On September 29, 2022, the U.S. House of Representatives passed a package of three antitrust bills (H.R. 3843) by a vote of 242-184. The package includes: (1) the Merger Filing Fee Modernization Act; (2) the Foreign Merger Subsidy Disclosure Act; and (3) the State Antitrust Enforcement Venue Act.
On 22 June 2022, the EU’s General Court (“GC”) fully dismissed thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision to block its proposed joint venture (“JV”) with Tata Steel in 2019.
This is the first time that the GC has considered the prohibition of a “gap” case under the EU Merger Regulation (“EUMR”) since it annulled the Commission’s prohibition of CK Hutchison’s proposed acquisition of Telefónica UK (O2) in 2020 (“CK Hutchison”) (see our previous blog post here). A “gap” case is a merger in an oligopolistic market that does not result in the creation or strengthening of an individual or collective dominant position. Rather, it risks causing a “significant impediment to effective competition”.
This result may indicate a return to a more traditional approach by the GC as regards “gap” cases than that demonstrated in the CK Hutchison judgment. The judgment also provides helpful guidance on the interpretation of the EUMR and other legal instruments (such as the Market Definition Notice and the Notice on Remedies). The key findings are:
- Standard of proof: In order to block a “gap” merger, the Commission must show with a sufficient degree of probability that the transaction significantly impedes effective competition in the internal market or in a substantial part of it.
- SSNIP test: The Commission is not required to apply the SSNIP (small but significant and non-transitory increase in price) test when assessing substitutability between products — it is only one of the methods available to the Commission when defining the market.
- Remedies: When assessing remedies, it is not necessary to demonstrate that the remedies remove the entire overlap between the merging parties or re-create fully the pre-merger structure in affected markets.
- Requests for Information (“RFI”): There is no procedural error where the Commission fails to take additional steps (beyond sending systematic reminders) to ensure that recipients respond to an RFI.
On 1 March 2022, the European Commission (“Commission”) published drafts of the revised Research & Development Block Exemption Regulation (“R&D BER”) and Specialization Block Exemption Regulation (“Specialisation BER”, together the “Horizontal Block Exemption Regulations” or “HBERs”) as well as the accompanying Horizontal Guidelines for stakeholder comments. The current HBERs are due to expire on 31 December 2022.
The HBERs set out how competitors can work together on projects and enter into horizontal agreements without breaching collusion-related prohibitions. During the Commission’s evaluation of the current HBER rules and horizontal guidelines, the Commission identified a number of areas for improvement, including the need to update the rules in line with the Commission’s policies on digitalization and sustainability (see our previous blog post here).
Three things for you to know about the recent amendments to the HBERs:
- There is a strong focus on sustainability, and how sustainability agreements may comply with EU competition law, which provides greater scope for companies to enter into sustainability agreements (which is detailed in this blog post).
- Data sharing and information exchange is at the forefront of the HBER update, with additional guidance on identifying and sharing commercially sensitive information and the use of algorithms.
- The competition rules for research and development agreements and specialisation agreements have been explained and clarified, including new definitions of key competition terms (e.g., active and passive sales, unilateral specialisation agreements).
Tuesday, January 18th, the Federal Trade Commission (“FTC”) and the U.S. Justice Department’s Antitrust Division (“DOJ”) launched a joint public inquiry regarding the agencies’ horizontal and vertical merger guidelines. As part of this inquiry, the agencies are soliciting public comment via a Request for Information (“RFI”) on a wide range of topics that could lead to significant changes in the merger guidelines and increased scrutiny of a broad array of transactions. The agencies’ inquiry will address numerous themes of the merger guidelines including those highlighted below.
Continue Reading FTC, DOJ Announce Process to Revamp Merger Guidelines
Now that the COVID 19 pandemic seems to be – at least temporarily – under control, competition authorities in Europe have gone back to performing dawn raids on companies in the second half of 2021.
