Competition Law News & Updates

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June 24, 2014
COMPETITION UPDATE
European Union

24 June 2014. Since 1995, the Commission has deemed that cooperation agreements between liner shipping carriers to provide joint cargo transport services (consortia) may allow the parties to rationalize their activities and achieve economies of scale provided they are not used to fix prices or share the market. Such agreements also improve productivity and quality of service for users; therefore, the Commission has exempted them from the prohibition of anticompetitive agreements where the shipping lines have a combined market share of under 30%. Regulation No 906/2009 of 28 September 2009 is the latest of those block exemption regulations.

After conducting a public consultation on the possible extension of the exemption, the Commission concluded that “the exemption has worked well, providing legal certainty to agreements which bring benefits to customers and do not unduly distort competition, and that current market circumstances warrant a prolongation”. The Commission thus extended for another five years up until April 2020 the validity of the existing legal framework (See Article 1 of Commission Regulation No 697/2014 of 24 June 2014 amending Regulation No 906/2009 as regards its period of application)

See GCL No 01.002.

June 11, 2014
COMPETITION UPDATE
Mexico

29 April 2014. After the Constitution was amended in June 2013 to establish the two new competition authorities – the IFETEL (specialized in the area of telecommunications) and the COFECE (for all other areas of the economy) - the Mexican Congress approved a new Federal Law of Economic Competition, published in the Official Gazette on 23 May 2014, which replaces the former Act. Without altering the key concepts of the latter, the new Act grants enhanced powers to the two new competition authorities, defines new concepts and new types of monopolistic behavior while streamlining competition proceedings and strengthening criminal sanctions.

The new Act introduces two new concepts in Mexican Law. Firstly, ‘barriers to competition’ (barreras a la competencia) designate any structural feature of the market, legal provision or behavior of undertakings having the objet or effect of hindering competitors’ access to the market, limiting their ability to compete or distorting the free play of competition. Secondly, ‘essential inputs’ (insumos esenciales), are inputs or facilities indispensable for the provision of goods or services on one or more markets, without close substitutes, the reproduction of which is not feasible from a technical, legal or economic point of view and which are controlled by one or more undertakings having substantial market power or having been deemed as such by the IFETEL. The existence of barriers to competition or hindered access to essential inputs may be discovered through the new power of the COFECE to conduct market inquiries where there is cause to suspect that there is no effective competition on one market. The COFECE is empowered to eliminate barriers to competition in particular by ordering the divestiture of assets, rights or equity interests and to regulate access to essential inputs, notably by fixing prices.

New “absolute monopolistic practices” (horizontal practices) are penalized. While formerly, bid rigging was only prohibited where it concerned public biddings, the prohibition now extends to private biddings. In addition, where previously information exchanges were only prohibited in relation to price fixing, they are now penalized in respect of any type of horizontal practice. The Act also introduces new “relative monopolistic practices” (vertical practices): sales below cost are now sanctioned even where they are not “systematic”; margin squeezes in relation to an essential input/facility; denial, restriction or discriminatory access to an essential input/facility.

The Act provides for the establishment of a separate investigation body within the COFECE, autonomous from the Pleno, the decision-making body. The body in charge of investigations is now entitled to ask for explanations on acts, information or documents related to the purpose of the investigation from the undertakings’ personnel or representatives. Where the undertakings hinder the conduct of the investigation, the facts will be deemed to be established. Finally, the statute of limitations for conducting investigations is doubled from 5 to 10 years.

Criminal sanctions for absolute monopolistic practices are increased from 3-5 years to 5-10 years imprisonment.

Merger provisions of the previous Act are also amended. While formerly, the parties to the merger could close the operation where the competition authority did not issue a formal order to suspend completion, they are now always prohibited from proceeding without clearance. Mergers completed without previous clearance will be deprived of all legal effect. The value of the parties’ assets taken into account in the notification thresholds are now limited to those held in the Mexican territory, while their global assets were previously also considered. The new act also increases from 35 to 60 days the time-limit granted to the COFECE to issue an opinion on the merger.

