Home | Feedback | Contact Us
Competition Law Corner by Luthra & Luthra Offices  
COMPETITION LAW UPDATE (JANUARY 2013 TO JULY 2013)
ASIA

  1. Korea's fair trade commission clears Google after 2-year probe:

    South Korea's Fair Trade Commission (KFTC) observed after an investigation of two-years that in making its search service the default in Android-powered smart phones, Google did not limit competition in the online search market. A complaint was filed against Google in 2011 by, Naver Corporation (“NHN”) and Daum Communications, which operate South Korean Web portals and search engines. It was found that NHN continued to be the dominant in the online search in South Korea with 70 percent of of market share. For the purposes of limiting competition in the market, Google was not found to be dominant and service being the default search engine in Android devices had little impact on the market. The deeply wired country is one of the few in the world where Google has failed to surpass local companies in online search.

  2. Fissler Korea fined for vertical restriction:

    KFTC issued a cease and desist order to Fissler Korea ltd (Fissler) for fixing the price of its cookware products in the Korean market and fined KRW 170 million. Fissler, since May 2007, had set a retail price and enforced its Korean franchise stores who sell its products in a door-to-door sales manner to follow until now. Apart from price fixing Fissler, imposed strong sanctions such as penalty, supply suspension, franchise contract cancellation against distributors who applied lower prices or took the goods outside its own distribution network. Fissler had set the retail price of its pressure cooker from May 2007 and prohibited its distributors from selling at any lower price than it to maintain minimum resale price. During the period of May 2007 to July 2011, Fissler was directly involved in the country's distribution by fixing the price and further indulging in resale price maintenance. Since August 2011, the company has been involved indirectly by forming a consultative body called the anti-dumping council wherein the owners of its franchise stores meet. Fissler's behavior of fixing the minimum RPM was

    1. http://www.nbcnews.com/technology/south-koreas-fair-trade-commission-clears-google-after-2-year-6C10669675
    2. http://eng.ftc.go.kr/bbs.do
    an attempt to preclude price competition among franchise stores under a single brand name thus preventing consumers from having wider choices of buying cookware at a lower price. The KFTC observed that the fixing of minimum RPM has a serious ramification on competition.

  3. Hyundai Motor Gets Biggest Fine In South Korea Price-Fixing Case:

    Hyundai Motor Co. and five foreign-vehicle importers and distributors, Scania Korea Ltd., Volvo Group Korea Co., Daimler Trucks Korea Ltd., MAN Truck & Bus Korea Ltd. and Tata Daewoo Commercial Vehicle Co., were fined a combined 116 billion won ($104 million) by the KFTC for fixing prices of the trucks and tractors sold in the country. It was alleged that the companies worked with Hyundai Motor Co. in exchanging information with respect to raising prices, inventory levels and promotion programs. The vehicles involved in the case included dump trucks, tractors and cargo trucks. The aforementioned companies colluded on prices in 55 meetings held from December 2002 to April 2011. It was observed that, in order to avoid fair competition and maintained similar price levels, the companies acted in concert which eventually resulted in a continued increase in selling prices of large vehicles during the cited period, regardless of market conditions.

  4. Competition Commission of Singapore clears the Emirates-Qantas alliance:

    Emirates Airline (“Emirates”) and Qantas Airways Limited (“Qantas”) notified the Competition Commission of Singapore (CCS) the proposed alliance between them, scheduled to take effect from 1 April 2013. Both Emirates and Qantas intended to coordinate their business activities such as network, scheduling, pricing, marketing, purchasing, customer service, frequent flyer programs and resourcing decisions in their passenger and freight operations globally for an initial term of ten years. The CCS subsequently passed its order regarding the proposed alliance between Emirates and Qantas Airways, wherein, both Emirates and Qantas provided voluntary undertakings to the CCS to increase their seat capacity for passengers flying to and from Singapore on the Singapore- Melbourne and Singapore-Brisbane routes. During its assessment, the CCS found that some areas of the proposed alliance would raise competition concerns.

    3.http://www.law360.com/articles/460671/s-korea-fines-hyundai-others-104m-in-price-fixing-probe
    4.http://www.ccs.gov.sg/content/ccs/en/Media-and-Publications/Publications/competitive-edge/issue-5/news/EmiratesQantasAllianceGetsAllClear.html
    These voluntary undertakings would provide a combined total of 8,246 seats weekly on each of the routes of Singapore-Melbourne and Singapore-Brisbane. Apart from the voluntary undertakings, the CCS may further require Emirates and Qantas to increase the seat capacities if their load factors and route profitability crosses certain thresholds for any given 12 month period and reserves it’s right to further investigate into the alliance if the undertakings were not complied with.

