UK: Focus Antitrust - 16 July 2014

Last Updated: 23 July 2014
Article by Paul Stone and Elora Mukherjee

In the News

Telefonica's margin squeeze appeal is dismissed by ECJ

The ECJ has dismissed Telefónica's appeal against the General Court's judgment that upheld the European Commission's 2007 decision finding that Telefónica had engaged in an abuse of a dominant position through the imposition of an unlawful margin squeeze. The ECJ confirmed that the Commission is entitled to apply Article 102 in regulated markets without it being necessary to demonstrate the actual anti-competitive effects of a margin squeeze. Further, the ECJ held that Telefónica could reasonably foresee that its conduct was abusive and the fine did not breach the principles of equal treatment or proportionality. . Click here.

European Commission fines Servier and five generic companies for delaying generic entry of perindopril

The European Commission has fined Les Laboratoires Servier (Servier) and five generic competitors nearly €427.7 million for practices that breached Article 101 and Article 102 by delaying the generic entry of the cardio-vascular drug perindopril. The Commission found that patent settlement agreements had been concluded between Servier and the generic companies which prevented or delayed entry of cheap generic versions of perindopril contrary to Article 101. The Commission also considered that Servier held significant market power in the market for the perindopril molecule and had abused its dominant position contrary to Article 102 by inducing such settlement agreements and by acquiring scarce competing technologies, which made generic entry more difficult. Click here.

General Court reduces fines on paraffin wax cartel participants

The General Court has delivered its judgments on appeals by Sasol, Esso and ExxonMobil and RWE, against the European Commission decision finding a cartel in the EEA paraffin waxes market and the German slack wax market. The General Court has reduced the fines imposed in each case. In relation to Esso/Exxon Mobil, the General Court found that the Commission, despite having correctly established the duration of the infringement, had failed to consider that Exxon did not participate in the infringement before the Exxon/Mobil merger when calculating the fine. In relation to Sasol and RWE, the General Court found that the Commission was wrong to find that they exercised decisive influence over certain joint ventures. Click here, here and here.

Two men face charges in CMA's ongoing criminal cartel investigation

The CMA has announced that, as part of its ongoing investigation into cartel activity in relation to the supply of galvanised steel tanks for water storage, two more individuals have been charged with breach of the criminal cartel offence under section 188 of the Enterprise Act 2002. Clive Geoffrey Dean and Nicholas Simon Stringer were charged with dishonestly agreeing to divide customers, fix prices and rig bids between 2004 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage. Click here.

EU

Articles 101 and 102

  • The European Commission has closed an antitrust investigation into generic pharmaceutical companies in France, which focused on suspected price co-ordination when negotiating an initial price with the French pricing authority before launching a new generic product. Click here.
  • The European Commission has published a Communication, which reviews the operation of Regulation 1/2003 over the last 10 years and also comments on areas where future progress is needed. Click here.

Mergers

  • The European Commission has conditionally approved the proposed acquisition of Rautaruukki by SSAB. Since both companies produce and distribute carbon steel and steel construction products, the Commission had concerns that the transaction would significantly reduce competition on the markets for certain carbon steel products in the Nordic countries, and for stainless steel and profiled steel construction sheets in Finland. SSAB has agreed to divest five businesses in Finland, Sweden and Norway in order to address these concerns. Click here.
  • The European Commission has published a White Paper setting out proposals for making EU merger control more effective. Click here.

UK

CMA

  • The CMA has published its provisional findings report on the completed acquisition by Alliance Medical Limited of certain manufacturing assets of IBA Molecular UK Limited. The acquired business had been making a loss for a number of years, suffers from various competitive weaknesses and would have closed without the merger. Accordingly, the CMA has provisionally concluded that the competitive situation following the merger is not expected to result in a substantial lessening of competition. Click here.
  • The CMA announced its provisional findings on its Phase II investigation into the anticipated acquisition of SurgiChem Limited by Omnicell, Inc/ MTS Medication Technologies, Inc. The CMA has provisionally found that the merger would not lead to a substantial lessening of competition, given that other existing players in the market will offer competitive constraints on the merged entity. Further, the possibility for entry and expansion indicates that the parties could be constrained further within a reasonable period. Click here.
  • The CMA has published a draft of the Private Healthcare Market Investigation Order 2014 for consultation. The proposed Order aims to address the adverse effects on competition stemming from high barriers to entry for private hospitals and weak competitive constraints on private hospitals in many local markets, identified during the private healthcare market investigation. Click here.

UK Courts

  • The High Court has delivered a ruling dismissing a competition defence against the alleged breach by Focus Caring Services Limited (Focus) of restrictive covenants in its franchise agreements with Carewatch Care Services Limited. The relevant post-termination non-competition and non-solitication clauses covered a period of twelve months, which the High Court held was necessary to protect Carewatch's know-how and to maintain the identity and reputation of its franchise network. The High Court concluded that the restrictive covenants were accordingly outside of the scope of Article 101 and the Chapter I prohibition. Click here.

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