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.
Potentially significant changes are just around the corner for the UK competition system, as the country prepares to take the final step of exiting the European Union. In this regard, the UK has three potential options: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving. Should the UK leave the EU with a deal, then its departure shall be governed by the Withdrawal Act ( “WA”), which simply confirms much of the competition framework will remain until December 2020 (the “Transition Period”). At the time of writing, the WA still awaits Parliamentary approval. In the case that the UK leaves without a deal in place, then from 29 March 2019 competition law will be governed by the statutory instrument titled The Competition (Amendment etc.) (EU Exit) Regulations 2019 (“No Deal Regulation”).
A very brief summary of the key differences between the WA and the No Deal Regulation in terms of the effect on the UK competition framework is as follows:
On 13 December 2018, the European Court of Justice (“ECJ”) rejected an appeal by Electricité de France (“EDF”) against a General Court (“GC”) judgment confirming a Commission decision ordering France to recover EUR 1.37 billion in State aid from EDF (Case C-221/18 P EDF v Commission). The ECJ judgment confirms that the aid, which had been granted back in 1997, had to be recovered. The EDF saga provides several lessons on how the private investor test should be applied by the Commission and on the burden of proof imposed on the Member State under this test.
On 12 December 2018, the EU General Court (GC) delivered its judgment in the Servier reverse payment patent settlement case, the second GC judgment to date on reverse payment patent settlements (after the 2016 Lundbeck judgment).
The GC confirmed that such agreements fall within the scope of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and may constitute a restriction of competition by object. The GC also confirmed that, to the extent that an infringement is a restriction by object, it is not necessary to analyse its effects. Finally, the GC annulled the fine imposed by the European Commission (Commission) because the Commission failed to establish that the market was limited to the perindopril molecule.
On December 3, 2018, the Dutch Authority for Consumers & Markets (“ACM”) published a speech from its board member, Cateautje Hijmans van den Bergh, regarding potential competition law concerns in the financial technology (“FinTech”) sector.
In particular, further to the European Parliament’s study on FinTech and competition law (the “Study”) – as discussed in a previous blog post – Hijmans van den Bergh voiced concerns regarding potential FinTech foreclosure, following the adoption of Technical Standards. She also provided some guidance regarding access to essential inputs held by firms in the sector. Continue Reading
The General Court dismissed the appeal by Groupe Canal + against the European Commission’s decision accepting Paramount’s commitments in the cross-border pay-TV investigation (T-873/16 Groupe Canal +). It held that territorial restrictions leading to a partitioning of the internal market could be considered as by-object infringements of competition law, thereby rejecting arguments of copyright law and cultural diversity as a justification under the facts in this particular case.
In November 2018, following an in-depth Phase 2 investigation, the European Commission (“Commission”) unconditionally approved the acquisition of Tele2 NL by T-Mobile NL, respectively the fourth and third largest players in the Dutch retail mobile telecoms market. The merged entity remains the third largest player in this market after KPN and VodafoneZiggo. This transaction is the first “four-to-three” telecom merger approved without remedies under Commissioner Vestager’s term, following earlier Commission decisions on four-to-three mergers in (i) H3G/Wind, where approval of a joint venture was conditional on the divestment of sufficient assets to allow a new MNO to enter the market; and (ii) Three/O2, an acquisition that was blocked by the Commission. It shows that there is no “magic number” for players in the telecoms market and that much will depend on the specifics of the merger.
With a musical ABBA twist, Johan Ysewyn presented the evolution of the cartel concept in the EU at the Chillin’ Competition Conference on 20 November 2018 in Brussels.