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

Last Updated: 29 June 2009
Article by SJ Berwin's EU & Competition Team

EU DEVELOPMENTS

Commission review: recast Merger Regulation has led to increased efficiency

The so called 'recast' EU Merger Regulation (Regulation 139/2004) ("Merger Regulation") came into force on 1 May 2004. One of the key objectives was to ensure that mergers are reviewed by the best placed authority. An improved system of pre and post-notification referrals was introduced to allow National Competition Authorities ("NCAs") and the European Commission ("Commission") to allocate and re-allocate cases between themselves as flexibly and as easily as possible. Five years on the European Commission has published a review of the Merger Regulations' effectiveness for the Council of Ministers, focusing on the jurisdictional thresholds and referral mechanisms.

The report indicates that many aspects of the Merger Regulation have led to increased efficiencies in EC Merger Control. In particular the 'two-thirds rule', which requires that a merger be assessed by the relevant NCA if more than two thirds of an undertakings' turnover is generated in that member state, has led to more undertakings filing merger referrals with the appropriate authority. Pre and post-notification referral mechanisms have also helped reduce potential parallel proceedings from an estimated 1,000 in 2004 to a mere 150 in 2008 (reducing the potential for inconsistent enforcement). The report also notes that over 40 cases have been re-allocated from the Commission to the member states since 2004.

There are however still instances in which mergers have not been dealt with by the best placed authority. In particular a number of mergers which have potential European cross border effects are still being handled by NCAs due to the application of the two-thirds rule. This has given rise to concerns that cross border issues may not be adequately dealt with and that non-competition policy considerations may be taken into account. The Commission considers that such cases would be better dealt with by it at a European level. On this basis the report acknowledges that there may be a need to review the efficacy of the two-thirds rule.

Also it was noted that in certain instances undertakings are notifying mergers to more than one member state, rather than utilising the referral system and making a single 'one-stop' notification to the Commission.

Although the report is extremely positive there is still considered to be room for improvement in certain areas. In particular the referral mechanisms have been deemed to be too lengthy and cumbersome (which may be turning parties away from using them). There is also considered to be a need to continue the convergence between national merger control rules and community rules in order to facilitate the review of complex merger filings. However both the Commission and practitioners appear to believe that the Merger Regulation has been a step in the right direction.

At this stage no proposals for reform have been put forward.

Electrical cables manufacturers appeal against dawn raids

On the 20 June 2009, details were published of appeals launched against the European Commission ("Commission) by two manufacturers of high-voltage under seas cables, Nexans France SAS and Nexans SAS ("Nexans"), Prysmian and Prysmian Cavi ("Prysmian"), in connection with dawn raids carried out at their premises.

The EC carried out unannounced inspections at the appellants' premises between 28 and 30 January 2009 in connection with an investigation into possible anti-competitive conduct in the electrical cable sector in breach of Article 81 of the EC Treaty. The parties are appealing both the decision ordering these inspections, and the way in which the inspections were conducted. Both appellants are asking the Court of First Instance to annul the Commission's decision ordering them to submit to the inspection. They are also challenging the Commission's actions with regards to the removal of DVD-ROMs and the copying of the whole of the hard drive of an employee's laptop which was taken away for inspection at the Commission's offices at a later date. Prysmian are arguing that, under Regulation 1/2003, no power exists which would allow the Commission to make and remove copies of complete electronic hard-disks and analyse the data contained at a separate location. They argue that the Commission's powers of inspection are specifically to be exercised at the premises of the undertaking.

In contesting the legality of the inspection the appellants have requested that the Commission return documents removed from their premises, in particular those which they argue have been obtained outside of the proper scope of the dawn raids, documents relating to projects outside the EEA and documents considered to be improperly seized from hard drives and DVD-ROMs. In addition, Nexans is arguing that the conduct of the dawn raid breached a number of its essential rights, including the right of defence, right to a fair legal process, privilege against self-incrimination and the presumption of innocence.

Prysmian has further accused the Commission of unduly prolonging the investigation by a month which they claim has created uncertainty as to the scope of the investigation and delayed the company from making a fully-informed assessment as to whether to apply for leniency.

This is one of a number of appeals that have been lodged against Commission dawn raids so far this year. The current appeal would however appear to be the first to directly challenge the Commission's powers to seize and remove from premises images of hard drives.

UK DEVELOPMENTS

Proposals for a competitive Digital Britain.

In a major statement of UK government policy, Lord Carter, ex-chief executive of Ofcom and now the Communications Minister, published the government's White Paper on Digital Britain (the "Report") on 16 June 2009.

Consultations for the Report began in October of last year with a remit to develop "an action plan to secure the UK's place at the forefront of innovation, investment and quality in the digital and communications industries." The final 238 page document details key recommendations for the modernisation of the UK's economy to compete in a global digital age, dealing with a range of policy issues, the most far reaching of which concern the telecommunications sector.

The centrepiece of the Report, as regards broadband, is a commitment to develop plans for a new digital Universal Service Commitment (the "USC"). The USC is to be effective by 2012 and seeks to ensure universal access to broadband technology for all in the UK - with competition for service provision as far as possible. The USC will be supported by public investment in high speed 'Next Generation Access' (NGA) networks. The government aims to deliver at least 90% coverage of NGA broadband for homes and businesses by 2017, at least two thirds of which is expected to be provided by the market, stimulated by market competition.

