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A regular EU competition law news alert service Produced by Bird & Bird, Brussels | ||||
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The European Commission has imposed a fine of €38 million. on E.ON Energie AG (“E.ON”) for the breach of a Commission seal in E.ON’s premises during an inspection. The seal had been affixed to secure documents collected in the course of an unannounced inspection in May 2006. When the Commission came back the next day, the seal was broken. The inspection formed part of the Commission's enforcement activities against allegations of anticompetitive practices on the German energy markets.The seal had been affixed by Commission officials during an unannounced inspection carried out in May 2006. The inspection concerned the suspicion of anticompetitive practices on the German electricity market. It is the Commission's practice to seal rooms when carrying out surprise inspections in order to make sure that no documents can be removed by the company when the inspection team is absent (e.g. at night). The Commission's seals are made of plastic film. If they are removed, they do not tear, but show irreversible "VOID" signs on their surface. When the inspection team returned in the morning of the second day of the inspection, it found that such "VOID" signs were clearly visible on the entire surface of one of the seals which had been affixed the evening before. Also pieces of glue were found around the seal indicating that somebody had removed the seal and tried to fix it again. The broken seal was intended to secure the room in which all documents previously collected by the Commission, i.e. highly sensitive documents, were stored. As these documents were not yet listed, the Commission was unable to ascertain whether and which documents were taken by EON. E.ON denied breaking the seal and first argued that the Commission had the only key to the room. However later it turned out that 20 keys were in circulation among E.ON employees. E.ON also tried to argue that there might be other explanations for the appearance of the "VOID" signs on the seal. E.ON's suggested explanations were inter alia: vibrations caused by the preparation of a conference next door, the use of an aggressive cleaning product, the age of the seal, and a high level of humidity. In order to assess these arguments, the Commission carried out a very thorough investigation, including the use of outside experts to test the seals, but came to the conclusion that the arguments were not valid. Both the manufacturer of the seal and the independent expert who tested the Commission's original seals confirmed that the state of the seal as found in the morning of 30 May 2006 cannot be explained by any other reasons than by a breach of the seal. Indeed, according to the manufacturer, similar seals have been in use for decades, without any examples of malfunction. The use of seals is intended to prevent the possibility of evidence being lost during an inspection, thus undermining the effectiveness of the inspection. Breaches of seals are therefore a serious infringement of competition law. As regards the level of the fine, Council Regulation 1/2003 (Article 23(1) (e)) provides that the Commission can impose a fine of up to 1% of the company's total turnover for a seal broken intentionally or negligently. When fixing the amount of the fine, the Commission has, however, taken into account the fact that it was the first time that a seal has been broken by a company subject to an inspection and that a fine has been imposed under the provisions of Regulation No 1/2003 concerning obstruction or interference with a Commission anti-trust investigation. [30 January 2008] Commission has carried out inspections in the ship classification sector The European Commission can confirm that on 29 – 30 January 2008 Commission officials carried out unannounced inspections at the premises of several providers of ship classification services and an association of such providers. The Commission has reason to believe that the companies and the association concerned may have violated the competition rules of the EC Treaty and the EEA Agreement that outlaw restrictive business practices. Providers of such classification services certify whether ships are in conformity with technical standards for design and maintenance. The Commission officials were accompanied by their counterparts from national competition authorities. Commission officials also participated in unannounced inspections at the premises of a provider of ship classification services that were carried out by the EFTA Surveillance Authority (ESA). Surprise inspections are a preliminary step in investigations into suspected anticompetitive business practices. The fact that the European Commission carries out such inspections does not mean that the companies or association are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself. The European Commission respects the rights of defence, in particular the right of companies or associations to be heard in antitrust proceedings. There is no strict deadline to complete inquiries into restrictive business practices. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings or associations concerned co-operate and the exercise of the rights of defence. [30 January 2008] Commission carries out inspections in the Central Processing Unit (CPU) and PC sector The European Commission has confirmed that on 12 February 2008, Commission officials carried out unannounced inspections at the premises of a manufacturer of Central Processing Units (CPUs) and a number of personal computer (PC) retailers. The Commission has reason to believe that the companies concerned may have violated EC Treaty rules on restrictive business practices (Article 81) and/or abuse of a dominant market position (Article 82).The Commission officials were accompanied by their counterparts from the relevant national competition authorities.
