Antitrust

Commission imposes 38 million fine on E.ON for breach of a seal during an inspection

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.ONs 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]

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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]

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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]

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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]

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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.
[21 February 2008]

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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 Commissions 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]

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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 Commissions March 2004 Decision prior to 22 October 2007. Todays 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 Commissions 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.

Todays 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]

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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.

The Commission welcomes these proposed commitments in so far as they could remedy the concerns that it has as regards E.ON. These proposals, if adopted, would structurally change the electricity sector in Germany and could spur competition in the sector to the benefit of domestic and industrial customers. The Commission will continue to conduct antitrust investigations in the energy sector. [28 February 2008]

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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]

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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.

There is no strict deadline to complete cartel inquiries. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned cooperate and the exercise of the rights of defence. [11 March 2008]

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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]

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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]

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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 DTs 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 Telekoms 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 DTs 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 Commissions 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 DTs 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 Commissions 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.

DTs 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 DTs local loop network. [10 April 2008]

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Mergers

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]

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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 CNE took its decision without any prior communication to (and approval by) the Commission and

• Enels and Acciona's acquisition of joint control over Endesa was subjected to to a number of conditions that were contrary to the EC Treatys rules on the freedom of establishment and the free movement of capital (Articles 43 and 56 of the EC Treaty) and, partly, the free movement of goods (Articles 28 and 29 of the EC Treaty).

The Commission's decision of 5 December 2007 required Spain to withdraw by 10 January 2008 the conditions imposed by CNEs 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]

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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 Polythylne 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 parties

However, 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]

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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.
[5 February 2008]

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Commission approves proposed acquisition of Katop by De Weide Blik

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Katop International S.A., a French fruit and vegetable importer and wholesaler, by De Weide Blik N.V. of Belgium. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

De Weide Blik is controlled by CVC Capital Group s.a.r.l., a private equity firm. It is active in the production, import, export, packaging, handling and logistics of fresh fruit, vegetables, flowers, flower bulbs, plants and convenience meals. Its main activities are concentrated in the Benelux region and Germany.

Katop is a French group active in the production, import, export, packaging and distribution of citrus, exotic and off-season fruits. In Europe, the UK and France are by far its two most important sales areas.

The Commissions examination of the proposed transaction showed that the horizontal overlaps between the activities of the two companies and their combined position on the concerned markets for fruits and vegetables on the import, producer and wholesale level are limited. For all markets concerned, the combined firm would continue to face several competitors. [8 February 2008]

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Commission approves proposed acquisition of various Hagemeyer and Rexel assets by Sonepar

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Dutch company Hagemeyer' s subsidiaries in Austria and Sweden, plus six Hagemeyer outlets in Germany by Sonepar of France. In a second decision, the Commission has also cleared the proposed acquisition of the French company Rexel's German and Luxembourg businesses by Sonepar. The Commission concluded that none of the transactions would significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Sonepar, Hagemeyer and Rexel are mainly active in the wholesale distribution of electrical products and installation material as well as the wholesale of heating, ventilation and air-conditioning products and household and consumer electronics in some Member States.

Sonepar and Rexel entered into an agreement pursuant to which Rexel would launch a public takeover bid over Hagemeyer. This latter transaction is still subject to the Commissions scrutiny under the Merger Regulation. Subject to a successful outcome of the takeover bid and the Commission's clearance, Rexel would transfer parts of Hagemeyer to Sonepar. Moreover, Sonepar and Rexel agreed that all of Rexel's activities in Germany and Luxembourg would be transferred to Sonepar, subject to the successful outcome of the takeover bid.

The Commission examined in a first case the effects of the proposed acquisition by Sonepar of Hagemeyer's assets in Austria and Sweden, six Hagemeyer outlets in Germany as well as part of Hagemeyer activities outside the EU (in the United States, Mexico, Canada, Australia, China, Singapore, Malaysia, Thailand and Switzerland). 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 in the Austrian market for the wholesale distribution of electrical products. In Sweden, where the proposed transaction would reinforce the pre-existing leading market position of Hagemeyer on the market for the wholesale of purely electrical products, the combined entity would continue to face effective competition from other wholesalers.

The Commission examined in a second case the effects of the proposed transaction whereby Rexel would transfer all of its activities in Germany and Luxembourg to Sonepar. The Commission found that, despite the significant position the merged entity would hold in some local areas, competitors that are already present in those areas or potential entrants from neighbouring areas would be able to exercise competitive constraints on the merged entity. [8 February 2008]

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Commission approves proposed acquisition of former ICI's adhesives and electronic materials businesses by Henkel

The European Commission has cleared under the EU Merger Regulation the proposed acquisition by Henkel KGaA of Germany of the entire adhesives and electronic materials business (the "A&E Businesses") that Akzo Nobel N.V. of The Netherlands recently acquired, when it bought Imperial Chemical Industries PLC of the UK (ICI). After a market investigation, the Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Henkel is listed on the Frankfurt stock exchange and on all of Germanys regional exchanges. The company is active in the production and supply of laundry and home care products, cosmetics and toiletries, adhesives, sealants and surface treatment products.

The A&E Businesses, which comprise all assets and liabilities relating to industrial adhesives and electronic materials as well as certain industrial surface treatment products, currently form part of the National Starch division of ICI, which is now controlled by Akzo.

The parties' activities overlap in three areas: industrial adhesives, electronic adhesives/materials and, to a limited extent, industrial surface treatments.

Concerning industrial adhesives (as opposed to consumer or DIY adhesives) the Commissions examination of the proposed transaction focused on the markets for automotive adhesives, bookbinding adhesives, non-woven hygiene adhesives, non-woven textiles adhesives and adhesives for disposable medical products.

The Commission's market investigation showed that the transaction would not raise competition concerns due to the fact that several alternative suppliers would remain active after the merger, both at EEA level and on potential national markets, and that barriers to entry are relatively low.

