EU/UK Competition Law Newsletter – October 2011

October 3, 2011

European Commission Poised to Settle Another Access to Interface Case

On Sep. 20, 2011, the European Commission (EC) announced that IBM had made proposals to the EC intended to settle an investigation into alleged conduct by the company affecting the market for mainframe computer maintenance services. The proposals aim to resolve concerns that IBM may have, in breach of an alleged dominant position, imposed unreasonable conditions on competing mainframe maintenance service providers when supplying them with inputs. The inputs are spare parts and technical information concerning IBM’s mainframe hardware and software products. Under the proposals, other service providers will be able to access the inputs on guaranteed reasonable and non-discriminatory terms and conditions over a period of five years.

The case shows once again the willingness of the EC to take on cases in the IT sector concerning complex issues of access to intellectual property and interface information owned by an allegedly dominant company. It is clear that the EC will not shy away from such cases in the sector, as well as cases involving tying practices, despite the bruising battles it has had in the past with some of the companies investigated. It is also clear that it will be flexible in how it settles these cases. In July 2009, Microsoft made informal proposals to the EC in relation to disclosures of interoperability information that would improve interoperability between third party products and several Microsoft products. Those proposals cannot be enforced by the EC, but can be privately enforced. The current IBM proposals would, if ultimately accepted, be enforceable by the EC.

Procedural Violations; EC Correct to Strip Leniency Applicant of Protection from Fine

In a judgment described by the EC as “very important”, on Sep. 9, 2011, the EU’s General Court confirmed the strict duties of cartel leniency applicants to comply with the EC’s rules on cooperation and secrecy during the course of an investigation. The case concerned Italian tobacco processor, Deltafina, which had been the first to tell the EC about a cartel and should therefore have obtained full immunity from any resulting fines.

After making its application, and before the Commission could carry out dawn raids to find evidence against the other cartelists, Deltafina revealed to its main competitors in a trade association meeting that it had sought leniency. This, according to the EC, put the entire investigation at jeopardy. The final decision therefore included a fine for Deltafina. The General Court confirmed that this was correct since Deltafina had violated the duty of confidentiality it owed to the EC. This case is another warning that the EC will be very strict about procedural violations affecting its investigations. It follows a series of cases in which companies have been fined or investigated for alleged obstructions to dawn raids and other procedural issues.

Complainant Prompts European Commission to Look at Standardisation in E-Payments

On Sep. 26, 2011, the EC opened an investigation, instigated by a complaint, which should provide useful guidance on the EC’s treatment of standardisation agreements. It is also another example of the current focus on the financial services sector in the EU.

The case concerns the standardisation process for payments over the internet (‘e-payments’) undertaken by the European Payments Council (EPC). The EPC is the coordination and decision-making body of the European banking industry for payments. The EU guidelines on horizontal agreements adopted in 2010 set out the kinds of agreements that do not raise competition concerns and the way that the EC analyses standardisation agreements and procedures under EU competition rules. The EC will investigate the e-payments standardisation process against the background of that guidance. In particular, it will consider issues such as whether it will exclude new entrants and payment providers who are not linked to a bank. The conclusions will be relevant to standardisation rules used across the EU.

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

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