Surprise inspections are a preliminary step in investigations into suspected infringements of EC competition law. The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour; nor does it prejudge the outcome of the investigation itself. The European Commission respects the rights of defence, in particular the right of companies to be heard in antitrust proceedings.
There is no strict deadline to complete such investigations. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate and the exercise of the rights of defence. [12 February 2008] Commission considers collective redresses in European Competition Law The Commission has been examining the problems that consumers face in obtaining effective redress. One problem which it has identified is that EU consumers who have small or scattered claims refrain from bringing an individual court action because the cost of bringing the action is likely to outweigh the amount of damages claimed. Collective redress, both judicial and non-judicial, could be a means of addressing this problem.
In its Consumer Policy Strategy for 2007-2013 the Commission underlined the importance of effective mechanisms for seeking redress and announced that it would consider action on collective redress mechanisms for consumers.
One key priority for both the European Commission and Member States is to take action to improve access to justice by creating measures which simplify and help access to the courts, particularly in cross border cases.
For this purpose the Commission organised a brainstorming event on collective redress in Leuven on 29 June 2007. Representatives of all stakeholders discussed the advantages, disadvantages and underlying problems of collective redress schemes currently in place in the Member States, as well as the likely consequences of a possible collective redress mechanism at EU-level.
Also, the Portuguese Presidency organised, with the support of the European Commission, a conference on collective redress in Lisbon on 9 & 10 November 2007. The conference gathered politicians, senior officials, representatives from consumer associations, the industry and the retail sector, economists, legal practitioners and academics from across Europe.
Finally, the Commission has launched a study which will provide more information on the key problems faced by consumers in obtaining redress for mass claims, and will analyse the consequences of such problems for consumers, competitors and the relevant market. The Commission will use the results of this study as well as the information provided by stakeholders and interested parties in order to decide whether, and if so, to which extent, an initiative on collective redress is required at EU level. [14 February 2008] Commission takes note of Microsoft's announcement on interoperability principles The European Commission takes note of today's announcement by Microsoft of its intention to commit to a number of principles in order to promote interoperability with some of its high market share software products. This announcement does not relate to the question of whether or not Microsoft has been complying with EU antitrust rules in this area in the past. The Commission would welcome any move towards genuine interoperability. Nonetheless, the Commission notes that today's announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability. In January 2008, the Commission initiated two formal antitrust investigations against Microsoft – one relating to interoperability, one relating to tying of separate software products. In the course of its ongoing interoperability investigation, the Commission will therefore verify whether Microsoft is complying with EU antitrust rules, whether the principles announced today would end any infringement were they implemented in practice, and whether or not the principles announced today are in fact implemented in practice. Today's announcement by Microsoft does not address the tying allegations.In its Microsoft judgment of 17 September 2007 the Court of First Instance established clear principles for dominant companies with regard to interoperability disclosures and the tying of separate software products. In January 2008 the Commission initiated two formal antitrust investigations in order to verify whether Microsoft is complying with the principles established by the Court.One of these investigations focuses on the alleged illegal refusal by Microsoft to disclose sufficient interoperability information across a broad range of products, including information related to its Office suite, a number of its server products, and also in relation to the so called .NET Framework and on the question whether Microsoft's new file format Office Open XML, as implemented in Office, is sufficiently interoperable with competitors' products. The second investigation concerns allegations of tying of separate software products, including Internet Explorer, to the Windows PC operating system.
