European Commission publishes new Guidance on the application of the referral mechanism set out in Article 22 EUMR on the control of concentrations
On 26 March 2021, after a public consultation on the control of concentrations, the European Commission has published Guidance on the application of the referral mechanism set out in Article 22 of the Council Regulation (EC) No. 139/2004 (EUMR).
The European Commission has analyzed the period from 2016 to today to scrutinize the effectiveness, efficiency, relevance and coherence of both procedural and jurisdictional aspects related to the control of EU concentrations. In particular, the Commission has examined the effectiveness of the turnover-based thresholds provided by the EUMR for the identification of concentrations subject to the obligation of prior notification to the Commission and the mechanism of referral set out in Art. 22 EUMR.
The analysis carried out by the Commission has shown that, although these thresholds have generally been effective in capturing transactions with a significant impact on competition in EU internal market, a certain number of cross-border transactions which could have a potentially significant impact on competition, especially concerning the digital and pharma sectors, have escaped review by both the Commission and the Member States.
In consideration of that, the Commission found that it is also important to encourage and accept referrals under Article 22 EUMR in cases where the concentrations do not reach either the national or European thresholds. Those cases would mainly concern (i) startups or recent entrants with a significant competitive potential that have low turnover; (ii) innovators or undertakings conducting potentially important research; (iii) actual or potential important competitive forces; (iv) undertakings with access to competitively significant assets; and (v) undertakings providing key products or services for other industries.
Once a referral has been made, the Commission will examine whether or not the concentration affects trade between Member States in a significant way and constitutes an effective threat for competition within the territory of one or more Member States.
Regarding procedural aspects, the referral shall be made within six months after the implementation of the concentration. However, the Guidance specifies that in exceptional situations "a later referral may also be appropriate, based on, for example, the magnitude of the potential competition concerns and of the potential detrimental effect [of the concentration] on consumers".
Annual law on competition: Italian Competition Authority's proposals to modify Law no. 287/90 and powers of the Authority
On 23 March 2021, the Italian Competition Authority (ICA) submitted to the government its proposals for the annual law on competition concerning, inter alia, proposals for amendments to Law no. 287/1990 and to the powers of the Authority (par. VII of the report).
In particular, the ICA proposes:
- Introducing amendments to the provisions on the control of concentrations, among which the introduction of the duty to notify, at the ICA's request, also transactions falling below notification thresholds which appear to be relevant for competition, and the extension of the deadline for the conclusions of investigations from 45 to 90 days;
- introducing a relative legal presumption of economic dependence in business relationships with undertakings providing services of intermediation for digital platforms that play a crucial role in reaching end-users and/or suppliers;
- granting the ICA the power to classify undertakings operating in several markets as undertakings "of primary importance for competition" and to prohibit the designated undertakings from certain "particularly distortive" practices unless they demonstrate that their conduct is objectively justified;
- introducing a settlement procedure for antitrust proceedings;
- strengthening the ICA's power to acquire documents and information also outside the context of investigations, consequently enabling the ICA to impose fines in case of refusal or delay in the provision of information and documents or where the information is either omissive or misleading; and
- appointing the ICA as the sole competent authority to tackle the infringements identified by Directive 2019/633 on unfair commercial practices in relations between undertakings in the agricultural and food chain.
Court of Justice dismisses appeals lodged by Slovak Telekom and Deutsche Telekom against the judgments of the General Court relating to anticompetitive practices on the Slovak telecommunications market
With the judgments of 25 March 2021, (Cases C-152/19 and C-165/2019), the Court of Justice of European Union (CJEU) has dismissed the complaints lodged by Slovak Telekom (ST) – the most important telecommunications operator in Slovakia – and Deutsche Telekom (DT) – which was ST's parent company at the time of the investigations – against the judgment of the General Court that mostly confirmed the decision adopted by the European Commission on October 15, 2014.
With this decision, the Commission imposed fines on both ST and DT, since they had abused ST's dominant position on the Slovak market for broadband internet services by setting unfair terms and conditions for access to its local loop and therefore limiting the access of the competitors.
