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Competition Law Newsletter

Competition Law Newsletter

Competition Law Newsletter


1.  ECJ ruling on a system of compulsory training set up by a professional association   
On 28 February 2013, the European Court of Justice ("ECJ") ruled on a preliminary reference from the Lisbon Court of Appeals seeking guidance on the application of the competition rules to a system of compulsory training imposed by an association of professionals (Case C-1/12).

In 2004, the Portuguese association of chartered accountants (Ordem dos Técnicos Oficiais de Contas ("OTOC")) adopted a regulation under which chartered accountants were required to obtain 35 credits for training provided or approved by the OTOC (the "Regulation"). Twelve of those credits had to be obtained through training that could only be provided by the OTOC. The remaining credits could be obtained through training provided either by the OTOC or other bodies registered with the OTOC, for which an approval procedure had to be followed.

Following several complaints, the Portuguese Competition Authority found that the Regulation distorted competition on the market for compulsory training for chartered accountants and violated Article 101 and 102 TFEU.
The OTOC challenged the decision of the Competition Authority and it was upheld insofar as it concerned Article 101 TFEU. In a further appeal, the Court of Appeals of Lisbon stayed the proceedings and referred a number of questions to the ECJ.
First, the ECJ ruled that the Regulation could be considered a decision of an association of undertakings within the meaning of Article 101(1) TFEU. The Court considered that the rules in question have a direct impact on the market for compulsory training for chartered accountants and belong to the sphere of economic activity. Furthermore, the Court concluded that the regulatory powers invested in the OTOC were not subject to any conditions or criteria imposed by the state and the OTOC did not exercise powers which are typical of a public authority when adopting the Regulation.

Finally, the Court ruled that the Regulation constituted a restriction on competition to the extent that it eliminated competition within a substantial part of the relevant market and it imposed discriminatory conditions to the detriment of competitors of the association on the remaining part of that market.

2.  ECJ assesses agreements between car repairers and insurers linking the rate of repairs to brokerage activities 
On 14 March 2013, the European Court of Justice ("ECJ") issued a judgment (Case C-32/11) following a reference from the Hungarian Supreme Court concerning the cooperation between car repairers and insurers.

In Hungary, the main insurers each year conclude an agreement with car repairers or their national association on the conditions and rates for repair services for insured vehicles. However, not only do the repair shops execute these repairs, they also act as insurance brokers for the insurance companies. In the agreement concerned, the hourly repair rate paid by the insurer was made dependent on the number of insurance policies signed by customers of the repairer. The referring judge now asked whether linking car repair services to the activities of repairers acting as insurance brokers has the object to restrict competition within the meaning of Article 101(1) TFEU.

The ECJ first recalled its established case law that infringements by object are those restrictions of competition that are by their very nature injurious to the proper functioning of normal competition. According to the Court, the establishment of a link between two, normally independent, activities (repair services and insurance brokerage) does not automatically mean that such agreement qualifies as an object infringement within the meaning of Article 101(1) TFEU. However, such link can constitute an important factor in that assessment. In any event, the assessment of the agreement concerned must take into account that it affects two markets. It is then for the Hungarian court to decide whether the agreements concerned are injurious to the proper functioning of the car repair and/or car insurance market. The following factors are relevant for that analysis: (i) the economic and legal context, including the fact that domestic legislation requires intermediaries or insurance brokers to be independent from the insurance companies, (ii) whether the agreements eliminate or seriously weaken competition on the market in light of the structure of that market, the presence of alternative distribution channels and their respective importance and the market power of the companies concerned and (iii) the fact that the agreements concerned appear to be concluded on the basis of recommended prices established in decisions of the national association of car repairers. Those decisions could potentially harmonise the hourly rates for car repairs and, therefore, restrict competition by object. Given that the insurers conclude the agreement directly with that national association, the potential unlawfulness of the association’s decisions can, therefore, render the agreements between the insurer and the national association null and void.

3.  The General Court upholds infringement by object through information exchange and joint liability in banana cases 
On14 March 2013, the General Court handed down two decisions, Del Monte v. Commission  (Case T-587/08) and Dole v. Commission (Case T-588/08), upholding the Commission's finding of participation in a concerted practice to coordinate quotation prices for bananas. In both Del Monte and Dole, the General Court confirmed a finding of infringement by object through the exchange of pre-pricing information. In Del Monte, the General Court also affirmed a finding of joint liability.

In both Del Monte and Dole, the General Court confirmed a finding that bilateral pre-pricing communications decreased uncertainty surrounding future decisions on the undertakings' quotation prices. The General Court found that the pattern of communication between the undertakings on critical pre-pricing factors, which included the competitors' own private assessments on demand, future quotation prices, and climatic events, in the context of the relatively concentrated market for bananas, rose to the level of infringement by object.

