Sector insights

International Competition Update | February 2018


Written on 28 February 2018

 

In the first couple of months of the year some of the key topics that we predicted would shape Competition Law in 2018 are already beginning to bear fruit.

It is no great surprise that ramifications from the Coty judgment are starting to be felt as courts begin to grapple with the implications of the important judgment that platform bans are, in some circumstances, acceptable. When in January the German Federal Court of Justice dismissed the appeal of shoe manufacturer ASICS against a finding made against it by the German competition authority, it did so against a background of keen interest, following indications that the German competition authority viewed Coty as being restricted to luxury goods. The FCJ has followed this interpretation. The extent to which this restrictive interpretation of the judgment prevails will continue to be of interest as courts and competition authorities outside Germany grapple with this issue.

Similarly, it is not unexpected that as the deadline for the UK’s official exit from the EU – 29 March 2019 – looms ever closer, the shape of competition law in a post-Brexit world is being looked at with increasing urgency.  The report published on 2 February 2018 by the House of Lords Brexit Committee, although not containing any particularly novel insights, is useful in setting out the challenges and opportunities arising from Brexit for competition law and State aid, including transitional arrangements; management of the risk of political interference in merger reviews; and the future of State aid.

While the UK is looking forwards to how State aid will operate post-Brexit, the European Commission has sought to clarify the law as it currently stands, updating its guidance on State aid for Energy Infrastructure.  Businesses involved in large public infrastructure projects across Europe will no doubt welcome this clarification about the extent to which they need to be concerned about EU State aid law compliance.

Elsewhere, the Commission continues to reiterate that it will not tolerate abuses of dominance in the IT sector. Following on from the €2.42 billion fine imposed on Google last summer, the Commission has fined Qualcomm, (the world’s largest supplier of LTE baseband chipsets)  €997 million for abusive exclusivity practices in a decision which is not only is the first to put to the test the CJEU’s ruling on the Intel decision, but also serves as a warning to dominant players that companies engaging in such abuses will be heavily penalised by the Commission.

While substantially lower than the fine imposed on Qualcomm, a chemical products company has been fined the still significant sum of €30 million for obstructing an investigation launched by the French Competition Authority, in the first instance of the FCA using its powers to do so. The fine is a reminder that authorities are willing to take action for non-compliance – any challenge to the authority’s powers must be done carefully and correctly.

Online sales | Ban of price comparison websites violates competition law in Germany

According to a recent decision of the German Federal Court of Justice, prohibiting authorised dealers from using price comparison websites may be a “hard-core” breach of competition law. This is a decision which the German competition authority will see as confirmation of its critical stance on online restrictions and of its restrictive reading of the Coty judgment, namely that it only applies to luxury goods in the narrow sense and not generally to all kinds of branded goods.

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House of Lords Brexit report identifies key challenges and opportunities for UK competition and State aid law

On 2 February 2018, the House of Lords Brexit Committee published its findings on competition and State aid. The report summarises the challenges and opportunities arising from Brexit as identified by leading experts in the fields of competition law and policy. The report highlights a number of topics and issues that are likely to be discussed with increasing urgency within the UK government in the coming months as the deadline for the UK’s official exit from the EU – 29 March 2019 – looms ever closer.

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New State aid analytical grid for Energy Infrastructures

The European Commission has updated its State aid analytical grid on the notion of State aid for Energy Infrastructure. This working document promises to give undertakings the necessary tools to self-assess whether State aid is part of their infrastructure projects providing much needed clarity for businesses involved in large public infrastructure projects across Europe about the extent to which they need to be concerned about EU State aid law compliance.

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French Competition Authority fines company €30 million for obstructing investigations and clarifies the scope of loyal cooperation obligation on investigated companies

On 21 December 2017, the French Competition Authority imposed a fine of €30m on the French branch of a chemical products company and its parent company for having hindered an investigation launched by the FCA. It is the first time that the FCA has enforced article L.464-2 of the French Code of commerce, which gives the FCA the ability to fine a company for obstructing an investigation.

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Commission fines Qualcomm €997 million for abuse of dominance

The world’s largest supplier of LTE baseband chipsets has been fined €997 million by the European Commission for abusive exclusivity practices, comprising exclusivity payments and predatory pricing. Not only is this decision of interest as the first Commission decision on an abuse of dominance since the important Intel judgment last September, but it also serves as a reminder that the Commission will levy significant fines on abusive behaviour that denies choice to consumers and companies alike, particularly in a sector where innovation is key.

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*This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.