Alcan has 8 weeks to reply
to the SO, after which it will have the right to be heard orally. It only signifies that the Commission will further investigate
the cases as a matter of priority. Commission confirms sending a Statement of Objections to Alcan The European Commission can confirm that it has sent a Statement of Objections (SO) to Alcan on 21 February 2008. The SO outlines the Commission’s preliminary view that Alcan has infringed EC Treaty rules on abuse of a dominant position (Article 82) by tying its dominant aluminium smelting technology with handling equipment sold by Alcan's subsidiary ECL. This behaviour, if proven, risks limiting innovation in the aluminium production sector and affecting competition on the €70 billion worldwide market for aluminium, an important input for many parts of European industry.
Alcan, headquartered in Canada, is
the parent company of an international group involved in many aspects of the
aluminium, engineered products and packaging industries. Its activities include
bauxite mining, alumina refining, aluminium smelting, manufacturing, recycling
and related research and development. Following the acquisition of Alcan by Rio
Tinto in October 2007, the merged entities' aluminium business "Rio Tinto Alcan"
became the world's biggest aluminium producer. ECL, a wholly owned subsidiary of
Alcan, is the major producer of equipment used in aluminium smelters in the
world. The SO concerns Alcan's contracts for the sale of its aluminium smelting technology which provide that purchasers must also buy ECL's handling equipment for aluminium smelters, the so-called Pot Tending Assembly (PTAs). As a result of these contractual provisions, Alcan's customers appear to be prevented from using PTAs from other suppliers. It is the Commission's preliminary view that Alcan is dominant on the market for aluminium smelting technology and that this contractual tie might significantly harm its customers and ultimately end-users of aluminium, through reduction in innovation and likely negative impact on the aluminium prices. Alcan has eight weeks to reply to the SO, after which it will have the right to be heard. If the preliminary views expressed in the SO are confirmed, the Commission may require Alcan to cease the abuse and may impose a fine. [22 February 2008] Commission imposes €899 million penalty on Microsoft for non-compliance with March 2004 Decision The European Commission has imposed a penalty payment of €899 million on Microsoft for non-compliance with its obligations under the Commission’s March 2004 Decision prior to 22 October 2007. Today’s Decision, adopted under Article 24(2) of Regulation 1/2003, finds that, prior to 22 October 2007, Microsoft had charged unreasonable prices for access to interface documentation for work group servers. The 2004 Decision, which was upheld by the Court of First Instance in September 2007, found that Microsoft had abused its dominant position under Article 82 of the EC Treaty, and required Microsoft to disclose interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers at a reasonable price.The Commission’s Decision of March 2004 requires Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems on reasonable terms. Initially, Microsoft had demanded a royalty rate of 3.87% of a licensee's product revenues for a patent licence (the "patent licence") and of 2.98% for a licence giving access to the secret interoperability information (the "information licence"). In a statement of objections of 1 March 2007, the Commission set out its concerns regarding Microsoft's unreasonable pricing. On 21 May 2007, Microsoft reduced its royalty rates to 0.7% for a patent licence and 0.5% for an information licence, as regards sales within the EEA, while leaving the worldwide rates unchanged. Only as from 22 October 2007 did Microsoft provide a licence giving access to the interoperability information for a flat fee of €10,000 and an optional worldwide patent licence for a reduced royalty of 0.4% of licensees’ product revenues. Today’s Decision concludes that the royalties that Microsoft charged for the information licence – i.e. access to the interoperability information – prior to 22 October 2007 were unreasonable. Microsoft therefore failed to comply with the March 2004 Decision for three years, thereby continuing the behaviour confirmed as illegal by the Court of First Instance. Today's Decision concerns a period of non-compliance not covered by the penalty payment decision of 12 July 2006 starting on 21 June 2006 and ending on 21 October 2007. The Decision does not cover the royalties for a distinct patent licence. The Commission has based its conclusions as to the unreasonableness of Microsoft's royalties prior to 22 October 2007 on the lack of innovation in a very large proportion of the unpatented interoperability information and a comparison with the pricing of similar interoperability technology. Paying this penalty will however not cure this infringement of Article 82 of the EC Treaty [27 February 2008] Commission welcomes E.ON proposals for structural remedies to increase competition in German electricity market The European Commission has welcomed structural remedies offered by E.ON to settle ongoing antitrust cases in the electricity sector. E.ON proposes to commit to sell its electricity transmission system network to an operator which would have no interest in the electricity generation and/or supply businesses and to commit to divest 4800MW of generation capacity to competitors. The Commission intends to market test E.ON's proposals, with a view to adopting a decision under Article 9 of Regulation 1/2003. Under this procedure, the commitments would be made legally binding by a decision of the Commission and the Commission would not pursue the antitrust cases.The Commission has conducted a number of antitrust investigations into energy companies as a consequence of the energy sector inquiry. Inter alia, the Commission has been investigating two cases against E.ON in the electricity sector.
