EC Cartel Fine Provides Warning on Dangers of Trade Associations
The European Commission (EC) fined Procter & Gamble and Unilever a total of
EUR315.2 million for operating a cartel together with Henkel in the market for
household laundry powder detergents in eight EU countries on April 13, 2011.
Henkel obtained full immunity from a fine for revealing the cartel to the EC.
The EC used its settlement procedure for the third time, and based on this, P&G
and Unilever received 10% fine reductions.
The EC described the cartel as starting when the companies implemented an
initiative through their trade association to improve the environmental
performance of detergent products. However, this led to wider arrangements aimed
at price coordination and stabilizing market positions. The case provides
another clear warning of the dangers inherent in trade association activities.
Due to these risks, companies are increasingly banning or restricting attendance
at trade associations. At the very least, competition law compliance programmes
must carefully consider the issues raised by trade associations, and staff who
attend meetings must be trained appropriately.
UK Regulator Provides Guidance on Competition Law Treatment of Land
UK law was changed so that its competition law applies to land agreements as
it does to other types of agreements on April 6, 2011. Reflecting this change,
on March 24, 2011, the UK Office of Fair Trading (OFT) published guidance on the
application of competition law to such agreements.
The guideline sets out that: there is no presumption that a land agreement
will infringe competition law, and the OFT expects that only a small minority
will do so; restrictions on the use of land may potentially infringe competition
law where this protects a business from competition, or prevents its competitors
from entering a market; and generally, the OFT is unlikely to take further
action in cases where none of the parties to an agreement has more than a 30%
share of the market in which the land is being used. The principles set out in
the guidance will also be of interest to any company or adviser considering
similar agreements in other EU countries or under EU competition law.
EU General Court Confirms State Aid Treatment of Airport Infrastructure
The EU’s General Court (its second highest court) ruled that the construction
of airport infrastructure is an economic activity on March 23, 2011. Therefore,
public funding of infrastructure necessary for the operation of an airport
alleviates the costs that the airport operator would normally have to bear and
constitutes State aid. State aid which is paid and which would not have been
provided by an investor operating under normal market conditions or which cannot
otherwise be exempted under one of the special provisions in the Treaty on the
Functioning of the European Union, must be repaid with interest by the
The EC welcomed this decision, stating that “the ruling of the General Court
is important . . . for [all EU] Member States and . . . European airports.” The
ruling is consistent with the EC’s approach as laid down in its 2005 guidelines
on the financing of airports, and as applied in a number of decisions since
EU General Court Provides Important Judgment on Agreements which Prevent
The EU General Court decided on April 14, 2011, that Visa had infringed EU
rules on restrictive business practices by refusing to admit, for six and a half
years, Morgan Stanley Bank as a member to its payment card network without
objective justification. The General Court also upheld the EUR10.2 million fine
imposed on Visa.
The court held that an assessment of the conditions of competition in a given
market has to be based not only on the existing competition between undertakings
already present in the market in question, but also on potential competition
from new entrants. The court took the view that it is correct to consider
whether the entry of a new player (here Morgan Stanley Bank) would have created
scope for further competition in the market in question. The essential factor on
which the assessment of a potential competitor must be based is its ability to
enter the market.
In the specific circumstances of this case, the judgment confirms that an
association of banks cannot unjustifiably exclude another bank which could
potentially bring further competition on the market. However, the principles
apply to any other scenario in which entry to a market may be foreclosed by
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