European Competition Law Newsletter – May 2016

May 2, 2016

Table of Contents

  • Third UK Fast-Track Claim Shows Rapid Development of Competition Law Private Claims as a Business Tool
  • Think Carefully Before Jointly Bidding With an Actual or Potential Competitor
  • The European Commission’s Latest Case Against Google (Android); “What Is It About” and “Why Should I Care”?
  • Warning About Joint Decisions Concerning the Use of Online Portals

Third UK Fast-Track Claim Shows Rapid Development of Competition Law Private Claims as a Business Tool

On 12 April 2016, the UK Competition Appeal Tribunal (CAT) listed (see here) its third fast-track competition law claim. The new fast-track rules in the UK are intended to increase the enforcement of competition law through the courts, in particular by small and medium-sized enterprises (SMEs). This claim shows that the system is rapidly gaining traction and that private litigation is a real alternative for any company seeking to rely on competition law arguments in the UK.

The claim in this new case is for abuse of dominance. The claimant is a provider of online training and an SME. The defendant, the Law Society, is the professional body for solicitors in England and Wales. It has developed a number of paid-for accreditation schemes for firms of solicitors, including the Conveyancing Quality Scheme (CQS).

The claimant alleges that the Law Society is dominant in the provision of accreditation services for lawyers and is illegally tying its training services to those services. In particular, it alleges that the Law Society requires that as a condition of a law firm maintaining its CQS accreditation such a firm must buy both anti-money laundering (AML) online training and mortgage fraud training from it. This allegedly restricts competition in the downstream market for the provision of AML and financial crime training and has caused loss to the claimant.

The previous two fast-track claims were also abuse of dominance cases and this may show that, even though the UK competition regulator rarely brings abuse of dominance cases, UK companies face a range of abuses by dominant companies in small or obscure markets. The fast-track regime provides an avenue to protect a company against this behaviour.

Think Carefully Before Jointly Bidding With an Actual or Potential Competitor

A recent Danish appeal court case shows the EU competition law dangers of submitting a joint bid with an actual or potential competitor. If a company is able to bid on its own, it needs carefully to analyse whether it is safe to team up with a competitor, particularly in a concentrated industry.

The case arose out of a 2015 finding by the Danish competition regulator, the Danish Competition Council (DCC) (see here). The DCC found that LKF Vejmarkering A/S (LKF) and Eurostar Danmark A/S (Eurostar) had infringed EU and Danish competition law by making a consortium bid for a road-marking tender and by deciding beforehand how to share the work in the procurement between them.

The DCC found that both LKF and Eurostar would have been able to make stand-alone bids and that the consortium therefore limited the number of bidders in the public procurement, which might have led to higher prices for the purchaser, the Danish Road Directorate. The DCC further found that the consortium was not objectively necessary to enable the companies involved to participate in the public procurement; i.e. they would have been able to participate individually. Consequently, the parties to the consortia arrangement were actual and/or at least potential competitors and an infringement arose.

The case went on appeal to the Danish appeals board, which on 12 April 2016 upheld the DCC’s decision. It confirmed that the competitors were actual competitors and that the agreement gave rise to an “object” (or automatic) infringement of competition law. The parties have the option to make a further appeal.

The European Commission’s Latest Case Against Google (Android); “What Is It About” and “Why Should I Care”?

On 20 April 2016, the European Commission (EC) issued a statement of objections (preliminary allegations of an infringement of competition law) against Google concerning the Android operating system and applications (see press release here). It is surely now preparing for another battle royal with the company.

You may ask “what is this case about”, but also “why should I care”? On the second point, competitors of dominant providers in other online or in offline industries now have more ammunition to use when those providers seek to entrench their dominant position in a service, favour their own separate services or discriminate against competitors of those separate services. Considering Google’s other activities, this could be of relevance for example to competitors in the smartphone and smart TV media and entertainment areas, as well as the Internet of Things.

Also, competing businesses, in particular manufacturers of rival search engines, mobile operating systems, web browsers and apps, may be able to rely on an eventual infringement decision in the current case against Google to launch private damages claims in the EU.

As to what the case is about, very briefly, it is based on Google’s alleged dominance in three markets in the EU:

  • General internet search services
  • Licensable smart mobile operating systems (e.g. Google’s Android)
  • App stores for the Android mobile operating system (e.g. Google’s Play Store)

According to the EC, the alleged abuses of these dominant positions then are as follows:

  • Google obliges device manufacturers which wish to pre-install Play Store also to pre-install Google Search, and set it as the default search provider on those devices. In addition, manufacturers which wish to pre-install Play Store or Google Search also have to pre-install Google’s Chrome browser. The EC’s preliminary conclusion is that by imposing these conditions, Google limits manufacturers’ freedom to choose the most appropriate apps to pre-install. This strategy appears to protect and strengthen Google’s dominant position in general internet search and adversely affect competition in the market for mobile browsers.
  • If a manufacturer wishes to pre-install Google proprietary apps, including Google Play Store and Google Search, on any of its devices, Google requires it to enter into an “Anti-Fragmentation Agreement”. That agreement commits it not to sell devices running on “Android forks” (a modified version of Android). The EC has found evidence that Google’s conduct prevented manufacturers from selling smart mobile devices based on a competing Android fork which had the potential of becoming a credible alternative to the Google Android operating system. In doing so, Google has also closed off an important way for its competitors to introduce apps and services, in particular general search services,which could be pre-installed on Android forks.
  • Google has granted significant financial incentives to smartphone and tablet manufacturers as well as mobile network operators on condition that theyexclusively pre-install Google Search on their devices. The EC takes issue with the conditions associated with Google’s financial incentives, in particular with the condition that the financial incentive is not paid if any other search provider than Google Search is pre-installed on smart mobile devices.

Warning About Joint Decisions Concerning the Use of Online Portals

On 21 April 2016, the UK Competition and Markets Authority (CMA) announced that it has sent an open letter to estate agents concerning the choice of online property portals on which to list properties (see here). Similar issues will apply EU-wide and of course in other industries.

The CMA reminds all estate agents in the UK that, when making a commercial decision about their choice of online property portals, that decision must be made without colluding with competitors. The CMA points out that the number and identity of online portals on which estate agents list their properties is an important aspect of competition among estate agents, and the choice of portal should be decided independently and not agreed with competitors.

The move comes after the CMA became aware that some estate agents may be making joint decisions to join the OnTheMarket portal and to remove their business from competing portals, rather than reaching these decisions independently of each other. The CMA has also contacted some agents that it suspects may have been directly involved in such activity.

This is interesting since:

  • once again it shows the CMA focusing on online selling issues;
  • the CMA is coming back to the property sector (after a recent decision concerning infringements in one local area concerning advertising of estate agents’ fees);
  • the CMA is again focusing on local areas and small markets; and
  • the CMA is trying to drive home a compliance message very publicly.

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

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