Competition Law News & Updates

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November 19, 2014
COMPETITION UPDATE
Romania

31 July 2014. Government Ordinance No 12/2014 of 31 July 2014 amending Act No 11/1991 on unfair competition and other acts dealing with competition matters was published in the Official Gazette dated 6 August 2014. In particular, the Ordinance amends various procedural provisions of the Romanian Competition Act of 10 April 1996 (Act No 21/1996). The new rules institute a new quorum for the deliberations of the Competition Council’s Plenum. The majority of its members will have to be present (as compared to 5 members previously) and the decisions will be adopted at the majority of the members present. The Competition Council will also be authorized to prioritize cases depending on the following factors: their potential effect on competition, the consumers’ general interest or the strategic importance of the economic sector at issue.

The new rules also improve the rights of the undertakings under investigation. First, when an ex officio investigation is closed due to insufficient grounds for action, the Competition Council will have to inform the investigated undertakings. Second, where investigations are carried out, the undertakings will be granted access to the file and the right to obtain copies in electronic format, except for confidential information. A special order from the President may however grant access to such information. Appeals against those orders are now only possible in the context of an appeal against the decision to terminate investigations, while previously, they could be appealed separately, with the effect of suspending operations and delaying the course of proceedings. 

November 19, 2014
COMPETITION UPDATE
Poland

10 June 2014. The Polish Parliament has adopted amendments to the Act of 16 February 2007 on Competition and Consumer Protection which aim at toughening enforcement of the competition law rules and streamlining merger control. Not yet published, they will come into force in early 2015.

Competition law enforcement. The new rules extend the statute of limitations for the prosecution of competition law infringements, by substituting a 5 year deadline to the current 1 year deadline. Individuals, namely managers, will also incur an administrative fine of up to EUR 500,000 for precisely detailed infringements, including anticompetitive vertical agreements. However, those rules will only apply to infringements committed after the entry into force of the amendments. Finally, the Office for Competition and Consumer Protection is now empowered to impose remedies – either structural or behavioral – on the undertakings to restore effective competition in the market.

Nevertheless, the amendments not only increase the penalization of anticompetitive conduct, they also enhance negotiated proceedings. Firstly, they improve the leniency program with a leniency plus option, according to which undertakings which are not the first to report the cartel will be allowed to inform the Office of the existence of another infringement in exchange for a fine reduction of 30% for the first cartel and full immunity for the second. Secondly the amendments institute a settlement procedure allowing undertakings who admit their participation in the infringement and waive their right to appeal the decision to benefit from a 10% fine reduction.

Mergers. The amendments institute a two-stage procedure, very similar to the system defined in the EU Merger Regulation and significantly shorten the examination deadlines. Cases not raising competition concerns will have to be dealt with within one month, whereas more complex cases will have to be scrutinized within four additional months. The Office will also be able to express its competition concerns before the adoption of its final decision, enabling the merging parties to offer commitments to avoid a prohibition of their transaction. Finally, two new notification exemptions apply: mergers and creations of joint ventures will not have to be reported where none of the parties has a turnover in Poland in excess of EUR 10 million.

November 19, 2014
COMPETITION UPDATE
China (People’s Republic of)

6 June 2014. The Chinese Ministry of Commerce (MOFCOM) has published a revised version of its 2009 Guiding Opinions on notification of concentrations between business operators. The new Opinions bring welcomed clarifications on the concept of control, the calculation of turnover and the content of prenotification meetings.

Concept of control. Under Section 20 of the Anti-Monopoly Law (AML), a concentration implies, inter alia, the acquisition of control by one or more undertakings over one or more undertakings by purchase of equities or assets. However, the AML fails to define ‘control’. According to the 2014 Guiding Opinions, acquisition of de facto control may give rise to a concentration and thereby, where assessing the existence of control, the authorities should take into account the parties’ agreement and the target’s articles of association and especially:

i) the aims of the transaction and the parties’ future plans;

ii) the structure of third parties’ shareholdings in the target before and after the transaction;

iii) the matters to be discussed in the target’s general shareholders meeting, its voting rules, past attendance rates and voting results;

iv) the composition of the target managing bodies and their voting rules;

v) the rules relating to the appointment and removal of senior managers in the target;

vi) the relationship between shareholders and between managers of the target;

vii) the business relationship or cooperation agreements between the parties.

In addition, the new Guiding Opinions introduced the concepts of sole or joint control, especially for the purpose of defining the notification obligation of joint-ventures. Henceforth, the establishment of a joint-venture should be notified where it is jointly controlled by its shareholders but not where it is solely controlled by one of them.

Calculation of turnover. The 2014 Guiding Opinions also clarify the scope of the turnover requirements contained in the notification threshold rules. Firstly, it specifies that turnover realized in the territory of China includes imports while excluding exports. Although taking account of the undertaking’s affiliates, it also excludes the turnover of the undertakings it sold or whose control it lost during the preceding accounting year. Likewise, in the case of a partial sale of assets or equity, the turnover taken into account is not that of the seller but that generated by the assets or that of the target where the transaction leads to the seller’s loss of control.

Pre-negotiation meetings. The Guiding Opinions recall that in principle, parties must file for notification only after their agreement is signed or, in the case of a takeover bid, after the bid is publicly announced. However, pre-negotiation contacts with MOFCOM made on a voluntary basis are welcome as they can help the parties to define the scope of the notification obligation and if the transaction may qualify as a ‘simple case’ for fast-track proceedings.

