Competition Law News & Updates

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December 1, 2014
COMPETITION UPDATE
Slovak Republic

1 July 2014. The amendments brought by Act No 151/2014 of 14 May 2014, and its four main implementing decrees (on de minimis agreements, settlement, leniency and notification of concentrations) came into force. They concern all aspects of competition law in the Slovak Republic and required a renumbering of many sections of Act No 136/2001.

Restrictive agreements. According to Section 4(2) of Act No 136/2001 in its new wording, agreements between undertakings, concerted practices and decisions by associations of undertakings are not caught by the prohibition if they do not have an appreciable effect on competition. Market share thresholds designed to measure appreciability are set out in De minimis Decree No 169/2014. However Section 4(2) specifies that restrictive agreements always have an appreciable effect where their object is to restrict competition. Under the decree, horizontal agreements have a negligible effect on competition where the overall market share of the parties is below 10%. In the same way, vertical agreements have a negligible effect where the market share of each of the parties is below 15%. Those figures are reduced to 5% in both cases where competition is restricted by the cumulative effect of a network of similar agreements covering more than 30% of the market.

Abuse of dominant position. Act No 151/2014 has amended the definition of abuse. Two cases of abuse are no longer covered by the terms of Section 8 of Act No 136/2001: temporary abuse of economic power with a view to excluding competition and refusal to grant access to essential facilities. However such practices may still be covered under the general definition of abuse of dominance.

Mergers. Under Section 10(9) of Act No 136/2001, “Notification of a concentration shall contain the requirements determined by the Office in the generally binding legal regulation”. Decree No 170/2014 on notification of concentrations details the content of notifications and the information required from the parties and provides a draft notification form. It also allows the merging parties to submit a short-form notification where: i) the transaction consists in the acquisition of sole control over an undertaking by one undertaking previously having joint control over it; ii) the transaction results in no horizontal or vertical overlap between the parties’ activities; iii) the parties’ aggregate market share is below 15% in the case of an horizontal merger or below 30% in the case of a vertical merger.

In addition, pursuant to new Section 12(7) of Act No 136/2001, the Antimonopoly Office is now allowed to market test the commitments proposed by the merging parties, either by forwarding them to third parties or publishing them on its website. Under new Section 12(8), the commitments offered may also include the obligation to appoint an independent trustee who will assist the Office in the supervision of implementation of the said commitments.

Investigations/dawn raids. Act No 151/2014 introduced clarifications relative to the powers of investigating officers and the corresponding duties of the investigated undertakings. Under new Section 22a(4) of Act No 136/2001, the employees of the Office are now under the obligation to draft minutes of the inspection and said inspection will only be deemed formally closed where the minutes are signed by the persons present during operations. To secure information and documents relating to the purpose of the investigation, the employees of the Office are now entitled: a) to seal documents or media on which information is recorded, to seal the premises and their equipment, including means of transport for the period and to the extent necessary for the inspection; b) to take away documents and media on which information is recorded with the aim of making copies or gaining access to information where the Office is unable, primarily for technical reasons, to gain access to information or make copies of documents during the inspection; c) to enter the undertaking´s premises and means of transport, to open closed premises and their equipment or otherwise provide access to documents and media on which information is stored; d) to access information stored in any electronic form on the undertaking’s data storage or even to which the undertaking may access in connection with its activity, including information stored on the data storage of other entities. Conversely, undertakings must allow entry in their premises and means of transport, cooperate with the employees of the Office, allow their own employees to give explanations and submit documents and information necessary for the Office regardless the medium on which it is recorded, ensure access to all documents, information and data in electronic form and that seals affixed remain intact (Section 22a(7)).

Protection of confidential information. Act No 151/2014 grants undertakings a strengthened protection of confidential information. Under Section 40 of Act No 136/2001, although parties to the proceedings and other persons with a legitimate claim are granted a right of access to the Office’s files, the Office is under a duty to avoid disclosure of confidential information, classified information, bank secrecy, tax secrets, trade secrets and telecommunication or post secrets. Before the Statement of Objections, the parts of the file containing a leniency application are excluded from access to the file. They only become part of the file following the sending of the Statement of Objections. However, the Office is only to enable access to such information to a party to the proceedings, in cases deserving special consideration, upon written consent of the person which has provided it. If this person does not give consent, the information is made available exclusively to the counsel of the party to the proceedings which requested it.

