The next instalment of our information service brings you interesting news from the world of competition law. This time, we have selected decisions and events that show the current priorities of European competition authorities and their practical impact on businesses.
The new year has brought a wide range of decisions by competition authorities across Europe. These confirm that competition rules affect everyday business operations and can turn seemingly normal business practices into a source of significant penalties. The following overview summarises the main topics that deserve attention, such as joint bids in tenders, agreements on labour markets and restrictions on resellers.
Beware of appeals after settlement
The Czech Competition Authority has re-imposed fines exceeding CZK 11 million on Taxi Praha and FIX for a cartel agreement concerning taxi services at Václav Havel Airport. The companies coordinated their business activities, unified their service offerings, harmonised prices and exchanged sensitive information. In the first-instance decision, the companies were granted a discount on the fine for settlement and for introducing and strengthening their compliance programme. However, these benefits were not retained in the new decision because the companies appealed against the first-instance decision.
This case shows that the Czech Competition Authority considers a reduction in fines to be consideration for the quick and effective termination of proceedings without further procedural defence. By filing an appeal, this purpose of the settlement is effectively nullified, and the company may lose the benefit granted. Therefore, if you settle with the competition authority and obtain a reduction in the fine, its benefits may be lost as a result of a subsequent appeal. Unfortunately, this approach effectively prevents independent verification of the legality of the originally imposed fine, although this requirement should not be waived even in the context of a settlement.
Joint bids in public procurement: the risk of bid rigging
The Finnish Supreme Administrative Court upheld fines of EUR 1.535 million on bus companies that submitted joint bids in public transport tenders, even though, according to the court, they had an actual opportunity to compete for contracts independently. The court concluded that such cooperation was capable of restricting price competition and was aimed at maintaining or increasing market shares, as the joint bid was not objectively necessary for participation in the tender procedure under the circumstances and replaced independent competitive behaviour with coordinated action between direct competitors.
This case confirms that joint bids by competing undertakings are often problematic if those undertakings could have submitted bids independently. An exception can only be considered if it can be demonstrated that the efficiency gains outweigh the harm caused by the restriction of competition and that both the contracting authority and end users benefit from them. The burden of proof lies with the company invoking these benefits, which complicates the situation. When a company is considering a joint bid with a competitor, it is therefore essential to carefully document the impossibility of separate participation and the specific benefits of the intended cooperation.
Labour markets: competition authorities continue to penalise no-poaching agreements
The Romanian Competition Authority imposed fines totalling approximately EUR 32.15 million on eight companies for agreeing to divide up the labour market in the automotive industry. The companies agreed not to compete for skilled workers and not to hire employees without the consent of a competitor. These so-called no-poaching agreements are the first sanctioned case of their kind in Romania, with the investigation launched following a report through a whistleblowing platform.
The Italian Competition Authority is also investigating possible cartel behaviour in the recruitment of specialised workers in the field of automated packaging machine validation, also based on a whistleblowing tip-off.
Competition for labour is increasingly seen as an integral part of competition and therefore as an area subject to competition law regulation. Dissatisfied employees are becoming an important source of information for competition authorities, which are increasingly using whistleblowing tools for this purpose; the Czech Competition Authority now also has its own platform. In some countries, whistleblowers can be rewarded for information leading to the discovery of a cartel. Such a tool is available to the Slovak Competition Authority and, since last summer, also to the US Department of Justice's Antitrust Division.
Vertical restrictions: price fixing and restrictions on online sales
Competition authorities continue to consistently penalise resale price maintenance (RPM).
The Czech Competition Authority fined Elberry CZK 767,000 for setting minimum retail prices for electrical appliances, monitoring compliance with them and exerting pressure to increase them. The Polish Competition Authority sanctioned bathroom equipment distributor Oltens for imposing minimum prices on online retailers, which prevented cheaper online purchases.
However, competition authorities are also increasingly focusing their attention on restricting online sales, which are protected as a key distribution channel. The Romanian Competition Authority fined Thelios EUR 915,068 for prohibiting its business partner from selling luxury eyewear online, thereby reducing competitive pressure in the online environment.
The Spanish Competition Authority then imposed a fine of EUR 1.2 million on I.C.O.N., mainly for a set of measures restricting online distribution, including a ban on sales on internet platforms such as Amazon, restrictions on discounts and promotions, and monitoring of distributors’ pricing behaviour, which together prevented effective competition in the online channel.
Decision-making practice confirms that absolute or disproportionate restrictions on online sales constitute a high-risk restriction of distribution from a competition law perspective.
Abuse of dominant position: exclusivity and predatory pricing
The Swiss Competition Authority imposed a fine of approximately CHF 50,000 on Aktiengesellschaft Hallenstadion Zürich (AGH) and a fine of approximately CHF 65,000 on Ticketcorner for a 2008 cooperation agreement under which the AGH concert hall was only rented to organisers who distributed at least 50% of tickets through Ticketcorner. Given the dominant position of the hall in the market for large concert venues on the one hand and the dominant position of Ticketcorner in the field of ticketing on the other, this constituted an abuse of the dominant position of both companies.
The case serves as a reminder that exclusive distribution or sales conditions between dominant companies may be considered exclusionary practices if they restrict competitors’ access to important infrastructure or customers.
Conversely, the Lithuanian Competition Council did not initiate an investigation into the possible abuse of a dominant position by the postal company Lietuvos paštas in its participation in a public tender, even though part of the services were offered at a price of EUR 0. It concluded that a low or zero price alone, without evidence of systematic behaviour and a significant impact on competition, does not constitute predatory conduct, especially if it was an isolated case and the company is planning to adjust its pricing policy.
It seems that even in the case of dominant companies, the decisive factor for intervention by the competition authority may be the actual impact on competition and enforcement priorities, rather than the aggressive pricing strategy itself.
