EU’s Highest Court Rules on Information Exchange
On 19 March 2015, the European Court of Justice (ECJ) handed down a
significant judgment on the application of EU competition law to information
exchange between competitors. The case was an appeal from the European
Commission’s 2008 decision to fine banana importers Dole, Weichert and Del Monte
a total of €60.3 million for participating in a cartel (established as a result
of information exchange) for bananas in northern Europe.
The ECJ agreed with the EC that the cartelists' communications before setting
the quotation prices for bananas reduced uncertainty for each of the
participants as to the conduct of their competitors. This had the objective of
creating competitive conditions that did not correspond to the normal conditions
on the market without such collusive contacts, and therefore gave rise to a
cartel on the basis of a “concerted practice” established between them.
The EC welcomed the judgment, which also confirmed that a concerted practice
may be anti-competitive even though there is no direct connection between the
practice and consumer prices.
The case is a reminder of the risks of engaging in private exchanges of
commercially sensitive information, particularly if this is forward-looking.
This type of activity is seen as a very serious infringement of competition law
by the EC and national regulators, a position now fully supported by the EU’s
Yet Another Reminder of The Risks of Trade Association Membership
On 19 March 2015, the UK Competition and Markets Authority (CMA) announced
that an association of estate and lettings agents, three of its members and a
newspaper publisher had admitted breaching competition law and agreed to pay
fines totalling over £775,000.
The parties admitted that at various times between July 2005 and January
- three members of the trade association entered into an agreement which
prevented members of the association (including themselves) from advertising
their fees or discounts in the local newspaper;
- two of these members extended the scope of this arrangement, with the
co-operation of the publisher of the local newspaper, to prevent any agents
(whether members or non-members of the association) from advertising their
fees or discounts in this newspaper; and
- the membership rules of the association prohibited the association’s
members from advertising their fees or discounts in the newspaper.
This case is of interest for several reasons, including that it relates to a
local market (the area in and around one town in the UK). In addition, it shows
that, where infringements take place within the context of trade associations,
both the members of the association and the association itself can be found to
have breached the law. This can result in severe financial penalties for the
members, even where the association itself has limited funds (the trade
association in this case was fined only £90, reflecting its “very limited
Any company which is a member of a trade association anywhere in the EU needs
to ensure that the association has a competition compliance programme in place
and that the programme is actively enforced.
The Application of Competition Law to Lease Restrictions
There have been several recent cases in the EU concerning the application of
competition law to retail lease restrictions, which are of interest to any
landlord or tenant active in the sector in the EU. The most recent decision was
announced by the German regulator (Bundeskartellamt) on 3 March 2015.
A factory outlet centre in Germany had been restricting its tenants from
operating shops in another outlet centre (or individually) within a 150 km
radius. The Bundeskartellamt required this restriction to be limited to five
years and 50 km since the wider clause was considered to be anti-competitive.
150 km was seen as beyond the geographic market in which the outlet centre
competes, since most of the customers who shop at the centre live within a 100
km radius of the center or use this shopping facility when passing through the
A particular issue had been that the operators of a fashion outlet center 147
km away from the centre had encountered considerable problems in acquiring
tenants because of this clause. The Bundeskartellamt considered that the
principal aim of the clause was to restrict competition between the centre and
its current and potential competitors by curtailing the freedom of action of its
Further Developments on Tax Rulings in the EU
The EC is currently investigating under the State aid rules tax ruling
practices in Ireland, Luxembourg, the Netherlands and Belgium. Broadly, the
issue is selective advantageous treatment of particular companies or types of
companies, which might be illegal under EU State aid law.
Separately, the EC proposed on 18 March 2015 a package of tax transparency
measures designed to tackle “corporate tax avoidance and harmful tax competition
in the EU”. The central component of the package is a legislative proposal to
improve cooperation between EU member states in relation to their cross-border
Currently, member states share very little information with one another about
their tax rulings since it is a matter for the discretion of the member state to
decide whether a tax ruling might be relevant to another EU country. The EC
considers that the lack of transparency on tax rulings is being exploited by
certain companies in order to artificially reduce their tax contribution.
To redress this situation, the EC proposes that member states will be
required to automatically exchange information on their tax rulings. The idea is
that this will enable member states to detect certain abusive tax practices by
companies and take the necessary action in response. It should also encourage
healthier tax competition, as tax authorities will be less likely to offer
selective tax treatment to companies once this is open to scrutiny by their
The legislative proposals of this package will be submitted to the European
Parliament for consultation and to the Council of the EU for adoption. The EC
hopes that member states will agree on the tax rulings proposal by the end of
2015, so that it can enter into force on 1 January 2016.
Additional European competition law news coverage can be found in our news section.
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