We are pleased to present you with the forty-eighth instalment of the newsletter, which brings you interesting facts from the world of competition law for July and August 2024. Regular readers will know that this is a purely subjective selection of events that we found interesting this time.
Anyone who thinks that competition authorities take a break during the summer is mistaken. This is evidenced by our collection of resale price maintenance cases, examples of abuse of dominance in the sports and pharmaceutical sectors, and illustrative examples of competition law interventions in the labour market.
Sports federations and competition law
In July, the Italian Competition Authority fined La Federazione Italiana Giuoco Calcio (FIGC) €4.2 million for abuse of a dominant position in the organisation of (amateur) youth football competitions. According to the Competition Authority, the FIGC used its dominant position in the market for (professional) football competitions to strengthen its position in the market for the organisation of (amateur) youth competitions, where it competed with Enti di Promozione Sportiva, among others. For example, it failed to conclude the necessary contracts with competing associations for the organisation of competitions. It also introduced a rule requiring players under the age of 12 to obtain prior authorisation from the FIGC in order to take part in a competition.
Another sports association that came under the scrutiny of a competition authority was the Dublin and District Schoolboys’/Girls’ League (DDSL). The Irish Competition Authority was approached by parents who complained that the DDSL had made the registration of their children for the forthcoming season conditional on the child taking out accident insurance with the DDSL’s chosen insurer, even though the child already had accident insurance with another insurer. DDSL argued that the purpose of the common compulsory insurance was to ensure that all participating children had affordable insurance, regardless of their personal circumstances. This was accepted by the Competition Authority on the condition that DDSL should ensure better communication with parents in the future and select the insurance company through a transparent competition.
There is likely to be another sports case at EU level. The European football leagues and FIFPro Europe, the association representing professional footballers, have lodged a joint complaint with the European Commission (EC) against FIFA for abuse of a dominant position in relation to the international match calendar. According to the complaint, FIFA sets the match calendar without consulting national leagues and players, thereby favouring its own competitions and economic interests. In doing so, it harms the economic interests of the national leagues and the welfare of the players. In addition, the French, Italian and English players’ associations had previously brought an action against FIFA on the same grounds and asked the court to refer a preliminary question to the Court of Justice.
Resale price maintenance
Anyone expecting the competition authorities to refrain from punishing resale price maintenance, at least for the summer, was wrong.
The German Competition Authority fined communications and network equipment manufacturer AVM Computersysteme Vertriebs GmbH (otherwise known as FRITZ!) almost EUR 16 million for coordinating price increases between dealers and setting minimum (target) prices. The French competition authority then fined the French winery SAS Distribution du Domain d'Uby EUR 0.5 million for setting recommended (but in fact minimum) prices for wines and armagnacs for wholesalers to impose on their customers (i.e. restaurants and hotels). Another company sanctioned was a Portuguese supplier of heating and air-conditioning equipment which, in addition to setting resale prices, prohibited dealers from providing after-sales services outside the contract territory. The Portuguese Competition Authority imposed a fine of EUR 104,000.
Two other companies were accused of resale price maintenance during the summer: the Lithuanian Competition Authority sent a statement of objections to heat pump manufacturer Iglu Tech, suspecting it of resale price maintenance and setting maximum discounts for resellers. The Polish Competition Authority opened proceedings against Decora, a manufacturer of floor panels, for allegedly fixing minimum resale prices.
So what is the lesson here? Don't set fixed or minimum resale prices (or maximum discounts) for your dealers and distributors, and be careful how you communicate with them. We're happy to help you set up communication systems if you need it.
Avoid exchanging information with competitors
Previously, the mere exchange of commercially sensitive information (without further restrictions), except for the exchange of price information, was considered a prohibited agreement only if negative effects on competition could be demonstrated. The Court of Justice has reviewed its position and confirmed the EC’s new approach. According to the Banco BPN/BIC Português judgment, the mere exchange of any commercially sensitive information may constitute a by object anti-competitive agreement for which there is no need to assess its effects on the market. The banks exchanged information on the supply of retail credit products, in particular mortgages, consumer credit and business loans. According to the Court of Justice, any exchange of information is in principle restrictive of competition if it is likely to reduce the uncertainty of undertakings as to the future behaviour of the other undertakings participating in the exchange. In any event, any exchange of information on future intentions which have not yet been made public enables those undertakings to react more quickly than the normal functioning of the market concerned would allow.
Even competition authorities recognise that in some areas the exchange of certain information is necessary for the proper functioning of the market. However, in the light of recent developments in case law, greater care must be taken to ensure that information exchange systems are set up in such a way as to avoid the risk of intervention by the competition authority.
And again, the employees
And the trend towards competition authorities scrutinising agreements between employers continues - because they too can restrict competition.
In July, the EC opened formal proceedings against Delivery Hero and Glovo, both active in the online food ordering market, for agreeing not to hire staff. The agreement was supposed to be facilitated by Delivery Hero holding a minority stake in its competitor, Glovo, since 2018. The EC's main concern with no-poaching agreements is the distortion of a fair labour market, where employers do not limit the number and quality of job opportunities, but compete with each other for labour talent.
In July, the Czech Competition Authority announced that it had opened an administrative procedure concerning an agreement between competitors not to approach each other's employees with job offers and not to recruit each other's employees. Details are not yet known.
The Polish Competition Authority has also opened an investigation into an agreement between the supermarket chains Biedronka (Jerónimo Martins) and Dino and their transport companies not to recruit each other’s drivers. According to the Competition Authority, the agreement included that the transport company could not recruit a driver who had left another transport company serving the same distribution centre after the driver had unilaterally terminated his employment.
The Swiss Competition Authority took a different approach and issued a Best Practices manual after identifying potential competition problems in labour markets, rather than opening an administrative procedure. In a sector inquiry launched in 2022, it found, among other things, that at least 200 companies had exchanged information on wages, wage developments, benefits and other working conditions in various situations. The newly published Best Practices should therefore help employers navigate the labour market within the limits of competition rules.
Takeover of employees as a notifiable concentration?
Let's stay with employees for a moment. In the technology sector, some competition authorities consider mergers to be situations where employees are transferred from one company to another. In other words, in order to get its hands on the brains of a rival company, a technology company does not buy the rival company itself, but simply takes over its employees. No assets are transferred. And yet the competition authorities want to have their say.
In the summer, for example, the UK's Competition and Markets Authority investigated the employment of former Inflection AI employees by tech giant Microsoft. This involved a whole team working on a specific project. The two companies also entered into licensing agreements. According to the Competition Authority, the merger control regime is based on the transfer of assets and does not say what specific assets should be involved. This may be the case even if collective know-how is “transferred” in the form of employees. In the end, however, the Competition Authority found that the merger would not distort competition and cleared it.
In July, the EC also joined the investigation of the Microsoft/Inflection AI merger at the request of seven Member States (including the Netherlands) applying the so-called Dutch clause. However, in early September, the Court of Justice overturned the EC's decision in the Illumina/GRAIL merger, ruling that the EC does not have jurisdiction over mergers that do not meet the turnover criteria even in the Member States. The Dutch clause is not intended to be a remedy for situations where the merger does not meet the notification criteria anywhere in the European Union. Hence, the seven Member States withdrew their request to review the Microsoft/InflectionAI “merger” due to the lack of EC jurisdiction.
Don't denigrate your competitors
Denigration is an increasingly common anti-competitive practice – at least in the pharmaceutical sector. In July, the EC closed a case against the pharmaceutical company Vifor for abuse of a dominant position in the form of denigration. Vifor had been accused of spreading false information about Pharmacosmos' Monofer, which competes with Vifor's successful anaemia drug Ferinject. (We wrote about the opening of the case here.) The EC did not fine Vifor, but accepted its proposed commitments, in particular a comprehensive multi-channel communications campaign to remedy the effects of potentially misleading messages Vifor had previously disseminated about the safety of Monofer.
In August, Novartis received a statement of objections from the Greek competition authority for, among other things, disseminating denigrating statements and reports about competing medicines for eye diseases. In addition to denigrating its competitors, Novartis was also accused of abusing its dominant position through “naked restraints” – known from the Intel case – which again involved direct and indirect payments to doctors for not using competitors' medicines. In this case, the payments included travel to conferences, participation in epidemiological studies and other direct gifts.
