EUROPEAN UNION (‘EU’) – EUROPEAN COMPETITION COMMISSION (‘COMMISSION’)
Gazprom Imposed with Binding Obligations by the EC for Preventing Cross-Border Flow of Gas
May 24, 2018
Gazprom is a leading Russian company operating extensively in the natural gas market across Eastern and Central Europe.
The European Commission found that Gazprom imposed territorial restrictions within supply agreements entered into with wholesalers and industrial consumers across several member states including Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, and Slovakia.
The Commission observed that Gazprom’s strategy artificially partitioned gas markets along national borders, enabling it to impose higher gas prices in several member states including Bulgaria, Estonia, Latvia, Lithuania, and Poland.
The restrictions imposed by Gazprom included:
- Export bans preventing free movement of gas
- Destination clauses requiring gas usage within specific territories
- Measures restricting cross-border gas flow
- Supply conditions linked to unrelated gas infrastructure commitments
The Commission held that Gazprom abused its dominant market position and imposed legally binding obligations under Article 9 of the EU Antitrust Regulation.
The obligations included:
- Removal of contractual barriers restricting free flow of gas
- Facilitating gas supply to and from isolated markets
- Ensuring a structured and competitive pricing process
- Prohibiting leveraging of dominance in gas supply markets
The obligations imposed upon Gazprom will remain operational for eight years.
UNITED STATES OF AMERICA (‘US’) – FEDERAL TRADE COMMISSION (‘FTC’) AND SUPREME COURT
American Express Prevails After Multiyear Antitrust Battle
June 6, 2018
The Supreme Court of the United States ruled in favour of American Express (‘Amex’) in a long-standing antitrust dispute concerning anti-steering provisions within merchant agreements.
The anti-steering clauses prevented merchants from encouraging customers to use competing credit cards by offering incentives.
Several States challenged these provisions under Section 1 of the Sherman Act, 1890, arguing that the clauses created unreasonable restraints of trade and increased merchant fees.
While competing entities such as Visa and MasterCard entered into consent agreements removing similar provisions, Amex contested the claims throughout litigation.
The District Court initially ruled against Amex, treating the credit card market as two separate markets:
- Merchant market
- Cardholder market
The Court of Appeals later reversed the ruling, holding that the credit card industry constituted a single integrated market.
The Supreme Court ultimately upheld the Court of Appeals decision and observed that:
- The anti-steering provisions promoted healthy competition
- The provisions encouraged better rewards and incentives
- The market could not be artificially separated into two independent markets
The dissenting opinion argued that the contractual protection against price competition was inconsistent with antitrust principles under the Sherman Act.
Following the judgment, Amex was permitted to continue using anti-steering clauses within merchant agreements.
INDIA – COMPETITION COMMISSION OF INDIA (‘CCI’), COMPETITION ACT, 2002 (‘ACT’)
CCI Busts Pune Municipal Corporation Contractors for Bid Rigging
May 1, 2018
An information was filed by Nagrik Chetna Munch alleging anti-competitive practices involving tenders floated by Pune Municipal Corporation (‘PMC’) relating to waste processing plants.
The Competition Commission of India found prima facie evidence of bid rigging and collusive bidding under Sections 3(1) and 3(3) of the Competition Act.
The Director General investigated multiple entities including:
- Fortified Security Solutions
- Ecoman Enviro Solutions Pvt Ltd
- Lahs Green India Pvt Ltd
- Sanjay Agencies
- Mahalaxmi Steels
- Raghunath Industry Pvt Ltd
The investigation revealed proxy bidding and cartelisation in multiple PMC tenders.
The CCI imposed significant monetary penalties upon the participating entities and directed them to cease anti-competitive conduct.
The Commission also criticised PMC for failing to identify cartelisation within its tender process and for lack of due diligence while scrutinising bids.
CCI Finds No Violation of Competition Laws by Indian Sugar Mills and Others
May 11, 2018
India Glycols Ltd challenged the mandatory Ethanol Blending Programme (‘EBP’) introduced by the Ministry of Petroleum and Natural Gas.
The Informant alleged that the programme and associated practices violated competition laws and adversely affected ethanol markets.
The Competition Commission of India directed the Director General to investigate the conduct of:
- Indian Sugar Mills Association (‘ISMA’)
- National Federation of Cooperative Sugar Factories Ltd
- Indian Oil Corporation Ltd
- Hindustan Petroleum Corporation Ltd
- Bharat Petroleum Corporation Ltd
The Director General concluded that ISMA did not qualify as an “enterprise” under the Competition Act for purposes of abuse of dominance.
The investigation further found that:
- The ethanol blending policy was a governmental policy decision
- The policy did not restrict production levels of sugar mills
- Market decisions remained independently driven
- No anti-competitive conduct could be established
The CCI observed that policy formulation falls within governmental prerogatives and cannot ordinarily be examined under competition law unless clear contraventions exist.
Accordingly, the Commission found no violation of the Competition Act.
MARKET DEVELOPMENTS
Green Flag for Acquisition of General Electric Industrial Solutions by ABB
June 1, 2018
The European Commission approved ABB’s acquisition of General Electric Industrial Solutions (‘GEIS’).
ABB is a global leader in power and automation technologies, while GEIS manufactures low and medium-voltage electrical products.
After investigation, the Commission concluded that:
- The merger would not significantly reduce competition within the European Economic Area (‘EEA’)
- Several effective competitors would remain in the market
- The products involved were largely interchangeable
- The merged entity would not possess the ability to foreclose competitors
The Commission therefore approved the transaction without competition concerns.
Merger Between Metal Recycling Companies Likely to Reduce Competition in Relevant Market
June 1, 2018
The Competition and Market Authority (‘CMA’) examined the proposed merger between European Metal Recycling (‘EMR’) and Metal & Waste Recycling Limited (‘MWR’).
The investigation revealed that EMR was the largest metal recycler in the UK while MWR operated as a strong competitor across multiple regions.
The CMA provisionally found that the merger could substantially reduce competition in:
- London
- South East England
- West Midlands
- North East England
The CMA observed that the merged entity’s combined market strength could negatively impact suppliers and customers in the relevant market.
The authority proposed remedies including divestment of portions of the merged business to preserve competition.
CCI Approves Bayer’s Acquisition of Monsanto Subject to Modifications
June 20, 2018
The Competition Commission of India approved Bayer’s acquisition of Monsanto subject to multiple structural and behavioural remedies.
Bayer operates in healthcare, consumer health, and crop sciences, while Monsanto is a major agricultural biotechnology company.
The Commission found that the proposed acquisition was likely to have an appreciable adverse effect on competition within certain relevant markets.
To address these concerns, the CCI imposed several binding conditions including:
- Divestment of Bayer’s cotton traits business
- Divestment of hybrid vegetable seed business
- Divestment of Glufosinate ammonium business
- Transfer of Monsanto’s shareholding in Maharashtra Hybrid Seed Company Limited
The combined entity was further required to:
- Provide access to Indian agro-climatic data free of charge to Government institutions
- Follow FRAND licensing principles
- Avoid exclusionary conduct within the agricultural products market
- Ensure non-exclusive licensing for future GM and non-GM traits
The obligations imposed by the CCI will remain binding upon Bayer for seven years.
IN-HOUSE CONTRIBUTORS
Parnika Medhekar
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Doc ID: CL/27/18