Continue Reading Dawn raids in the EU are back in full swing
On 6 October 2021, a preliminary ruling of the Court of Justice of the European Union (“CJEU”) in Sumal confirmed that follow-on damages actions can be brought against subsidiaries of companies found to have infringed EU competition law. This note briefly analyzes the judgment and the implications thereof.
Continue Reading The CJEU’s Sumal Judgment: Parental Liability is “Going Down”
In May 2021, the Court of Justice of the European Union (“CJEU”) published the summary of an appeal filed by the International Skating Union (“ISU”) against a ruling from the General Court (“GC”) which found that ISU rules restricting athletes from taking part in rival events infringed Article 101 TFEU. At the same time, a Spanish judge referred questions to the CJEU for a preliminary ruling concerning the compatibility of UEFA and FIFA regulations with EU competition law, which forced UEFA, the governing body of European football, to suspend disciplinary proceedings against members of the recent European Super League (“ESL”) that have not yet abandoned the project (i.e., Juventus, Barcelona and Real Madrid). This note briefly analyzes how the CJEU’s ruling on the ISU case could frame the response to the reference from the Spanish court.
Continue Reading The potential implications of the CJEU’s ISU judgement on the European Super League: Football “on thin ice”
On 6 May 2021, the European Commission (“Commission”) published the findings of its evaluation of the horizontal block exemption regulations for Research & Development (“R&D BER”) and specialisation agreements (“Specialisation BER”, together “HBERs”), as well as the accompanying Horizontal Guidelines (“Evaluation”).
The Commission launched the Evaluation in 2019 to assess the future relevance of the HBERs and the Horizontal Guidelines, since their adoption in 2011 and 2012. It gathered a variety of evidence on the functioning of the HBERs, which included:
- findings of an open public consultation running from November 2019 to February 2020;
- responses to the call for contributions on Competition Policy and the Green Deal launched in 2020; and
- an external evaluation support study, which cross checked the public consultation and the responses received with the Commission’s and national competition authorities’ own experiences.
According to the Commission, the results show that, while still relevant and useful to businesses, there is a need for the HBERs and Horizontal Guidelines to better reflect recent socio-economic developments like digitalisation and sustainability. The Evaluation also identified that businesses perceive some rules as unnecessarily strict and unclear.…
Covington’s four-part video series offers snapshot briefings on key emerging trends in UK Competition Law. In part two, James Marshall and Sophie Albrighton focus on current trends in enforcement and litigation. They are joined by guest speaker Louise Freeman, co-chair of Covington’s Commercial Litigation and European Dispute Resolution Practice Groups, who has extensive experience…
On 25 March 2021, the Court of Justice of the European Union (“CJEU”) dismissed the appeals by Lundbeck, Merck KGaA (and Generics UK), Arrow, Alpharma (and Xellia) and Ranbaxy, against the General Court’s (“GC”) judgment upholding the European Commission’s (“Commission”) 2013 pay-for-delay infringement decision.
The case concerns the antidepressant containing the active pharmaceutical ingredient (“API”) citalopram. Lundbeck’s patents for the API and two processes to produce it were protected in a number of European countries until 2003 (“Lundbeck’s original patents”). Over time, Lundbeck developed other processes for the production of citalopram, in respect of which it obtained various patents (“Lundbeck’s new process patents”).
In 2002, Lundbeck entered into settlement agreements concerning potential launches of generic versions of citalopram with Generics UK (at the time an indirect wholly-owned subsidiary of Merck KGaA), Alpharma, Arrow and Ranbaxy. Under the agreements, Lundbeck made payments to these producers of generic citalopram (“Other Providers”) in various forms (e.g., direct payments, purchase of generic citalopram stock for destruction, and guaranteed profits in a distribution agreement). In exchange, the Other Providers agreed to cease or refrain from selling generic citalopram in the EEA as a whole or in specific Member States.
In 2013, the Commission adopted an infringement Decision against Lundbeck and each of the Other Providers, concluding that the agreements were “by object” restrictions of competition.
Continue Reading The CJEU’s Lundbeck judgment