European Competition Law Newsletter – February 2016

February 1, 2016

First Fast-Track Competition Claim at UK Competition Appeal Tribunal

On 17 December 2015, the first fast-track competition claim was filed before the UK Competition Appeal Tribunal (CAT) under new rules brought into law in October 2015 (see the CAT’s case page here). Showing the potential impact of the rules, the case was settled at an early stage, with the defendant agreeing to various behavioural undertakings.

The defendant in the case was a health and safety membership organisation. Part of its role is the accreditation of qualifications in the health and safety sector. The claimant was a company that has developed qualifications, training material and courses in health and safety, including a diploma in applied health and safety. The claimant submitted an application to the defendant for the accreditation of its diploma qualification.

The claimant alleged that the defendant holds a dominant position in the market for the accreditation of qualifications in the health and safety sector and that its failure and refusal to accredit the claimant’s diploma qualification was an abuse of its dominant position, restricting competition in the downstream market for the provision of training leading to qualifications in health and safety.

The claimant had sought an injunction, a declaration that the defendant had abused its dominant position, damages, interest and costs. Following the settlement, it dropped all of its claims.

The new fast-track rules are intended to increase the enforcement of competition law through the courts in the UK and it seems unlikely that in the past this type of case would have gone to court. The claim and settlement therefore shows that the system is beginning to work and the procedure should be considered as a potential avenue to deal with disputes relying on competition law arguments.

Compliance Warning; Classic Resale Price Maintenance Case in Germany

The German competition regulator, Bundeskartellamt (BKA), recently provided an example of a fine being imposed on a company for engaging in resale price maintenance (RPM) by indirect means (see press release here). This shows the continuing need for competition compliance training in this area for any company active in the EU and is a useful example for training sessions, particularly since it involves such a well-known name.

The case concerned LEGO, which was found to have enforced RPM by threatening retailers with reductions in supply or even with a refusal to supply. It also made the level of discounts on retailers’ purchase prices conditional on retailers using listed resale prices provided by LEGO.

LEGO was fined only EUR130,000, but the figure had been reduced since the company cooperated with the BKA and reached a settlement. The company also appears to have adopted internal compliance and disciplinary measures to the satisfaction of the BKA.

These are classic indirect RPM measures which are each expressly referred to in the relevant EU guidelines as not being allowed. RPM, including in relation to Internet sales, continues to be an enforcement priority in the EU and these same principles apply EU-wide. Distribution arrangements need to comply and compliance programmes should be updated to cover the topic adequately.

Compliance Warning; Use of Electronic Platforms

On 21 January 2016, the EU’s highest court, European Court of Justice (ECJ), ruled on a case concerning the use of an electronic platform to facilitate illegal collusion (see the ECJ’s case page here). The case is useful as it sets out how to react to messages sent via a platform which could impact competitive parameters. It also raises general compliance issues in relation to the use of platforms.

The case came to the ECJ from a Lithuanian court, which was considering an appeal from the Lithuanian competition authority. The authority had fined several tour operators for concerted practices related to a common online travel reservation system. The platform operator had sent the travel agents participating in the system an electronic message capping the rebates that could be granted for products sold via the system and had technically adapted the system so as to implement this cap. The authority found this to constitute an illegal information exchange.

In reviewing the case, the ECJ held that travel agents which knew the content of the message could be presumed to have participated in a concerted practice, unless they had distanced themselves from the message, challenged its imposition or adduced other evidence to rebut the presumption, such as systematically granting higher rebates than those set under the cap. The Lithuanian court must now consider the practical application of these guidelines to the facts of the case.

The general compliance message is that users and administrators of these systems need to adapt their programmes to reflect the fact that competitors may all be active on the same system. The dissemination of any type of restriction, suggestion or recommendation in relation to pricing and other competitive issues, or indeed pure information exchange on competitive parameters, between competitors is dangerous under competition law in the EU.

EU State Aid and Tax

The European Commission (EC) continues to push forward with its investigations under the EU state aid rules into corporate tax arrangements put in place by several EU countries. Even a company which is not involved should be aware of this, since there may be opportunities available to use these rules against competitors.

The latest case concerns the Belgian “excess profit” tax scheme. On 11 January 2016 (see the EC’s press release here), the EC announced its decision that selective tax advantages granted by Belgium under the scheme are illegal under the EU state aid rules. The scheme had benefitted at least 35 (unidentified) multinationals, mainly from the EU, which as a result must now return unpaid taxes to Belgium.

The Belgian “excess profit” tax scheme, applicable since 2005, allowed, according to the EC, certain multinational group companies to reduce their tax paid in Belgium on the basis of tax rulings. The scheme reduced the corporate tax base of the companies by between 50 percent and 90 percent to discount for so-called “excess profits” that allegedly result from being part of a multinational group.

The EC’s in-depth investigation, opened in February 2015, showed, according to the EC, that the scheme derogated from normal practice under Belgian company tax rules and the so-called “arm’s length principle”. This is considered by the EC to be illegal under the EU state aid rules.

The decision is sure to be appealed, but the EC continues to be very focused on the application of EU state aid law to tax arrangements. Companies need to consider the state aid implications when entering into special arrangements (such as under tax rulings) with EU states or when making use of special schemes designed to benefit particular types of companies. In addition, on the positive side, a company which feels that a competitor has unfairly benefited from a tax arrangement may be able to use the state aid rules to challenge this.

Additional European competition law news coverage can be found in our news section.

U.S. Antitrust

We publish a newsletter and bulletins on U.S. antitrust developments, as well as regular publications on numerous other topics.

For additional information, please contact:

Matthew Hall