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Competition Law Newsletter

Competition Law Newsletter

Competition Law Newsletter

01.06.2015 NL law

1. Court of Justice ruled that antitrust damage claims may be brought where one of the defendants or the actual injured party resides
2. The General Court ruled that the Commission may divert from the fine range indicated in a settlement procedure in a subsequent regular procedure relating to the same cartel
3. The Commission may deny access to documents in order to protect National Competition Authorities' powers of inspection
4. The establishment of a "personal union" may qualify as a concentration under Dutch competition law
5. Dutch civil court confirmed ruling holding Dutch State liable for damage resulting from the publication of a cartel decision that was subsequently annulled
1. Court of Justice ruled that antitrust damage claims may be brought where one of the defendants or the actual injured party resides

On 21 May 2015, the Court of Justice answered preliminary questions posed by the Landgericht Dortmund about the rules governing jurisdiction to hear antitrust damages claims (CDC HP judgment).

Antitrust damages cases invariably involve multiple defendants and often large groups of claimants. These cases are regularly initiated by commercial "claims vehicles" who have bought the claims from the individual injured parties. In such cases, disputes about jurisdiction often arise. This was no different in the current case, which was initiated by claim vehicle Cartel Damage Claims ("CDC"). Claimant CDC pursued the purported claims of 32 individual purchasers of hydrogen peroxide domiciled in 13 different EU and EEA Member States. Only one of the defendants, Evonik Degussa, was domiciled in Germany. Just months after serving its writ of summons on Evonik Degussa and the other defendants, CDC withdrew its action against Evonik Degussa following a settlement between them. Furthermore, supply contracts between the defendants and their purchasers contained arbitration and jurisdiction clauses. The suit against the other defendants non-domiciled in Germany remained.

In its judgment, the Court of Justice confirmed that there is a sufficiently close connection between antitrust damages claims against the various addressees of one decision to allow them to be sued jointly in the Member State where any one of them is domiciled (the "anchor defendant"). However, the court may nevertheless find it has no jurisdiction to hear the case if it can be proven that CDC and Evonik Degussa as anchor defendant purposefully delayed the formal conclusion of the settlement until proceedings had been instituted.

If jurisdiction cannot be based on a close connection with the case against an anchor defendant, the German court may still have jurisdiction if Germany is the place where the harm occurred. It is settled case law that the place where the harmful event occurred covers both the place where the damage occurs and the place of the event giving rise to it. In CDC HP, the Court of Justice ruled that the latter criterion "depends upon the identification, in [...] jurisdiction [...], of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer." The place where the damage occurs, on the other hand, is generally each individual injured party's registered office. A claim vehicle such as CDC, who has consolidated several injured parties' potential claims for damages, would therefore need to bring separate actions for every individual injured party to the extent their registered offices are not in one and the same jurisdiction.

The Court of Justice concluded with the observation that jurisdiction or arbitration clauses may validly derogate from EU jurisdictional rules, "provided that those clauses refer to disputes concerning liability as a result of an infringement of competition law".
2. The General Court ruled that the Commission may divert from the fine range indicated in a settlement procedure in a subsequent regular procedure relating to the same cartel

The General Court ("GC") upheld a decision of the Commission imposing a fine of almost EUR 60 million on Timab for its participation in the animal feed phosphate cartel (Timab and Roullier v Commission T-456/10).

Initially, the Commission opened settlement procedures for all participants in the cartel. However, Timab decided to walk out after being informed that the fine to be imposed would be in the range of EUR 41 to 44 million. Since then, the Commission had two parallel procedures running concerning the same cartel: the standard procedure for Timab and the settlement procedure for the remaining undertakings (see the Commission decision following the settlement procedure). Ultimately, the Commission imposed a fine of almost EUR 60 million on Timab.

Timab claimed before the GC that the Commission misused its powers by penalising it for abandoning the settlement procedure. Also, it claimed that the Commission was in fact not allowed to deviate from the range indicated during the settlement procedure.