By dismissing ST's and DT's appeals, the CJEU has clarified the scope of its Bronner judgment, especially in relation to the conditions which must occur to qualify as abusive, for the purposes of art. 102 TFEU, the refusal of access to infrastructures owned by a dominant undertaking. One of the conditions is the indispensability for competitors of the access to such infrastructures.
ST and DT also stated that the General Court had erred in law in holding that the Commission was not required to demonstrate, for the purposes of Art. 102 TFEU, that the access to ST's infrastructure was indispensable for competitors, as otherwise held in the Bronner case.
The Court has indeed clarified that, since ST was subject to the regulatory obligation to grant access to the network and therefore could not and did not actually refuse to grant access to the network, and since the fined practices did not constitute a refusal of access to ST's local loop, but referred to the conditions of such access, the conditions set in Bronner judgment could not apply in the present case. Therefore, the General Court correctly affirmed the Commission shall not prove the "indispensability" of ST's infrastructure.
European Commission launches public consultation on state aid for research, innovation and development
In the context of the so-called State Aid Fitness Check, i.e. a broad assessment started in 2019 and aimed at verifying the effectiveness of the European competition rules in face of a continuously evolving market, on April 8 the European Commission launched a public consultation with the aim of aligning the European Framework for State Aid for Research, Development and Innovation (the so-called R&D&I Framework, contained in Commission Communication 2014/C 198/01) with the new strategic objectives of the EU.
In particular, among the priorities of the consultation, the Commission has indicated the following objectives:
- Improve and update the existing definitions of research and innovation activities eligible for support under the R&D&I Framework;
- Introduce new provisions to allow public support for technology infrastructures to stimulate R&D&I investment;
- Simplify some rules (introducing, for instance, a simplified methodology for calculating indirect costs to determine eligible costs), to facilitate the practical application of the R&D&I framework, where the evaluation has identified possible excessive administrative burdens for enterprises and managing authorities.
The consultation is open to private citizens, NGOs, enterprises, associations and public authorities.
Contributions and comments on the review proposals should be submitted online to the Commission by 3 June 2021.
The adoption of the new European Framework for State Aid for Research, Development and Innovation is foreseen for the second half of 2021.
EU Court of Justice definitively rejects challenges relating to 'Lundbeck' case on pay-for-delay agreements
With judgments of 25 March 2021, the Court of Justice definitively closed the Lundbeck case, concerning the agreements that the Danish pharmaceutical company had concluded in 2002 with certain generic manufacturers in relation to the anti-depressant drug containing the active substance known as "citalopram."
In particular, when its basic patent on that molecule expired, Lundbeck possessed only a number of secondary patents giving it more limited protection; in exchange for the generic manufacturers' undertaking not to enter the citalopram market, Lundbeck had granted them substantial payments and purchased their stocks of generic products.
By its decision of 19 June 2013, the European Commission found that Lundbeck and the generic manufacturers concerned were at least potential competitors and that the agreements in question constitute restrictions of competition "by object" within the meaning of Article 101 TFEU.
The Commission found, inter alia, that the sums paid by Lundbeck to prevent generic manufacturers from entering the citalopram market corresponded approximately to the profits which they could have made if they had successfully entered the market. The Commission therefore imposed a total fine of EUR93.7 million on Lundbeck and a total fine of EUR52.2 million on generic companies.
The General Court of the EU upheld the Commission's decision in judgments dated September 8, 2016.
The Court of Justice has upheld the General Court's decisions, affirming in particular the correctness of (i) the assessment as to whether Lundbeck and the generic traders were in a relationship of potential competition; (ii) the assessment as to whether the agreements qualified as agreements "by object". In the latter respect, the Court essentially stated that such qualification must be confirmed where under the agreements in question the transfer of value from the original manufacturer to the generic manufacturer can be explained only by the parties' common commercial interest in not competing on the merits. Such agreements, where the payments induce generic manufacturers not to pursue their attempts to enter the market, belong to the category of practices which are particularly harmful to competition.
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