The General Court recalled that an anti-competitive object may be present if the concerted practices directly or indirectly fix prices or other trading conditions, without necessarily finding a direct link between those practices and consumer prices  (Case C-8/08, T-Mobile Netherlands and Others). The General Court also found that the presumption that if the undertakings remain in the market, they could not fail to take into account the information exchanged, had not been rebutted (Case C-199/92 P, Hüls v. Commission; Case C-49/92 P,  Commission v. Anic Partecipazioni).

Moreover, in Dole, the General Court rejected the argument that "an exchange of information can constitute a restriction of competition by object only if it forms part of broader cartel arrangements" as unfounded in the law.

Therefore, in the banana cases, the General Court signals its willingness to hold pre-pricing communications related to future quotation prices as commercially sensitive information, and their exchange amongst competitors, given the market context, as an infringement by object.

Regarding joint liability, it is noteworthy that although Del Monte had joint control of Weichert, the General Court found that because Del Monte exercised decisive influence over Weichert, they constituted a single economic entity, and were therefore jointly and severally liable. The General Court found that by virtue of owning an 80% interest in Weichert, Del Monte had ability and interest in exercising decisive influence. Examining Del Monte's powers under the partnership agreement and an exclusive distribution agreement with a subsidiary wholly owned by Del Monte, the General Court affirmed that Del Monte exerted such decisive influence.

4.  District Court of Rotterdam annuls fines for home care providers for lack of evidence    
On 14 March 2013, the District Court of Rotterdam (the "District Court") annulled a decision of the Dutch Competition Authority ("NMa") imposing fines on two Dutch home care providers for participating in an anti-competitive agreement (LJN: BZ4169). In its decision of 21 October 2010, the NMa had found that two home care providers, Carint and Carinova, agreed to refrain from offering their services in each other's geographic areas. For this reason, the NMa imposed fines of € 3.7 and € 1.2 million on Carinova and Carint respectively.

Both home care providers were members of an association of home care providers called Plectrum, which was envisioned to serve as a franchise organisation. The establishment of Plectrum as a franchise organisation was conditional upon an amendment of the Dutch legislation concerning the financing of home care. This amendment never occurred and thus Plectrum became devoid of purpose and now has been dissolved.

During the meetings held by Plectrum, various home care providers discussed the structure of the proposed franchise organisation. During these discussions, the home care providers stated that there would be no competition between the members of Plectrum. The NMa produced various documents as evidence of these discussions and therefore, of an illegal agreement in violation of competition law. Before the District Court of Rotterdam, the home care providers stated that the discussions only concerned a future situation and that the establishment of the franchise organisation was conditional upon a positive review by a competition law expert. Since the agreement never entered into force, they argued that they never had entered into an anti-competitive agreement.

The District Court agreed with the home care providers and found the evidence presented by the NMa insufficient to establish an actual infringement. The District Court considered the home care providers' contentions that the agreement never entered into force to be plausible, since at least one of the home care providers did not feel bound by the alleged non-compete agreement. Therefore, according to the District Court, there could not have been consensus between home care providers that could be qualified as an infringement of Article 6 of the Dutch Competition Act, i.e. the Dutch equivalent of Article 101 TFEU.

5.  Brussels Court of Appeal and Dutch Supreme Court confirm legal professional privilege for in-house counsels  
In its judgment of 5 March 2013 (Case 2011/MR/3) , the Brussels’ Court of Appeal ("CoA") has confirmed that advice given by in-house counsel to its employer as well as the related correspondence is protected by legal professional privilege ("LPP") and is thus confidential. In order to benefit from such protection, in-house counsel must be a member of the Belgian Institute for in-house counsel ("IBJ/IJE").

The case at hand started with a dawn raid by the Belgian Competition Authority on 12 and 13 October 2010 at the premises of Belgacom during which the competition authorities seized and copied several hard disks and mailboxes. From the start of the dawn raid, Belgacom opposed the use of French as language of the investigation, the very broad and unspecified scope of the investigation, as well as the seizing of numerous documents which were unrelated to the subject-matter of the investigation. After the dawn raid a number of decisions were taken by the Competition Prosecutor (Auditeur, "CP") and the independent Competition Prosecutor (Auditeur-tiers). Belgacom appealed three of these decisions (rejection of LPP for certain advice of in-house counsels, decision qualifying documents as ‘in-scope’ and decision of transmission of seized document to the investigation team).

The CoA first establishes that, in order to guarantee the right of effective judicial protection, it is competent to review the legality of the decisions taken by the CPs even though the Act on Protection of Economic Competition ("APEC") does not provide for this possibility.

