VBB On Competition Law | Volume 2023, NO1

Van Bael & Bellis


Van Bael & Bellis is a leading independent law firm based in Brussels, with a second office in Geneva dedicated to WTO matters. The firm is well known for its deep expertise in EU competition law, international trade law, EU regulatory law, as well as corporate and commercial law. With nearly 70 lawyers coming from 20 different countries, Van Bael & Bellis offers clients the support of a highly effective team of professionals with multi-jurisdictional expertise and an international perspective.
French authorities fine metal recycling companies for non-compete and no-poach agreements in merger...
European Union Antitrust/Competition Law
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National level


French authorities fine metal recycling companies for non-compete and no-poach agreements in merger

On 6 January 2023, the Directorate-General for Competition, Consumer Affairs and Fraud Control of the French government (DGCCRF) announced its decision to fine three metal recycling companies a total of € 148,000 for entering into non-compete and no-poach agreements in the context of a merger.

The French authorities reaffirmed that non-compete and no-poach agreements can be found illegal if (i) they are not necessary to complete the transaction; (ii) they constitute the main object of the agreement in question; or (iii) their geographical, material or temporal scope is disproportionate.

In this case, the non-compete and no-poach agreements were concluded for a period of three years and covered the whole national territory, which exceeded the territory in which the seller offered its services. The French authorities found that, because of their wide territorial scope and their reciprocal nature, the non-compete and no-poach agreements went beyond what was necessary to complete the merger and therefore amounted to a market sharing agreement.

Accordingly, in a settlement procedure, the DGCCRF fined the three companies € 37,600, € 90,000 and € 21,000 respectively, and required them to commit not to apply the non-compete and no-poach agreement.


Meta/Kustomer - Higher Regional Court Düsseldorf provides guidance on when a target has "significant domestic activities" under the transaction value threshold for merger notifications in Germany

On 23 November 2022, in appeal proceedings lodged by Meta against a decision of the German Federal Cartel Office ("FCO") relating to its acquisition of Kustomer, the Higher Regional Court of Düsseldorf (the "Court") provided guidance on the interpretation of the criterion of "significant domestic activities" of the target. This criterion is one of the criteria that may trigger a merger notification requirement in Germany under the "transaction-value threshold." The transaction value threshold, which was introduced in 2017 as an alternative notification threshold, applies if the target does not meet the turnover threshold of € 17.5 million in Germany, but if the total value of the transaction exceeds € 400 million and the target is "active in Germany to a significant extent."

The FCO considered that Meta's acquisition of Kustomer, a US-based company providing customer relationship management services and software whose turnover in Germany did not meet the turnover threshold, was required to be notified under the transaction value threshold. Although the target's data processing activities take place outside Germany and the vast majority of its customers are located outside Germany as well, the FCO noted that the target's services include the processing of data of several German companies' customers. According to the FCO, this was sufficient for the target to have "significant domestic activities" in Germany. The FCO therefore required the parties to notify and ultimately cleared the transaction without conditions in February 2022.

The parties nonetheless appealed the notification requirement. The Court sided with the parties and held that the processing of data of German companies which are not the target's customers does not in itself amount to "significant domestic activities" of the target within the meaning of the transaction value threshold. The Court specified that, insofar as Kustomer is engaged in the processing of data of German companies or consumers outside of Germany and for non-German customers, this does not amount to domestic activity. This is because the customers or users of the target's data processing services are not the German companies or consumers whose data is being processed, but rather only those companies with which the target has a contractual relationship, the vast majority of which are domiciled outside of Germany. Domestic activity is performed only to the extent that the target provides services or products to customers or users that are domiciled in Germany. As the target had only a few customers domiciled in Germany which represented only a small proportion of the target's total activity the Court held that these domestic activities did not qualify as "significant." The Court concluded that the FCO had incorrectly considered that transaction was subject to a notification requirement and was not entitled to charge an administrative fee for its review of the transaction.

These court proceedings show that it may be difficult to determine with certainty whether the target has "significant domestic activities" and the transaction value threshold applies, and that the FCO tends to apply a rather broad interpretation of this criterion. In fact, the Court has allowed the parties to appeal its decision on points of law to the Federal Supreme Court, as it considers that the interpretation of the criterion of "significant domestic activities" involves an important point of law which is not yet resolved. In particular, the Court indicated that an issue to be clarified is whether, for the purpose of establishing significant domestic activities of the target, the acquirer's plans for the target's future activities, in particular in relation to the achievement of turnover in Germany, should be considered, even if the target's current business plans do not envisage significant activities in Germany.