Commission calls on Greece to grant fairer access to lignite so as to improve competition in the electricity sector The European Commission has adopted a decision finding that Greece has infringed Article 86 of the EC Treaty in combination with Article 82 by maintaining rights giving the state-owned electricity incumbent Public Power Corporation (PPC) quasi-exclusive access to lignite. As a result, despite liberalisation of the electricity wholesale market which started in 2001, PPC continues to enjoy today a virtual monopoly over access to lignite and Greece has protected PPC's dominant position in the electricity market. With this Decision, the Commission calls on Greece to propose and adopt remedies to ensure sufficient access to lignite by competitors of PPC. The Court of Justice has previously ruled that when a state measure results in inequality of opportunity between economic operators in favour of a dominant public undertaking, this constitutes an infringement of Article 86 (1) of the Treaty, in conjunction with Article 82. Article 86 (1) of the EC Treaty requires Member States to ensure that public undertakings and undertakings to which Member States grant special or exclusive rights to comply with EC Treaty rules, including the competition rules. Article 82 of the EC Treaty prohibits abuse of a dominant market position. The Commission has concluded that the measures adopted by Greece have distorted competition in favour of state-owned PPC, the former monopoly for electricity production, transport and supply. Virtually all lignite deposits in Greece are owned by the state, which grants exploration and exploitation rights to undertakings. PPC has obtained 91% (in terms of volume of deposits) of the current exploitation rights. PPC has also obtained exploration rights for two of the three deposits for which exploitation rights are still to be allocated. It is currently Greece's policy to continue to grant lignite exploitation rights for electricity generation and it has indicated its intention to grant new exploitation rights for the three remaining deposits in the near future. In Greece, virtually all lignite is used as a fuel for electricity generation in power plants situated close to the mines. Lignite is abundant in Greece, and is the cheapest available fuel in the country. Indeed, lignite-fired electricity generation currently represents more than 60% of total generation and lignite-fired plants are by far the most extensively used power plants in Greece. Competitors of PPC in the electricity market cannot currently compete efficiently with PPC in the Greek market because they are denied access to sufficient quantities of lignite. The very limited additional generation capacity that competitors have built since the liberalisation of the market in 2001 is based on comparatively expensive energy sources. As a result, PPC continues to produce more than 85% of the electricity consumed in Greece. By maintaining quasi exclusive access to lignite in favour of PPC, Greece has allowed PPC to maintain its dominant position in the electricity wholesale market. It is Greece's responsibility, in the framework of its national energy policy, to identify concrete measures to end the infringement. The Decision of the Commission indicates that competitors would probably need to have access to a minimum of 40% of exploitable lignite resources in order to create a level playing field in the electricity market. This conclusion is valid irrespective of whether or not Greece maintains its current national policy of allocating additional lignite reserves for exploitation, bearing in mind the obligation to respect environmental and public health objectives that must be met with regard to the exploitation of lignite. The evolution of national policy in this regard, on environmental, health or other grounds, is unaffected by today's decision. [5 March 2008] Commission carries out inspections in the international airline passenger sector The European Commission has confirmed that on 11 March 2008 Commission officials carried out unannounced inspections at the premises of a number of international airline passenger carriers. These airline carriers provide scheduled passenger air transport services on long-haul routes between Europe and a third country. The Commission has reason to believe that the companies concerned may have violated EC Treaty rules on restrictive business practices (Article 81). The Commission officials were accompanied by their counterparts from the relevant national competition authorities.
