Short Reads

General Court confirms illegality of non-compete clause in telecoms transaction

General Court confirms illegality of non-compete clause in telecoms transaction

General Court confirms illegality of non-compete clause in telecoms transaction

01.07.2016 NL law

On 28 June 2016, the General Court ("GC") ruled on appeals by Telefónica and Portugal Telecom ("PT") against the decision of the European Commission to impose  fines of EUR 67 million and EUR 12 million respectively. The judgments confirm the findings of the Commission that the non-compete clause agreed upon between the parties amounted to a market sharing agreement with the object of restricting  competition. The GC, however, referred the case back to the Commission as it found that the Commission had erred in calculating the amount of the fine.

 

Telefónica and PT together held the shares in the Brazilian telecom company Vivo Participações through a joint venture company. In 2010, Telefónica and PT concluded a stock purchase agreement by which Telefónica acquired sole control over Vivo. That agreement included a non-compete clause prohibiting the companies from conducting business in the telecommunications sector that "can be deemed to be in competition with the other in the Iberian market", excluding economic activities already performed by the companies.

In its judgements, the GC ruled that the Commission had rightfully concluded that the non-compete clause amounted to a market-sharing agreement with the object of restricting competition. The GC clarified that the non-compete clause did not qualify as an ancillary restraint as the parties were not able to prove that the restriction was necessary for the implementation of the Vivo transaction.

The GC, however, ruled that the Commission had erred in law in calculating the amount of the fine as it had failed to conduct a detailed legal and economic assessment of the sales directly or indirectly relating to the infringement. As the non-compete clause only covered activities in which the parties were actual or potential competitors, the Commission should have excluded sales which were not covered by the clause.

The judgments show that non-compete clauses in the context of a transaction require careful review and confirms that such clauses have to be necessary to the implementation of the transaction to qualify as an ancillary restraint. The judgments also show that once the Commission decides to calculate the fine on the basis of the sales relating to the infringement, it should conduct a detailed analysis before calculating  the correct amount of sales.

This article was published in the Competition Law Newsletter of July 2016. Other articles in this newsletter:

1. Court of Justice dismisses appeals in the Calcium Carbide Cartel
2.
General Court confirms that the financial position of shareholders and the possibility to increase credit facilities are relevant when assessing an inability to pay request
3. District Court of Rotterdam rejects the applicability of arbitration clauses in antitrust damages litigation
4. Update on changes in antitrust damages claims legislation in the Netherlands
5. New maximum fines for competition law infringements in the Netherlands as of 1 July 2016
6. General Court rules that an implicit and unlimited guarantee does not necessarily constitute State aid

Related news

26.03.2020 BE law
​I am suffering significant financial losses as a result of the spread of the corona virus. Is there a possibility of State aid?

Short Reads - COVID-19 brings certain questions to centre stage regarding State aid. In this short read, Peter Wytinck, Sophie Van Besien and Michèle de Clerck discuss the possibility of State aid in case of significant financial losses as a result of the spread of the corona virus.

Read more

05.03.2020 NL law
Swifter merger clearance and shorter merger filings in Belgium

Short Reads - Companies can expect swifter merger clearance and simpler filing rules in Belgium. The Belgian Competition Authority has published a communication with additional rules concerning the simplified procedure for certain types of concentrations. As a result, a new category of concentrations will be eligible for a simplified merger filing, leading to swifter approval and lower costs. It will also allow the BCA to focus its resources on more problematic and complex files.

Read more

10.03.2020 NL law
De AVG staat niet in de weg aan de verwerking van persoonsgegevens door een toezichthouder tijdens een bedrijfsbezoek

Short Reads - Bedrijven die met toezicht worden geconfronteerd, zijn gehouden op verzoek van een toezichthouder in beginsel alle informatie te verstrekken. Met de komst van de Algemene verordening gegevensbescherming (AVG) is in de praktijk de vraag opgekomen of een toezichthouder bevoegd is om persoonsgegevens die onderdeel uitmaken van de gevraagde informatie te verwerken.

Read more

05.03.2020 NL law
ECJ confirms: gun jumping is double trouble

Short Reads - Companies beware: the European Court of Justice has confirmed the Commission’s practice of imposing two separate fines for gun jumping; one for failing to notify a concentration prior to its implementation, and another for implementing the concentration before obtaining clearance. The ruling underlines, once again, the increased focus of competition authorities on procedural merger control breaches – good reason for companies to keep a watchful eye on their gun jumping obligations and to take note of the possibility of two separate gun jumping fines. 

Read more

05.03.2020 NL law
CBb confirms: no cartel fine, still interest to appeal cartel decision

Short Reads - Companies can challenge a decision establishing that they committed a competition law violation, even if no fine was imposed on them. The CBb – the highest court for public enforcement of cartel cases – recently confirmed that the absence of a fine does not affect a company’s interest to appeal. Consequently, parent companies held liable for a subsidiary’s cartel infringement can still challenge a cartel decision, irrespective of whether fines were imposed on them separately.

Read more

05.03.2020 NL law
Commission continues cross-border trade crusade

Short Reads - The European Commission is on a roll in its fight against territorial sales restrictions. Just one month after fining broadcast network company NBCUniversal for restricting cross-border sales, it has also imposed a fine on hotel group Meliá for discriminating between customers based on nationality or place of residence. Meanwhile, the Commission is urging national consumer protection authorities to tackle cross-border issues, after an EU-wide screening of nearly 500 e-shops showed that one fifth of the flagged websites did not respect the Geo-blocking Regulation. 

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring