1. President of the General Court rejects EDF’s request to postpone Nest-Energie divestment date for lack of urgency
By Order of 11 October 2012 (Case T-389/12 R), the President of the General Court dismissed a request by Electricité de France ("EDF") for interim measures for lack of urgency. The application was aimed at the postponement of the date by which EDF had to make a final investment decision, relating to merger remedies.
In 2009, the Commission had given the green light for the acquisition by EDF of the Belgian undertaking Segebel, albeit subject to certain divestment obligations (Case COMP/M.5549). In its decision, the Commission required EDF inter alia to divest the ‘Nest-Energie’ power plant project, in the event it did not take a final decision to invest itself in that project by 30 June 2012. In May 2012, EDF requested the Commission to grant it a postponement of the deadline until late 2014 on account of unforeseeable changes on the Belgian electricity market. However, the Commission only granted an extension until 15 October 2012. EDF then lodged an application for annulment of this decision, as well as an application for interim measures, aimed at obtaining a postponement of the date by which it had to make a final investment decision.
By reference to established case law, the President recalls that when the harm invoked by an applicant for interim measures is of a financial nature, the applicant must demonstrate that, absent interim measures, its financial viability would be seriously threatened or that its market share would be affected substantially. In doing so, the applicant must present a faithful overall picture of the financial situation based on specific and precise particulars. Taking these considerations into account, the President concludes that in the application for interim measures EDF failed to provide any information whatsoever on the size and turnover of its undertaking, but instead confined itself to expressing doubts as to the quantifiability of the alleged harm. In addition, the President notes that EDF fails to provide any details on the financial strength of the group to which it belongs.
The President goes on to consider that the alleged financial harm would in any event remain substantially below the cost of the investment in the Nest-Energie project, which is estimated at €800 million. Furthermore, the President finds that the harm caused to EDF, either by the divestment of the assets of the company charged with the development of the Nest-Energie, or by the final decision by EDF to invest in the project itself, cannot be categorised as serious in the light of the EDF group’s overall financial strength, which amounts to €65 billion according to the group’s 2011 report. The application for interim measures is dismissed.
2. NMa seizes cartel evidence from outside "competition law audit firm" but is prevented from "fishing expedition"
On 5 October 2012, the President of the District Court in The Hague ruled in interim proceedings (LJN: BX9781) that a company was not obliged to provide certain information to the Dutch Competition Authority ("NMa"). The judgment is interesting in that it provides some clarity on the scope of the duty to cooperate with the NMa.
The plaintiff in this case was a company that specialised in competition law audits. These audits allow undertakings to verify whether its employees are involved in activities potentially violating the competition rules. Potentially, the results of these audits constitute very valuable information for the NMa. During a visit at the premises of a company under investigation, the NMa found a report drafted by the digital forensic investigation company. The report indicated that infringements of competition law had taken place. The documents that formed the basis of the findings were however no longer at the disposal of the alleged infringer. This led the NMa to turn to the firm that had executed the "audit".
The NMa demanded the audit firm to provide an overview of undertakings in the same industry where it had conducted such competition law audits in the previous five years. In addition, the NMa required the investigation company to preserve documents provided by these undertakings to the audit firm in the context of the audits available for investigation by the NMa.
The audit firm sought to suspend the NMa's requests for information. In the judgment, the President considered that an undertaking is only under a duty to cooperate as far as a request for information is proportionate.
In relation to the missing audit documents the President held that since the NMa could not turn to the alleged infringer and the audit firm did have the missing documents on file, the NMa was authorised to demand the missing audit documents from the audit firm. The President furthermore found the NMa's request that the plaintiff should keep the other information available for investigation was, in principle, proportionate if limited to a reasonable period of time (which was set at three months).
However, the President considered the NMa's demand that the audit firm should provide an overview of all companies in the same sector it had conducted audits at was not proportionate. The President held that the duty to cooperate does not entail an obligation for third parties to acquiesce in arbitrary demands for information on the basis of which the NMa may decide whether or not to deploy its supervisory competences.
It is clear from the events in this case that there are evident risks in employing an audit firm to conduct an internal investigation company without thinking about the potential consequences. In as far as the content of the report is not privileged the NMa can seize the documents which are central to the audit. Unwittingly, the audit can compile just the evidence a competition authority is most interested in.
3. Belgian Competition Council annuls a decision to dismiss a complaint of anti-competitive conduct against Mitsubishi
By decision of 27 September 2012 (decision No. 2012-P/K-23), the Competition Council annulled a decision by the Belgian Competition Prosecutor, because it violates the duty to state reasons.
On 4 November 2009, a Belgian forklift wholesaler (Duma NV) and a forklift assembling company (G.S. International) filed a complaint of anti-competitive conduct against Mitsubishi before the Belgian competition authority. Some two years later, however, the complaint was dismissed by the Belgian Competition Prosecutor pursuant to Article 45§2 of the Act on the Protection of Economic Competition, which inter alia permits the College of Competition Prosecutors to reject a complaint ‘by a reasoned decision according to the available resources and the priorities which are set.’ The contested decision sets out a number of criteria that steer the College’s priorities, notably the economic importance of the file, consumer interest, the gravity of the infringement, the feasibility of the investigation and the international context.
