In an interview with MLex on 5 July 2021, Olivier Guersent, top official at the European Commission, said that the Commission will not soften its approach in the medium or long term because of Covid-19.[1]
During the pandemic, there was a special regime of subsidies and bailouts that allowed governments to put vulnerable industries on life support, and merger control slowed down. Now, the European Commission is thinking about how to move beyond this special regime. The normal application of competition law will be crucial to ensuring that Europe’s economies recover fully from the crisis, says Guersent.
About the “failing firm” provision, for example, Guersent says that this is a valid defence, adding however that the Commission will continue to insist on a high standard of proof.
The merger rules will not change as there is no consensus for changing the rulebook in either direction. Different standards will not be applied. But new rules might be needed for entrenched markets.
As regards cartel enforcement, the Commission is working on new techniques to better identify, detect and prosecute cartels. It is also working on the efficiency of the Leniency Notice. However, raids will continue to be carried out.
[1] MLex, ‘No competition enforcement let-up as Europe exits pandemic, Guersent says’, 5 July 2021.
On 13 July 2021, the German Federal Court of Justice, the Bundesgerichtshof (BGH), upheld a model for collecting mass claims.[1] The decision is a breakthrough for the possibility of collective redress in Germany. This applies not only, but in particular, to cartel damage claims. With this decision, the BGH anticipated the upcoming reform act for class actions that is still to enter into force. Importantly, the BGH did not see a significantly increased risk of unqualified legal services in the model for mass claims. In addition, the BGH clarified that the model for mass claims does not lead to conflicts of interest. This is because they all have a common interest in the most efficient implementation possible. The BGH concluded that there are risks related to the different degree of likelihood of execution of claims when these are combined in a group arrangement. Claims that have a lower likelihood of execution could adversely affect claims that have a higher likelihood of execution. The BGH nevertheless ruled that the advantages of sharing the cost risks and strengthening the negotiating position outweigh these possible risks.
Although the decision of the BGH related to a somewhat special scenario (enforcement of claims against the former director of an insolvent company), its relevance goes far beyond the collection of claims related to insolvent companies. Claims for damages due to cartel formation have often been the frontrunners in shaping the legal landscape for collective redress in Germany. Many leading cases, such as the well-known CDC cases (“Cartel Damages Claims”) before the Court of Appeal of Düsseldorf and the European Court of Justice related to claims due to cartel formation.
On 12 July 2021, Cargolux brought an action against the European Commission before the General Court of the EU for the recovery of unpaid interest following annulment of the antitrust fine imposed on the airline. Cargolux is claiming more than 8 million euros in interest.[1]
In support of its application, the applicant puts forward two pleas:
- First plea in law, alleging that the contested decision notified by the letter of 30 April 2021 is vitiated by an error of law and must be annulled in full pursuant to Article 263 TFEU. The applicant alleges that the contested decision incorrectly asserts that Cargolux’s request of 2 February 2021 for payment of the Default Interest Amount Payable and the Compound Interest Amount Payable is time-barred and inadmissible.
- Second plea in law, alleging that the Commission’s breach of the first paragraph of Article 266 TFEU renders the Union non-contractually liable to pay compensation equal to the Default Interest Amount Payable and the Compound Interest Amount Payable to Cargolux, pursuant to the second paragraph of Article 266 TFEU, Article 268 TFEU and the second paragraph of Article 340 TFEU.
Several banks fined by the EC in May 2021 for participation in a European government bond trading cartel (which we reported on in Q2) filed appeals against the EC’s decision with the EU General Court. UBS, Bank of America, Portigon, Nomura, Unicredit and Natixis have started legal proceedings against the fines. That means that only the whistleblower bank NatWest has not appealed the fine. All banks declined to comment on their challenge nor did they reply to requests for comments.[1]
[1] Case references are T-449/21 Natixis v Commission, T-453/21 UniCredit v Commission, and T-455/21 Nomura v Commission.
On 8 July 2021, the European Commission published a press release stating that the EC has found that Daimler, BMW and Volkswagen group (Volkswagen, Audi and Porsche) breached EU antitrust rules by colluding on technical development in the area of nitrogen oxide cleaning in the period between 25 June 2009 and 1 October 2014.[1] The Commission has imposed a fine of €875,189,000. Daimler was not fined, as it had revealed the existence of the cartel to the Commission. All parties acknowledged their involvement in the cartel and agreed to settle the case. This is the first time that the Commission concluded that collusion on technical development amounts to a cartel.