The transaction would not lead to competition concerns in the market for electronic adhesives either. Electronic adhesives are specifically designed for the manufacture of electronic components and systems. The Commission found that the market for electronic adhesives is global and that several large competitors are active on the market. Also, a majority of customers confirmed that they do business with several suppliers for electronic adhesives, rather than depending on a single supplier. [15 February 2008]

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Commission clears acquisition of Reuters by Thomson subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the UK-based Reuters Group by Thomson Corporation of Canada, subject to conditions and obligations. The Commissions in-depth investigation, opened in October 2007, indicated that the concentration, as originally notified, could have led to a substantial impediment of effective competition in several markets of the financial information sector. The parties submitted commitments which have removed the Commissions competition concerns and are suitable to restore effective competition in the Single Market.

Both Thomson and Reuters are leading financial information providers. The companies source, aggregate and disseminate real-time and historical market data and other type of financial content to respond to the needs of financial professionals, such as traders and sell-side people in the on-trading floor space, of investors on the buy-side and of analysts in the off-trading floor space within banks, investment funds and corporations. In addition, Thomson is active in legal, fiscal, accounting and scientific research markets, whereas Reuters is best known as one of the largest international news agencies.

The Commission's market investigation assessed Thomson's and Reuters' respective positions in the various markets in the financial services sector. The main areas of overlap concerned the off-trading floor space (i.e. the research and asset management area), given Thomson's marginal presence in the on-trading floor area. The in-depth investigation showed that the concentration, as originally notified, would have raised competition concerns in the markets for the distribution of aftermarket broker research reports, of earning estimates, of fundamental financial data of enterprises and of time series of economic data.

Aftermarket broker research reports analyse securities, industries or markets. This market comprises the sale of the reports after an initial "embargo" period of around two weeks, prior to which they are only accessible to selected customers. Earning estimates are predictions by analysts about future earnings of companies. Fundamentals databases contain company-specific data, such as financial statement data, financial ratios or earnings per share data. Time series of economic data comprise data on macroeconomic variables, such as GDP, unemployment rates, etc. collected over long periods of time to allow an analysis of trends. These databases are predominantly used in off-trading floor activities of financial institutions.

The proposed transaction would have eliminated rivalry between the two main suppliers of such databases in the marketplace, both at the worldwide and EEA level, leaving financial institutions and customers of such products with a reduced choice, the likelihood of price increases and a severe risk of discontinuation of overlapping products.

The proposed transaction would also have had a negative impact on providers of desktop products which obtain and integrate the types of content described above into their own offerings to customers. The merged entity would have had the ability and the incentive to close off such competitors, thereby adversely affecting competition at the downstream level.

To remove the Commissions competition concerns, the parties committed to divest copies of the databases containing the content sets of such financial information products, together with relevant assets, personnel and customer base as appropriate to allow purchasers of the databases and assets to quickly establish themselves as a credible competitive force in the marketplace in competition with the merged entity, re-establishing the pre-merger rivalry in the respective fields. The parties can also continue to use these databases in the future to commercialise the respective data to their own customers. With the remedies, customers of such financial information products therefore would continue to have sufficient alternatives post-merger.

The Commission's investigations, and negotiations of remedies, were undertaken in parallel with the examination of the case by the US Department of Justice. The process involved close co-operation between the two authorities, including exchanges of views on analytical methods and of detailed information, plus joint meetings and negotiations with the parties. [19 February 2008]

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Commission approves proposed acquisition of Arysta by Permira

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Japanese company Arysta LifeScience Corporation by Permira Holdings Limited of the Channel Islands. After examining the operation, the Commission concluded that the transaction would not significantly impede competition in the European Economic Area (EEA) or any substantial part of it.

Arysta is primarily active in the supply of agrochemicals that protect crops against damage by weeds, insects and disease. Permira is a private equity firm. Among its investments, Permira has an interest in Cognis, a German specialty chemicals company, which produces adjuvants which are raw materials used in the production of agrochemicals.

The Commission's examination of the proposed transaction showed that it would not give rise to competition concerns in any horizontally affected markets as Arysta and Permira's existing portfolio companies, including Cognis, are not active in the same markets. The investigation therefore focused on the potential vertical issues arising from the proposed transaction given that Cognis produces adjuvants that are used downstream in the manufacture of agrochemicals, where Arysta is present.

The Commission concluded that the proposed transaction would not give rise to vertical competition concerns. Firstly, Arysta is one of many companies active in the manufacture of agrochemicals and the types of adjuvants produced by Cognis are also used beyond agrochemical applications. Competitors of Cognis would therefore still have access to a sufficiently large customer base in agrochemical and other markets should Arysta choose to purchase all of its adjuvant requirements from Cognis after the transaction. Secondly, Cognis would not have the ability to restrict Arysta's competitors' access to adjuvants given the presence of alternative suppliers of these materials. [25 February 2008]

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Commission clears proposed joint control of Spanish online travel agency Rumbo by Telefnica and Orizonia

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition by the Spanish travel operator Orizonia Corporation (via its subsidiary Turmed) of joint control of online travel agency Rumbo ("Red Universal de Marketing y Booking Online") with Spanish telecommunications company Telefnica, S.A. The Commission further approved the integration of the travel agencies Terra Business Travel (belonging to Telefnica) and Viajar.com (belonging to Orizonia) into Rumbo. The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Orizonia is active in a wide range of tourist services, including tour operating and travel agency services via its subsidiaries Viajar.com and Viajes Iberia. Telefnica operates via Terra Business Travel both online and traditional travel agency services. In 2000, Telefnica and Amadeus IT Group S.A. founded the online travel agency Rumbo, which offers travel agency services mainly in Spain.

The proposed acquisition would combine Orizonia's and Telefnica's activities in the Spanish market for travel agency services. The Commission's investigation showed that this would not give rise to any competition concerns, given the small combined market share of the companies and the number of active competitors. Although Orizonia holds a strong position in the upstream market for tour operating services, the Commission found it would not adversely affect competition as Orizonia's relationships with travel agencies are non exclusive and there are sufficient competitors in the market. The Commission concluded that post-merger Orizonia would have no incentive to either favour its own integrated travel agencies or to increase its prices for tour operator services sold to competing travel agencies. [28 February 2008]

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Commission approves proposed acquisition of Foseco by Cookson subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Foseco by Cookson, both located in the UK, subject to commitments to divest Foseco's business of isostatically pressed products ("IPP") and to divest Cookson's foam filter business. In view of the remedies proposed by the parties, the Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Cookson is, through its wholly-owned subsidiary Vesuvius, a supplier of advanced refractories (non-metallic ceramics which resist extremely high temperatures) to the iron and steel producing industry. Foseco is active in the supply of consumable products, in particular filters (technical ceramics used during the casting of molten metal to reduce impurities and inclusions in castings) mainly for use in the foundry industries.