A range of technical changes are also expected to be introduced to make it easier and cheaper to build next-generation networks, including opening up infrastructure such as tunnels and ducts. Changes to the Communications Act 2003 will also amend Ofcom's remit to include encouraging investment (alongside the promotion of competition), which is hoped to assist in ensuring that regulation does not hinder the market's ability to develop next-generation networks.

The government also proposes to improve access to 3G mobile coverage. It plans to liberalise the allocation of the existing radio spectrum currently used for 2G networks, and to auction spectrum band that becomes available following the switch from analogue to digital - the so called "Digital Dividend". The government also proposes to extend existing 20 year 3G mobile operator licenses indefinitely to ensure the financial certainty necessary to encourage private investment.

Two main doubts have arisen since the publication of the Report. The first, inevitably, concerns funding. The government hopes to fund the UCS partly by diverting resources from under spend of the switchover from analogue to digital radio. It also hopes that a 50p monthly tax on all fixed copper lines (i.e. on households with a fixed-line telephone) from 2010 onwards will help fund its NGA commitments. But it is unclear how the government will deal with any future funding gaps. The second concerns the departure of Lord Carter in July and the impact of next year's general election on costly, long term policy plans.

Digital Britain sets out an ambitious roadmap of the UK's telecommunications future, however it remains to be seen to what extent these proposals become a reality.

Ofgem consults on amendment to proposed Energy Supply Probe proposals

On the 22 June, the Office of Gas and Electricity ("Ofgem") published for consultation an amendment to the package of remedies that it proposes to introduce to promote competition in the retail energy supply market. The proposed amendment replaces the prohibition on gas and electricity suppliers implementing automatic contract rollovers.

In February 2008 Ofgem deployed its general powers under the Enterprise Act 2002 to launch an investigation into the supply of gas and electricity for micro-business and household consumers (the "Energy Supply Probe"). The preliminary findings of the Energy Supply Probe revealed no evidence of cartel activity between energy supply companies. That said, Ofgem found that certain consumers had failed to engage with the market effectively. Accordingly, the final report on the Energy Supply Probe, published in April 2009, proposed a range of measures to further promote competition and consumer engagement. Key proposals included:

  • providing consumers with clear information on both the terms and conditions of their contract and their rights upon termination; and
  • prohibiting unfair practices in relation to the rolling over fixed term contracts.

Ofgem's remedies package was generally met with enthusiasm. Yet, the 'Big Six' suppliers, in addition to smaller non-domestic suppliers, expressed strong reservations in relation to the rollover prohibition. They argued that increasing uncertainty around customer demand would expose suppliers to increased costs associated with wholesale market risk, and make it more difficult for suppliers to obtain credit when purchasing energy. These added costs would ultimately be passed onto the consumer, affecting in particular those consumers who are not actively engaged in the market.

Ofgem took these criticisms into account by launching this month's consultation. Whilst the amended proposal still seeks to address the practice of automatically rolling over fixed term contracts, it no longer seeks to do so via a prohibition. Rather, suppliers would be obliged to give consumers at least 30 days notice to either transfer to an alternative contract or switch supplier before the contract is rolled-over. At the same time, consumers would also gain the right to give notice to of their intention to transfer to another contract at any time until the close of the regular notice period.

It is worth noting that Ofgem reserves the right to revisit the question of prohibiting the automatic rollover of contracts if its amended remedy fails to remedy the supplier's behavior. Comments on this proposal are to be submitted to Ofgem by 3 July 2009.

FRENCH DEVELOPMENTS

French Competition Authority clears the merger between Banque Populaire and Caisse d'Epargne

On 22 June 2009 the French Competition Authority (the "Authority") cleared the merger between two French banks, Banque Populaire and Caisse d'Epargne (the "Group"), albeit with commitments.

The Authority reviewed the potential anti-competitive effects of the merger in two separate sectors: banking services to individuals (retail banking); and banking services to companies (commercial banking).

Post-merger, the Group will be the second largest player on most relevant retail banking markets in France. However, the Authority noted that the market shares of the Group will not exceed 25% and thus considered that at national level the merger will not infringe competition law. The Authority also noted that at a local level competition will be maintained as the five competitors of the Group will remain present on the relevant local markets except in the French overseas territory La Réunion where 50% of the banking agencies will be owned by the Group.

In relation to the commercial banking sector, the Group will be the largest market player in some markets and the second largest player in others. However, as in the retail banking sector, the Authority believes that the merger will not infringe competition at national level since several competitors remain present on the market. The same is true of the situation at the local level, except in La Réunion where the Group will maintain a strong position through three networks (Banque de la Réunion, Caisse d'Epargne and BRED).

To remedy the anticompetitive effects in La Réunion, the Group made commitments to maintain the legal independence and the managerial autonomy of the three aforementioned networks for a period of five years. During this period, the Authority will regularly review the competitive situation of the Group to ensure that the commitments are sufficient to meet any concerns regarding a potential lessening of competition.

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.