EU/UK Competition Law Newsletter - June 2012

June 1, 2012

Compliance Warning: Do Not Restrict Cross-Border Trade

The Swiss Competition Authority (SCC) fined German car manufacturer BMW CHF156 million (around USD163 million or EUR130 million) on 24 May 2012 for restricting cross-border trade between the EU and Switzerland. Since the rules applied by the SCC in this area are effectively the same as those which apply to trade between EU/European Economic Area (EEA) countries, the case provides yet another warning of the care which companies need to take in this area.

BMW had included in contracts with its dealers a clause requiring them to sell new vehicles under its BMW and Mini brands only in the EEA. Switzerland is not in the EEA so, for example, a dealer in neighbouring France or Germany could not sell to a customer in Switzerland, even if approached directly. A number of complaints were made to the SCC by Swiss customers who had therefore been unable to purchase a BMW or Mini outside Switzerland. The SCC, like its counterparts in the EU/EEA countries and like the European Commission (EC), is highly vigilant in relation to restrictions against cross-border trade, particularly bald restrictions such as that applied by BMW.

European Commission Seeks to Protect Customers and Competitors of Google

The EC’s highest-profile competition law investigation at the moment is one into allegations that Google has illegally abused a dominant market position in the EU. An announcement made by Competition Commissioner Joaquίn Almunia on 21 May 2012 concerning this case is of great interest to all of Google’s competitors and customers, since it indicates that the company may be forced to change its business practices in the EU.

Almunia announced that the EC has identified four activities which may be considered as abuses of dominance and therefore illegal. He invited Google to table proposals to deal with these points. The activities of Google identified by the EC as potentially problematic are: displaying links to its own specialized search services (e.g. for restaurants) differently than it does for links to competing specialized search services; copying, without permission, original material from the websites of competing specialized search services and using that material on its own sites; using agreements which de facto require third-party websites only to display search advertisements from Google; and using agreements which restrict software developers from offering tools that allow advertisers to transfer online search advertising campaigns from Google’s AdWords platform to other search advertising platforms.

UK Government Supports Private Competition Law Actions

On 24 April 2012, the UK Government published a consultation document on methods to promote private sector challenges to anti-competitive practices in the UK. This is intended to cover actions by businesses seeking to stop anti-competitive behaviour (for example seeking an injunction against termination of supplies by a dominant company) as well as actions for damages by consumers and businesses (such as in relation to cartel activity which has increased prices). The regime would operate alongside the public enforcement regime operated in the UK by the Office of Fair Trading and EC.

The document includes, amongst other things, consideration of: whether to introduce a rebuttable presumption of loss for cartel cases, likely to take the form of a presumption that a cartel had affected prices by a fixed amount, such as 20 %; whether to introduce an opt-out collective actions regime for competition law; the promotion of Alternative Dispute Resolution (ADR); and how to ensure private actions complement the public enforcement regime. This is a very significant consultation and has attracted great interest in the UK. The consultation is open until 24 July.

Report on Competition Law Enforcement in the Food Sector

On 24 May 2012, the European Competition Network (ECN) (an informal grouping of the EC and the 27 EU member state national competition authorities) published a significant report on competition enforcement in the food sector across the EU. The report shows that the food sector has been a priority of competition authorities in the EU over the last few years and that their actions have intensified since the food price crisis broke out in 2007. The largest number of cases have concerned processing and manufacturing.

The report follows the EC’s Communication of 28 October 2009 on a better-functioning food supply chain. It is clear that the food sector will remain a high priority for EU competition authorities. They are currently investigating about 60 competition law cases and carrying out other general market monitoring actions.

Additional EU/UK competition law news coverage can be found in our news section.

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