Surprise inspections are a
preliminary step in investigations into suspected cartels. The fact that the
European Commission carries out such inspections does not mean that the
companies are guilty of anti-competitive behaviour; nor does it prejudge the
outcome of the investigation itself. The European Commission respects the rights
of defence, in particular the right of companies to be heard in antitrust
proceedings. Commission fines providers of international removal services in Belgium over €32.7 million for complex cartel The European Commission has imposed fines, totalling €32,755,500, on Allied Arthur Pierre, Compas, Coppens, Gosselin, Interdean, Mozer, Putters, Team Relocations, Transworld and Ziegler for fixing prices, sharing the market and bid rigging for international removal services, in violation of the EC Treaty's ban on cartels (Article 81). The cartel operated for almost nineteen years (from October 1984 to September 2003). Cartel members fixed prices, presented bogus quotes to clients and compensated each other for lost bids. Allied Arthur Pierre's fine was reduced by 50% because it cooperated in the investigation under the Commission's 2002 Leniency Notice. The case was investigated on the Commission's own initiative. The Commission started an investigation at its own initiative with surprise inspections, carried out at the premises of Allied Arthur Pierre, Interdean, Transworld and Ziegler in September 2003 in Belgium. The inspections proved particularly successful and abundant evidence of cartel activities was obtained. After the inspections, Allied Arthur Pierre submitted a leniency application under the 2002 Leniency Notice and provided the Commission with evidence of significant added value. The cartel covered international "door-to-door" removals to and from Belgium. The companies agreed on prices, attributed removal contracts by way of bid rigging in the form of bogus quotes called "cover quotes" and benefited from a system of financial compensation for lost bids, called "commissions". These commissions were a hidden element of the final price that the consumer had to pay. From the mid 1980s to the beginning of the 1990s the cartel operated on the basis of written price fixing agreements. In parallel, arrangements on "commissions" and "cover quotes" took place. Cartel members invoiced each other the lost bid commissions by way of bills. They also cooperated in order to submit bogus quotes that made clients falsely believe that they had a choice based on competition. These practices constitute very serious infringements of EC Treaty antitrust rules. In setting the fines, the Commission took into account the duration and the gravity of the infringement. Exel Investments Limited, a former parent company of Allied Arthur Pierre, cannot benefit from the leniency granted to Allied Arthur Pierre because Exel Investments Ltd. could have applied for leniency but chose not to do so. The Commission has seen no grounds for reducing the amounts of the fines of four undertakings, who claimed their inability to pay, but the Commission exceptionally took into account the inability to pay and particular circumstances concerning the individual situation of a fifth undertaking, Interdean, and reduced its fine by 70%. [11 March 2008] Commission initiates formal proceedings against Visa Europe Limited The European Commission has decided to open formal antitrust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions within the EEA using Visa branded consumer payment cards, and the "Honour-All-Cards-Rule" as it applies to these transactions. The proceedings will seek to establish whether these practices constitute infringements of Article 81 of the EC Treaty and Article 53 of the EEA Agreement, which forbid restrictive business practices such as price fixing.This initiation of proceedings does not imply that the Commission has proof of an infringement. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority.There is no strict deadline for the Commission to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.The proceedings concern the Visa network rules relating to the MIF for cross-border point of sale consumer payment card transactions within the EEA and, by default, for certain domestic point of sale consumer payment card transactions within the EEA, as well as the "Honour-All-Cards-Rule" as it applies to these transactions. The MIF is a charge on each payment at a merchant outlet, retained by the customer's bank (the "issuing bank") and charged to the merchant's bank (the "acquiring bank"), which then takes this cost element on board in setting its prices to merchants. The "Honour-All-Cards-Rule" obliges merchants to accept all valid Visa-branded cards, irrespective of the identity of the issuer, the nature of the transaction and the type of card being issued.In 2002, the Commission