  5. CCS fines 12 motor traders for bid-suppression:

    The CCS has fined 12 motor traders who were found to have engaged in anti-competitive agreements in order to suppress bids at public auctions of motor vehicles over a period of three years from January 2008 to March 2011. CCS commenced its investigations after receiving information by the Land Transport Authority, the National Environment Agency, Singapore Civil Defence Force, Singapore Customs and the Singapore Police Force with respect to the alleged bid-rigging activities at public auctions of motor vehicles.

    After the investigation, CCS observed that the Parties entered into an agreement to refrain from bidding against each other at public motor vehicles auctions held by the government agencies. It was observed that, the difference in the bid prices of the vehicles between the public auctions and the 'private' auctions were put into a common pool and shared amongst those present at the 'private' auctions.

    The CCS hence found the motor traders guilty of bid – rigging and subsequently fined them a total of $179,071 for the infringements with fines ranging from $50,733 to $8,000 for bid – ringing and collusive pricing. The three traders that received the highest fines were Pang's Motor Trading, Tim Bock Enterprise and Kiat Lee Machinery.

  6. Japan’s Fair Trade Commission imposes a 4.3 billion Yen Fine on Car Parts Companies for Price-Fixing:

    The Japan’s Fair Trade Commission (JFTC) fined four Japanese car parts companies, namely, Mitsubishi Electric Corp., Mitsuba Corp., T. Rad Co. and Calsonic Kansei Corp. a total of 4.3 billion Yen ($47.7 million) for engaging in price-fixing. The JFTC commenced

    5.http://www.ccs.gov.sg/content/ccs/en/Media-and-Publications/Media-Releases/ccs-fines-12-motor-vehicle-traders-for-bid-rigging-activities-at.html
    6.http://www.nytimes.com/2013/09/27/business/9-auto-parts-makers-plead-guilty-to-fixing-prices.html?ref=global-home
    its investigation in June, 2000 which ended only in March, 2003, during which, the other regulators, including the U.S. Department of Justice, were carrying out parallel probes. The JFTC found that the companies conspired to fix the prices of several car parts, including generators, starters, windscreen wipers and radiators, and charged inflated prices to several car companies including Honda, Suzuki and Nissan. In addition to levying fines, the JFTC ordered the companies to adopt a resolution stating that the following:

    i. they have terminated the offending conduct;
    ii. will not engage in similar conduct in the future;
    iii. will issue compliance guidance; and
    iv. will implement regular staff training on Japan’s Anti-Monopoly Act, 1947.


  7. JFTC clears ASML acquisition of Cymer:

    JFTC has cleared the merger between Cymer, Inc. (“Cymer”) and affiliates of ASML Holding NV (ASML). Resultantly, ASML will now manage Cymer as an independent business unit with respect commercial hardware sales and services activities. Cymer will continue to supply sources to, and engage in R&D activities with all lithography tool manufacturers on fair, reasonable and non-discriminatory commercial terms. Furthermore, ASML will continue to let its customers choose their preferred light source, and its scanners will continue to interface with light sources from all manufacturers. Cymer and ASML continue to expect the transaction to close in the first half of 2013.

  8. Israel aiming for Antitrust Scrutiny Foreign Airlines:

    Israel's competition regulator has proposed a legislation meant to expand the country's ability to pursue antitrust cases against international airlines. As the country's competition law currently stands, Israel has allowed foreign airlines to enter into restrictive agreements under certain conditions, exempting them from antitrust scrutiny in those cases. But with the proposed amendments, the agency would be given more power to regulate those type of agreements to determine if they flout Israel's antitrust law. The changes to the law are

    7.http://www.asml.com/asml/show.do?lang=JA&ctx=5869&rid=48723
    8.http://www.law360.com/articles/436389/israel-aiming-for-more-foreign-airline-antitrust-scrutiny
    intended, in part, to provide Israeli and foreign carriers a level playing field and to encourage companies to complement the government's antitrust enforcement efforts by filing private actions. The amendments would allow private companies to sue for alleged breaches of the country's competition law, and to seek triple damages for any violations. Israel's antitrust authority would also be able to pursue criminal cases against foreign air carriers.