During its investigation, the Commission identified competition concerns relating to the markets for IPP and foam filters.

As regards IPP, Cookson would have become by far the market leader after the merger, and the limited number of remaining competitors would not have been able to counter the new entity's market power. Concerning filters, an area where Foseco has a strong market position, the merger would have combined the existing market leaders and closest competitors in terms of quality, service and innovation. Due to insufficient pressure from competitors, the Commission concluded that the transaction, as initially notified, would have threatened to impede effective competition on this market.

To address the Commission's concerns Cookson made the commitment to divest its filter business and, with the exception of a smaller plant in Asia, Foseco's IPP business. The commitments entirely remove the overlaps in the parties' activities in both areas of concern. After market testing these commitments, the Commission concluded that they would be suitable to eliminate its concerns. [4 March 2008]

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Commission clears acquisition of Maxit by Saint-Gobain subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Maxit Holding AB of Sweden by Compagnie de Saint-Gobain of France, subject to commitments to divest two subsidiaries of Maxit active in the production and sale of gypsum-related products. In view of the remedies proposed by the parties, the Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Saint-Gobain is active in the production of glass, ceramics, plastics and building materials, such as mortars and gypsum products. Saint-Gobain is also active in the distribution of building materials.

Maxit is active in the production of mortars and gypsum- products. Maxit is currently wholly-owned by HeidelbergCement Group, a German cement producer.

The activities of Maxit and Saint-Gobain overlap for two types of products: premix mortars and gypsum products. Premix mortars are construction products commonly employed for masonry, tile fixing and faade rendering. Gypsum is a raw material used in the production of cement, ceramics and plasters.

With regard to premix mortars, the Commission's investigation confirmed that Saint-Gobain and Maxit have a complementary product range, Maxit - contrary to Saint-Gobain - focusing on low value, high volume mortars, and a different geographic focus, Saint-Gobain being mostly present in France, Italy and Spain and Maxit in the Benelux, Germany and Scandinavia. The Commissions investigation showed that the horizontal overlaps in mortar markets, whether at national or local level, are generally limited and that the combined firm would continue to face numerous competitors, in fragmented and competitive markets characterised by low barriers to entry.

The Commission also assessed the vertical relationship due to Saint-Gobain's presence in the distribution of building materials. The Commission concluded that the addition of Maxit's mortar activities to Saint-Gobain's would not lead to a risk of closing off competing distributors' access to premix mortars supply or competing mortar suppliers' access to distribution channels, due to the absence of market power of the combined entity in both markets.

However, the Commission identified serious competition concerns in several markets related to gypsum, namely natural gypsum in Germany, natural anhydrite in Austria, gypsum-based semi-finished products in Austria, Belgium, Germany and The Netherlands and gypsum-based plasters for ceramics in the EEA. The proposed transaction would have led to the creation of monopolies or near-monopolies, depriving customers from competing alternatives.

To address the Commission's concerns, Saint-Gobain offered to divest two Maxit subsidiaries, Sdharzer Gipswerk GmbH and Maxit Baustoffe GmbH & Co KG, which would remove the entire overlap between Saint-Gobain and Maxit on these markets.

Finally, the Commission investigated the potential impact of the transaction on the market for External Thermal Insulation Composite Systems ("ETICS"), an external wall insulation technique primarily used in Northern and Central Europe. Maxit and Saint-Gobain are both producers of ETICS and Saint-Gobain is also active in the manufacturing of some ETICS components (insulation materials and glass fibre mesh). The Commission concluded that the parties' would have a limited market share for ETICS and that there would be no risk that the new entity would close off rival ETICS producers from access to ETICS components. [4 March 2008]

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Commission clears proposed acquisition of Telelogic by IBM

The European Commission has approved under the EU Merger Regulation the proposed acquisition of Telelogic of Sweden by IBM of the US. Both companies are suppliers of software development tools, that is software used to develop software. The Commission's in-depth investigation, opened on 3 October 2007, has shown that the transaction would not significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.

IBM is active worldwide in the development, production and marketing of a variety of information technology ("IT") products, software and services. As part of its diverse software activities, IBM develops and sells software development tools. Telelogic is a Swedish software company.

The activities of IBM and Telelogic mainly overlap in the markets for modelling and requirements management tools. Modelling tools are designed to help software developers model the software before developing it. The software's functions are mapped out by creating visual models as well as by generating data definitions, programming specifications and ultimately the software code itself. Requirements management tools are designed to streamline and document a development team's analysis of new software's requirements.

The Commission's in-depth investigation, which included a detailed analysis of win/loss data, revealed that IBM and Telelogic's modelling and requirements management products are not close substitutes, as they generally address different types of customers and different needs. Therefore, the removal of the competitive constraints between IBM and Telelogic as a result of the proposed transaction would not allow the merged entity to increase prices post merger.

The Commission's in-depth investigation also indicated that competition between IBM and Telelogic has not been a major force for innovation in the recent past. Instead innovation in the software development industry has primarily been spurred on by customers' increasing demands and by improved open standards.

Finally, although it would be technically possible for IBM to thwart interoperability between its software and those of third parties, the in-depth investigation revealed that the merged entity would have no incentive to engage in such a strategy, as the potential costs would by far outweigh the potential benefits. [5 March 2008]

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Commission clears proposed acquisition of Respironics by Philips

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Respironics, located in the US, by Philips of The Netherlands. 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.

Philips manufactures a wide range of electronic products, including lighting products, domestic appliances, consumer electronics and medical systems. Respironics manufactures medical devices used primarily for the treatment of patients suffering from sleep and respiratory disorders. Its products are mainly used in homes, hospitals, alternative care facilities and emergency medical settings.