The five car manufacturers possessed the technology to reduce harmful emissions beyond what was legally required under EU emission standards. But they avoided to compete on using this technology’s full potential to clean better than what is required by law. Instead, they held regular technical meetings to discuss the development of the selective catalytic reduction (SCR) technology which eliminates harmful nitrogen oxide (NOx) emissions from diesel passenger cars through the injection of urea (also called “AdBlue”) into the exhaust gas stream. They also removed the uncertainty about their future market conduct concerning NOx emissions cleaning beyond and above the legal requirements (so-called “over-fulfilment”) and AdBlue-refill ranges. This means that they restricted competition on product characteristics relevant for the customers.
The conduct of the five car manufacturers constitutes an infringement by object in the form of a limitation of technical development under Article 101(1)(b) of the Treaty and Article 53(1)(b) of the EEA Agreement.
[1] European Commission, “Antitrust: Commission fines car manufacturers €875 million for restricting competition in emission cleaning for new diesel passenger cars”, 8 July 2021, https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3581.
According to the CMA’s preliminary findings, Pfizer Ltd. and Flynn Ltd. abused their dominant position by charging the NHS unfair prices for four years for phenytoin sodium capsules, an anti-epilepsy drug. [1]
In the CMA’s opinion, the companies used a legal loophole by de-branding the drug, with the effect that the drug was not subject to price regulation in the way branded drugs are.
The companies Pfizer Ltd. and Flynn Ltd. can respond to these preliminary findings in the Statement of Objections. After studying these objections, the CMA must decide whether they have broken the law.
[1] CMA press release, ‘CMA accuses pharma firms of illegal pricing’, 5 August 2021.
The CMA imposed fines of more than £100 million on Advanz Ltd. after it had excessively inflated the price of thyroid tablets for more than eight years, to the detriment of patients and the National Health Service (NHS).[1]
A previous investigation by the CMA reveals that in the period from 2009 to 2017, Advanz Ltd. charged unfair prices for the supply of liothyronine tablets used to treat thyroid hormone deficiency. Advanz Ltd. was able to do so because there was little or no competition in the sale of liothyronine tablets. The investigation was part of the CMA’s ongoing work in the pharmaceutical sector.
[1] CMA press release, ‘CMA fines pharma firm over pricing of crucial thyroid drug’, 29 July 2021.
On 15 July 2021, the CMA announced that it had imposed fines totalling more than £260 million on various pharmaceutical firms, for competition law breaches in relation to the supply of hydrocortisone tablets for which they charged excessive and unfair prices to the National Health Service (NHS). The CMA’s decision also entails that the NHS may claim damages for the conduct of the companies.[1]
The CMA had previously conducted an investigation into the conduct of these pharmaceutical companies, which revealed that Auden Mckenzie Ltd. and Actavis UK Ltd. (now known as Accord-UK Ltd.) had been massively overcharging the NHS for hydrocortisone tablets for nearly ten years. These pharmaceutical companies also abused their dominant position by paying two potential competitors, Waymade PLC and AMCo Ltd. (now known as Advanz Pharma Services Ltd.), not to enter the market.
[1] CMA press release, ‘CMA finds drug companies overcharged NHS, 15 July 2021.
On 17 August 2021, the Bundeskartellamt imposed a fine totalling around 2 million euros on Fond Of GmbH, Cologne, on account of vertical price fixing.[1] The President of the Bundeskartellamt stated that Fond Of set minimum prices for its school backpacks and school bags and made sure that the retailers involved would not undercut these prices. Fond Of GmbH as well as the retailers involved monitored compliance with the prices and rules for online sales at regular intervals and called on retailers to comply with these. In setting the fine, the Bundeskartellamt took into account that the company had cooperated extensively with the authority.
[1] Bundeskartellamt press release, ‘Bundeskartellamt imposes fine on the Cologne-based company Fond Of GmbH’, 17 August 2021.
On 5 August 2021, the Bundeskartellamt announced that it had imposed fines totalling approximately 21 million euros on three manufacturers and two retailers of musical instruments and on staff responsible, as they are accused of resale price maintenance (manufacturers and retailers) and of agreeing on horizontal price-fixing (retailers).[1] The manufacturers are Yamaha Music Europe GmbH, Roland Germany GmbH, and Fender Musical Instruments GmbH. The retailers are Thomann GmbH and MUSIC STORE professional GmbH. In setting the fine, the Bundeskartellamt took into account that the parties involved had cooperated extensively with the authority in uncovering the agreements and that a settlement could be reached.
[1] Bundeskartellamt press release, ‘Bundeskartellamt imposes fines on manufacturers and retailers of musical instruments’, 5 August 2021.
