The Netherlands

A. T-Mobile Netherlands May Acquire Simpel.

On Nov. 17, 2020, the Netherlands Authority for Consumers and Markets (ACM) cleared the acquisition of telecom operator Simpel by rival operator T-Mobile Netherlands (T-Mobile). Over its fixed and mobile networks, T-Mobile offers consumers various services, such as telephony, broadband access, and television. Simpel sells mobile-telecom services, such as sim-only plans for mobile phones. For its mobile-telecom services, Simpel uses T-Mobile’s network, as do several other operators.

ACM’s investigation has shown that this acquisition does not create any anticompetitive concerns, as it will not have a significant impact on the competitive landscape in the market for mobile-telecom services. The investigation has also shown that, after the acquisition, T-Mobile will continue to face sufficient competition from telecom operators KPN, VodafoneZiggo, and various telecom operators without networks of their own.

ACM has also assessed whether, after the acquisition, telecom operators with mobile networks of their own will continue to have the incentive to offer access to telecom operators without networks of their own. ACM’s investigation has shown that, after the acquisition, telecom operators with their own networks continue to have sufficient incentives to offer wholesale access to their networks. This acquisition of an operator without a its own network by an operator with its own network hardly changes this.

United Kingdom

A. UK Competition Law Post-Brexit

EU law will cease to apply in the UK on Jan. 1, 2021.1 At the time of writing this newsletter, there is still no agreement between the EU and UK on the terms of their future relationship. However, it is clear that, starting on Jan. 1, 2021, the UK competition regime will operate separately from the EU competition regime, with the following impacts on businesses. 

1.        Mergers and acquisitions.

The one-stop shop created by the EU Merger Regulation (EUMR), providing a single merger clearance decision for the whole of the EU, will no longer apply in the UK. Businesses contemplating mergers affecting the UK and qualifying for investigation under both the EUMR and the UK Enterprise Act will have to prepare for the possibility of parallel UK and EU merger investigations. The only exception will be the few cases where the European Commission has already started to investigate a merger that also qualified for investigation under the UK regime. In those cases, the UK Competition and Markets Authority (CMA) will not start an investigation. Instead, the Commission will continue with its investigation of the UK as well as EU impact of the merger, and its decision, even if issued after Dec. 31, 2020, will be binding in relation to the UK as well as in relation to the remaining 27 EU Member States. In the meantime, the CMA has published proposals to update its jurisdictional guidance for 2021.

2.        Agreements.

Agreements that have an impact on trade and competition in the UK as well as in the EU will no longer be subject to EU competition law as far as their UK impact is concerned – only UK competition law will apply. In practice, at least initially, Brexit is unlikely to change significantly the basis on which these types of agreements are analyzed for competition law compliance, since the principles that underpin both EU and UK rules relating to anti-competitive agreements are similar. Consequently, the drafting of these agreements should not need to change fundamentally. However, in the longer term, the two regimes may diverge.

3.        Firms with market power.

The terms on which firms with market power do business in the UK will be subject to UK competition rules relating to abuse of market dominance. Where those firms also operate in the EU, the EU rules on market dominance will apply. Here too, the UK and EU principles are similar, and there is unlikely to be a fundamental change in analysis between the two separate jurisdictions initially, with the possibility of divergence in the longer term.

4.        Investigations of agreements and conduct.

Businesses operating anti-competitive agreements, or abusing a position of market dominance, in the UK may be investigated by the CMA. There is a risk of parallel UK/EU investigations where the agreement or abusive conduct in question impacts on competition and trade in both the UK (investigation by the CMA) and the EU (investigation by the European Commission). However, from Jan. 1, 2021, the Commission will not have jurisdiction to conduct “dawn raids” at those businesses’ UK premises.

5.        State aid.

From Jan. 1, 2021, the UK will no longer be subject to the EU rules on state aid. The UK government has developed proposals for the UK’s own state aid regime, but these may not become law until later in 2021.

B. National Security and Foreign Investment

On Nov. 12, 2020, the UK published proposals for a substantially stricter and more comprehensive system for controlling transactions and acquisitions of assets that have the potential to impact on UK national security. These proposals include mandatory filing and clearance in advance of completing a transaction that falls within its scope. The consultation on these proposals ends on Jan. 6, 2021. 

Poland

A. Potential impact of recent Nord Stream 2 decision on UOKiK review of joint ventures.

In November 2020, we reported that the president of the Polish Competition Authority (UOKiK) imposed a record-breaking fine of over PLN 29 billion (approx. EUR 6,5 billion, USD 7.6 billion) on Gazprom (the Russian gas giant), and over PLN 234 million (approx. EUR 51 million or USD 61 billion) in total, on five other entities involved in the construction of the Nord Stream 2 gas pipeline without UOKiK merger clearance. In November, the full text of UOKiK’s decision was published. The decision sheds light on UOKiK’s reasoning in the case and provides guidelines on how UOKiK may potentially consider similar cases in the future.

