On July 11, 2019, Assistant Attorney General Makan Delrahim announced fundamental and sweeping changes to the Division’s approach to corporate compliance policies that will bring it into line with other Department of Justice branches. In every case, the Division will now consider compliance programs in deciding whether to file criminal charges and in calculating fines. Also, when a company faces charges, Division prosecutors may now consider proceeding by way of deferred prosecution agreements (DPAs) rather than requiring companies to plead guilty. These policy shifts could be the most significant changes to U.S. criminal antitrust enforcement since the Division adopted its Corporate Leniency Policy more than 25 years ago. This Covington Alert will discuss how the policy change departs from longstanding DOJ practice, the significance of the change to corporations that face potential risk in cartel investigations, and the many unanswered questions about how the DOJ will apply the policy.
On 14 May, Johan Ysewyn and Dirk Van Erps (DG COMP) gave a presentation on recent EU cartel enforcement at the annual Advanced EU Competition Law Conference in London. Their presentation covered developments in enforcement, policy, and court review between May 2018 and May 2019.
There was not much cartel enforcement by the European Commission (“EC”) during the time period covered by the review. The EC issued only one settlement decision in Occupant Safety Systems II, which was triggered by an immunity application. The decision covered two separate cartels, which lasted from 2007 to 2011 and from 2008 to 2011, respectively. Both cartels involved the exchange of commercially sensitive information and price coordination for the supply of seatbelts, airbags, and steering wheels to Volkswagen and BMW, respectively.
On May 13, 2019, the Supreme Court (“the Court”) announced its 5-4 decision in Apple, Inc. v. Pepper, permitting iPhone users to proceed with an antitrust suit against Apple alleging that it monopolized the retail market for iPhone apps. The Court emphasized that it decided only the threshold issue, ruling that the iPhone users were not barred by federal law from bringing the suit, and did not address the merits of the claims. The Court concluded that consumers could bring suit against Apple because they purchased apps directly from Apple—through the Apple App Store— even if app developers (and not Apple) were setting the retail price of the apps. In this Covington Alert, Thomas Barnett, Beth Brinkmann and Derek Ludwin discuss the decision as well as a number of questions that it raises about the Supreme Court’s antitrust precedents relating to direct and indirect purchasers.
On 16 April 2019, England’s Court of Appeal ruled that the Competition Appeals Tribunal (the “CAT”) had erred in rejecting certification of former financial ombudsman Walter Merricks’ class action against MasterCard, for £14 billion. As a result, the CAT will now reconsider whether to certify the class. The decision has lowered the bar that will need to be cleared in this and future class actions in order to achieve certification. Louise Freeman and Harry Denlegh-Maxwell consider the decision and its implications for the UK’s fledgling class action regime in this Covington Alert.
On 5 April 2019, the European Commission (“EC”) published a report – prepared by Europe Economics at the request of DG COMP – on EU loan syndication and its impact on competition in credit markets (the “Report”).
The Report describes the functioning of the syndicated loan business and seeks to assess whether there are potential competition concerns with regard to syndicated loans in leveraged buy-outs (“LBOs”), project finance (“PF”) and infrastructure projects (“INFRA”). Syndicated loans are considered to be an important source of finance to the European economy. The EC’s interest in this business is therefore primarily motivated by an assessment of its effectiveness and functioning besides potential competition concerns. Geographically, the Report focuses on France, Germany, the Netherlands, Poland, Spain, and the UK. These countries account for approx. 75% of syndicated lending volume in the identified segments in the EU, with Poland making up the smallest share of the group.
On 14 March 2019, the Court of Justice of the European Union (“CJEU”) issued a preliminary ruling in Case C-724/17 Vantaan kaupunki v Skanska Industrial Solutions Oy and Others, holding that the principle of economic continuity applies in actions for damages resulting from infringements of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). The judgment followed a preliminary reference from the Supreme Court of Finland, submitted in the course of proceedings regarding an asphalt cartel in the Finnish market. Continue Reading
In the last months, the Landgericht Düsseldorf (District Court of Düsseldorf – LG Düsseldorf) has handed down 10 judgments dealing with standard essential patents (SEPs) in the smart phone sector. While not all judgments have been published yet, cases 4a O 17/17 and 4b O 4/17 answered a number of fundamental questions as to how German courts will apply the CJEU’s case law for FRAND licensing of SEPs by patent pools. Continue Reading
On 16 January 2019, the European Court of Justice (“ECJ”) rejected the European Commission’s (“Commission”) appeal in Commission v. UPS. The judgment followed Advocate General Kokott’s Opinion of July 2018, and upholds the 2017 judgment of the General Court (“GC”) annulling on procedural grounds the Commission’s decision prohibiting the acquisition of TNT by UPS.
On 14 February 2019, the General Court (“GC”) annulled the European Commission’s (“Commission”) decision of 11 January 2016 declaring Belgium’s system of excess profit rulings as an aid scheme incompatible with the Internal Market. The Commission had ordered the Belgian authorities to recover around € 700 million from at least 35 companies that had benefited from the excess profit exemption through tax rulings. The GC considered that the excess profit exemption was not a “scheme” within the meaning of State aid law and that the Commission should have considered each tax ruling individually. Whilst the judgment does not address the question of “selectivity”, which is central to most tax ruling cases, it establishes that tax rulings, which are given with some latitude and discretion by the tax authorities, cannot be reviewed collectively as a “scheme”, but must be assessed individually.
On 21 January 2019, the UK government published its draft statutory instrument on State aid, outlining the changes to the UK State aid regime in the event of a no deal Brexit. Its publication comes at critical moment for the UK as it considers the potential options for leaving the European Union: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving.
The State Aid (EU Exit) Regulations 2019 (“State Aid No Deal Regulation”), which still requires the approval of the UK Parliament, does not make material changes to the substance of the EU State aid framework, but rather transposes the regime into UK domestic law, establishing the UK Competition and Markets Authority (“CMA”) as the UK State aid enforcement authority, thereby replacing DG Comp.