The proposed acquisition would result in some overlaps in the parties' activities in the markets for light boxes and soothers (dummies) and create vertical links between, on the one hand, Respironics' OEM capnography components and Philips' critical care monitors and, on the other hand, between Philips' critical care monitors and Respironics' ventilation equipment used in hospitals.

Light boxes are lighting appliances that produce light with the intensity and quality of natural daylight, used for both light therapy and normal lighting. The Commission's market investigation confirmed that the proposed acquisition would be unlikely to raise competition concerns as the combined market share of Philips and Respironics would not exceed 25% in any national market.

Regarding the soothers markets where Philips is active, the proposed acquisition would only lead to a marginal increment to Philips' market share. There would be no overlap in the parties' activities if the soothers market would be split into separate markets for the retail sale of "normal" soothers and the sale of "specialty" soothers (for example. soothers for preterm babies) to hospitals, as Philips does not sell "specialty" soothers.

As regards the potential vertical relationships between the parties, the proposed acquisition would not give rise to competition concerns, considering, in particular, the respective market position of the parties and the presence of a sufficient number of alternatives to the parties' products on the market. [5 March 2008]

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Commission approves proposed acquisition of joint control of Prisma and OeKB-V by Euler Hermes and OeKB

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control of Prisma Kreditversicherungs AG and OeKB Versicherung Aktiengesellschaft (OeKB-V), both of Austria by Euler Hermes Kreditversicherungs-AG of Germany and Oesterreichische Kontrollbank AG (OeKB) of Austria. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Euler Hermes is an insurance company active in the credit insurance sector. OeKB is a bank active in export financing, capital markets and the management of state guarantees for exporters. Prisma and OeKB-V are specialised insurance companies mainly offering credit insurance policies, in particular delcredere insurance (which covers risks emanating from customers who are unable to pay for goods supplied or services provided as a result of their insolvency) and capital goods credit insurance in Austria.

OeKB currently controls both OeKB-V and - jointly with Euler Hermes - Prisma. The proposed transaction would therefore lead to a limited structural change, through which Euler Hermes would acquire joint control - together with OeKB - over OeKB-V.

The Commissions examination of the proposed transaction showed that it would not give rise to competition concerns in the markets for credit insurance (delcredere or capital goods credit) in Austria and that, for all products concerned, the joint venture would continue to face several strong, effective competitors with significant market shares.

Additionally, despite the concentration of this relatively small market, the nature of the market would not allow any coordination of behaviour between the competing suppliers of credit insurance. [5 March 2008]

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Commission welcomes Court judgment on Spain's failure to withdraw illegal conditions imposed on E.ON / Endesa merger

The European Commission welcomes todays judgment by the European Court of Justice (case C-196/07) on an infringement case against Spain. The Court found that Spain failed to comply with the Commission's decisions requiring the withdrawal of certain conditions imposed on E.ONs bid for Endesa. Some of the conditions were imposed by the Spanish Energy Regulator (CNE) in July 2006, others by a Ministerial decision of 3 November 2006. The conditions in question were declared illegal under Article 21 of the EU Merger Regulation by Commission decisions adopted on 26 September 2006 and 20 December 2006 respectively. When Spain failed to withdraw the conditions, the Commission referred the case to the Court in March 2007. The Court ruling confirms that Member States cannot deprive businesses and consumers of the benefits of the Single Market.  Today's judgement confirms that the Commission can and should continue to monitor national measures in order to ensure that Member States do not impose unjustified restrictions on cross-border mergers that are the exclusive competence of the Commission.

The European Commission approved the proposed E.ON bid for Endesa on 25 April 2006 under the terms of the EU Merger Regulation. However, in July 2006 the Spanish energy regulator CNE adopted a decision imposing a number of conditions on the E.ON bid, which were then modified by a decision of the Spanish Minister of Industry on 3 November 2006. Both these decisions were found by the Commission, on 26 September 2006 and on 20 December 2006 respectively, to be in breach of Article 21 of the EU Merger Regulation. The Commission decisions required Spain to withdraw the conditions which had been declared incompatible with EU law.

Since the Spanish Government did not withdraw the illegal measures, the Commission decided to open an infringement procedure under Article 226 of the EC Treaty. Despite the letters of formal notice and the reasoned opinion, the Spanish authorities did not comply with the Commission decisions. Therefore, the Commission decided to refer the case to the European Court of Justice.

Today's judgment is of material significance because it confirms the Commissions position that Member States should comply with the Commission's decisions requesting the withdrawal of State measures that have been declared illegal because they negatively affect mergers of a Community dimension and are not necessary and proportionate for the protection of a legitimate public interest.

Finally, the Court clarified that, contrary to what the Spanish authorities argued during the proceedings, the fact that EON's public offer failed does not render the action devoid of purpose or interest and does not make it absolutely impossible to implement the Commission's decision. [6 March 2008]

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Commission approves proposed acquisition of Emap by Apax Partners Worldwide and Guardian Media Group

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control over Emap plc, the UK media services company, by Apax Partners Worldwide LLP (APW) and Guardian Media Group Plc (GMG) of the UK. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Following the recent divestment of its consumer media and radio divisions, Emap is active in the provision of business to business media services delivered through multiple platforms such as print and online publications, events organisation and online information products. APW is an adviser to private equity funds. GMG is a publisher of newspapers and magazines and a radio broadcaster.

The Commissions examination of the proposed transaction showed that the horizontal overlaps between the activities of Emap, GMG and APW, including its portfolio companies, are minimal and that, after the transaction, Emap would continue to face several strong, effective competitors with significant market shares for all products concerned.

The Commission also investigated the vertical relationship between Emap and Trader Media Group Ltd. (TMG), a company jointly controlled by APW and GMG. Emap provides automotive datasets to TMG for the use in online classified vehicle advertising. Automotive datasets contain details of the manufacturer, model and specifications of a car. Datasets are provided to help customers accurately identify the specification of vehicles they may be selling/buying, and to compare and configure new vehicles based on specification parameters. Datasets enable users who wish to sell their vehicles to automatically fill in required information fields. The Dataset includes a code that links the relevant data automatically to a vehicle registration mark put in by the website user.