AUSTRALIA

  1. Competition Commission of India (CCI) and Australian Competition and Consumer Commission (ACCC) signed a Memorandum of Understanding (MOU):

    The MOU was signed by Mr. Ashok Chawla, Chairperson, CCI and Mr. Rod Sims, Chairman, ACCC. The MOU provides for sharing information on significant developments in competition policy and enforcement developments in the respective jurisdictions. It is recognised that it may be in common interest of both the countries to work together in technical cooperation activities as well as cooperate in appropriate cases, consistent with the respective enforcement interests, legal constraints, and available resources. It has been planned that the effectiveness of the cooperation under the Memorandum would be evaluated on a regular basis to ensure that the expectations and needs as envisioned are being met. The MOU is expected to further strengthen existing cooperation between the CCI and the ACCC.

  2. ACCC has sued credit card company Visa for alleged "misuse of market power":

    The ACCC has accused Visa from preventing customers from using a currency of their choice in their transactions. It is alleged that Visa "engaged in exclusive dealing" and barred retailers from using rival currency conversion services which were meant to boost Visa's revenue. By such an act the retailers were denied the opportunity to share the revenue arising from such transactions and that Australian suppliers of dynamic currency conversion services were, and continue to be, denied the opportunity to compete with Visa in relation to Dynamic Currency Conversion services at ATMs.

    9. http://www.pib.nic.in/newsite/erelease.aspx?relid=96432
    10. http://www.bbc.co.uk/news/business-21318349

  3. ACCC rebuffs Heinz bid for baby food rival:

    The ACCC opposed the proposed acquisition of Rafferty’s Garden by Heinz Baby Foods (Heinz). Heinz and Rafferty’s Garden are the two largest suppliers of wet and dry infant food in Australia. The merged Heinz/Rafferty’s Garden would account for 80 per cent of the share of sales in the wet infant food market and around 70 per cent in infant cereals and infant snacks.

    The ACCC held that the proposed acquisition is likely to result in a substantial lessening of competition through the removal of Rafferty’s Garden, which has around 40 per cent market share in wet infant food. It is a close and effective competitor of Heinz, which also has around a 40 per cent market share in the same segment. Also, the proposed acquisition would combine the two largest suppliers of wet and dry infant food in Australia, resulting in highly concentrated markets where barriers to entry and expansion are high, particularly because of brand recognition and preference. This is likely to reduce the frequency and depth of promotional activity, increase prices and reduce innovation in the wet and dry infant food markets. In reaching its decision, the ACCC carefully considered the dependence of both Heinz and Rafferty’s Garden on the major supermarket chains for stocking their products.

  4. ACCC approves Virgin Australia's Tiger Airways acquisition:

    Virgin Australia Airways has been given the green light from ACCC to buy a controlling 60 per cent stake in budget Tiger Airways. The ACCC held that the $35 million acquisition was “unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services” and the decision to approve the acquisition was driven by fears that the loss-making Tiger would pull out of Australia if the deal did not go ahead. In six years, in Australia, Tiger has never made an operating profit, and its current losses are large. The ACCC had previously indicated that it would be looking for Virgin Australia to commit to expanding Tiger's fleet from 11 to 35 aircraft over the next five years a commitment.

    11.http://www.australiancompetitionlaw.org/news.html
    12.http://www.accc.gov.au/media-release/accc-to-not-oppose-virgin-australia%E2%80%99s-proposed-acquisition-of-60-of-tiger-australia
    The ACCC had a difficult decision, as Tiger Airways Australia’s parent company in Singapore indicated that they would shut down the Australian subsidiary if the deal did not proceed, and this would have lessened competition in the low-cost airline market. Virgin Australia also warned that it would pull out of the takeover if the ACCC imposed restrictions on future growth. Tiger Airways Australia has been suffering ongoing losses during the entire six years it had been operating in Australia. The airline was grounded by the Civil Aviation Safety Authority for a period in 2011 due to safety and operational issues, and this had a significant negative impact upon the airline’s financial performance. The ACCC determined that the survival of Tiger Australia would be extremely difficult if the proposed acquisition didn’t proceed’ and concluded that its 11 Airbus A320 aircraft would probably be transferred to Asia if the deal was not consummated.


