Australia: In brief: Legal changes around the competition world in Belgium, COMESA, European Union, France, Netherlands, United States

Belgium: New Competition Act takes effect

In September 2013, Belgium's new Competition Act came into force. It involves a number of significant institutional and procedural changes, intended to improve the effectiveness of national competition law enforcement in Belgium. Key changes include:

  • The amalgamation of the existing Competition Council and Directorate General for Competition into a new single competition authority, to be known as the Belgian Competition Authority (Autoritié belge de concurrence / Mededingingsautoriteit). This is similar to the development in the United Kingdom, where the existing Competition Commission and Office of Fair Trading are to be amalgamated into a new single authority, the Competition and Markets Authority;
  • There is to be a settlement procedure for investigations under the prohibition on anti-competitive agreements;
  • The new authority will have the power to impose fines on individuals, as well as on companies, for cartel infringements;
  • There will be new strict timetables for investigations under the prohibitions on anti-competitive agreements and abuse of dominance; and
  • In merger control, there will also be a stricter timetable, with the simplified procedure shortened from 20 to 15 working days.

COMESA (Common Market for Eastern and Southern Africa): COMESA merger control overrides national merger control

In much the same way that, within the European Union, a merger filing (notification) to the European Commission removes the need for filings to national competition authorities in the EU Member States, so too the COMESA Court of Justice has ruled that a merger filing (notification) to COMESA's Competition Commission will remove the need for filings to national authorities in the COMESA Member State.

At the end of August 2013, the COMESA Court of Justice issued a ruling in the case of Polytol v Mauritius43 about the applicability of the COMESA Treaty within COMESA Member States, including those Member States that have not yet adopted the Treaty as domestic law in their national jurisdictions.

Several Member States – including Kenya, Mauritius and Zambia – had taken the position that, in the absence of domestication into national law, the COMESA competition regulations are not enforceable in their jurisdictions – the result being that (in their view) parties to M&A transactions that are notifiable to the COMESA Competition Commission must also notify the national authorities in those countries where their notification requirements are triggered by the transaction concerned.

The COMESA Court of Justice rejected this view:

"The argument of [the Government of Mauritius] that the [COMESA] Treaty is not directly enforceable in some jurisdictions... is misconceived. It is indeed true that there are differences in legal systems regarding their position towards the domestication of international law. In some Member States, treaties become directly applicable; in others they require another domestic legal instrument for their incorporation. Notwithstanding the differences in domestic legal systems, the [COMESA] Treaty objectives can be achieved when all Member States fulfil their obligations under the Treaty. Any Member State that acts contrary to the Treaty cannot, therefore, plead the nature of its legal system as a defence when citizens or residents of that State are prejudiced by its acts."

It seems, therefore, that parties to an M&A transaction that are notifiable to the COMESA Competition Commission can now resist any requirement to make notifications to national competition authorities within COMESA. That said, the enforcement of the COMESA Court of Justice's judgments still requires the cooperation of national courts, and it is unclear at this stage how national courts which have not domesticated the COMESA Treaty will treat this judgment.

European Union (EU) – the European Commission adopts new measures to streamline its merger review process

The European Commission announced on 5 December 2013 that it had adopted a package of measures to simplify the procedures for notifying transactions under the EU Merger Regulation (EUMR). These reforms came into effect on 1 January 2014 and attempt to streamline the process for the notification and review of mergers, particularly with regard to the following:

Simplified Procedures Notice: the Commission will provide greater leeway to notifying parties whose combined market shares fall below certain thresholds:

  • Parties can file shorter notification forms under the Commission's simplified procedure if their combined market share is less than 50% and where the increase in their combined market share as a consequence of the transaction is low (defined as a delta of less than 150 in the Herfindahl–Hirschman Index). However, the Commission reserves the right to consider whether such transactions qualify for the simplified procedure on a case-by-case basis.
  • The Commission has raised by 5% the market share thresholds for markets to qualify as "affected markets" for which detailed information must be provided. Markets in which the parties' combined share is less than 20% in horizontal relationships (previously 15%) or 30% in vertical relationships (previously 25%) will no longer be considered affected markets. Markets not meeting the "affected market" threshold will face less scrutiny by the competition authorities.

Taken together, the above changes are expected to increase the percentage of deals reviewed under the Commission's simplified process by around 10%, to a total of 60-70% of transactions notified. This widening of the scope of the simplified procedure should reduce the burden on businesses and related costs associated with merger notifications.

Amendments to the Implementing Regulations: The Commission has also streamlined the requirements for submission of internal documents accompanying the "Form CO" – the notification document used in the EUMR process:

  • For example, the Commission no longer requires internal board presentations analysing options for acquisitions other than that eventually pursued and internal business reports assessing affected markets only are required for the last two years, as opposed to three years under the previous rules.
  • Notifying parties will also have more discretion in deciding whether to engage in pre-notification contacts and whether to apply for waivers to produce certain information, such as providing lists of acquisitions made by the parties in the last three years. Merging parties will be encouraged to request waivers in these categories, rather than compiling such information in anticipation of a waiver not being granted.
  • Additionally, changes to the Implementing Regulations allow for a reduction in the information required from companies that request a referral of a case from the Commission to one of the EU's member states.

The Commission's new measures are expected to shorten the time needed for pre-notification contacts. According to the Commission's own analysis, these changes may affect around 25% of cases notified.

All "plausible" markets: The Commission has provided more guidance on what to consider "plausible" product market and geographic market definitions, in effect suggesting these be limited to those considered in prior decisions or industry reports, market studies or internal business documents. This guidance might be useful for parties seeking to reduce the scope of information they provide, although precedents in many sectors have considered a wide range of market definitions without reaching any firm conclusions. In such sectors, the new guidance would imply parties still need to consider a wide range of alternatives.

