We present you the forty-ninth instalment of our newsletter bringing you interesting facts from the world of competition law. This time for September 2024. Regular readers know that this is a purely subjective selection of events that we found interesting.
September brought a number of interesting competition events, but blog space is limited. This time we have devoted more space to the activities of the Czech Competition Authority. We looked at merger control and assessed the competition risks of car sales. Surprisingly, we have no news on resale price maintenance this time. Is this a coincidence or a change of trend?
On the activities of the Czech Competition Authority
In September, the Czech Competition Authority completed an investigation into possible anticompetitive practices in the sugar market that could have led to a significant increase in sugar prices in 2022. The investigation followed a sector inquiry conducted by the Czech Competition Authority at a request from the Ministry of Agriculture (we reported on the results of the sector inquiry here). According to the Czech Competition Authority, the sector inquiry report indicated that anticompetitive practices could be taking place in the sugar market. However, on the basis of the subsequent investigation (which included, among other things, onsite inspections of selected undertakings), the Czech Competition Authority concluded that the increase in sugar prices was not the result of anticompetitive behaviour, but a combination of several factors – in particular, a sharp increase in input prices at all stages of the production, processing and marketing chain in 2022.
In September, the President of the Czech Competition Authority annulled the first-instance decision of the Czech Competition Authority on the fine imposed on BEKO for obstructing an onsite inspection. A year ago, the Czech Competition Authority imposed a fine of CZK 13.65 million on the electronic goods distributor for failing to block the email accounts of its agents (not employees) operating on the @beko.com domain so that they could not be manipulated during the investigation. The Chairman of the Czech Competition Authority accepted BEKO’s defence that it did not interpret the request to make the email accounts available to the Authority’s inspectors as a request to prevent manipulation, i.e. to block the email accounts. It acknowledged that although BEKO’s conduct may have had some elements of obstruction, it could not be considered unlawful because of the unclear instructions and the conduct of the inspectors themselves. In the words of the Chairman, “the inspectors allowed themselves to be dragged into a particular undertaking’s game and failed to manage the endgame.”
In September, the Czech Competition Authority also gained a seemingly minor power across the whole spectrum of its powers, but one that may have significant consequences for the Czech Competition Authority and especially for the undertakings under investigation: from 1 January 2025, it will have access to data collected by pricing authorities (including from undertakings) in the exercise of their powers (e.g., retailer margins). This may be useful for example when carrying out sectoral investigations, but also when investigating complaints, etc. Price authorities include the Ministry of Finance, the Ministry of Health, the State Institute for Drug Control, the Czech Trade Inspection Authority, the Energy Regulatory Office, the Czech Telecommunications Office, etc. Thus, the data collected by them is now available to the Office. It is good to keep this in mind when initially providing information.
Interesting facts from the world of mergers
The biggest sensation was undoubtedly the Court of Justice’s decision in Illumina v. GRAIL, which denied the European Commission (EC) jurisdiction over mergers that do not meet the turnover thresholds either at EU level or in individual Member States and therefore do not need to be notified anywhere in the EU (and are not at risk of being prohibited). According to the Court of Justice, the turnover thresholds used to determine whether or not a transaction must be notified are an important guarantee of predictability and legal certainty for the undertakings concerned. Therefore, according to the Court of Justice, the EC may not use the so-called Dutch clause as a backdoor to obtain the power to review otherwise non-notifiable concentrations. It is likely that the legislation will be amended to allow the EC to deal with risky mergers that are currently under its supervision. After all, the Czech Competition Authority is now also seeking to gain the power to review certain mergers that do not meet the turnover thresholds, as part of a forthcoming amendment to the Competition Act that is expected to come into force in the middle of next year.