The Commission concluded that the vertical relationship would not give rise to competition concerns. Emap would not be able to restrict TMG's competitors' access to automotive datasets in the UK, given the presence of alternative suppliers. Conversely, competitors of Emap would still have access to a sufficiently large customer base should TMG choose to exclusively purchase from Emap after the transaction. [7 March 2008]

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Commission approves proposed acquisition of Scottish & Newcastle assets by Carlsberg

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of certain assets of the UK-based brewer Scottish & Newcastle (S&N) by the Danish company Carlsberg. After examining the operation, the Commission concluded that the transaction would not significantly impede competition in the European Economic Area (EEA) or any substantial part of it.

S&N is a public company with interests in the production and distribution of beer, soft drinks and mineral water in a number of countries around the world. Its beer brands include 'Kronenbourg' and 'Grimbergen'.

Carlsberg is active worldwide in the production and distribution of beer and other beverages. Its main beer brands are 'Carlsberg', 'Tuborg' and 'Holsten'.

Carlsberg and S&N are currently partners in a joint venture, Baltic Beverages Holding AB ('BBH') which produces and distributes beer and other beverages in Estonia, Latvia, Lithuania, Russia and several other CIS members.

On 25 January 2008, a consortium formed by Carlsberg and Heineken announced a public bid for the entire share capital of S&N. If the bid is successful, it would lead to the division of S&N between Carlsberg and Heineken. The consortium's bid is considered to give rise to two distinct concentrations: one in respect of those S&N assets to be acquired by Carlsberg and a second covering those assets to be acquired by Heineken.

Under the terms of the public bid, Carlsberg would acquire S&N's 50% interest in BBH as well as S&N's businesses in France and Greece. Today's decision concerns only the merger that would result from Carlsberg's acquisition of certain S&N assets. Heineken's proposed acquisition of the remaining assets of S&N, which was notified to the Commission on 1 February 2008, is currently under review.

The Commission's examination of the proposed transaction showed that it would not lead to competition concerns in any of the markets considered. As BBH is an existing joint venture between Carlsberg and S&N, the only effect of the proposed transaction in those markets where BBH is active would be the change from joint to sole control. The proposed transaction would not result in any significant change in France and Greece either, as Carlsberg is currently not active in these markets. As regards other EEA countries, the S&N brands to be acquired by Carlsberg only have minor sales via imports and would not change Carlsberg's existing positions.

[7 March 2008]

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Commission approves proposed acquisition of Continental's cooling fans and electric motor drives business by Brose

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the cooling fans and electric motor drives business of Continental AG by Brose Fahrzeugteile GmbH & Co. KG, both of Germany. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Brose is a supplier of door and seat systems for vehicles as well as of components for such systems. Continental acquired most of the targeted business in November 2007 from Siemens VDO.

By the proposed transaction, Brose would enlarge its activities as a supplier to the automotive industry and integrate its current supplier of electric motors for vehicle windows.

The Commission's investigation revealed that, despite Brose's relatively high market share for electric window motors and door systems at the EEA level, the merged entity would not be in a position to close off access to the market by competitors. Competitors that are not already vertically integrated would still be able to source electric motors from alternative suppliers or turn to in-house production. In addition, suppliers of door systems may be limited in the choice of their supplier of electric motors to be integrated into the door systems by their customers, the vehicle manufacturers, who often specify the origin of such key components. [10 March 2008]

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Commission clears proposed acquisition of Galvex by ArcelorMittal

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the galvanised steel business of the Estonian Galvex Group by ArcelorMittal, a leading global steel company based in Luxembourg. The Commissions investigation found that the proposed transaction would not impede effective competition in the European Economic Area (EEA) or any substantial part of it.

ArcelorMittal is the parent company of the ArcelorMittal group, the world's largest steel producer, also active in the distribution of various steel products. Galvex Estonia specialises in the manufacture and sale of galvanised steel products, used in applications where corrosion resistance is required. This includes the construction, automobile, domestic appliance and metal furniture industries. Through the proposed transaction, ArcelorMittal would de facto acquire all operating businesses of the Galvex group.

The proposed merger would create an overlap in the market for galvanised strip and coils, where both ArcelorMittal and Galvex are active. However, the Commission's investigation found that the operation would not give rise to competition concerns in this market, as Galvex's share in the EEA market is very low (0.5%) and a number of other significant competitors are active on this market. Moreover, in 2008, several of these competitors plan capacity increases that would exceed the additional capacity to be acquired by ArcelorMittal as a result of the merger. Imports into the EEA market for galvanised strips and coils are also increasing (from 10% in 2006 to 15% in 2007) and are expected to continue to grow providing a further competitive constraint on the merged entity.

The merger would also create vertical relationships: the first between the market of cold rolled carbon steel flat products (where ArcelorMittal is active) and the market for galvanised strip and coils (with Galvex galvanising cold rolled carbon steel flat products supplied by steel producers). The second vertical relationship would arise between Galvex's production of galvanised strips and coils and ArcelorMittal's distribution activities of these products. However, the transaction is unlikely to result in supply problems for competitors of the merged entity, particularly as Galvex is a very small player both as a consumer of cold rolled steel and as a producer of galvanised strip and coils. [10 March 2008]

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Commission clears proposed acquisition of DoubleClick by Google

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the online advertising technology company DoubleClick by Google, both of the US. The Commissions in-depth investigation, opened in November 2007, concluded that the transaction would be unlikely to have harmful effects on consumers, either in ad serving or in intermediation in online advertising markets. The Commission has therefore concluded that the transaction would not significantly impede effective competition within the European Economic Area (EEA) or a significant part of it.

Google operates an internet search engine that offers search capabilities for end users free of charge and provides online advertising space on its own websites. It also provides intermediation services to publishers and advertisers for the sale of online advertising space on partner websites through its network "AdSense".

DoubleClick mainly sells ad serving, management and reporting technology worldwide to website publishers and to advertisers and agencies. Such technology allows internet publishers and advertisers to ensure that advertisements are posted on the relevant websites and to report on the performance of such advertisements.

