V 5EH, England T: +44 20 7614 2200 F: +44 20 7600 1698 MOSCOW Cleary Gottlieb Steen & Hamilton LLC Paveletskaya Square 2/3 Moscow, Russia 115054 T: +7 495 660 8500 F: +7 495 660 8505 FRANKFURT Main Tower Neue Mainzer Strasse 52 60311 Frankfurt am Main, Germany T: +49 69 97103 0 F: +49 69 97103 199 COLOGNE Theodor-Heuss-Ring 9 50688 Cologne, Germany T: +49 221 80040 0 F: +49 221 80040 199 ROME Piazza di Spagna 15 00187 Rome, Italy T: +39 06 69 52 21 F: +39 06 69 20 06 65 BEIJING 45th Floor, Fortune Financial Center 5 Dong San Huan Zhong Lu Chaoyang District Beijing 100022, China T: +86 10 5920 1000 F: +86 10 5879 3902 BUENOS AIRES CGSH International Legal Services, LLPSucursal Argentina Avda. Quintana 529, 4to piso 1129 Ciudad Autonoma de Buenos Aires Argentina T: +54 11 5556 8900 F: +54 11 5556 8999 SÃO PAULO Cleary Gottlieb Steen & Hamilton Consultores em Direito Estrangeiro Rua Funchal, 418, 13 Andar São Paulo, SP Brazil 04551-060 T: +55 11 2196 7200 F: +55 11 2196 7299 ABU DHABI Al Sila Tower, 27th Floor Abu Dhabi Global Market Square Al Maryah Island, PO Box 29920 Abu Dhabi, United Arab Emirates T: +971 2 412 1700 F: +971 2 412 1899 SEOUL Cleary Gottlieb Steen & Hamilton LLP Foreign Legal Consultant Office 19F, Ferrum Tower 19, Eulji-ro 5-gil, Jung-gu Seoul 100-210, Korea T:+82 2 6353 8000 F:+82 2 6353 8099 .