Subsequently, the CoA confirms that in accordance with Article 5 of the Act on the IBJ/IJE, advice of in-house counsel is protected by the LPP and is thus confidential. The CoA holds that the Belgian legislators have explicitly expressed their will to protect the advice of an in-house counsel member of the IBJ/IJE, given to its employer, against disclosure. The fact that the Court of Justice of the European Union in its Akzo judgment did not extend LPP to advice of in-house counsel is without incidence on this choice as the Court of Justice only expresses itself on the situation at European level but does not exclude differing solutions at the level of the Member States. Thus the CoA confirms that advice of in-house counsel, as well as the correspondence concerning this advice, drafts of such advice, and the preparatory documents regarding this advice, are covered by LPP. However, these documents lose this protection once the employer has shared these documents to a person outside the company.

In its judgment of 15 March 2013  (LJN: BY6101) the Dutch Supreme Court applied a similar reasoning as to the legal privilege of an in-house counsel that is admitted to the Dutch bar association. In its judgment the Supreme Court points out that the Akzo judgment only relates to the European level and that this does not affect an in-house counsel's legal privilege under Dutch law.

6.  Dutch Competition Authority substantially reduces fines for two producers of insulated glass units 
On 14 March 2013, the Dutch Competition Authority ("NMa") published a fining decision after administrative objections in a case concerning an alleged cartel between four producers of insulated glass units (Case 5965). After administrative objections, the fines of two parties were substantially reduced mainly because the NMa, after reconsideration, established that there was insufficient evidence for their involvement in part of the alleged infringement found in the primary decision. The decision confirms that the NMa will need to adduce specific evidence of involvement of all individual parties allegedly involved in an infringement, and cannot solely rely on general statements from leniency applicants.

The case concerns an alleged cartel between four undertakings in the insulated glass market throughout the period 2004-2005. Two of the undertakings, Saint Gobain and AGC, had applied for leniency. On the basis of the leniency statements, the NMa established in its decision of 29 December 2010 that the four undertakings had agreed to increase their prices and had agreed on a minimum price list in two meetings. The other two undertakings, Scheuten and Pilkington, submitted objections against the NMa's findings, arguing that there was insufficient evidence to find an infringement.

After reconsideration, the NMa partly accepts the arguments brought forward by Scheuten and Pilkington and determines that one of the two leniency applicants had not specifically stated that he had discussed prices with representatives of Scheuten and Pilkington at the first meeting. In this context it may have been relevant that the representatives of Scheuten and Pilkington arrived late at the meeting, and that the representative of Scheuten left early. This would be in line with the judgment of the Industry and Trade Appeals Tribunal (College van Beroep voor het bedrijfsleven, "CBb") in the Mobile Operators case (LJN: BC1396), which determined that if the representatives of an undertaking are partly absent in an alleged anticompetitive meeting, the NMa needs to establish at what moment in time the alleged anticompetitive agreement or coordination was discussed.

Regarding the second meeting, the NMa rejects the arguments by Scheuten and Pilkington and confirms that the parties agreed or coordinated price increases and minimum prices. It is interesting to note that the NMa's Advisory Committee came to a different conclusion. The Advisory Committee had advised the NMa to drop the whole case as the leniency statements were "less reliable". Especially one of the leniency statements was not very specific and detailed. Furthermore, the leading questions of the NMa raised questions about the reliability of the statements. Therefore, there was insufficient evidence for an infringement.

7.  Netherlands Consumer Authority imposes fine of EUR 370,000 on Ryanair 
In its decision of 26 February 2013, the Netherlands Consumer Authority (Consumentenautoriteit, "CA") imposed a fine of EUR 370,000 on Irish airline Ryanair for four violations of consumer protection provisions.

On its Dutch website, Ryanair offers airline tickets which can be purchased by consumers through an online booking system. Article 23 of Regulation (EC) No 1008/2008 on common rules for the operation of air services in the Community requires airlines to include all foreseeable and unavoidable costs in airfares at the time of publication on their websites. According to the CA, Ryanair failed to meet this requirement as its advertised prices did not include all foreseeable and unavoidable fees and surcharges, such as airport charges and credit card costs.

Furthermore, the CA established a violation of Article 6:193g sub h of the Dutch Civil Code (the implementation of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market), as it considered that Ryanair was misleading its consumers by providing after-sales customer services in English only, without mentioning this on its Dutch website.

The other violations established by the CA consisted of Ryanair's failure to offer consumers the option to review the information they entered into the online booking system in order to correct possible mistakes, and Ryanair's failure to publish an email address on its website, making it difficult for consumers to communicate with Ryanair directly.

With regard to the continuing violations by Ryanair, the CA has imposed three orders subject to periodic penalty payments which could run to a maximum of EUR 240,000 per violation. Ryanair has filed an objection against the decision of the CA. This objection will be dealt with by the Netherlands Authority for Consumers and Markets ("ACM"), the new Dutch market regulator that constitutes the merger of the CA, the Netherlands Competition Authority ("NMa") and the Netherlands Independent Post and Telecommunication Authority ("OPTA").


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