Leniency. Act No 151/2014 has significantly enhanced the Slovak Republic’s leniency program. Under new Section 38d(1), the benefit of leniency is no longer limited to the specific cases previously listed but covers any horizontal agreement. Further, full immunity may now be granted even to the cartel instigator provided he/she did not coerce other undertakings into taking part in the infringement (Section 38d(3)). Partial immunity may be granted even to the cartel instigator who coerced other undertakings into taking part in the infringement (Section 38d(4)). Detailed rules on submitting applications for the leniency program, applications for reservation of marker, particulars of these applications and the procedure followed by the Office may be found in Leniency Decree No 172/2014.

Under new Section 42 relative to civil lawsuits, the beneficiary of full immunity is exempt from the obligation to pay damages if the victim can be indemnified by other parties to the agreement. If such is not the case, he/she shall only be liable for damages caused to its own direct or indirect customers or suppliers.

Act No 151/2014 has also instituted a special reward for individual whistleblowers. According to the new Section 38g of Act No136/2001, an individual who comes forward to the Office with decisive information concerning an infringement, before any leniency application has been made may be awarded up to 1% of the total of fines collected due to that information provided that that sum does not exceed EUR 100,000. If the fine is not paid within 100 days from the time the Office’s decision became enforceable, the reward is reduced to 50% of the sum that would otherwise have been granted, with a ceiling of EUR 10,000. The Office may, at the request of the whistleblower, keep her/his identity secret.

Settlement. Act No 151/2014 has introduced a settlement procedure in the Slovak Republic’s competition law. Pursuant to the new Section 38e of Act No 136/2001, if a participant in an infringement of competition rules admits its involvement in the violation, the Office may, at its discretion, grant a reduction of the fine that would otherwise be imposed. Detailed rules on the settlement procedure may be found in Settlement Decree No 171/2014, which provides for a fine reduction of up to 50 % for vertical agreements and up to 30 % for horizontal agreements under certain conditions.

Fines. Under new Section 38a natural persons now incur a fine of up to EUR 1,650 for non-compliance with the obligation to submit documents or information requested by the employees of the Office, or where they supply false or incomplete documents or information, or do not allow the Office to examine them. Undertakings still face a fine of up to 1% of their turnover for the same actions.

December 1, 2014
COMPETITION UPDATE
Cyprus

20 June 2014. Law No 83(I)/2014 on the control of concentrations between undertakings has been published in the Official Gazette. The new law repeals and replaces Law No 22(I)/1999 which had been in force since 1999 and brings Cypriot law in line with EU law and especially Merger Regulation No 139/2004. The main amendments brought to the previous legislation are as follows:

  • The notification thresholds have been changed and now cover only transactions having a strong nexus with Cyprus, therefore excluding purely foreign-to-foreign mergers from the scope of control. Now, a concentration must be notified where
    • the aggregate turnover achieved by each of at least two of the undertakings concerned exceeds EUR 3.5 million;  
    • at least two of the undertakings concerned achieve a turnover in Cyprus; and
    • at least EUR 3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.
  • However, the Minister of Energy, Commerce, Industry and Tourism may deem that a concentration not reaching those thresholds has a significant public interest and therefore must be controlled where it may, inter alia, have an impact on public safety or the plurality of the media.
  • The 2014 Act abolishes the duty to notify a concentration within seven calendar days. The deadline to file for notification is now set after the signing of an agreement or the issuance of a public offer. However, an earlier notification may be made where the parties show a bona fide intention to conclude an agreement or publish a public offer.
  • A filing fee of EUR 1,000 is due at the time of notification. An additional EUR 6,000 fee is incurred where a phase II examination is necessary.
  • A standard notification form detailing the information required from the parties is provided in Annex III of the Act. In particular, parties must now calculate the HHI index before and after the transaction.
  • The new criterion for the assessment of the transaction’s compatibility is whether it is likely to significantly hinder competition in Cyprus, inter alia by creating or strengthening a dominant position.
December 1, 2014
COMPETITION UPDATE
Estonia

19 June 2014. The Estonian Parliament has decriminalized most competition law infringements except anticompetitive agreements, taking effect 1st January 2015. Currently, abuse of a dominant position, failure to notify a concentration and misuse of essential facilities may constitute crimes where they are repeatedly committed by a previously sanctioned undertaking. Anticompetitive agreements are also considered as crimes but without having to establish the existence of a repeat offense. From 1st January 2015, even if repeated, abuse of a dominant position, failure to notify a concentration and misuse of essential facilities will no longer constitute crimes but will be regarded as misdemeanors.

The amendment does however significantly increase the level of fines for misdemeanors. Currently, the maximum fine is of up to EUR 32,000. From 1st January 2015, it will reach up to EUR 400,000. The maximum fine for crimes such as anticompetitive agreements, currently set at up to EUR 16 million, remains unchanged.