 

See GLC 42.01 et seq.

April 18, 2014
COMPETITION UPDATE
China (People’s Republic of)

18 April 2014. The Chinese Ministry of Commerce (MOFCOM) has released a temporary document providing guidance on the notification of simple cases of concentrations between business operators, to supplement the previously reported document setting the standards for the assessment of simple mergers of 11 February 2014. The ‘Guiding Opinions’ contain two annexes providing a simplified notification form and a public notice template.

As expected, the simplified notification form requires less information from the notifying parties. In particular, the latter are exempted from providing data on the supply and demand structure of the relevant markets, market entry, efficiencies, failing company defense etc. Where the Anti-Monopoly Bureau deems that the transaction meets the standards for simplified proceedings and the information supplied is complete, it files the case and publishes the public notice template inviting third parties to submit their observations within 10 days. If during that period a third party opposes the operation on solid grounds, the notifying parties lose the benefit of the simplified procedure and will have to re-file the case under the standard procedure. The simple case status may also be revoked if the Anti-Monopoly Bureau discovers that the notification is based on false or misleading information.

See GCL No 35.24

March 28, 2014
COMPETITION UPDATE
Cyprus

28 March 2014. The Protection of Competition Law 2008 was amended and should now be referred to as the Protection of Competition Laws 2008 and 2014. The amendments brought to the existing law are mainly designed to strengthen the investigative powers of the Commission for the Protection of Competition (CPC) and boost the deterrent effect of fines by substantially increasing them.

Under new Section 32A, the CPC may now conduct sector inquiries or inquiries into specific types of agreements in various sectors where circumstances create suspicions of a possible distortion of competition in Cyprus. The CPC may then publish a report on the result of such inquiries and use the information gathered during the course of investigations on potential infringements of competition rules. During investigations, the CPC may request information from the undertakings or associations of undertakings concerned and take oral statements.

The fines provided for in the new wording of Section 24 are also incurred for infringements of Articles 101 or 102 TFEU and not only for violations of Sections 3 or 6 of the Law. Where a decision of the CPC is not complied with, a daily administrative fine of up to 5% of the average daily turnover of the undertaking concerned is incurred (compared to EUR 85,000 previously). A fine of 5% of its turnover is applicable where the undertaking does not comply with an interim order as well as a fine of 5 % of its average daily turnover for each day of non-compliance (compared to a daily fine of EUR 17,000 previously). An administrative fine of up to 10% of the turnover of the undertaking now sanctions non-compliance with a commitment made binding, compared to EUR 85,000 previously. Finally, where an undertaking refuses to cooperate during a dawn raid, provides false information or fails to properly address a CPC request for information, it may be given a single fine of up to 1% of its turnover (compared to EUR 85,000 previously) as well as a daily fine of up to 5% of its average daily turnover until the infringement persists (compared to EUR 17,000 previously).

See GCL Nos 6.10 et seq.

March 19, 2014
COMPETITION UPDATE
Israel

19 March 2014. The Knesset has passed the Law on the Advancement of Competition in the Food Sector to address the issue of the high cost of living in Israel, as revealed by the mass protests of the summer 2011. The new law aims at fostering competition in the food sector by prohibiting certain arrangements between suppliers, between retailers or between suppliers and retailers and impeding monopolies in local areas, while promoting price transparency towards consumers.

Any price agreement between suppliers or between retailers is strictly prohibited, irrespective of their market power. Secondly, large suppliers - defined on the basis of market share and turnover thresholds – are prohibited from exerting any pressure on large retailers concerning, inter alia, the allocation of shelf space or their pricing policy. The law also forbids agreements between suppliers and retailers providing, inter alia, for sales below marginal cost, tying or bundling of products.

In concentrated areas, the antitrust commissioner is entitled to block the expansion of a retailer whose market share is higher than 30 or 50%. He/she may also recommend the divestiture of a store where a large retailer holds more than a 50% market share and owns at least three stores in the same catchment area.

Finally, the law requires large retailers to publish online their prices for each product sold in any of their branches.

See GCL No 39.01

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