Competition Law Update: August 2016
Published on 18th Aug 2016
Although we are in August, competition law in Europe has not yet taken a break. The last month has seen a record fine of €2.93 billion on truck manufacturers for a cartel that the European Commission estimates covered 90% of the market. It is no surprise that many companies affected by the cartel have already contacted lawyers, including Osborne Clarke’s teams across Europe, and that claims are on the cards in a number of EU jurisdictions.
Demonstrating that this type of competition litigation can be fruitful, Sainsbury’s has been awarded £68.6 million in damages, plus interest, following its successful UK claim against MasterCard. This case has important implications for the “passing on” defence and is just one of a number of damages claims which MasterCard is currently defending.
This is not the only development in the payments sector. The rapid growth of alternative payments services and the need for access to infrastructure has made competition law a key focus in this area. In Germany, the FCO has brought an action against terms and conditions commonly used by German banks, arguing that they restrict the development of alternative payment services providers. In the UK, the Payments Services Regulator is also seeking to promote the development of alternative competition, publishing a detailed report on potential issues in the ways in which banks, building societies and other payment service providers gain access to the main interbank payment systems.
Across Europe, the authorities continue to make use of settlements to reach speedier resolutions of competition cases. The European Commission has finalised Paramount’s commitments in the Pay TV case and France has reached its first settlement under new rules. Both these cases relate to vertical agreements, also demonstrating the significant shift in focus towards vertical cases, particularly in the digital economy. Notable cases this month include the German FCO’s action against LEGO and the CJEU’s decision that royalty agreements are not anti-competitive where the patent is no longer valid. Find out more about these developments below.
Please do contact our experts to discuss any of the issues raised in this Update.
Record fine of €2.93 billion in EU truck cartel
The EU Commission has handed down record fines to truck manufacturers who fixed prices of trucks and delayed the release of new technology for more than a decade. The cartel controlled some 90% the market meaning there is a likelihood of substantial follow on claims from businesses who may have suffered losses.
MasterCard ordered to pay Sainsbury’s £68.6 million damages
This judgment is an important development in competition law damages jurisprudence. For third parties harmed by infringing conduct, it demonstrates that significant damages can be achieved by bringing private enforcement action through courts.
The judgment also illustrates that considerable economic evidence is likely to be required to establish the “pass on” defence that the direct customers passed on the increased costs to their downstream customers. In general terms, this is good news for claims by direct purchasers and bad news for claims by indirect purchasers.
Online vs. high street discounts: German Federal Cartel Office forces LEGO to change its rebate scheme
The German Federal Cartel Office initiated proceedings against LEGO for restrictions on online discounts after receiving complaints of discrimination against online sales. LEGO has since altered its discount system so that the maximum discounts are available both in high street stores and through online retailers. As a result the FCO has terminated proceedings but the case acts as a reminder that there is significant importance placed on equality between online and offline sales criteria.
Pay-TV investigation: European Commission makes commitments binding on Paramount
As we reported in April, Paramount surprised commentators by offering commitments in the long-running Pay-TV investigation. As these commitments become legally binding, Zoë Hare considers the implications for the defendants still fighting.
PSR final report: market review into the supply of indirect access to payment systems
Following its year-long review, the Payment Services Regulator (PSR) published a report on its market review into the supply of indirect access to payment systems. The report, published 21 July 2016, looked at the ways in which banks, building societies and other payment service providers gain access to the main interbank payment systems.
Having identified that access can be either direct or indirect, the PSR has concerns about the limited choice, barriers to switching provider and the quality of service associated with indirect access.
German Federal Cartel Office backs online payment services
The German Federal Cartel Office decides that the terms and conditions used by many German banks restrict competition, by limiting the access to consumers’ security data by alternative service providers. As the Deutsche Kreditwirtschaft appeals this decision on the grounds of financial security, our German team provides commentary on the FCO’s investigation.
French Competition Authority hands down first precedent under new settlement procedure
The French Competition Authority (FCA) has fined German consumer goods company Henkel approximately €615,000 for the unlawful implementation of exclusive import contracts between itself and its wholesaler-importers.
The case is the first to be dealt with under the FCA’s new settlement procedure, which allows a company to apply for a reduction in the fine for anti-competitive behaviour on condition that it agrees not to challenge the FCA’s formal settlement objections. The new procedure departs from the previous regime by providing minimum and maximum penalties, thereby clarifying the liability of a potentially infringing company.
Royalty payment clauses generally enforceable despite invalidity of the associated patent
As a result of a dispute over royalty payments between Genentech and Hoechst, the question has arisen over whether royalty payment obligations under a licence agreement can survive an invalid or expired patent. The CJEU has ruled that an obligation to pay royalties must be adhered to even where no valid patent exists.
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Osborne Clarke’s Simon Neill and Rebecca Malone write for Cecile Park Publications – available here to CCP subscribers now and on OC.com from 31 August. For more information on the potential implications of Brexit for your business, click here.