  5. ACCC takes action against Energy Australia:

    The ACCC has launched legal proceedings against one of Australia's largest energy companies, Energy Australia, alleging its sales representatives misled homeowners during a door-to-door marketing campaign. The ACCC has alleged that sales representatives made "false, misleading or deceptive'' claims when calling on people at homes in Victoria, NSW and Queensland to discuss their gas and electricity contracts between 2011 and 2012. In March last year, the Federal Court ordered Neighbourhood Energy and the marketing company Australian Green Credits to pay a total of $1 million for illegal door-to-door selling practices, after action was lodged by the ACCC.

CANADA

  1. Nestlé Canada, others charged with chocolate price-fixing:

    Criminal charges have been laid in a chocolate price-fixing case against the market leader Nestlé Canada Inc., Mars Canada Inc. and the National Distribution Network Itwal Ltd., along with three senior industry executives. The charges cap Canada’s Competition

    13.http://www.accc.gov.au/media-release/accc-takes-action-against-origin-energy-and-salesforce-for-door-to-door-selling
    14.http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03569.html
    Bureau (“Competition Bureau”) investigation lasting more than five years into Canada’s multibillion dollar a year candy industry. The three individuals charged are Robert Leonidas, former President of Nestlé Canada; Sandra Martinez, former President of Confectionery for Nestlé Canada; and David Glenn Stevens, President and CEO of ITWAL. Class-action law suits were filed against the companies in connection with the price-fixing allegations resulted in settlements of more than $22 million. Nestle Canada settled for $9 million, Cadbury Adams Canada for $5.7 million, Hershey Canada for $5.3 million, and Mars Canada for $3.2 million.. The Bureau became aware of the conduct through its Immunity Program, where under, , the first party to disclose to the Bureau an offence not yet detected or to provide evidence leading to a referral of evidence to the PPSC may receive immunity from the PPSC, provided that it fully cooperates with the Bureau and the PPSC. Subsequent cooperating parties may receive lenient treatment under the Bureau's Leniency Program.

  2. Japanese Bearings Manufacturer Fined $5 Million:

    JTEKT Corporation (JTEKT), a Japanese bearings manufacturer pled guilty to two counts of bid-rigging under the Competition Act and was fined $5 million by the Superior Court of Quebec in Gatineau for its participation in an international bid-rigging cartel. JTEKT's plea related to automotive wheel hub unit bearings supplied to Toyota Motor Manufacturing Canada Inc. (Toyota) between 2007 and 2013. The evidence showed that JTEKT secretly conspired with another bearings manufacturer in Japan to submit bids or tenders in response to requests for quotations to supply Toyota. JTEKT was the first party to plead guilty in relation to the investigation into automotive bearings. There was no allegation of wrongdoing against Toyota, the customer of the companies under investigation. JTEKT participated in the Bureau's Leniency Program and provided substantial assistance to the Bureau.

  3. Hershey Pled Guilty in Price-fixing Cartel:

    Hershey Canada Inc. (Hershey) pled guilty before the Ontario Superior Court of Justice in Toronto for its role in fixing the price of chocolate confectionery products in Canada contrary to the criminal conspiracy provision in the Competition Act and was fined $4

    15. http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03583.html
    16. http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03578.html
    million. As Hershey cooperated with the Competition Bureau's investigation, and will cooperate with any subsequent prosecution, the Competition Bureau recommended to the PPSC that Hershey should receive lenient treatment. Hershey admitted that it had conspired, agreed or arranged to fix the price of chocolate confectionery products in Canada in 2007. Hershey further admitted that, in 2007, its senior employees acting within the scope of their authority at Hershey communicated with other members of the alleged cartel, to exchange price sensitive information as regards chocolate confectionery products in Canada.

  4. Bell Canada gets Competition Bureau clearance for Astral acquisition:

    Bell Canada cleared another major hurdle in its effort to acquire Astral Media when it got the Competition Bureau's approval to proceed with the proposed acquisition. The telco still needs to get the Canadian Radio-television and Telecommunications Commission's (“CRTC”) approval. To gain the Competition Bureau's approval, Bell Canada agreed to sell a number of Astral TV services. Bell Media will retain the French-language SuperEcran, CinePop, Canal Vie, Canal D, VRAK TV and Z Tele as well as the English-language service The Movie Network, which includes HBO Canada and TMN Encore. Under the terms of the agreement, Bell and Astral undertook that the two companies will sell a number of TV assets to Corus: Astral's share of six TV joint ventures including the bilingual Teletoon/ Teletoon service, English-language Teletoon Retro and Cartoon Network (Canada), and French-language Teletoon Retro, Historia and Series+ for CAD 400.6 million ($389.5 million). Corus will also acquire two of Astral's radio stations in Ottawa, CKQB-FM and CJOT-FM. Corus' acquisitions are also subject to regulatory approval.