exempted the MIF proposed by Visa International after Visa International offered substantial reforms. The Commission cleared Visa's "Honour-All-Cards-Rule" in 2001. In the proceedings leading to the Commission decision of 2002, Visa offered to progressively reduce the level of its MIF from an average of 1.1% to 0.7% until the end of 2007 and to cap the MIF at the level of costs for specific services. Visa also enhanced the transparency of fees and allowed banks to reveal information about the MIF to businesses. The exemption, however, expired on 31 December 2007 and Visa Europe Limited, which has taken over responsibility from Visa International for the network rules applicable in the EEA, has from that moment been responsible for ensuring that its system is in full compliance with EU competition rules.The legal base of this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.Article 11(6) of Council Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply the competition rules laid down in Articles 81 and 82 of the EC Treaty. Moreover, Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.Article 2(1) of Commission Regulation No 773/2004 provides that the Commission can initiate proceedings with a view to adopting, at a later stage, a decision on substance according to Articles 7-10 of Council Regulation No 1/2003 at any point in time, but at the latest when issuing a statement of objections or a preliminary assessment notice in a settlement procedure. In the case at stake, the Commission has chosen to open proceedings before any such further steps. [26 March 2008]Commission welcomes Court judgment wholly upholding margin squeeze decision against Deutsche Telecom The European Commission welcomes today's judgment of the European Court of First Instance (CFI), upholding in its entirety a 2003 Commission decision imposing a €12.6 million fine on Deutsche Telekom AG (DT) for abusing its dominant position on the German telecommunications market. For more than 5 years DT charged unfair prices for the provision of local access to its fixed telecommunications network (local loops). This meant that alternative operators could not compete effectively with Deutsche Telekom and German consumers were deprived of the benefits of choice and price competition for more than five years. The CFI ruling is important, not only for German consumers, but also because it confirms that dominant operators who have a regulatory obligation to supply access to their networks cannot evade this obligation through a margin-squeeze price policy. In its judgment, the Court of First Instance rejects all pleas advanced by DT. The Court confirms that the Commission correctly found that, from the beginning of 1998 to the end of 2001, and from 2002 to the adoption of the decision, DT had sufficient scope to end or reduce the margin squeeze, while complying with the price ceiling imposed by the German Regulatory Authority (RegTP). The Court of First Instance also clarifies that the fact that DT’s charges had to be approved by RegTP does not absolve it from responsibility under competition law. As an undertaking in a dominant position, DT was obliged to and had the possibility to submit applications for adjustment of its charges as soon as those charges had the effect of impairing genuine undistorted competition on the common market. Furthermore, the Court of First Instance upheld the method used by the Commission to establish a margin squeeze. It notes that the abusive pricing policy of Deutsche Telekom was due to the reduced spread between its prices for wholesale access and its retail prices. The Commission was not therefore required to demonstrate that the retail prices were, as such, predatory and abusive. The Commission was also correct to base its calculation of the margin squeeze on a comparison of wholesale access with a weighted average of retail prices for all Deutsche Telekom’s access services (analogue, ISDN and ADSL). The judgment recalls that at the time of the adoption of the Commission decision in 2003, there was no infrastructure in Germany other than DT's fixed network that would have enabled its competitors to make a viable entry onto the market in retail access services. A potential competitor who was just as efficient as DT could thus not enter the retail access services market without suffering losses. This effect is proven by the small market shares acquired by DT’s competitors which show that the abusive behaviour also had an impact on the market. As regards the argument of DT that the Commission had impinged on the competences of the German Regulatory Authority, RegTP, the judgment observes that decisions of national authorities do not in any way affect the Commission’s power to find infringements of competition law. The Court of First Instance underlines that the Commission cannot therefore be accused of introducing