January 3, 2011
New rules on horizontal cooperation agreements in the EU
On Dec. 14, 2010, the European Commission (EC) published revised rules for
the assessment of cooperation agreements between competitors. The texts include
two “block exemptions” (safe harbor rules) covering certain specialization
agreements, and research and development (R&D) agreements, as well as very
important general guidelines. The latter provide a framework for the EU
competition law analysis of the most common forms of horizontal cooperation
agreements, including those concerning R&D, production, purchasing,
commercialization, standardization, standard terms and information exchange.
The R&D block exemption has been, in the words of the EC, “considerably
extended” so as “to [facilitate] innovation in Europe.” The two most noteworthy
changes in the guidelines are a new chapter on the difficult issue of
information exchange, and substantial changes to the chapter on standardization
agreements. This set of rules is important to any company which has or proposes
to enter into a cooperation agreement with a competitor, if that agreement may
have an impact in the EU.
UK Companies Cannot Recover Competition Law Fines from Their Directors or
Employees
On Dec. 21, 2010, the English Court of Appeal found that corporate
competition law fines imposed under the UK Competition Act 1998 are “personal”
to the fined entity. Accordingly, it cannot seek recovery of the fines or
related costs from the directors or employees who engaged in the conduct which
brought about the fine. The case arose out of Safeway’s (a British supermarket
chain) settlement with the UK Office of Fair Trading (OFT) in December 2007,
under which it agreed to pay a fine of GBP11 million for alleged price fixing
concerning dairy products.
It subsequently brought an action in the UK for damages against certain
former employees (including directors), which has now been stopped by this
judgment. The judgment removes one area of potential competition law-related
liability for UK directors/employees, although it remains the case that the OFT
is increasingly seeking to ensure that UK directors focus on competition law
compliance.
Do Not Obstruct the EC During a Raid
Several recent cases demonstrate an increased EC appetite to tackle
procedural violations arising out of dawn raids. In the most recent development,
on Dec. 20, 2010, the EC issued a formal statement of its case (statement of
objections) against Czech companies Energetický a průmyslový holding and J&T
Investment Advisors. The allegation is that during a dawn raid at the companies’
premises, they obstructed the EC through “the failure to block [access to] an
e-mail account, the failure to open encrypted e-mails [so as to allow review by
the EC] and the diversion of incoming e-mails.”
This very closely followed a Dec. 15, 2010, judgment of the European General
Court which upheld a EUR38 million fine imposed by the EC on German energy
conglomerate E.ON. The fine was for obstructing a raid by breaking a seal which
had been affixed to an office door overnight so as to preserve documents
identified by the EC as relevant to its investigation.
Dominance Investigations in EU; Now It’s Google’s Turn
On Nov. 30, 2010, the EC announced an investigation into allegations that
Google has abused a dominant position in online search in the EU. The opening of
the case follows complaints by search service providers about unfavourable
treatment of their services in Google's unpaid and sponsored search results,
coupled with an alleged preferential placement of Google's own services.
Subsequently, the French competition authority announced on Dec. 14, 2010, that
it had concluded that Google holds a dominant position in France on the
advertising market linked to search engines (although it did not find any
abuses).
These cases follow the EC’s opening in July 2010 of two investigations of IBM
for suspected abuses of a dominant position (concerning tying and access to
spare parts), and a 2009 settlement with Microsoft (which included a commitment
regarding disclosure of interoperability information). It is clear that the EC
and national competition authorities in the EU remain willing and able to
investigate technology companies (wherever they are based), including in
difficult areas such as access to intellectual property and interface
information.
Additional EU/UK
competition law news coverage can be found
in our
news section.
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