According to the Polish Act on Competition and Consumer Protection (Competition Act) the creation of a joint entrepreneur by other entrepreneurs is subject to merger control notification (if the relevant turnover thresholds are met). To date, in practice, the creation of a joint entrepreneur has been typically associated with the acquisition of shares in such entrepreneur. In the Nord Stream 2 case, the parties argued that a shareholding participation is necessary in order to establish the creation of a joint entrepreneur. The parties, however, did not acquire shares in the new entrepreneur but instead signed agreements for the financing of the pipeline with such entrepreneur. According to UOKiK, such action constitutes circumvention of the merger clearance obligation because, in particular:

1. irrespective of whether the parties acquired shares in the company or signed the financing agreements, the parties have the same common business goal: financing the construction of the pipeline;

2. each of the parties took an economic risk, as they potentially could lose the funds that they lent.

UOKiK also stated that the parties had secured the financing agreements with an option to convert the loan into shares in the company. Finally, according to UOKiK, despite the parties deciding to change the form of cooperation (from the acquisition of shares in the new company to cooperation on the basis of financing agreements), a joint entrepreneur was created. Such reasoning may impact how UOKiK considers contractual joint ventures, i.e., cooperation between entrepreneurs without the creation of a separate company in which the parties hold shares.

B. UOKiK’s recent activities in the field of anticompetitive agreements.

In November 2020, UOKiK announced that it had launched explanatory proceedings in order to investigate whether pharmaceutical wholesalers exchange commercial data, including information on prices. According to UOKiK’s information, this could be achieved by special software used by wholesalers that allows them to check the prices applied by their competitors. UOKiK conducted dawn raids on the wholesalers’ premises and the software providers. UOKiK will investigate whether the software could have been used for the purpose of an anticompetitive agreement.

Earlier in November, UOKiK announced it had fined Yamaha Music Europe for resale price maintenance. The fine seems low (approx. PLN 0.5 million, which is approx. EUR 113 000 or USD 139 000), taking into account that the infringement lasted for 13 years. UOKiK indicated, however, that the fine would have been significantly higher, but Yamaha cooperated with UOKiK within the leniency program and voluntarily submitted to the penalty.

C. Interchange fee saga continues: 14 years after the UOKiK decision was issued, the case returns to the Court of First Instance.

On Nov. 21, 2020, the Court of Appeal delivered a ruling repealing the judgment of the District Court of Competition and Consumer Protection (SOKiK) and referring the case back to that court (Court of First Instance). The Court of Appeal’s judgment concerns UOKiK’s unprecedented decision issued in December 2006 against 20 banks for concluding an anticompetitive agreement pertaining to setting fees for transactions carried out using Visa and Mastercard payment cards. As a result of the decision, a PLN 164 million fine was imposed on the banks. Since UOKiK issued the decision, the case has gone through all instances of the Polish judicial system (including the Supreme Court) – some instances several times.

In the oral justification of its judgment, the Court of Appeal reiterated the Supreme Court’s Feb. 6, 2019, position (no. III SK 38/16) that the agreement in question does not restrict competition by its very nature and therefore its effects should have been thoroughly analyzed. SOKiK will need to consider both the anticompetitive and the procompetitive effects of the agreement, bearing in mind these effects can appear either horizontally or vertically, or both, as compared to the relevant market of the agreement. It has been emphasized by the Court of Appeal that the motions to permit evidence for the exemption of the concerned agreement from the laws prohibiting illegal agreements were rejected unjustifiably and need to be reconsidered. Also, due to ownership changes that took place with respect to certain banks, SOKiK should decide which entity is liable under the potentially anticompetitive agreement.

Italy

A. Italian Competition Authority (ICA)

1.    ICA opens investigation into ANIA.

On Nov. 16, 2020, the ICA opened an investigation into the National Association of Insurance Companies (ANIA). The investigation stems from a communication sent by ANIA to the ICA concerning an “anti-fraud project” in the life (pure risk) and non-life sectors; the communication provides, among other things, for the creation of databases and the development of common algorithms to determine fraud risk indicators that insurance companies could use in both the liquidation and hiring phases.

The ICA considers that, as currently designed, ANIA’s “anti-fraud project” presents a number of critical competition issues. In particular, the preliminary assessment showed the risk that – since the project is developed by an association representing the interests of insurance companies – there are insufficient guarantees from third parties such that the anti-fraud activity can actually be carried out for the benefit of all stakeholders. ICA will also assess whether and to what extent the exchange of information inherent in the project and useful to its success could cause an artificial increase in transparency in the markets concerned, facilitating collusion between competitors. With regard to this issue, the development of common algorithms and the sharing of a large amount of data could influence and standardize the choices of companies in important phases of the insurance business.