double regulation of DT's pricing practices by punishing DT for having failed to use its discretion in order to end the margin squeeze. In its decision of 21 May 2003 the Commission found that DT charged new entrants higher fees for wholesale access to the local loop than what DT’s subscribers paid for fixed line subscriptions. This discouraged new companies from entering the market and reduced the choice of suppliers of telecoms services as well as price competition for consumers. The Commission’s action stemmed from complaints by numerous new entrants in the German telecommunications market. Since 1998 DT was legally obliged to provide competitors access to its local loops. In spite of this clear obligation, there was still very little effective unbundling of the local loops and DT, with a market share of 95% in 2003, remained the dominant provider of broadband and narrowband retail access. Many new entrants tried to compete with the incumbent operator. None of them was able to reach significant market share, not least because DT charged its competitors higher fees for local loop access than its end users had to pay for broadband or narrowband access. This was clearly harmful to consumers, because competition between operators is the best means to bring overall prices down. The “local loop” is the physical circuit between the customer's premises and the telecommunications operator's local switch. Traditionally it takes the form of pairs of copper wires. New entrants on the telecommunications markets need access on fair and non-discriminatory terms to the local loops (“local loop unbundling”) to be able to offer retail services to end-customers, as it would be impossible to replicate such a network built over a century. Effective local loop unbundling is key for the spread of electronic communications services. It was imposed on the incumbent operators by way of legislation at EU level and, in some Member States, such as Germany, also at national level. The regulatory framework was not the only tool available to tackle the show take-up of local loop unbundling. The conditions of local loop unbundling, such as pricing, were also subject to scrutiny under EU competition rules. In Germany, DT has offered local loop access at two different levels for many years. Besides the retail subscriptions to end customers, DT also offers unbundled access to the local loop to competitors, which allows them direct access to end-users. DT was and is thus active on the upstream market for wholesale local loop access to competitors and on the downstream market for retail access services to end-customers. Both markets are closely linked to each other. DT’s local access network is not the only technical infrastructure allowing for the provision of wholesale access services to competitors and of retail access services to end-users. But the other alternatives, which include fibre-optic networks, wireless local loops, satellites, power lines, and upgraded cable TV networks, were at least during the infringement period not yet sufficiently developed and could not be considered as equivalent to DT’s local loop network. [10 April 2008]
Commission approves proposed acquisition of Cognos by IBM The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Canadian company Cognos, an independent provider of business analytics software, by IBM Corporation of the US. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.IBM provides a wide range of information technology (IT) solutions comprising software, hardware and services. Cognos offers business analytics software solutions which corporate customers use to analyse, report and visualise data across their organisation to gain better insight into their businesses.The Commission examined the effects that the proposed merger would have on the business analytics sector and its various sub-divisions. In each instance, the Commission found that the horizontal overlap between the parties' activities would not give rise to competition concerns, since the parties' combined market share would be moderate at EEA level. The combined IBM/Cognos entity would continue to face several strong competitors and customers would find sufficient alternative suppliers of such software products.The Commission's investigation found no significant risk that the merged entity would be able to close off competitors from the market. IBM's and Cognos' positions in their respective segments of enterprise application software (EAS) would not provide sufficient incentives to prevent standalone business analytics software vendors from integrating with their EAS platforms. [23 January 2008]Commission opens infringement procedure against Spain for not lifting conditions imposed by CNE on acquisition of Endesa by Enel and Acciona The European Commission has formally requested Spain to explain why it has not withdrawn