National level


Italy's highest administrative court clarifies Foreign Direct Investment screening principles while upholding veto against acquisition in agri-food sector

On 9 January 2023, the Italian highest administrative court (Consiglio di Stato, "COS"), emphatically confirmed that the Italian President of the Council of Ministers (informally also referred to as Prime Minister) enjoys a very wide margin of discretion in the application of the national foreign direct investment ("FDI") screening mechanism, i.e., the so-called "Golden Powers", limiting appreciably the effectiveness of a potential judicial challenge against the Prime Minister's decisions.

Moreover, the COS held that blocking an acquisition, especially by Chinese State-owned enterprises, is justified even when remedies are offered citing difficulties in ensuring compliance.

On 21 October 2021, the President had issued a decree blocking the acquisition of the Dutch agri-food company Verisem B.V., including its five Italian subsidiaries, by Syngenta Crop Protection AG, a Swiss company indirectly controlled by the Chinese State-owned enterprise ChemChina. ChemChina's challenge had been rejected at first instance.

In its judgment rejecting the appeal, the COS repeatedly emphasised that the Prime Minster enjoys a wide margin of discretion in relation to most aspects of the FDI regime, including the strategic nature of the target, the definition of the national interest and whether the acquisition affects such interest.

The COS pointed out that the assessment of these aspects is not only related to industrial policy but also to international politics and security. While the Italian legislative framework lists certain sectors (including the agri-food supply chain) as subject to the FDI regime, the notion of strategic asset is ultimately linked to the national interest, which in turn depends on prospective geopolitical determinations; it is not an objective concept.

Interestingly, the COS was not convinced by the argument that the same indirect buyer (i.e., ChemChina) already controlled another Italian leading company in the automotive sector.

Finally, the COS confirmed that the Prime Minister is not required to inform the parties of his or her intention to block a transaction prior to his or her final decision.


European Union level

Court of Justice of European Union upholds finding of abuse of dominance by Lithuanian national railway company

On 12 January 2023, the Court of Justice of the European Union ("ECJ") upheld the General Court's judgment fining the Lithuanian national railway company, Lietuvos gelezinkeliai AB ("LG"), € 20 million for abusing its dominant position in the Lithuanian freight market (Case C-42/21 P).


In its decision of 2 October 2017, the European Commission found LG to hold a dominant position in the management of railway infrastructure in Lithuania. LG also provides rail transport services in the country and was found to be dominant in the provision of rail transport services for oil products as well.

One of LG's major customers, Orlen Lietuva AB ("OL"), owned a refinery in Lithuania near the Latvian border. In 2008, following a dispute with LG, OL considered redirecting its freight to a Latvian seaport instead of a Lithuanian seaport, using the services of the Latvian national railway company, Latvijas dzelzcela ("LDZ"), instead of LG.

In October 2008, LG dismantled 19 kilometres of track connecting Lithuania and Latvia, close to OL's refinery. The removal of the track meant that OL had to use a much longer route to reach Latvia, and harmed LDZ's competitive position vis-à-vis LG. LDZ's entry into the Lithuanian market was rendered significantly more difficult. OL was prevented from using the services of LDZ, and as such, the removal of the track was found to constitute an abuse of dominant position.

The Commission imposed a fine of approximately € 28 million on LG which then brought an action before the General Court seeking annulment of the Commission's decision and a reduction of the fine. In its judgment of 18 November 2020, the General Court dismissed the appeal brought by LG and exercised its unlimited jurisdiction to re-evaluate and reduce the fine to approximately € 20 million, taking into consideration the gravity of the infringement (in terms of its nature and geographic extent and LG's position on the relevant markets) and duration of the infringement.

ECJ judgment

LG appealed to the ECJ, which upheld the judgment of the General Court. LG argued that the General Court should have applied the test set out in Bronner v Mediaprint (Case C-7/97) – i.e., that in order to prove an abuse consisting of the refusal of access, it must be shown that the service/ infrastructure is indispensable and that the refusal to grant access to it would eliminate all competition in the relevant market and is not objectively justifiable. The ECJ held that the Bronner test did not apply as (i) removal of the train tracks did not correspond to a refusal of access but to a destruction of infrastructure; (ii) the tracks were financed by public funds and owned by the state instead of being funded and built by LG for its own business needs; and (iii) LG was under a regulatory obligation to grant access to the Lithuanian rail network and was not at liberty to refuse access.

The removal of the train tracks was found to constitute an independent form of abuse. In order to prove the abuse, it was sufficient to show (subject to any objective justification) that the conduct was such as to restrict competition and constitute an impediment to market entry.

Download: VBB On Competition Law | Volume 2023, NO1

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