COMPETITION LAW NEWSLETTER NOVEMBER 2014
Competition Law: Information; Updates and Analysis
Covering September-October 2014
Alaya Legal presents its fifth issue of the Competition Law Newsletter. This issue covers important judicial pronouncements and market developments in certain jurisdictions across the globe, including the Republic of India.
- Legal Pronouncements – European Union
- Legal Pronouncements – Republic of India
- Market Developments – United States of America
- Market Developments – European Union
- Market Developments – United Kingdom
- Market Developments – Republic of India
Our next issue: January 2015.
LEGAL PRONOUNCEMENTS
EUROPEAN UNION
Antitrust: Commission fines smart card chips producers €138 million for cartel
September 03, 2014
The European Commission found that Infineon, Philips, Samsung and Renesas coordinated their market behaviour for smart card chips in the European Economic Area.
- Coordination through bilateral contacts
- Exchange of sensitive commercial information
- Discussion on pricing, customers and contract negotiations
- Discussion on production capacity and future market conduct
- Breach of Article 101 TFEU and Article 53 of the EEA Agreement
The Commission imposed fines totalling €138,048,000.
Antitrust: Commission fines Slovak Telekom and Deutsche Telekom for abusive conduct in Slovak broadband market
October 15, 2014
Slovak Telekom offered fixed broadband services over legacy metallic telephone networks and fibre networks. The regulator required Slovak Telekom to give access to local loops, but the company imposed conditions that delayed or prevented alternative operators from entering the market.
- Withholding of necessary network information
- Reduction of regulatory obligation to unbundle local loops
- Unfair terms relating to collocation, qualification, forecasting, repairs and bank guarantees
- Margin squeeze through wholesale and retail pricing
- Abuse of dominant position under Article 102 TFEU
The European Commission imposed a fine of €38,838,000 on Slovak Telekom and Deutsche Telekom.
UNITED KINGDOM
Merger: Anticipated acquisition by EVO Business Supplies Limited of Office2Office plc
November 14, 2014
Vasanta Group Limited and Office2Office plc were engaged in providing business services, including office stationery, through wholesale and contract stationery routes.
- Proposed acquisition of Office2Office by EVO Business Supplies Limited
- CMA assessed whether a relevant merger situation was created
- Limited overlap at wholesale level
- Moderate combined shares in contract stationer channel
- Presence of several competitors in the market
The CMA found that the merger would not give rise to a realistic prospect of substantial lessening of competition.
REPUBLIC OF INDIA
Indian Sugar Mills Association and Ors. v Indian Jute Mills Association and Ors.
MANU/CO/0092/2014
The information was filed by Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories Ltd. and All India Flat Tape Manufacturers Association against Indian Jute Mills Association and Gunny Trade Association.
- Alleged anti-competitive agreement between IJMA and GTA members
- Fixing of sale price of jute packaging material
- Daily Price Bulletin issued by GTA
- Contravention of Section 3(3)(a), Section 3(3)(b) read with Section 3(1)
- Penalty imposed at 5% of average turnover of last three years
The Commission also observed that compulsory use of jute bags under the Jute Packaging Materials Act restricted customer choice and created market distortions.
In re: Collective boycott/refusal to deal by Chemists & Druggists Association, Goa, Glenmark Company and Wockhardt Ltd.
MANU/CO/0086/2014
The case concerned anti-competitive practices by Chemists & Druggists Association, Goa and its non-compliance with an earlier order of the Commission.
- Refusal to deal and collective boycott
- Restriction of pharmaceutical companies from supplying through non-authorised stockists
- Threats to stockists to stop taking supplies
- Non-compliance with previous Commission order dated 11.06.2012
- Penalty calculated at 10% of average receipts for three financial years
The Commission directed CDAG to cease and desist from anti-competitive practices and imposed a penalty of INR 10,62,062.
Shri Bijay Poddar v M/s Coal India Limited and its subsidiaries
MANU/CO/0087/2014
The informant alleged that the terms and conditions of the Spot e-Auction Scheme 2007 introduced by Coal India Limited and its subsidiaries were unfair and abusive.
- Challenge to forfeiture clause under Spot e-Auction Scheme
- Penalty by forfeiture of EMD for non-lifting of coal
- No corresponding liability on opposite parties for failure to deliver coal
- Abuse of market power by opposite parties
- Contravention of Section 4(2)(a)(i) of the Competition Act
The Commission issued a cease and desist order and directed modification of the scheme.
M/s Sai Wardha Power Company Ltd. v M/s Western Coalfields Ltd.
MANU/CO/0085/2014
M/s Sai Wardha Power Company Ltd. filed information against Western Coalfields Ltd. and Coal India Ltd. alleging abuse of dominant position in relation to Fuel Supply Agreements.
- Supply of coal from identified cost-plus coal mines
- Virtual monopoly over production and supply of coal in India
- One-sided and anti-competitive Fuel Supply Agreements
- Lack of bargaining power for the informant
- Unfair conditions in FSAs for supply of non-coking coal
The Commission directed the opposite parties to cease and desist and make necessary modifications in FSAs.
M/s HT Media Limited v M/s Super Cassettes Industries Limited
MANU/CO/0080/2014
HT Media filed information against Super Cassettes Industries Limited alleging abuse of dominant position in relation to music licensing for Fever 104 radio station.
- Excessive licence fees and royalty
- Minimum commitment charges payable irrespective of actual needle hour
- Licensing subject to acceptance of fees and MCC
- Restriction of choice of music for end consumers
- Denial of market access for other music companies
The Commission directed the opposite party to cease and desist from imposing unfair MCC conditions and imposed a penalty of INR 2,83,28,000.