The Commission's in-depth market investigation found that Google and DoubleClick were not exerting major competitive constraints on each other's activities and could, therefore, not be considered as competitors at the moment. Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger. The Commission therefore concluded that the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market.

The Commission also analysed the potential effects of non-horizontal relationships between Google and DoubleClick following concerns raised by third parties in the course of the market investigation. These relationships concern DoubleClick's market position in ad serving, where Google, by controlling DoubleClick's tools, could allegedly raise the cost of ad serving for rival intermediaries, and  Google's market position in search advertising and/or online ad intermediation services, where Google could allegedly have required purchasers of search ad space or intermediation to also purchase DoubleClick's tools.

The Commission found that the merged entity would not have the ability to engage in strategies aimed at marginalising Google's competitors, mainly because of the presence of credible ad serving alternatives to which customers (publishers/advertisers/ad networks) can switch, in particular vertically integrated companies such as Microsoft, Yahoo! and AOL. The market investigation also found that the merged entity would not have the incentive to close off access for competitors in the ad serving market, mainly because such strategies would be unlikely to be profitable.

The Commission's decision to clear the proposed merger is based exclusively on its appraisal under the EU Merger Regulation. It is without prejudice to the merged entity's obligations under EU legislation in relation to the protection of individuals and the protection of privacy with regard to the processing of personal data and the Member States' implementing legislation. [11 March 2008]

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Commission approves proposed acquisition of UBI Vita by Aviva Italia

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of UBI Vita, the life insurance branch of UBI S.c.p.a. , by Aviva Italia Holding S.p.A. both of Italy. After examining the operation the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Aviva Italia is active in the insurance sector in Italy and belongs to the UK-based Aviva group, which is also active in the insurance sector and in the long term savings and fund management business around the world. UBI Vita is active in the life insurance sector.

The Commissions examination of the proposed transaction showed that the horizontal overlaps between the activities of Aviva Italia and UBI Vita would not result in high market shares on any market. Furthermore, the combined firm would continue to face several strong, effective competitors with significant market positions. The examination also showed the absence of competitive risks in vertically related markets, given the low share in the market for distribution of insurance products hold by Aviva Italia and UBI Vita. [11 March 2008]

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Commission approves proposed acquisition of CICA by ACE

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Combined Insurance Company of America (CICA) by ACE Limited of the Cayman Islands. 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.

ACE is a holding company active in global property, casualty insurance and reinsurance in more than 140 countries. In Europe it offers a broad range of non-life insurance products. CICA provides life insurance, accident and health insurance products primarily to individuals in the US, EU, Canada and Asia Pacific.

The Commission's investigation concluded that the horizontal overlaps between the activities of ACE and CICA on European markets would be minimal, with the exception of the underwriting of insurance products in Ireland, where the merged entity would increase its market share on the sub-segment of individual accident and health insurance. However, the Commission's analysis showed that this increase would not raise competition concerns as the combined firm would continue to face strong competitors. [11 March 2008]

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Commission approves proposed acquisition of Transfesa by Deutsche Bahn

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Transportes Ferroviarios Especiales (Transfesa) of Spain by Deutsche Bahn (DB) of Germany. The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

DB is a state-owned German-based railway company providing rail passenger transport and rail freight transport in Germany, The Netherlands and Denmark, through its subsidiary Railion and in the UK and France through its recent acquisition of EWS. DB also provides freight forwarding by all modes of transport, logistics and ancillary services worldwide through its subsidiary Schenker. DB is active in finished vehicle logistics services and car components logistics via its subsidiaries ATG and SAR respectively.

Transfesa delivers freight forwarding and logistics services, mainly within, from and to Spain. Transfesa is primarily active in rail and road freight forwarding and logistics services for vehicle parts and components and finished vehicles, through its subsidiary Semat. Transfesa also operates two rail axle changing stations between France and Spain.

DB and Transfesa's activities mainly overlap with regard to freight forwarding services provided to car manufacturers. These overlaps would only be significant for rail-based finished vehicles and car components logistics. In these areas the merged entity might have a competitive advantage due to the ownership of certain transport equipment which would be particularly suitable for the transport of cars and component parts.

However, the Commission's investigation found that the market is characterised by the existence of current and potential competitors, by competitive constraints from road and sea and by a limited number of large customers with very specific needs and considerable know-how in logistics. The Commission therefore concluded that the proposed transaction would not lead to competition concerns in the finished vehicles logistics market. It also concluded that competition concerns in the car components logistics sector would be similarly outweighed by competitive constraints from other competitors, general cargo logistics and road transport. [19 March 2008]

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Commission approves proposed acquisition of Getrnke Essmann by Radeberger

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Getrnke Essmann by Radeberger (Oetker), both of Germany. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Radeberger belongs to the Oetker Group and is one of Germany's largest breweries. Radeberger is also active in the wholesale of alcoholic and non-alcoholic beverages. Getrnke Essmann is mainly active in the wholesale distribution of beverages in the Federal States of Lower Saxony, Bremen, North Rhine Westphalia and Saxony-Anhalt and, to a very limited extent through its subsidiary Phoenix, in the production of beer.

The Commission's investigation found that concerning the production of beer, the proposed merger would bring about only a very modest increment in the merged entity's market share, which would have hardly any influence on Radeberger's market position.

Through the proposed transaction, Radeberger would strengthen its activities in the wholesale of beverages. However, the parties' combined market share would only be slightly above 15% in Lower Saxony and Bremen and in the other Federal States where Essmann is active it would be below 15%. Customers could therefore have a choice of alternative suppliers after the merger. [27 March 2008]

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Commission approves proposed acquisition of Aearo by 3M

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Aearo, a US producer of protective equipment, by the US company 3M. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

3M is a US-based diversified technology company active in a number of areas, including safety, security and protection services. Aearo is a producer of personal protective equipment, such as hearing protection and protective eyewear, and also supplies speciality composites, in particular thermal acoustic systems.

