UK: SJ Berwin´s Community Week: A Weekly Summary Of Competition Law And Policy Developments

Last Updated: 3 July 2009
Article by SJ Berwin's EU & Competition Team

EU DEVELOPMENTS

Procurement Update

Advocate General Ruiz-Jarabo Colomer delivered an opinion on the legal regime governing public-private partnership arrangements ("PPPs") on 2 June 2009, concluding that it is legitimate for regional public authorities to establish legal entities to enter into partnerships with private participants (institutionalised PPPs or IPPPs).

The Advocate General confirmed the Commission's conclusion that a "double tendering procedure - one for selecting the private partner to the IPPP and another one for awarding contracts or concessions to the public-private entity" is not necessary. Rejecting the Commission's justification of "pragmatism", he explained that "the use of a double tendering procedure is not compatible with the reduction of procedural formalities which underlies IPPPs", via the use of a single procedure to select the private sector partner and to award the public contract or concession to the public-private partnership vehicle. On this basis, the EC Treaty and Procurement Directives do not prohibit the direct award of a public services contract to a PPP formed for that purpose where:

  • the company maintains that single corporate purpose throughout its existence;
  • the private sector participant is selected through a public tendering procedure, after verification of its skill and ability to perform the contract in question and consideration of its tender;
  • the regional public authority informed all tenderers in the contract notice of its plan to form a PPP to which a public contract or concession would be awarded;
  • the private participant assumes responsibility for the provision of the services and execution of the works; and
  • the tendering procedure is consistent with the principles of free competition, transparency and equal treatment as required under Community law for concessions or with the rules on the publicity and the award of public contracts.

The second recent procurement development concerns the decision of the Court of First Instance ("CFI") on 20 May 2009. The CFI annulled a decision of the European Parliament not to award a contract for car transport services to the claimant.  Despite the Parliament's broad discretion to determine the award criteria, the CFI found that the Parliament had breached the obligation to provide reasons for its decision and had failed to provide details of the successful bidder's price, which was especially important in this case as the criterion was weighted at 55% in the evaluation of bids. Refusal to provide details of the price by the successful bidder could not be justified on the grounds of confidentiality. However, the CFI concluded that the claimant's claim for damages was inadmissible in the absence of details in relation to the nature and character of the loss and having failed to demonstrate a causal link between the actions of the Parliament and the alleged loss.

UK DEVELOPMENTS

CC Chairman Speaks On Competition Policy And Enforcement In Economic Downturn

On 2 June the Competition Commission ("CC") published a speech by its Chairman, Mr Peter Freeman.  Mr Freeman discussed how the current economic downturn is influencing competition policy and its enforcement, examining what lessons can be learnt.

Mr Freeman stated that in the current climate there is, more than ever, a balancing act to be played out between competition policy and wider public interest needs, such as financial stability concerns.  Although he discussed whether competition rules should be altered in light of the economic crisis, he concluded that the basic principles of competition law remain just as pertinent and relevant today - claiming that they are in no way a luxury policy.  However he did concede that competition policy may not always meet all public interest needs, and as a result, government must try to strike a balance between competition policy and other policy objectives.  For example if the state needs a particular vaccine to ward off a flu pandemic, he acknowledged that it may not be sufficient to simply sit back and wait for competition to provide the solution.

Regarding the financial sector, Mr Freeman discussed what he described as the regulatory failure.  Although his view is that competition in banking is to some extent "special", he considered it would be an error to exempt the banking sector from the competition regime entirely, or to lay the blame for the financial crisis on an excess of competition.  He took the view that there should be more focus on 'careful regulation' in the sector having regard to the special features of banking such as an imbalance of information and systemic risk. This however should not be to the abandonment of competition which generally brings benefits. 

Mr Freeman further took the view that the lessons learnt from encouraging bank mergers in the interests of stability are at best ambiguous and noted that having a merged bank that is 'too big to be allowed to fail' creates its own set of problems - in addition to any adverse effect on competition. He specifically warned against consolidation as an automatic solution.

It was noted however that competition enforcement is continuing worldwide notwithstanding the economic crisis.  The US Department of Justice for example has recently promised a more active approach to anti-trust enforcement (particularly on single firm conduct), and the European Commission has imposed a record fine on Intel for abuse of its dominant position (of over € 1 billion).  Furthermore in the last year the OFT obtained the first convictions under the criminal cartel provisions of the Enterprise Act.  

Court Of Session Rules On Application Of Waiver Of Legal Privilege

On 27 May 2009 the Scottish Court of Session issued a ruling dismissing an application for disclosure of legal advice and other documents prepared in the context of an Office of Fair Trading ("OFT") investigation into a breach of the Competition Act 1998 ("CA98"). 

The action arose out of a share purchase agreement which completed in September 2004.  BSA International SA ("BSA") acquired shares in A McLelland & Son Ltd ("McLelland") from the defenders. Under the share purchase agreement, the defenders warranted that there were no circumstances that might give rise to any form of communication from the OFT or the European Commission.