2.   The ICA fines the consortium Corepla for abuse of dominant position.

Specifically, the ICA found that Corepla implemented a structured strategy with a view to hampering its competitor Coripet, a consortium involving the producers of plastic bottles for food liquids, formerly belonging to Corepla. Coripet was authorized in 2018 by the Italian Ministry of the Environment to participate in an innovative project for pet bottle recovery and recycling. The ICA’s investigation revealed that Corepla used abusive tactics in order to prevent Coripet from executing the aforesaid project, thus distorting competition, impeding innovation in the services related to recovery and recycling of pet bottles for food use, and hindering the competitive dynamics provided for by the Consolidated Environmental Law. Before issuing the 27 million euros fine, the ICA adopted interim measures for the timely elimination of Corepla’s exclusive claims on materials derived from urban waste sorting.On Nov. 10, 2020, the ICA published its decision fining the plastic supply chain consortium Corepla for having abused of its dominant position on the Italian market for services aimed at the recycling and recovery of PET bottles for food use. The bottles are offered to producers to comply with relevant environmental obligations.

3.   ICA opens investigation into Benetton for abuse of economic dominance.

On Nov. 25, 2020, the ICA opened an investigation against Benetton, a leading player in the clothing market, relating to an alleged abuse of economic dependence against a franchisee. In Italy, the ICA can open investigations into businesses that abuse bargaining power with respect to other businesses that are placed in a situation of economic dependence.

According to the ICA, the franchisee was economically dependent on Benetton because the former was contractually obliged to establish an organizational structure tailored to the franchisor’s needs. Therefore, the franchisee’s ability to reconvert its business or switch to other commercial partners was significantly hindered. Therefore, the ICA found that certain clauses of the franchising agreement enabled Benetton to determine the purchase orders, with regard to both quantities and timing, thus influencing the activity of the franchisee, which was de facto unable to exercise its business autonomously.

Given Benetton’s leading position in the clothing market, the ICA considered that the issue affects competition in the interested market rather than just the specific contractual relationship. In this respect, the ICA stressed that the use of similar contractual arrangements by an operator managing a large franchising network may affect all the undertakings which are part of such network, to the detriment of competition in the relevant market.

European Union

A. European Commission

The European Commission (the Commission) has recently taken a significant step towards revising Vertical Block Exemption Rule (VBER), which provides a safe harbor for specific types of vertical agreements by exempting those agreements from the cartel prohibition. The revised VBER may have far-reaching implications for businesses starting in mid-2022, when it will enter into force. On Oct. 23, 2020, the Commission published its “Inception Impact Assessment,” providing its plans to reform the VBER together with the vertical guidelines to address the problems identified during the VBER evaluation, which was published Sept. 8, 2020.

B. Court of Justice brings proceedings against online hotel booking platforms.

On Nov. 24, 2020, the Court of Justice ruled in Case C-59/19 re Wikingerhof that a hotel using the platform Booking.com may, in principle, bring proceedings against Booking.com before a court of the Member State in which that hotel is established in order to bring to an end a possible abuse of a dominant position. Even though the practices which are the subject of complaint are implemented within the context of a contractual relationship, the rule of special jurisdiction in matters relating to tort, delict, or quasi-delict laid down in the Brussels Ia Regulation is applicable to them.

C. According to AG Tanchev, the CJEU should dismiss the appeal brought by the Commission against the General Court’s judgment in the Tercas case.

By judgment of March 19, 2019, the General Court annulled an earlier Commission decision that held certain measures (both a financial contribution and guarantees) granted by the Italian deposit guarantee fund (FITD) to an Italian bank, Banca Tercas, were incompatible aid. Notably, the GC found that the measures at issue did not qualify as State aid because they did not entail the use of State resources and were not imputable to the State. The Commission appealed such judgment before the CJEU.

In its Oct. 29, 2020, opinion, AG Tanchev dismissed the Commission’s argument that the GC set a higher standard of proof for demonstrating that a measure was imputable to the State where that measure was granted by a private entity – such as FITD, a consortium of Italian banks governed by private law – rather than by a public undertaking. Conversely, according to the AG, the GC merely pointed out that the Italian legislation did not confer to a public entity, namely the Italian Banking Authority (Banca d’Italia), the power to influence the content of the measures taken by FITD.

Additionally, the AG stressed that, even if the Commission’s plea regarding the application of a higher standard of proof was grounded, the appeal should nevertheless be rejected. In this respect, the AG pointed out that the elements adduced by the Commission did not demonstrate that the measures were imputable to the State, especially in light of the limited role of the Bank of Italy in the context of the adoption of said measures.

1 Due to the time difference between Belgium (Brussels) and UK, the UK will in fact become independent of the EU’s legal regime at 23:00 GMT on 31 December 2020. 

Edoardo Gambaro, Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Hans Urlus, Dawn (Dan) Zhang, Filip Drgas, Simon Harms, Marta Kownacka, Shuhei Mikiya, Pietro Missanelli, Jose Abel Rivera-Pedroza, Ippei Suzuki and Rebecca Tracy Rotem contributed to this piece.