The GC dismissed Timab's claims and ruled that the Commission applied the same methodology of calculating the fine in both procedures and thus did not penalise Timab. Moreover, the GC ruled that the Commission is not bound by the range indicated during settlement discussions since the settlement procedure is a voluntary procedure distinct from the standard procedure.

Interestingly, although the Commission ultimately defined a more limited scope of the infringements in its decision in the standard procedure than it originally had done in the settlement procedure, the fine turned out to be higher as a result of a reassessment of the reductions that would have been granted earlier. According to the GC, the Commission may, as it did in this case, take new information into account, redefine the duration and scope of the cartel and readjust the amount of the fine.

This is the first GC judgment on the settlement procedure. The Commission introduced the settlement procedure in 2008. An increasing number of Commission investigations are resolved on the basis of the settlement procedure. Since participants in settlement procedures accept their liability, appeals are rare.

This ruling shows that there are risks involved in abandoning a settlement procedure. Not only will the Commission withhold the standard reduction of the fine of 10% offered in settlement procedures, the Commission may also take new information into account and readjust the scope of the cartel. This is likely to result in higher fines being imposed under the standard procedure than in settlement procedures, quite apart from the standard 10% reduction in settlement procedures.     
3. The Commission may deny access to documents in order to protect National Competition Authorities' powers of inspection

On 12 May 2015, the General Court ("GC") dismissed the appeal launched by Unión de Almacenistas de Hierros de España ("UAHE") against the Commission's refusal to grant access to documents (Case T-623/13). The documents contained communications between the Spanish Competition Authority ("CNC") and the Commission in relation to two draft CNC decisions on alleged infringements of Article 101 TFEU.

The Commission decision denying access was partly based on Article 4(2) third indent of Regulation 1049/2001 (the "Transparency Regulation"). This provision draws exceptions for access to documents that would undermine the protection of the "purpose of inspections, investigations and audits". In its claims, the UAHE argued that this provision referred to "institutions or organs of the Union" and not to national competition authorities ("NCAs").

The GC recalled that the communication between the CNC and the Commission took place in the context of Article 11(4) Regulation 1/2003, which places on the Member States the duty to communicate to the Commission 30 days prior to taking an Article 101 TFEU decision. In this context, the GC confirmed that the circumstance that the investigation was being carried out by a public authority of a Member State and not by an Institution of the Union does not affect the inclusion of those documents in the aforementioned provision of the Transparency Regulation. Therefore, the GC held that documents that have originated from an NCA competition law proceeding refer to an investigatory activity under that provision.

With the above considerations, the GC did not find error in the Commission's application of the presumption that documents exchanged between a NCA and the Commission pursuant to Article 11(4) Regulation 1/2003, may be protected from disclosure under the Transparency Regulation. GC dismissed the UAEH argument that this presumption is inapplicable given that the CNC proceedings have concluded. The GC held that the interest in keeping a functioning exchange of information between the different public authorities of the Member States necessitates the maintenance of confidentiality. Therefore, the GC stated that the presumption would continue to be applied even after the CNC proceedings have been concluded.
4. The establishment of a "personal union" may qualify as a concentration under Dutch competition law

On 13 May 2015, the Netherlands Authority for Consumers and Markets ("ACM") delivered an informal opinion on the intended merger of two hospitals: Academisch Medisch Centrum ("AMC") and VU medisch centrum ("VUmc") (hereinafter jointly referred to as the "Parties"). The Parties requested the ACM to render an informal opinion as to whether establishing a union of the executive and supervisory bodies ("personal union"), under a new legal entity qualifies as a concentration under Dutch competition law. In its opinion, the ACM confirmed that the envisaged transaction qualifies as a concentration.

By means of a full union of the executive and supervisory bodies of both institutions, the Parties intend to establish a permanent joint board of directors for the AMC and the VUmc. In its decision, the ACM points out that a merger like this may qualify as a concentration under Dutch competition law if i) it concerns a personal union with "full and permanent" character and ii) the "full and permanent" character is safeguarded.