In 2005 the OFT sent a statutory request for information to McLelland, and in September 2007 issued a statement of objections alleging price fixing by McLelland and others in the dairy product market between 2002 and 2003.  Following negotiations with the OFT and having taken advice from counsel, an early resolution agreement was reached in February 2008, under which McLelland  admitted it had breached the CA98 and agreed to pay a reduced penalty. 

BSA then brought an action for damages against the defenders (for the amount of the penalty imposed by the OFT as well as their costs arising from the OFT's investigation) on the basis of negligent misrepresentation and/or breach of warranty.   

In defending the claim, the defenders applied, amongst other things, for the disclosure of the instructions and related documents that were provided to counsel by BSA in relation to an opinion on the relative advantages of entering into the early resolution agreement together with other legal advice on the issue.

It was accepted by BSA that privilege had been waived in relation to counsel's opinion itself - which BSA had lodged at court and sought to rely on.  BSA argued however that counsel's opinion was self-contained and that no further disclosure was required whether by way of legal advice or instructions.   

Examining the application Lord Glennie noted that, on the issue of substance, the approach to legal privilege is consistent in both England and Scotland.  The court examined how far the waiver of privilege extended in this case.  He noted that once a party has waived privilege on a certain document or chain of documents, there is a presumption that privilege on all documents relating to the same 'issue' or 'transaction' should be similarly waived on the basis that partial waiver may not give the full picture. 

However the use of otherwise privileged material does not itself immediately waive privilege in the whole of the legal advice obtained by a party in relation to a case.  He considered that the crux is to identify the 'issue' in question and looked to the purpose for which partial disclosure of the privileged material had been made. 

In this case, the key issue that counsel's opinion addresses is why steps were taken by BSA and McLelland when they did to seek early resolution and enter an agreement with the OFT.  This was held to be the extent of the 'transaction' to which the waiver of privilege relates in this instance.  There were no wider issues, such as whether the early resolution agreement should have been entered into.  On this basis it was found that previous advice forms no part of this transaction.  The request for further disclosure was therefore denied.  

OTHER DEVELOPMENTS

Japan Brings Competition Law In Line With Other Jurisdictions

On the 3 June Japan's Diet approved sweeping changes to the Japanese competition regime. The Japanese Fair Trade Commission ("JFTC") and practitioners had been demanding that the country's 2005 Antimonopoly Act be brought in line with international standards for some time. The changes may take effect as early as January 2010.

The main change to the cartel regime is that companies that are part of the same group may now jointly apply for leniency. Under the old regime if a member of a corporate group applied for leniency this would prevent other members of the same group from receiving the 100% reduction in fines - as only one can claim complete immunity. However it is now possible for groups to apply as a single entity, which should have the effect of increasing leniency applications from entities previously concerned about their application resulting in fines on their sister or parent companies.

The number of potential leniency beneficiaries per cartel has also been raised from three to five (provided the applications are made before the JFTC begins an investigation), with the first applicant receiving a full reduction in fines, the second 50% and the remainder 30% each. Further the fines that can be levied on cartel ringleaders have been raised to 15% of affected sales and the maximum prison sentences for cartel offenders extended from three to five years.

The merger regime has also seen an overhaul with a major change to the notification system. Rather than qualifying share transactions having to be filed with the JFTC within 30 days of completion they must now be filed pre-completion.  Such notifications require to be notified to the JFTC no later than 30 days before completion. 

The threshold test has also changed from an asset based test to a turnover based test which is expected to result in more mergers being caught by the regulations. Further the JFTC will look at mergers by groups rather than by individual company meaning that inter-group acquisitions should not now require notification.

As a result of the substantial changes, the JFTC has been warned to expect an increase in its workload. Guidance is expected to be issued by the JFTC before the new provisions take effect.

Sweden: Record Fines For Asphalt Cartel

Sweden's Market Court has imposed the largest ever fines in a Swedish cartel case, on a cartel operating in the asphalt market. Hardest hit was asphalt company NCC, which incurred a fine of 200 million Swedish kronor (€18.4 million) having been found to have played a leading role.  Other operators shared the burden of a further SEK 77 million, while Svenska Väg (another asphalt company) escaped without a fine as the court was not satisfied that they had participated in the cartel. 

The decision came as a result of an appeal from the district court, in which NCC had originally incurred a fine of SEK 150 million (its fine being increased by SEK 50 million in the final Court of Appeal). Several firms who were found to have participated in the cartel chose not to appeal the ruling. 

Sweden's competition authority reacted well to the news, its Director General calling the ruling a "victory for both central and local government, and ultimately for the taxpayers, who have had to pay excessively high prices for asphalt work". 

The case stems from cartel operations dating from 1994 onwards, and much of the evidence was gathered when the Swedish competition authority conducted a series of dawn raids in 2001.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.