3 August 2011

EU/UK Competition Law Newsletter - July 2011

On June 22, 2011, the European Commission (EC) fined Telekomunikacja Polska (TP), the incumbent telecoms operator in Poland, EUR127 million for limiting access to its wholesale broadband access products in Poland.
European Union Antitrust/Competition Law
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Following Complaints, Telekomunikacja Polska Fined for Refusal to Supply

On June 22, 2011, the European Commission (EC) fined Telekomunikacja Polska (TP), the incumbent telecoms operator in Poland, EUR127 million for limiting access to its wholesale broadband access products in Poland. This was an abuse of its dominant position, in breach of EU competition law. The decision followed complaints from smaller downstream retail broadband competitors active in Poland.

The case concerned types of refusal to supply by TP and will be of interest to dominant companies active in the EU as well as their competitors and customers. The particular abusive activities identified by the EC were: proposing unreasonable conditions for access; delaying the negotiation process; rejecting orders in an unjustifiable manner; and refusing to provide reliable and accurate information to alternative operators.

The case also provides a useful reminder that a complaint to the EC (or a national competition regulator in the EU) can be a useful commercial strategy. The decision should in principle ensure that TP no longer engages in these activities. In addition, the complainants and other third parties will be able to use the decision as a basis for private claims for damages.

Private Claims in the EU: Court Provides Support

A June 14, 2011, judgment from the European Court of Justice (ECJ), the EU's highest court, has made it more likely that third parties claiming damages against companies for breaches of EU or national competition law will be able to use leniency applications as part of their evidence.

The EC has consistently taken the line that leniency applications ("the voluntary presentations by leniency applicants of their knowledge of a cartel and their role therein prepared especially to be submitted under [the EC's or a national competition authority's] leniency programme," which should be distinguished from pre-existing documents such as incriminating e-mails) should not be accessible to private claimants. This is on the basis that, although an application for leniency does not protect a company from private damages claims, making applications available would make it less likely that companies would come forward in the first place.

The ECJ decided that in principle EU law allows access to leniency applications. However, whether this should take place in any particular case is a matter for the national court before which a claim is brought.

The case concerned an application filed with a national competition authority and it is not yet clear whether the reasoning can be extended to leniency applications made to the EC itself. An EC official has stated that the EC will not be changing its position, but it seems clear that the reasoning of the judgment extends to cartel investigations dealt with by the EC. Further, in a current damages claim before a UK court, the judge appeared to recognize that the ECJ's view would extend to EC leniency applications and indicated that the judgment had "wide implications."

Private Claims in the EU: EC Sets Out its Thoughts On the Level of Damages

While continuing to defend its position on barring access to leniency applications, the EC continues otherwise to support the ability of private claimants to recover damages for infringements of competition law in the EU. Its latest move in this direction is the publication on June 17, 2011, for consultation of a draft guidance paper on quantifying harm in actions for damages for breaches of the EU competition rules. The consultation closes on Sept. 30, 2011.

The draft guidance covers any type of infringement of Article 101 of the Treaty on the Functioning of the European Union (TFEU) (the basic ban on anti-competitive agreements in the EU) and Article 102 TFEU (the ban on abuse of dominance in the EU). It is not limited to cartels. The principles would also equally apply to actions under national competition law rules in the EU, which generally follow Articles 101 and 102.

The principal purpose of the paper is to "present the main methods and techniques currently available to quantify ... harm [caused by infringements of the EU competition law rules]." It will encourage, as is the intention, the further development of the nascent "plaintiff bar" in the EU competition law field.

Additional EU/UK competition law news coverage can be found in our news section.

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