The Commission examined the competitive effects of the proposed merger in the area of personal protective devices, in particular hearing protection devices, where the parties have the most overlapping activities in Europe. Hearing protection devices are earplugs or earmuffs which protect the wearer from outside noise. They are used by workers in a number of industries.

The Commission's investigation revealed that the merged entity would face several competitors who would be able to effectively compete and expand on the market, while customers would continue to be able to source hearing protection products from a number of alternative suppliers. As overlaps in other markets such as head, eye and face protection products were minimal, the Commission concluded that the transaction would not lead to any adverse effects on competition. [28 March 2008]

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Commission opens in-depth investigation into Nokia's proposed acquisition of Navteq

The European Commission has opened a detailed investigation under the EU Merger Regulation into the proposed acquisition by Finnish company Nokia of Navteq, a US company. Nokia produces mobile phone handsets and Navteq is one of two producers of navigable digital maps, a crucial input for navigation services that can be distributed via mobile handsets. The Commission's initial market investigation has indicated that the proposed merger raises serious doubts with regards to vertical competition concerns. A decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has until 8 August 2008 to take a final decision on whether the proposed transaction would significantly impede effective competition within the European Economic Area (EEA) or a significant part of it. 

Nokia is active in the provision of navigation services and manufacturing of mobile phone handsets where it is the world market leader. The US company Navteq is one of only two producers of navigable digital maps which offer complete coverage of Europe and North America (the other producer is the Dutch firm Tele Atlas).

After a preliminary review, the Commission has identified serious doubts about the compatibility with the Common Market of the acquisition by Nokia of Navteq because it might, in the light of the duopoly market for navigable digital maps and Nokia's strong position on the market for mobile handsets, lead to a significant impediment of competition within the EEA. The Commission's in-depth investigation will focus, inter alia, on assessing whether the transaction would increase the costs of navigable digital map for other companies providing navigation services on mobile handsets or limit their access to these maps, and as a consequence harm consumers. 

This operation raises some issues similar to another vertical merger, involving the proposed acquisition of Tele Atlas by TomTom, a Dutch company manufacturing portable navigation devices and selling navigation software for mobile phones. The proposed TomTom/Tele Atlas transaction is currently under review by the Commission. [28 March 2008]

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Commission clears proposed acquisition of Moeller by Eaton

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the whole of Moeller Group, a German manufacturer of electrical engineering components and devices, by Eaton Corporation of the US. 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.

Eaton is a diversified industrial company. Its electrical division manufactures electrical products serving the industrial, utility, commercial, residential, IT and original equipment manufacturer markets worldwide. Moeller is a manufacturer of electrical components and devices focusing on four core business areas, namely command and control devices, motor starters and drives, circuit breakers and building automation.

As Moeller is notably active in the production and distribution of low voltage electrical equipment and components, the main horizontal overlaps in the activities of the parties would be on a number of national markets for low voltage equipment and components, such as final panel boards, circuit breakers (MCBs and MCCBs) and earth leakage protection devices. The proposed acquisition would also lead to a number of vertical relationships between the parties' activities since Moeller manufactures several low voltage components (in particular circuit breakers and earth leakage protection devices) that are part of the final products manufactured by Eaton (distribution boards, final panel boards and medium-high UPS (uninterruptible power supply) devices).

The Commission's market investigation confirmed that the proposed acquisition would be unlikely to raise competition concerns as the parties would continue to face strong competition from internationally active vertically integrated competitors such as Siemens, ABB, Schneider, Hager, Legrand and GE. As regards the vertical relationships between the parties, the proposed acquisition would not give rise to competition concerns, considering, in particular, that both upstream and downstream sufficient alternatives exist and competitors do not face capacity constraints. [2 April 2008]

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Commission approves Heineken's acquisition of Scottish & Newcastle assets in Belgium, Finland, Portugal and UK; refers acquisition of Irish assets to Irish Competition Authority

The European Commission has approved under the EU Merger Regulation the proposed acquisition by the Dutch company Heineken of the businesses of UK-based brewer Scottish & Newcastle in Belgium, Finland, Portugal and the United Kingdom as it found that the transaction would not significantly impede effective competition on these markets. At the same time, the Commission has referred Heineken's proposed acquisition of Scottish & Newcastle's business in Ireland to the Irish Competition Authority following the latters request under the EU Merger Regulation. After a preliminary investigation, the Commission found that the proposed transaction threatens to significantly affect competition in the beer markets in Ireland. Those aspects of the transaction will now be examined by the Irish Competition Authority under national law.

Scottish & Newcastle (S&N) is a public company with interests in the production and distribution of beer, soft drinks and mineral water in a number of countries around the world. Its beer brands include Foster's, Kronenbourg and Grimbergen.

Heineken is active worldwide in the production and distribution of beer and other beverages. Its principal international beer brands are Heineken and Amstel.

On 25 January 2008, a consortium formed by Carlsberg and Heineken announced a public bid for the entire share capital of S&N. If the bid were successful, it would lead to the division of S&N between Carlsberg and Heineken. The consortium's bid is considered to give rise to two distinct concentrations: one in respect of those S&N assets to be acquired by Carlsberg and a second covering those assets to be acquired by Heineken. The first concentration was cleared by the Commission on 7 March 2008.

In its request for referral, the Irish Competition Authority claims that the transaction threatens to affect significantly competition in the Irish beer markets, in particular with regard to lager.

This was confirmed by the Commissions preliminary market investigation. The Commission found indications that the beer markets in Ireland are currently characterised by two strong players Heineken and Diageo, and that S&N, via its Irish subsidiary Beamish & Crawford, constitutes an important challenger. The removal of S&N as a competitor in Ireland risks eliminating competitive pressure on Heineken and Diageo and potentially harming consumers.

Furthermore, based on its preliminary investigation, the Commission could not exclude the existence of competition problems for stout on a regional level.

Against this background and given that the Irish Competition Authority in the Commission's view is best placed to investigate the effect of the transaction on the Irish market, the Commission has referred the assessment of the Irish part of the transaction to the Irish Competition Authority.

