Criminal Cartel Investigation in the UK Continues
There has been an important development in one of two UK criminal cartel
cases against individuals which are currently being investigated by the
Competition and Markets Authority (CMA). This case concerns suspected cartel
conduct regarding the supply in the UK of galvanised steel tanks for water
At a hearing on 26 January 2015 at Southwark Crown Court (London), Clive Dean
and Nicholas Stringer both pleaded not guilty to the charge of committing the
criminal cartel offence under UK law (section 188 of the UK Enterprise Act
2002). Their trial, before a jury, has now been set to start on 1 June 2015. One
other individual, Peter Snee, has already pleaded not guilty. Any individual
convicted for the criminal cartel offence faces jail time and/or an unlimited
This will be an important and keenly watched trial, in particular since the
CMA (and its predecessor, the Office of Fair Trading) has not had much success
in the area of criminal cartel enforcement against individuals. To date only one
case (arising out of the marine hose cartel) has been successful, while another
(arising out of the British Airways/Virgin cartel) rather embarrassingly
collapsed as a result of procedural problems.
The CMA is conducting a related civil investigation into whether businesses
have infringed the UK Competition Act 1998 as a result of arrangements affecting
galvanised steel tanks (for which they could be fined in the normal way).
Dismantling Track May Be Abusive
On 5 January 2015, the EC announced that it has sent a statement of
objections (SO; preliminary statement of case) to Lithuanian railway incumbent
AB Lietuvos geležinkeliai (LG) to investigate whether it limited competition on
the rail markets in Lithuania and Latvia by removing a railway track.
In September 2008, LG suspended traffic on a railway track running between
Lithuania and Latvia. One month later, LG dismantled the track and has not
rebuilt it. The EC’s initial view is that since this limits the number of rail
connections between Lithuania and Latvia for international freight traffic, it
could limit competition on the rail markets in Lithuania and in Latvia, in
particular, by preventing a major customer of LG from redirecting its railway
freight to Latvia using the services of other rail operators. The EC considers
that this could amount to the illegal abuse of a dominant position by LG.
This case shows once again that the scope of illegal abuses of a dominant
position can be very wide. Companies which are struggling against the actions of
a dominant or potentially dominant competitor, supplier or customer should take
London Black Cabs Case; The Myriad Possibilities for State Aid Arguments
If there is any hint of state support for a competitor in the EU, a company
should consider whether state aid arguments could be brought to bear, since
ultimately any illegal aid might have to be repaid, with interest. The London
black cabs case decided by the European Court of Justice (ECJ, the EU’s highest
court) on 14 January 2015 provides an interesting example of the scope of state
aid law, even though ultimately the arguments did not prevail.
In London, “black cabs” are permitted to use bus lanes, but minicabs are
generally prohibited from doing so during the hours when bus lane restrictions
are operational. An operator of minicabs was served with penalty notices due to
the fact that two of its drivers had used a bus lane. The operator challenged
those notices, claiming that the bus lanes policy constitutes state aid to the
operators of black cabs.
The English Court of Appeal asked the ECJ whether this benefit for black cabs
constitutes state aid. The ECJ found that it does not, since no state resources
are involved and black cabs and minicabs in London are not comparable offerings.
The argument therefore failed. Nevertheless, it was very imaginative and
shows the possibilities for using state aid arguments as a weapon.
SodaStream Fined for Limiting Competition in Refilling Its CO2 Cartridges
On 22 January 2015, the German competition authority (Bundeskartellamt)
imposed a fine of EUR225,000 on SodaStream for abusing its dominant position in
the market for refilling the CO2 cartridges used with its soda makers. This is
an interesting case for companies which operate in similar types of markets,
including markets for spare parts.
A 2008 German court judgment had found that hindering competitors from
refilling CO2 cartridges represented an abuse of SodaStream’s dominant position,
since this behaviour prevented consumers from taking advantage of alternative
refilling possibilities. The company modified its behaviour. However, the
Bundeskartellamt has now found that the company's warning and safety
instructions as well as disclaimers of warranties still gave customers and
business partners the impression that SodaStream was exclusively entitled to
refill the cartridges.
One example of this was SodaStream indicating that empty cartridges should be
returned to the company itself or its authorised dealers. In addition, in one
note it stated that unauthorised refilling could be illegal.
In addition to being fined, SodaStream has undertaken to correct the texts
disputed by the Bundeskartellamt and for three years will attach a label to its
CO2 cartridges stating that they can also be refilled by other companies that
comply with the relevant legal provisions.
Additional European competition law news coverage can be found in our news section.
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