MARKET DEVELOPMENT
UNITED STATES OF AMERICA
Prevention of fraudulent, deceptive and unfair business practices: AT&T Mobility LLC
October 28, 2014
The Federal Trade Commission filed a federal court complaint against AT&T Mobility LLC regarding its mobile data service practices.
- Customers were charged for “unlimited” data plans
- Data speeds were reduced in some cases by nearly 90%
- Customers were not properly informed about throttling
- Early termination fees were charged when customers cancelled contracts
- Complaint filed in the U.S. District Court for the Northern District of California
The complaint alleged misleading conduct against millions of smartphone customers.
Unfair Trade Practices: Worldwide Info Services, Inc.
November 13, 2014
A settlement obtained by the Federal Trade Commission and the Office of the Florida Attorney General shut down an Orlando-based operation targeting seniors.
- Use of pre-recorded robocalls
- Sale of supposedly free medical alert systems
- False claims that systems were bought by friends or family members
- Targeting elderly consumers with limited or fixed incomes
- Violation of FTC Act, Telemarketing Sales Rule and Florida Deceptive and Unfair Trade Practices Act
The settlement banned the defendants from robocalls, restricted telemarketing activities and barred misrepresentations.
Abuse of Dominant Position: In the Matter of AmeriGas and Blue Rhino
November 07, 2014
The Federal Trade Commission issued an administrative complaint against Blue Rhino and AmeriGas regarding coordination on propane exchange tanks.
- Alleged illegal coordination on reducing propane fill levels
- Two leading suppliers of propane exchange tanks involved
- Settlements barred agreements with competitors on fill levels
- Companies barred from fixing prices of exchange tanks
- Companies barred from coordinating communications to customers
The FTC stated that private agreements to avoid competition are not permitted under antitrust laws.
EUROPEAN UNION
Mergers: Commission approves acquisition of several Rockwood chemical businesses by Huntsman, subject to conditions
September 10, 2014
The European Commission cleared Huntsman Corporation’s proposed acquisition of several chemical businesses held by Rockwood Specialties Group.
- Both companies were based in the United States
- Clearance conditional on divestment of Huntsman’s TR52 business
- TR52 used in titanium dioxide grade for printing ink applications
- Commission had concerns over price increases in the EEA
- Commitments offered by Huntsman addressed the concerns
The transaction was cleared subject to conditions.
Mergers: Commission approves acquisition of Holcim assets by Cemex in the building materials sector
September 09, 2014
The European Commission cleared Cemex’s proposed acquisition of Holcim’s Spanish operations under the EU Merger Regulation.
- Cemex and Holcim are global suppliers of cement and building materials
- Assets included plants and quarries in Spain
- Products included cement, aggregates, ready-mix concrete and mortar
- Commission assessed the transaction following referral from Spain
- Merged entity would continue to face sufficient competition
The Commission concluded that the acquisition would not raise competition concerns.
Mergers: Commission approves acquisition of WhatsApp by Facebook
October 03, 2014
The European Commission authorised the proposed acquisition of WhatsApp Inc. by Facebook Inc.
- Both companies offered smartphone communication applications
- Facebook Messenger and WhatsApp allowed text, photo, voice and video messages
- Commission found that they were not close competitors
- Consumers would continue to have alternative communication apps
- Network effects were considered during investigation
The Commission found that the merged entity would continue to face sufficient competition.
UNITED KINGDOM
CMA market investigation into personal current accounts and SME banking services
September-October 2014
The Competition and Markets Authority announced that it would proceed with a full market investigation after receiving support from most respondents to its consultation.
- Investigation into personal current accounts
- Investigation into banking services for small and medium-sized enterprises
- Concern over low customer switching and shopping around
- Difficulty in comparing products and overdraft charges
- Barriers to entry and expansion for smaller and newer providers
- Four largest banks controlled 77% of personal current account market
- Four largest banks controlled 85% of business current account market
The CMA stated that a market reference group would be appointed and a timetable for the investigation would be published.
REPUBLIC OF INDIA
Merger: CCI review of Sun Pharma-Ranbaxy deal
September-October 2014
The Competition Commission of India was likely to take the final decision in the $4 billion Sun Pharma-Ranbaxy deal by the end of the month.
- Deal would create India’s largest pharmaceutical company
- First M&A transaction in pharma space to go through public scrutiny
- Concerns over adverse impact on fair competition
- CCI found prima facie that the combination may have appreciable adverse effect on competition
- Deal came under close scrutiny by the fair trade watchdog
The matter was pending final decision by CCI at the time of the newsletter.
Do You Know?
Competition law under Roman law
Competition law under Roman law traces its roots back to 50 BC.
- The Lex Julia de Annona was enacted during the Roman Republic around 50 BC
- The law was intended to protect the grain trade
- The government imposed heavy fines for stopping supply ships
- It applied to direct, deliberate and insidious obstruction of supply
This historical reference highlights early legal control over trade restrictions and supply disruption.
Disclaimer
Private circulation
The information in this private circulation is not legal advice and should not be treated as such.
- The information is taken from the public domain
- The circulation is for private and non-commercial purposes
- No representation is made that the information is correct, accurate, complete or non-misleading
- The disclaimer is governed by and construed in accordance with the laws of India
- Disputes relating to the disclaimer are subject to the exclusive jurisdiction of courts of the Republic of India
- If the recipient does not accept the disclaimer or does not wish to receive the circulation, they may reply with “Do Not Send”