The Competition Council asserts that, even in case a complaint is dismissed by reference to the priority policy of the College of Competition Prosecutors, the Prosecutor is obliged to make explicit the factual or legal elements that have played a role in this decision so as to allow for a degree of scrutiny. The Council acknowledges that the reasons can be made explicit in full in the decision in which the complaint is rejected, or they can be provided in combination with an overview of the investigative steps undertaken. However, in the present case neither the decision nor the file contained any indications that would have offered insight into the reasons of the Prosecutor. The Council moreover insists that the Prosecutor should have identified which of the listed criteria (the economic importance of the file, consumer interest, the gravity of the infringement, the feasibility of the investigation and the international context) were decisive in this case. While the Court implicitly accepts that the complaint could have been rejected by reference to the fact that a case was simultaneously brought before and decided by a civil court, it notes that this element is not mentioned in the decision. In conclusion, the Prosecutor’s decision is annulled and the case is referred back to the College of Competition Prosecutors.
4. NMa clears acquisition by Dutch incumbent railway operator (NS) subject to far-reaching behavioural remedies
In its decision of 3 October 2012 (Case 7436), the Dutch Competition Authority ("NMa") approved the acquisition by NS of certain assets and services from ProRail.
ProRail is an undertaking entrusted with the exploitation of the main railway infrastructure in the Netherlands. The assets included the provision of train travel information to passengers as well as associated services. ProRail provides the train travel information to both NS and other railway operators in the Netherlands, such as Connexxion, Veolia and Arriva. The transaction therefore has a vertical dimension.
According to the NMa, NS would as a consequence of the transaction be able to provide the travel information services on discriminatory terms. In addition, as a consequence of the transaction NS would be able to gain access to commercially sensitive information of its competitors. In view hereof the NMa took the preliminary view that the transaction would lead to a significant impediment of effective competition on the Dutch market for contestable public railway transport.
This in turn led the NS to offer several commitments in order to alleviate the said competition concerns. These commitments included a duty to provide non-discriminatory access to a standard service quality agreement concerning the provision of travel information to all public passenger transporters and a duty to charge costs that do not exceed certain criteria that are laid down in detail in the decision. Furthermore, NS committed itself to ensure the quality of its travel information services by monitoring its services through an independent party and to pay back to its customers 25% of the tariffs charged in case the average service level over a 6-month period was 10% below the relative service level delivered to itself. Finally, NS committed itself to set up a travel information service centre. This service centre would be responsible for the management of the travel information agreements and for keeping passenger transporters up to date with the quality and service costs of NS.
This case indicates that even in a phase I-decision the NMa is willing to accept far-reaching and innovative behavioural commitments in order to give the green light to a transaction. Another well-known example of a case where a wide set of behavioural remedies was accepted in phase I is the NMa's decision relating to the acquisition of Reggefiber by KPN (Case 6397). The underlying case differs from the KPN/Reggefiber decision in that it concerns a purely vertical merger.
5. Frozen snacks merger fails despite Dutch Competition Authority green light
On 5 October 2012, the Dutch Competition Authority ("NMa") published its second phase decision regarding the proposed merger between the two largest producers of frozen snacks in the Netherlands, Buitenfood and Ad van Geloven (Case 7313). Despite the conditional clearance decision, the parties ultimately decided to call off the transaction. The decision is nevertheless interesting since one of the remedies implied that one of the most well-known Dutch brands for frozen snacks would after a six-year period no longer be sold in Dutch supermarkets.
Buitenfood and Ad van Geloven produce branded and private label frozen snacks for the retail market (supermarkets) and, through wholesalers, for the out of home market (hospitality industry, e.g. restaurants and bars). Well-known brands of these producers are Mora (Ad van Geloven), Van Dobben and Kwekkeboom (Buitenfood).
In its decision the NMa concluded that the merged undertaking would gain too strong a position on the Dutch supermarket segment for croquettes and bitterballen (small croquet balls). The NMa found that the merger would eliminate competition between branded croquettes and bitterballen produced by Buitenfood on the one hand and branded and private label croquettes and bitterballen produced by Ad van Geloven, on the other hand. Furthermore, the NMa was concerned that competitors producing these snacks for supermarkets, would not be sufficiently able to compete with the merged entity. Finally, the NMa considered it unlikely that the supermarkets possessed countervailing buyer power to discipline the position of the merging parties.
Buitenfood and Ad van Geloven subsequently offered remedies to remove the competition concerns. One of the remedies implied that Buitenfood had to transfer to a competitor a licence to sell for a period of six years "Van Dobben" croquettes and bitterballen to Dutch supermarkets. During these six years, that licensee had to 'rebrand' the Van Dobben croquettes and bitterballen. After the period of six years, the licensee would still be allowed to use the recipes of the snacks as well as the copyrights on the Van Dobben packing and advertising materials. After the six-year period, both the licensee and the merged undertaking would no longer be allowed to use the brand Van Dobben with respect to the sale to Dutch supermarkets.
However, a week after the decision was published, the parties announced that they had pulled the plug on the negotiations, for reasons unknown. It was only confirmed that the remedy as described above, did not form the only obstacle in the negotiations.