With regard to other national markets, the transaction will not bring about any sizeable overlap of activities. Consequently, the Commission has concluded that the proposed transaction will not give rise to any significant reduction of competition on these markets. [3 April 2008]

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Commission approves proposed acquisition of AvtoVaz by Renault and Russian Technology

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control over AvtoVaz of Russia by Renault SA of France and Russian Technology of Russia. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Renault is a diversified automotive group which produces and sells passenger, commercial and light commercial vehicles under the brands Renault, Dacia and Samsung Motors. In addition, Renault has two strategic shareholdings in AB Volvo and Nissan. Russian Technology is a state corporation managing the participations of the Russian state in companies not related to the car industry. AvtoVaz is a Russian-based passenger car manufacturer operating under the brand Lada. It is predominantly active in the Russian Federation.

The Commissions examination of the proposed transaction showed that it would not give rise to competition concerns in the EEA in any of the markets concerned. The proposed transaction would bring about only a very minor increment in market share, which would have hardly any influence on Renault's market position in the EEA. [9 April 2008]

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Commission clears proposed joint venture between ArcelorMittal and BE Sverige

The European Commission has cleared under the EU Merger Regulation the proposed joint venture between ArcelorMittal Steel Service Centres SAS (AMSSC) belonging to the ArcelorMittal group, a leading global steel company based in Luxembourg, and the Swedish company BE Sverige AB). The joint venture would combine the steel service centre activities of the parties in Sweden. The Commissions investigation found that the proposed transaction would not impede effective competition in the European Economic Area (EEA) or any substantial part of it.

AMSSC is specialised in flat carbon steel processing and logistics and is active on the Swedish market through its wholly owned subsidiary Arcelor SSC Sverige AB. AMSSC is ultimately controlled by the steel group ArcelorMittal.

BE Sverige AB, which belongs to BE Group AB, a leading trading company in the steel sector in Northern Europe, is a steel distribution company on the Scandinavian market and is active in the steel service centre (SSC) sector in Sweden. Steel service centres specialise in the finishing and processing of steel for the purpose of fabricating, plating or moulding steel parts.

The joint venture (JV) would combine the steel service centre activities of both parties in Sweden. The JV  would only be active in the distribution of flat carbon steel. It would be jointly controlled by AMSSC and BE Group.

The Commission generally considers the steel service distribution market to be national. On the Swedish market for steel distribution centres, the predicted market shares of the JV measured in volume would remain below 15%, based on the parties' current market shares. Moreover, the JV would face competition from a number of major players such as Dickson/Tibnor, Ruukki, GA Industri AB and Norsk Stal. On a hypothetical larger market including Norway, the parties' share on the steel service distribution market share would be even lower. ArcelorMittal has market shares above 25% in markets such as the sale of hot-rolled carbon flat products (excluding quarto plates), cold-rolled carbon flat products and galvanised steel products, which are all used as supply in steel service distribution. However, due to the presence of alternative suppliers for steel service centres and the fact that the joint venture would in any event be unable to absorb a large part of ArelorMittal's steel products, the proposed transaction would  increase neither ArcelorMittal's ability nor incentives to prevent other steel service centres in the area from accessing steel products. [10 April 2008]

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Commission approves proposed acquisition of Trane by Ingersoll-Rand

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Trane by Ingersoll-Rand, both US-listed companies. Ingersoll-Rand is in particular active in solutions to transport, preserve, and display temperature-sensitive products, whereas Trane provides air conditioning systems and related products. The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Ingersoll-Rand is active in three core areas: climate control, providing solutions for customers to transport, preserve, and display temperature-sensitive products, industrial technologies to enhance customers' industrial and energy efficiency, and security technologies.

Trane provides air conditioning ("AC") equipment, including refrigerant compressors, services and solutions for the commercial, residential, institutional and industrial AC industry. Trane is also active in the associated aftermarket services to the AC industry which include replacement parts and retrofit products, maintenance services for its own and other manufacturer's commercial products, and contracting services for the installation, upgrade, and replacement of commercial building AC systems featuring its products.

The Commission's investigation found that the parties' activities do not overlap but that there is a potential vertical issue concerning refrigerant compressors. Refrigerant compressors, produced by Trane, are used to raise the pressure of refrigerant gas in the process of temperature control, whereas air compressors, manufactured by Ingersoll-Rand, cannot be used in temperature control units because the seals and compression ratios are significantly different in refrigerant applications. Refrigerant compressors are used in AC systems for buses and trams and in refrigeration equipment, where Ingersoll-Rand is active.

However, Trane's activities with regard to refrigerant compressors are very limited. Trane only sells compressors to third party dealers or end customers for the purpose of repairing and maintaining its own AC systems but not to original equipment manufacturers (OEMs). The Commission therefore concluded that the proposed transaction would not raise any competition concerns. [10 April 2008]

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Commission opens in-depth investigation into proposed acquisition of BarcoVision by Itema

The European Commission has opened a detailed investigation under the EU Merger Regulation into the proposed acquisition of BarcoVision of Belgium by the Italian company Itema. Itema produces textile machinery while BarcoVision manufactures sensors and other inputs for the textiles market. The Commission's initial market investigation indicated that the proposed merger raises serious doubts as to its compatibility with the Single Market as there are potential competition concerns due to the vertical relationship between the parties, in particular on the market for winders for stocking unwoven yarn, which might increase the cost or affect the quality of sensors purchased by other winder producers. A decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 26 August 2008, to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it. 

Itema is active in the production and sale of machinery for textile manufacturing. Itema is one of the three main companies supplying textile mill owners with winders, which are machines used to stock yarn before it is woven or knitted. 

BarcoVision focuses on the production and sale of sensors for textile machinery as well as software systems specifically designed for the textile industry. BarcoVision is one of the two main companies currently producing sensors for winders, an essential device for ensuring textile quality.

The Commission's preliminary investigation revealed that BarcoVision has a strong position as a supplier of sensors for winders. In view of Itema's position on the market for winders, the Commission has serious concerns that the proposed transaction might increase the cost or affect the quality of sensors purchased by other winder producers.

The Commission's in-depth investigation will therefore in particular focus on ascertaining whether the new entity would have an incentive to negatively influence the availability of sensors. [14 April 2008]

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