Remedies standard texts: Certain mergers require remedies or commitments to remove competition problems in order to allow a transaction to proceed. The Commission has updated its model texts for commitments to divest assets (first published in 2003) to bring them in line with the policy approach contained in the 2008 Notice on Remedies. Although these model texts are not legally binding, they will provide more legal consistency and predictability in commitment agreements.

Notifying parties will benefit from the Commission's revisions, particularly by making more deals eligible for the simplified procedure, and reducing the volume of internal documentation that companies are required to provide. However, these improvements will not change the fundamental challenges of the EUMR process, namely that it is a frequently slow and burdensome process requiring significant information on areas which often turn out to be of no concern to market participants.

France: Limitation periods for private antitrust enforcement

In France, there is a legal limitation period of ten years for bringing a private enforcement action in the court for damages as a result of antitrust or competition law infringements. A June 2013 ruling of the Paris Court of Appeal – in the case of Central Parts v JCB Service44 - has held that the period starts with the infringement itself (or, at least, with the victim having reasonable knowledge of the facts). Although a private action can only be brought on the basis of a decision by a competition authority (whether the European Commission or the French national competition authority), it is not necessary to wait until all routes of appeal have been exhausted and there is a final unappealable decision; indeed, in the case concerned, because the claimant (plaintiff) had waited for the outcome of an appeal against the European Commission decision to the EU Courts, it was entitled only to damages for part of its losses, with damages for earlier losses being time-barred.

This principle seems to be consistent with the statute of limitations regime that came into force in France in June 2008, under which the triggering event is the "reasonable knowledge of the facts" by the victim. Such knowledge is presumed to occur at the latest on the date of the initial finding of the infringement by a competition authority, regardless of the bringing of any appeals.

The Netherlands: Information exchange by public announcement – the mobile telecoms case

In November 2013, the Netherlands competition authority, the Autoriteit Consument en Markt (ACM), announced the conclusions of its investigation into the country's mobile operators – and, in doing so, pushed forward the frontiers of the concept of unlawful information exchange.

It is well-established in antitrust and competition laws around the world that it is restrictive of competition (and unlawful) for competitors to pass to each other competitively sensitive information, for example about proposed pricing, customers being targeted, or business and marketing strategies. Generally, such unlawful information exchanges occur through private communications – conversations at trade associations meetings, exchanges of emails between sales managers in different companies, etc.

In this case, however, the ACM took the view that even public statements about future market behaviour could carry antitrust risks. The AMC announced that "statements made in public (for example, at conferences or in trade journals)" about planned price increases could – if competitors took note and followed such publicly made statements – lead to collusive behaviour.

On this basis, the ACM required the three major mobile network operators in the Netherlands – KPN, T-Mobile and Vodafone – to make a commitment that they would refrain from making such public statements so as to avoid any risk of unlawful collusive behaviour in future.45

The ACM's view represents a development of thinking in competition law in Europe. At EU level, the European Commission's 2011 Guidelines on horizontal cooperation agreements state that "where a company makes a unilateral announcement that is... genuinely public, for example through a newspaper, this generally does not constitute" an infringement of the prohibition on anti-competitive agreements – although with a caveat that "where such an announcement was followed by public announcements by other competitors" the possibility of finding an infringement "cannot be excluded".46 Nearly thirty years earlier, the European Commission, in its decision on the Wood Pulp case,47 had found an infringement when a number of producers of wood pulp had made quarterly public price announcements in advance, giving other producers sufficient time to announce their own corresponding new prices before the start of the new quarter and so making the market artificially transparent. On appeal, however, the EU's Court of Justice had overturned the European Commission decision, holding that the Commission had failed to present enough evidence that there was concentration.

Most recently, in late November 2013, the European Commission began proceedings against a number of container liner shipping companies alleging infringement of the EU prohibition on anti-competitive agreements, Article 101.48 The alleged infringement consisted of the fact that, since 2009, the companies concerned had been making regular public announcements of price increase intentions through press releases on their websites and in the specialised trade press. The European Commission is concerned that this practice "may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe".

United States: New protections proposed for employees who "blow the whistle" on antitrust infringements

A Bill to introduce whistle-blower protections for employees who report antitrust law infringements is progressing through the US Congress. On November 4, 2013, the Senate unanimously approved a draft of the Criminal Antitrust Anti-Retaliation Act of 2013 (S.42).

The proposed legislation provides that employers will be prohibited from dismissing or discriminating against a whistle-blower in its terms and conditions of employment because either (i) the whistleblower provided to the employer or to the US federal government information related to the violation of an antitrust law or other criminal law committed in conjunction with a violation of antitrust law or (ii) the whistle-blower participated in an investigation of such a violation. Any employees who do suffer retaliation by way of dismissal or discrimination in such a case will be entitled to receive reinstatement, back pay, special damages and legal fees and costs.

Footnotes

43 COMESA Court of Justice (First Instance Division), Polytol Paints & Adhesives Manufacturers v Republic of Mauritius, ref. 1 of 2012, judgment of August 31, 2013.
44 Judgment of June 26, 2013.
45 Netherlands competition authority, Autoriteit Consument en Markt, Case 13.0612.53, press release, "Investigation into mobile operators concluded", November 21, 2013.
46 European Commission Communication, Guidelines on the applicability of Article 101... to horizontal cooperation agreements (2011/C11/01), OJ 2011 C11/1, paragraph 63.
47 European Commission decision 85/202, Wood Pulp, OJ 1985 L 85/1.
48 European Commission press release IP/13/1144, "Antitrust: Commission opens proceedings against container liner shipping companies", November 22, 2013.

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