Miscellaneous. The new rules also specify for the first time that two or more transactions between the same business operators taking place within a two-year period amount to one transaction which must be notified, should the thresholds be met, at the date of the last transaction. Further, the parties legally bound to notify are now allowed to designate which of them is to carry out the filing obligations but the Opinions clearly specify that neither is exempt from their own responsibility if the other fails to do so.

 

October 31, 2014
COMPETITION UPDATE
Ireland

31 October 2014. The Competition and Consumer Protection Act 2014 adopted in July 2014 to amend the Competition Acts 2002 to 2012 came in force. It creates a new authority with enhanced powers and brings significant amendments to the merger regime.

The 2014 Act merges the Competition Authority and the National Consumer Agency into a new Competition and Consumer Protection Commission (CCPC). The CCPC, which should start operating on 31 October 2014, will be headed by the Chairperson of the Competition Authority and composed of a maximum of six members, including the current members of the Competition Authority and the Chief Executive of the National Consumer Agency. All the functions that immediately before the establishment of the CCPC were vested in the dissolved bodies are transferred to the Commission. However, the CCPC is granted new competition law enforcement powers. It will now be able, inter alia, to compel undertakings to disclose information protected by legal privilege, as long as the confidentiality of such material is maintained or to request data held by telecommunications service providers. A new offense, consisting in withholding information relating to a cartel infringement is created and sanctioned by a fine of up to EUR 5 million and/or imprisonment.

The 2014 Act also amends the rules pertaining to merger control. Firstly, it sets new notification thresholds. Now, transactions must be notified where (i) the aggregate turnover in Ireland of the undertakings involved is not less than EUR 50 million and (ii) the turnover in Ireland of each of 2 or more of the undertakings involved is not less than EUR 3 million. Until then, transactions were reportable where the worldwide turnover of each of two or more of the undertakings involved in the merger or acquisition was not less than EUR 40 million and each of two or more of the undertakings involved in the merger or acquisition carried on business in any part of Ireland, and turnover in Ireland of any one of the undertakings trading in the State was at least EUR 40 million. The new rules clearly aim at focusing on mergers having a strong link with the territory of Ireland, thereby reducing the control of foreign-to-foreign mergers. They also allow an earlier notification of transactions, i.e. where the parties demonstrate a good faith intention to conclude an agreement, whereas until then only binding agreements already entered into could be notified.

 

In addition, the 2014 Act extends the merger review deadlines. Phase I may last up to 30 working days (previously a calendar month) and the review make take up to 120 working days for Phase I & Phase II combined (previously 4 months). The amendments introduce a ‘stop-the-clock’ mechanism in the Phase II proceedings, which was previously available only for Phase I proceedings, where additional requests for information are needed. Those deadlines may be extended, as was already the case before the Act, where commitments are proposed by the merging parties.

 

Finally, the Act operates a significant overhaul of the rules governing media mergers. Now media mergers will have to be notified both to the CCPC and the Minister for Communications, Energy and Natural Resources (previously the Minister for Jobs). The latter will carry out a Phase I assessment based on the effects of the merger on media plurality while the Phase II examination will be carried out by the Broadcasting Authority of Ireland.

June 25, 2014
COMPETITION UPDATE
European Union

25 June 2014. In July 2013, the Commission launched a consultation on the review of the De Minimis Notice in order to take account of recent developments in EU competition legislation (Vertical Block Exemption Regulation 330/2010 and Horizontal Block Exemption Regulations Nos 1217 and 1218/2010) and the ECJ's case law (in particular Case C-226/11 Expedia of 13 December 2012). In that case, the question was raised as to whether restrictions by "object" should be considered as "de minimis" and therefore fall outside the scope of Article 101(1) TFEU. The ECJ replied that such restrictions constitute an appreciable restriction of competition by their very nature.

The Commission therefore repealed the existing notice and replaced it by a new one dated 25 June 2014 which clearly specifies that a "restriction by object" may never benefit from the safe harbor, regardless of the market shares of the parties to the agreement. According to the Commission, the concept of “restriction by object” refers, inter alia, to agreements which either directly or indirectly have as their object the setting of prices for the sale of products to third parties, the limitation of output or sales or  the allocation of markets or customers. The hardcore restrictions set out in the block exemption regulations which the Commission considers as restrictions by object, are also excluded from the scope of the de minimis notice. In addition the notice also states that in order to determine whether or not a restriction of competition is appreciable, the competition authorities and the courts of the Member States may take into account the thresholds established in the notice but are not required to do so.

The market share figures provided in the former notice remain unaffected. Therefore, agreements between undertakings that affect trade between Member States do not appreciably affect competition within the meaning of Article 101(1):

a) if the aggregate market share held by the parties to the agreement does not exceed 10% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors on any of these markets (agreements between competitors); or

b) if the market share held by each of the parties to the agreement does not exceed 15% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors on any of these markets (agreements between non-competitors).

However, as was previously the case, the thresholds are brought down to 5% when, on the market in question, competition is restricted by a cumulative foreclosure effect from parallel networks of similar agreements, whether those agreements are horizontal or vertical. A cumulative foreclosure effect is only probable if more than 30% of the market in question is covered by similar agreements. Furthermore, exceeding the specified thresholds (5%, 10% and 15%) for two consecutive calendar years by two points is deemed as not having any restrictive effect. 

See GCL No 1.12.

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