Competition round-up: Summer 2013

It is time for what has become the Competition Bulletin’s regular half-yearly update of EU and UK competition law developments. (For our previous round-ups see here).

Thinking big

2013’s biggest theme so far is the series of policy announcements. In January the UK government published its plans to facilitate more private actions. The most eye-catching proposal is an opt-out collective action regime (see my blog here), and the plans are already making their way through the legislative process in the form of schedule 7 to the Consumer Rights Bill. The European Commission followed shortly afterwards, publishing a trio of important policy documents in June – including its own recommendation on collective redress (favouring an opt-in regime) and a draft Directive on private actions (see our blog here). And finally, the UK government launched a further consultation to streamline, and to raise the threshold for, appeals in the regulatory and competition sectors (see our blog here).

We were also thinking big at the Competition Bulletin, drawing inspiration from beyond our usual horizons of reported UK and EU cases. We launched a series of posts by Oxera on key economic concepts for competition lawyers: the first addressed the economics of pass-on. Tom de la Mare promoted a novel way of founding jurisdiction under the Brussels Regulation by suing in the country where the undertaking has a “branch or agency”. Ravi Mehta considered the competition problems inherent in pharmaceutical patent settlements. And Oke Odudu started the year by giving encouragement to those who might want to use competition law to drive down the cost of school uniforms; then turned his sights on the Court of Session’s decision on minimum alcohol pricing; before finally highlighting the lessons for European lawyers from the recent American e-books case.

UK cases

There have been a few interesting domestic competition cases in 2013, albeit almost all in the Competition Appeal Tribunal (CAT). The only contribution from the Court of Appeal was its judgment in Everything Everywhere Ltd v Competition Commission [2013] EWCA Civ 154 in which it held that, if the Competition Commission decides that a price control imposed by Ofcom contains an error, the Competition Commission would normally decide upon an alternative solution itself, and would only rarely be unable to do so due to lack of evidence. Emily Neill blogged on the case here.

Turning to the CAT, the case which got the most airtime among UK lawyers was Albion Water Ltd v Dwr Cymru Cyfyngedig [2013] CAT 6, in which Albion was awarded damages for Dwr Cymru’s abuse of dominant position in relation to the price it was prepared to charge for the use of its water pipes. Anyone with the stamina to go through 130 pages of detailed factual analysis will find a couple of interesting points of principle buried deep within. Anyone wanting a short-cut could read my blog on the case instead.

Akzo Nobel NV v Competition Commission [2013] CAT 13 is an important judgment on the ability of the Competition Commission to block transactions between companies outside the UK. The CAT held that Akzo Nobel NV, a Dutch company, could be treated as part of the same economic unit as its UK subsidiary, and that the Competition Commission could therefore block its proposed acquisition of an Italian company. I suggested in my blog that the CAT’s judgment may not be the last word on the subject, and it appears that Akzo Nobel is indeed seeking to appeal.

UK procedure

It is also worth highlighting several cases on domestic procedure. First is the CAT’s unusual decision, on rather exceptional facts, to allow Somerfield and Gallaher to appeal against the OFT’s tobacco decision several months late. My blog flogged a somewhat tortured metaphor about whether or not the decision would prove to be the final nail in the coffin of this sorry saga. The answer seems to be no, since the OFT has since obtained permission to appeal against it. In any event, no-one should take the case as an indication that the CAT is going to be more generous about time limits in future: in another recent case (BT’s appeal against Ofcom’s Ethernet dispute decision) the CAT declined to give BT even an additional couple of weeks to file its Notice of Appeal.

The CAT’s recent costs decisions give a helpful overview of its general approach. It has confirmed that the normal rule is that costs should follow the event – so the losing appellant Telefonica had to pay Ofcom’s costs. Ofcom failed in its attempt to argue that the same rule should not apply in cases which Ofcom loses – and it therefore ended up footing the bill in the Sky case. There are of course exceptions to the general rule, and it is no surprise that, despite their notable success, Gallaher and Somerfield will be paying their own costs for their extension of time application. In the John Lewis case the CAT confirmed the general principle that there should be no order for the costs of interveners. Finally, in the Albion case the CAT adopted an issues-based approach of the type which is common in private litigation in the High Court.