The acquisition of Paramount’s Nickelodeon broadcast rights package by the German media group Bertelsmann, which also owns the children’s TV channel SuperRTL, was headed for a prohibition by the German Competition Authority. According to the German Competition Authority, the merger would have a negative impact on the market for film advertising aimed at children aged 3 to 13, as there are very few companies offering advertising space aimed at children. SuperRTL is currently the main player in the German market for advertising space for children. It is followed by Disney with Nickelodeon a distant second. Neither Netflix nor Amazon are currently active in the market for advertising aimed at children, and YouTube Kids does not yet have a significant market share. The acquisition of the Nickelodeon rights package would further strengthen SuperRTL's position. However, the Bertelsmann Group withdrew the notification as it backed out of the acquisition and thus avoided the prohibition.
Although the merger clearance procedure is not a sanctioning procedure, the parties are obliged to provide full information and may be fined if they fail to do so. In September, the UK Competition and Markets Authority fined sugar producer Tereos UK & Ireland GBP 25,000 (approximately EUR 30,000) for failing to provide relevant information in the merger proceedings on T&L Sugars’ acquisition of part of the Tereos business. The Authority requested Tereos to provide internal documents relating to the board of directors and corporate governance. Although Tereos replied to the request for information, the Competition Authority subsequently found that the reply was incomplete. Tereos had unjustifiably narrowed the scope of the requested documents in the context of the subject matter of the merger clearance procedure, which could have had a negative impact on the outcome of the merger assessment.
Risks of selling motor vehicles
The Austrian Competition Authority has imposed a fine of EUR 15 million on Peugeot Austria for abusing its dominant position in the sale of new cars and in the provision of maintenance and repair services. On the market for the sale of new cars, the prohibited conduct consisted in linking the payment of bonuses to dealers to an existing and effectively implemented system of customer satisfaction surveys, in reducing margins by deliberately setting excessive sales targets and in the application of very low sales prices (so-called predatory pricing) on the retail market by dealers in which Peugeot has a majority shareholding. On the market for maintenance and repair services, the abuse consisted in obliging repairers to carry out warranty and post-warranty work under conditions imposed by Peugeot, in particular a costly inspection system, and the handling of warranty and post-warranty orders at hourly rates that did not cover costs and the reimbursement of spare parts below their actual cost.
The Polish Competition Authority has fined Iveco Poland and ten truck dealers PLN 238 million (approx. EUR 54.7 million) for a cartel agreement in the sale of trucks. Ten managers were also fined a total of PLN 2.5 million (approx. 574,780 EUR), with the largest fine being PLN 490,000 (approx. EUR 112,653). The cartel consisted of market sharing: dealers were allocated territories, and if a customer from another territory contacted the dealer, the dealer would refer the customer to the dealer from that territory or make an unfavourable offer to the customer. Dealers also exchanged information on price offers to individual customers. This was coordinated by Iveco, which intervened if dealers did not comply with the rules.
Selected highlights from the competition life of tech giants
In September, the Court of Justice ruled on price parity clauses (also known as MFN clauses) invoked by Booking.com. According to the Court of Justice, these clauses – whether broad (covering offers on hotel and third-party websites) or narrow (covering only hotel websites) – do not appear to be objectively necessary for the exercise of Booking.com’s core business, i.e. an online accommodation booking service. Nor, according to the Court, are they proportionate to the objective of preventing free-riding by other booking platforms. The Court of Justice therefore found that the clauses were liable to restrict competition between online booking platforms.
In September, the General Court upheld a fine imposed by the EC on Qualcomm for predatory pricing. According to the EC, Qualcomm abused its dominant position by selling its Universal Mobile Telecommunications System (UMTS) baseband chips at below-cost prices to two strategic customers, Huawei and ZTE. In doing so, it sought to drive its competitor Icera out of the market. The General Court held, inter alia, that in assessing whether a dominant undertaking has engaged in predatory pricing, the EC is not required to consider whether the market share affected by the conduct in question is sufficiently large to give rise to anticompetitive effects.
Also in September, Advocate General Medina issued his opinion in the Google Android Auto case. Google should have prevented ENEL X Italia from developing a version of its JuicePass car charging management app for Android Auto. According to the Advocate General, it is an abuse of a dominant position to exclude, prevent or delay access to a platform (in this case Android Auto) for an application developed by a third party when such conduct is likely to have anticompetitive effects to the detriment of consumers and is not objectively justified.