the conditions imposed by the Spanish Energy Regulator (CNE), as modified by the decision of the Spanish Minister of Industry and Tourism of 19 October 2007. The Commission declared the conditions to be contrary to EU law in a decision adopted on 5 December 2007 under Article 21 of the EU Merger Regulation. The request takes the form of a “letter of formal notice”, which is the first step of infringement proceedings under Article 226 of the EC Treaty. If there is no satisfactory reply within 15 working days, the Commission may issue a formal request to Spain to comply with its decision. This request would be in the form of a ‘reasoned opinion’, the second stage of infringement proceedings.On the basis of the powers granted by Royal Decree-Law 4/2006, on 4 July 2007 CNE decided to submit the Enel/Acciona/Endesa operation to a number of conditions. This decision was adopted without prior communication to, or approval by, the Commission.On 19 October 2007, and following an appeal lodged by Enel and Acciona against CNE's decision of 4 July, the Spanish Minister of Industry and Tourism adopted a decision modifying some of the conditions imposed by CNE in its decision of 4 July 2007 and withdrawing others.On 5 December 2007, the Commission adopted a decision declaring that the CNE decision, as partially modified, breached Article 21 of the EU Merger Regulation because:
The Commission's decision of 5 December 2007 required Spain to withdraw by 10 January 2008 the conditions imposed by CNE’s decision which had been declared incompatible with EU law. To date the Spanish authorities have not informed the Commission of any steps or measures taken in order to comply with the 5 December decision. [31 January 2008]Commission approves proposed acquisition of Berre Refinery by Basell The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the refinery Compagnie de Distribution des Hydrocarbures SAS (Berre Refinery) of France, currently controlled by Royal Dutch Shell plc. (Shell) of the UK/Netherlands, by Basell Polyéthylène SAS (Basell) of Luxembourg, belonging to Access Industries (Access) of the US. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.Basell is active in the manufacture and sale of various chemical products, such as polyolefins, polyolefin compounds and other specialty polyolefin products, catalysts, ethylene and propylene and the development and licensing of technology.The Berre Refinery is situated in the South of France and uses the fractional distillation process to convert crude oil into various petrochemical products, including LPG, naphtha, jet fuel, gasoline, heating oil, bitumen, fuel oil and gasoil. Basell will also buy the infrastructure associated with the refinery (including pipeline and terminals) and the contracts necessary for its operation.Some of the petrochemical products derived from the fractional distillation at the Berre Refinery are used as feedstock in the polyolefins sector, in which Basell is active, and therefore the Commission analysed the vertical relationships between the partiesHowever, given the parties' limited position on all the upstream and downstream markets, the Commission concluded that the transaction would not strengthen either the parties' incentive or their ability to close off the market to competitors. [4 February 2008]Commission clears joint ventures between Aviva and Bank Zachodni in Polish insurance sector The European Commission has cleared under the EU Merger Regulation the proposed creation of two new joint ventures in Poland (one for underwriting life assurance and one for underwriting general insurance) between the UK's Aviva insurance group and the Polish bank Bank Zachodni WBK S.A., controlled by the Allied Irish Banks group. The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or in any substantial part of it.Aviva is an international insurance group that is also active in long term savings and fund management. Bank Zachodni WBK S.A. is a universal bank, offering services to personal customers, small and medium enterprises, large corporate companies, as well as a wide range of activities such as mutual funds, brokerage activities, factoring and asset management.The Commission's investigation focused on the underwriting of insurance products in the Polish market, where the two joint ventures will exclusively be active and on a possible vertical relationship, as both parent companies are active in asset and pension fund management.The Commission's investigation indicated that as far as the Polish insurance market is concerned, the parties would have combined market shares below 15%.
Regarding
asset and pension fund management Aviva and Bank Zachodni would have combined
market shares between 20% and 30%. However, the market investigation did not
indicate any competition concerns.
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