Over in the High Court, there have been two further case management decisions adding to the line of private competition cases in which the defendant’s application for the case to be stayed pending developments at the EU level is rejected in favour of a more targeted approach in which the litigation is allowed to continue as far as possible without encroaching on the EU procedure: see Infederation Ltd v Google Inc [2013] EWHC 2295 (Ch) and Wm Morrison Supermarkets Plc v MasterCard Inc [2013] EWHC 1071 (Comm).

EU cases

The year has brought several important European judgments. Perhaps the most important is one which the Competition Bulletin has not yet had an opportunity to cover, namely the CJEU’s recent decision that it is not a violation of a person’s fair trial rights for cartel infringement decisions to be taken by the Commission, rather than by an independent tribunal, because fair trial rights are protected by the ability to appeal the Commission’s decision to the General Court (see Case C-501/11 P Schindler Holding Ltd v European Commission). Schindler is the latest case to defend the European competition regime from attacks founded on human rights arguments, and it again emphasises the importance of the Court’s power to assess the evidence for itself.

Many practitioners are likely to remain doubtful over the extent to which the Court’s power of review is helpful in practice, given the complexity of competition cases and the inevitable difficulties inherent in reopening decisions on appeal. However, that criticism does need to be tempered by a recognition that the General Court does frequently overturn Commission decisions. A notable example is the recent “CISAC” cases in which the General Court set aside the Commission’s decision that various national copyright collecting organisations had infringed Article 101 by using reciprocal representation agreements. The Court emphasised the importance of the presumption of innocence and the need for the Commission to rely on evidence which was not open to an alternative “plausible explanation” other than anti-competitive conduct.

In Joined Cases C 274/11 and C 295/11, Spain v Council and Italy v Council, the Court rejected Spain and Italy’s challenge to the unitary patent system. In his blog on the judgment, Ravi Mehta commented on the significance of the Court’s decision that the creation of centralised IP rules did not constitute “competition rules” for the purpose of Article 3(1)(b) TFEU.

In Case C 652/11 P Mindo Srl v European Commission the Court reiterated that the General Court is required to state its reasons “clearly and unequivocally” so that they can be understood by the persons concerned and by the CJEU on appeal. As that had not been done, the General Court’s decision was set aside and the matter sent back to the General Court to give another judgment.

The CJEU also delivered a word of warning for lawyers everywhere: it appears that relying on incorrect legal advice is no defence to an infringement action, and also no reason to reduce the fine – see Case C-681/11 Bundeswettbewerbsbehorde v Schenker & Co.

Kieron Beal QC blogged on Case C-508/11 P Eni SpA v Commission, a decision which confirms how hard it is to rebut the supposedly rebuttable presumption that a parent company exercises decisive influence over a wholly-owned subsidiary. Kieron’s blog suggests that it now appears to be the law that the involvement of a parent company, even if it is very close to being a mere holding company, in any of the economic activities of a subsidiary will probably suffice to prevent the rebuttable presumption being rebutted.

Tom Cleaver blogged on Case C-1/12 Ordem dos Técnicos Oficiais de Contas v. Autoridade da Concorrência, in which the CJEU followed the controversial approach in Case C-309/9 Wouters to deciding whether rules imposed by professional bodies are caught by Article 101 – in short, if any restrictive effects are simply the inherent result of the pursuit of the association’s legitimate objectives then (somewhat bizarrely) the restriction will not even fall within Article 101(1), let alone requiring an exemption under 101(3). The Court has recently endorsed the same approach again in its decision that a rule imposed by the Italian National Council of Geologists that geologists must not charge fees which are so low as to damage the dignity of the profession is lawful if (but only if) it is necessary to guarantee the high standard of geologists’ work (see Case C-136/12).

Finally, the term also saw the launch of Blackstone Chambers’ Sports Law Blog – an occasion marked by Emily Neill’s article, hosted by both blogs, on the CJEU’s decision in Case C-269/12 P Canas v Commission. The Court that Guillermo “Willy” Cañas, an Argentinean tennis player once ranked world number 8, was no longer able to pursue his complaint to the European Commission about the alleged anti-competitiveness of certain anti-doping rules because his retirement due to injury had made the complaint academic.

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Filed under Abuse, Agreements, Conflicts, Damages, Free movement, IP, Mergers, Penalties, Pharmaceuticals, Policy, Procedure, Procurement, Round-Up, State aid, Telecoms

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