EC Settles with Standard & Poor’s over Excessive Pricing Claims
On Nov. 15, 2011, the European Commission (EC) announced that it had formally accepted commitments offered by Standard & Poor’s (S&P) to settle
an abuse of dominance investigation. S&P will abolish the licensing fees that banks pay for the use of U.S. International Securities Identification
Numbers (ISINs) in the European Economic Area (EEA) and will significantly reduce the cost for other users such as information services providers
(ISPs). The case is interesting since the EC’s allegations concerned excessive pricing. The EC had taken the view in its Nov. 2009 statement of
objections (preliminary statement of case) that S&P’s fees were unfairly high, in particular with regard to the international organization of
standardization (ISO) cost recovery principle. The EC regards that as a benchmark for fair prices and under it there should be no charges for indirect
users and fees for direct users, and ISPs should not exceed the distribution costs incurred. The case also provides yet another example of the EC
closing an abuse of dominance proceeding using the commitment procedure, under which no decision is published and in effect a negotiated settlement is
reached. Settlements of all types, including for cartels, are increasingly common in EU competition law, before the EC and national regulators.
UK Office of Fair Trading Provides Guidance on Farming and Competition Law
The UK Office of Fair Trading (OFT) published on Nov. 9, 2011, updated guidance to UK farmers on competition law. In addition to noting developments in
the law since the 2004 guidance, the new document adds more detail on:
how the OFT defines markets and estimates market power in the sector;
how the OFT determines whether there are competition problems in farming markets; and
which collaborative activities are most and least likely to breach the law.
Although the guidance is aimed at UK farmers, the principles are relevant EU-wide and in any other jurisdiction which applies similar competition law
UK Office of Fair Trading Supports Competition Law Compliance Programmes in Revised Fining Guidance and Publishes Revised Leniency guidance
On Oct. 26, 2011, the OFT published for consultation a revised version of its fining guidelines in competition law cases. The headline message was that
this includes a proposal of a significant increase in the maximum potential starting point for a fine. However, the document also provides an enhanced
explanation of the relevance of competition law compliance programmes to the OFT’s fining decisions. In short, "evidence of adequate steps . . . may be
treated as a mitigating factor" (but the existence of a programme will only be an aggravating factor in exceptional cases). This is not a new position
for the OFT, but nevertheless a good reminder that the OFT, unlike the EC and other authorities in the EU, but alongside the U.S. Federal Sentencing
Guidelines, is prepared to recognise adequate compliance programmes when setting the level of fines.
At the same time, the OFT published for consultation revised guidance on its corporate and individual leniency programmes. One particular point of
interest is guidance on when the OFT will seek waivers of legal professional privilege from leniency applicants. It suggests that it will not request
waivers in civil cases (against companies) but cannot exclude the possibility in some criminal cases (against individuals).
European Commission Finally Joins in with Its Own Compliance Guidance (“Highway Code”)
On Nov. 23, 2011, the EC unexpectedly produced its own guidance on EU competition law compliance (which it calls "a sort of competition highway code"),
following the trend set by national regulators in the EU. The guidance specifically makes the points that ignorance of the law is no defence and that
“being small is no excuse for not complying with the applicable EU or national competition rules”. The EC makes it clear that it supports compliance
programmes, tailored to the business in question. As with other regulators, such as the OFT, the EC suggests a proactive risk-based approach, including
risk identification, assessment, mitigation and review, backed by “unequivocal senior management support”. In a departure from the OFT's approach, the
guidance also confirms that, although all compliance efforts are welcomed, the existence of a compliance programme will not be used as a mitigating
factor justifying the reduction of any fine imposed for an infringement of competition law. This is because the purpose of a compliance programme is to
avoid an infringement in the first place. On the other hand, the existence of a programme will not be considered as an aggravating circumstance
justifying an increase in a fine should there be an infringement. This is because “if the programme has failed . . . the sanction will come in the
form of the fine imposed”. Therefore, as the EC points out, "a credible competition compliance programme can only deliver benefits to a company".
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Robert B. Rakison