According to the ACM, a personal union would be considered to be "full and permanent" if the bodies involved in the union are authorized to decide on the commercial strategy of the undertaking. The board of directors of an undertaking typically has the authority in view of its statutory powers. Applying the criterion to the present case, the ACM determined that this personal union would also have to include the supervisory bodies of the Parties and the new legal entity if it is to be considered full and permanent, given that those bodies have powers relating to the commercial strategy of the undertaking.

Furthermore, the full and permanent character of the personal union is only considered to be safeguarded when it is governed by permanent rules or binding agreements so as to assure its continued existence. However, the possibility to dissolve the concentration in itself does not imply that it is not "safeguarded", provided that such dissolution can only be invoked under highly exceptional circumstances. In other words, the mere possibility to dissolve the union would not preclude the characterization of the transaction as a concentration.

As both conditions were met, the ACM concluded that the envisaged transaction qualifies as a concentration. It should be noted, however, that the ACM only delivered an informal opinion and therefore did not substantively assess the transaction.

5. Dutch civil court confirmed ruling holding Dutch State liable for damage resulting from the publication of a cartel decision that was subsequently annulled 

In a judgment published on 22 April 2015, the Appeal Court of The Hague ("Court of Appeal") upheld an earlier ruling of a District Court in which the Dutch State was held liable for harm that a company had allegedly incurred as an addressee of an annulled ACM decision. At the same time, the Court of Appeal agreed with the District Court that not all of the ACM's actions surrounding the decision were unlawful. It limited the harmful event to the publication of a decision that was annulled on appeal.

In 2006, the ACM imposed a fine on a construction company for participating in a cartel. The decision was subsequently annulled in 2011, because the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven, "CBb") found that the ACM had committed a procedural error. The construction company then started civil-law proceedings against the Dutch State, claiming that it had incurred harm because of the ACM's conduct. Such harm had allegedly occurred due to the ACM's publication of the decision as well as the generation of bad publicity on various other occasions. On first instance, the District Court of The Hague ruled that the Dutch State was indeed liable for any damage that the company had incurred as a result of the erroneous nature of the published decision. The amount of damages was to be determined in follow-up proceedings.

The Court of Appeal upheld this judgment after both parties appealed it. The Dutch State had submitted that it was not liable for any damage, because no causal link existed between the alleged harm and the ground for the decision's annulment. The Court of Appeal dismissed this. It held that once a decision has been annulled by the CBb, civil courts have to assume that the fine has been imposed unlawfully by the Dutch State. The legal consequence of this is that the resulting damages will have to be borne by the Dutch State. The presence of a causal link, however, would have to be established in follow-up proceedings.

The construction company's grounds of appeal were also dismissed. It had submitted that the District Court should also have qualified two of the ACM's other actions as unlawful: (i) the dispatching, together with the statement of objections, of a list of all the suspected companies to those companies in 2005; and (ii) the ACM's statement to a professional journal, after the annulment of the decision in 2011, that it stood by its finding of infringement given that the CBb did not conduct a substantive assessment of the decision. The Court of Appeal, however, ruled that the mere dispatching of the list did not equate to publishing it and that the ACM's statement in the journal was not incorrect. The case is now back at the District Court for an assessment of the damages.

This judgment demonstrates that the Dutch practice concerning regulators’ liability for decisions annulled on appeal differs from that at the EU level. Under EU law, annulment of a Commission decision does not imply that the Commission acted unlawfully. In fact, EU case law shows that the hurdles for establishing non-contractual liability of the Commission for harm flowing from annulled decisions are high.  When assessing whether the Commission is liable for the harm flowing from annulled decisions, the EU Courts review whether the mistakes made by the Commission are sufficiently manifest to render the behavior unlawful. Dutch courts consider the unlawful character of the regulators' act established if a decision is annulled. It suffices for addressees of annulled decisions to demonstrate the existence of harm and the causal link between the decision and the harm. 


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