On May 14, 2018, the competition authorities of Germany and Austria have published joint draft guidelines on the new transaction value merger thresholds for public consultation, see here.
Comments can be submitted by June 8, 2018. The draft concerns the new merger control thresholds introduced in 2017. These provide that a transaction may be notifiable if the value of the consideration for a transaction exceeds € 400 million in Germany or € 200 million in Austria, respectively, and the target has significant domestic activities, even if the other turnover-related thresholds are not met. The draft guidelines deal with interesting issues, such as determining the consideration value (including which point in time is relevant and how to determine the value in case of earn-out clauses or other conditional or future payments), when domestic activity is considered as significant, including in digital markets and concerning R&D activities, as well as other questions. Silke Heinz has published a blog on the draft guidelines on Kluwer Competition Law Blog, see here.
The Bundeskartellamt (“BKartA”)has for the first time referred an ongoing cartel investigation to the European Commission within the framework of the network of European Competition Authorities (“ECN”) on April 27, 2018 (see here). The BKartA had inspected several metal packaging manufacturers in Germany in March 2015 following an anonymous tip-off, and has since then pursued national proceedings. It is an unusual step to refer a case after such a long duration of proceedings at national level. Typically, the case allocation within the ECN takes place at the beginning of an investigation. The BKartA gave the following reasons: (i) increasing evidence that the cartel was not limited to Germany but also concerned other EU Member States, and (ii) that several companies subject to the proceedings undertook internal restructuring prior to the new legal regime that took effect in mid-2017. To these restructuring measures the former legal rules would still apply, which might render sanctioning these companies impossible. This point refers to the so-called sausage gap in German competition law, which made fining of legal successors difficult or sometimes impossible. The new law provides for group liability and full liability of the “economic” successor of a cartel participant (i.e. not limited to the value of the cartel participant’s assets). Interestingly, the BKartA now seems to confirm that the contingent liability rules aimed at covering the interim period between old and new law would not apply to restructuring measures carried out prior to mid-2017 when the new law took effect. In light of this, the BKartA has indeed followed its announcement to refer sausage-gap-like scenario cases to Brussels. Silke Heinz is quoted on this step in the Global Competition Review, (see here).
The Federal Cartel Office announced on February 1, 2018, to launch a sector inquiry into online advertising (here).
This in line with the FCO’s focus on competitive conditions in the digital economy and big data. The FCO follows the French competition authority that started a separate online advertising sector inquiry in 2016 and has recently published its results. Silke Heinz has published a blog on the FCO’s sector inquiry and its background on Kluwer Competition Law Blog (see here).
We have already reported on the Bundeskartellamt’s press release on its preliminary assessment in the Facebook probe, see previous news item. Silke Heinz has now published a post on this topic on Kluwer Competition Law Blog, see here.
On December 19, 2017, the FCO has published a press release (here) and a background paper (here), outlining the preliminary assessment in the Facebook proceedings: Facebook is considered dominant in the German social media network market and to abuse its position through collecting and combining user data from third-party sources in a very broad way.
The allegations focus on collecting user data from third-party websites or Apps with a Facebook like button, even if the user does not click on it. The FCO finds that this practice infringes data protection laws, and Facebook’s general t&cs therefore violate the legal principles on general terms and conditions, which in turn qualifies as an abuse of dominance.
The fact that the FCO publishes a background paper pending proceedings is unusual. It may be explained by the great public interest in these proceedings, in which the FCO explores new territory. In addition, the FCO thereby puts some public pressure on Facebook. The proceedings raise the question whether antitrust law is the proper tool to tackle data protection law infringements. Silke Heinz is quoted on this in Global Competition Review, see here.
The Bundeskartellamt has published a background paper on innovation and related challenges in the antitrust law practice in October 2017, see here.
The paper covers economic and legal aspects of innovation across various areas of antitrust analysis, a hotly debated topic in recent months, notably after the European Commission’s Dow/DuPont merger decision. Silke Heinz has published a blog on the background paper on Kluwer Competition Law Blog, see here.
On July 24, 2017, the German FCO has published its sector inquiry report in cement and ready-mix concrete. The FCO’s sector inquiry deals with four main topics: divestitures of existing JVs in the market and the applicable criteria, joint bidding, potential price signaling and abusive practices. Roman Zagrosek has published a post on Kluwer Competition Law Blog, see here.
On July 26, 2017, Advocate General Wahl issued his opinion in the proceedings referred to the Court of Justice of the EU from Frankfurt’s Court of Appeals in case Coty vs. Parfümerie Akzente. The opinion confirms the Court’s longstanding jurisprudence that manufacturers of luxury goods can opt for selective distribution in order to protect a brand image and impose certain restrictions on authorized dealers. The opinion finds that the Court’s ruling in case Pierre Fabre has not changed this principle. In the case at hand, Wahl considers Coty’s prohibition for dealers to sell the luxury cosmetic goods via discernable third-party Internet platforms in principle as compatible with Article 101 TFEU. Wahl does not qualify the prohibition as a hardcore restriction, so that it can at least be exempted under the vertical group exemption regulation or individually under Article 101(3) TFEU. The opinion thus differs from the Bundeskartellamt’s position in similar questions. The Court of Justice now needs to rule. Silke Heinz is quoted on the opinion in Global Competion Review and by Bloomberg.
On July 13, 2017, the FCO imposed fines totaling € 9.6 million on three suppliers of heat shields for automotive engines and terminated the proceedings with settlements. The proceedings were triggered by a fourth company through a leniency application. Based on the FCO’s press release (see here in German), the case concerned exchange of sensitive information (i.a. on the status of negotiations with car manufacturer VW) as well as an agreement to pass on increased input material prices to VW in 2011. It seems that the infringement was limited in time to 2011, which may explain the relative moderate total fine amount. The FCO moreover took into account the cooperation of some of the companies and the settlements. Interestingly, it seems that the FCO also considered VW’s strong buyer power and the car manufacturer’s own conduct as mitigating factor when setting the fines. Silke Heinz is quoted on the case in Global Competition Review, see here.
On July 6, 2017, the Commission has opened two proceedings because of provision of incorrect or misleading information in merger control proceedings, i.e. against Merck (Merck/Sigma-Aldrich) and GE (GE/LM Wind). The allegation is that the companies did not or disclose too late information that was important for the assessment of the merger or the remedies package, respectively. At the same time, the Commission has opened proceedings against Canyon for possible gun jumping in the context of its acquisition of a Toshiba unit. This concerns in particular the structure of “parking” the target with an interim third party prior to the merger clearance. The parties in all three proceedings may face fines. Silke Heinz is quoted on these proceedings in Global Competition Review, see here .