December 1, 2014
COMPETITION UPDATE
Cyprus

28 March 2014. Law No 41(1)/2014, amending the Protection of Competition Law has been published in the Official Gazette. Accordingly, the Protection of Competition Law may now be referred to as the Protection of Competition Laws 2008 and 2014. The amendments aim at conferring extended powers on the Commission for the Protection of Competition in order to improve the fight against cartel activity and focus on the most significant breaches.

Section 2 now provides a new definition of the term ‘undertaking’ covering any entity engaged in an economic activity regardless of its legal status and method of financing.

New Section 23A allows the Commission for the Protection of Competition to prioritize cases depending on criteria such as the public interest, the potential impact of its decision on competition and/or consumers and the limitation periods provided by the Act.

According to new Section 32A, the Commission is entitled to launch sector inquiries or inquiries on particular types of agreements in various sectors of the economy where the course of trade, the inelasticity of prices or other circumstances suggest a possible limitation or distortion of competition in the Republic of Cyprus. Information gathered during such investigations may be used to open ex officio proceedings.

 

In the course of any kind of investigation, the Commission is empowered to take oral statements from legal or natural persons with their consent (Section 21), gather forensic IT evidence, i.e. take, obtain copies or extract files, books, accounts and other records irrespective of their storage medium or place of storage (Section 31). The Commission may also cooperate with other Cypriot regulatory authorities or national competition authorities and require their assistance during investigations (Section 23 B).

 

In addition, the 2014 Act determines a new standard for the issuance of interim relief, which is more compliant with EU rules. Pursuant to Section 28, the test is now whether urgency is established, i.e. there is a serious risk of irreparable damage to competition.

 

Furthermore, Section 25 provides that where the Commission intends to adopt a decision requiring that an infringement to Sections 3 and/or 6 of the Law and/or Articles 101 and/or 102 TFEU be put to an end and undertakings or associations of undertakings offer commitments meeting the concerns expressed in its preliminary assessment, the Commission may decide to make those commitments binding on the undertakings or business associations concerned. The decision may be issued for specified period and conclude that there are no longer grounds for further action.

 

Finally the 2014 Act substantially amends the method of setting fines. Apart from the fine sanctioning infringements to Sections 3 and/or 6, fines were calculated on the basis of a maximum fixed amount. From now on, any fine will be assessed on the basis of a percentage of the undertaking’s turnover. 

November 19, 2014
COMPETITION UPDATE
Germany

30 September 2014. The Bundeskartellamt has published a Guidance paper “on domestic effects in merger control” providing useful advice on the issue of whether foreign-to-foreign mergers must be notified in Germany. Under German law the notification obligation is triggered by two conditions: the transaction must meet the turnover thresholds described in Section 35 GWB and have an appreciable effect within Germany. The guidance paper describes typical case scenarios in which domestic effects can be clearly identified or ruled out. In any other instance, a case-by-case assessment must be conducted and the guidance provides essential criteria for such examination.

 

Where the assessment of a concentration’s domestic effects raises more complex questions than the assessment of its competitive effects and it is obvious that the concentration will not raise any competition concerns, the Bundeskartellamt suggests a pragmatic approach, advising the parties to notify the merger. It will then focus on the relevant competition issues and leave open the question of domestic effects.

 

According to the guidance, there are two scenarios where appreciable effects can be clearly identified. Firstly, where the concentration involves only two parties and the target company is active in Germany with a turnover exceeding at least the domestic turnover threshold of EUR 5 million, the merger is deemed as having appreciable domestic effects. Secondly, where more than two companies are involved in the concentration, the joint venture will clearly have sufficient domestic effects if the turnover it achieves exceeds EUR 5 million in Germany.

 

In cases involving more than two parties, domestic effects can be clearly ruled out if the following (cumulative) conditions are met:

1. the joint venture is only active on markets outside Germany;

2. the parent companies do not compete on the joint venture’s relevant product market (or on upstream or downstream markets).

 

A case-by-case assessment must be carried out in any other scenarios involving more than two parties. A useful criterion is whether the activities of the joint venture have marginal domestic effects. The turnover achieved by the joint venture in Germany must not exceed the EUR 5 million threshold. It also must not hold a market share exceeding 5% of the relevant market. However, the guidance specifies that a joint venture's business activity is not automatically deemed "marginal" where the turnover and market share thresholds are not reached.  Indications that a market position is more than “marginal” may also result from the transfer of intellectual property rights and know-how to the joint venture. Likewise, despite the marginal activities of the joint venture in Germany, domestic effects may arise due to possible spillover effects between or among the parent companies.

 

In the case of a newly established joint venture that has not yet achieved a turnover, its projected sales in Germany during the first three to five years after its establishment may provide a useful benchmark as to whether the joint venture’s activity in Germany is more than marginal.

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