EUROPEAN UNION

  1. European Commission fines Telefónica and Portugal Telecom € 79 million for illegal non-compete contract clause:

    The European Commission (EC) has imposed fines of € 66 894 000 on Telefónica and of € 12 290 000 on Portugal Telecom for agreeing not to compete with each other on the Iberian

    17.http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03543.html
    18.http://europa.eu/rapid/press-release_IP-13-39_en.htm
    telecommunications markets, in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) which prohibits anti-competitive agreements. The terms of the acquisition by Telefónica of the Brazilian mobile operator Vivo, (which was until then jointly owned by both parties), contained a clause in the contract indicating they would not compete with each other in Spain and Portugal as from the end of September 2010. The parties terminated the non-compete agreement in early February 2011, after the EC investigated into the matter. In setting the level of fines, the EC took into account the duration of the infringement (4 months) and its gravity, including the fact that the agreement was not kept secret by the parties. The early termination of the agreement was also taken into account by the EC as a mitigating circumstance.

  2. EC opens investigation into proposed acquisition of Olympic Air by Aegean Airlines:

    The EC has opened an in-depth investigation under the EU Merger Regulation into the proposed acquisition of Olympic Air by Aegean Airlines. The companies are the two main Greek airlines offering passenger air transport services on Greek domestic and international routes. Each of the companies operates out of Athens International Airport. The EC had concerns that the transaction may lead to price increases and poorer service on several domestic Greek routes out of Athens, where the merged entity would have a monopoly or an otherwise dominant position. However, opening of an in-depth inquiry does not prejudge the outcome of the investigation. The EC’s initial market investigation indicated that the proposed transaction raises serious competition concerns on a number of Greek domestic routes where Aegean and Olympic currently compete or are well placed to compete. These routes are used not only by the Greek passengers, but also by a large number of foreign travelers, given the popularity of Greece as a tourist destination. The EC would investigate the proposed acquisition in-depth to determine whether its initial concerns are confirmed or not.

  3. EU and Switzerland sign Cooperation Agreement in Competition Matters:

    The EU and the Swiss Confederation have signed an agreement that will strengthen co-operation between their respective competition authorities, i.e., the EC and the Swiss Competition Commission. This is the fifth such agreement signed by the EU after agreements concluded with the United States, Canada, Japan and Korea. An innovative

    19.http://europa.eu/rapid/press-release_IP-13-361_en.htm
    20.http://europa.eu/rapid/press-release_IP-13-444_en.htm
    feature of the agreement with Switzerland is that it will enable the two competition agencies to exchange information that they have obtained in their investigations. The execution of the cooperation agreement took place subject to ratification and the agreement will enter into force once it has been approved by the European Parliament and the Swiss Parliament. The Agreement provides for general information duties to facilitate the coordination of transnational procedures. The competition authorities will notify each other on their enforcement activities if such activities could have an effect on important interests of the other party. This should avoid or lessen the risk of conflicts (negative comity). Furthermore, one competition authority may ask the other authority to initiate or expand enforcement activities if the other competition authority is better positioned (positive comity).

  4. EC renders legally binding commitments from Star alliance members Air Canada, United and Lufthansa on transatlantic air transport passenger market:

    The EC accepted commitments offered by Air Canada, United and Lufthansa to address EC's concerns that the parties' cooperation under a revenue-sharing joint venture may be in breach of EU antitrust rules and harm premium passengers on the Frankfurt-New York route. Premium passengers are passengers travelling in the first, business and flexible economy classes. In order to address these concerns, the parties offered to make slots available at Frankfurt and New York airports and to enter into agreements with competitors, allowing them to offer more attractive services. As a result, competition on the Frankfurt-New York route is expected to improve. After having consulted interested parties through a market test, the EC has now made these commitments legally binding on the three airlines for a period of ten years.

    The revenue sharing joint venture eliminated competition between the parties on price and capacity. The EC had concerns that this may have resulted in higher prices for premium passengers on the Frankfurt-New York route. The parties therefore offered commitments aimed at facilitating the entry of new competitors on the Frankfurt-New York route. Since the main entry barrier remains the slot shortage at airports, the parties offered to make landing and take-off slots available at Frankfurt and/or New York. The

    21.http://europa.eu/rapid/press-release_IP-13-456_en.htm?locale=en
    parties also offered to enter into agreements allowing competitors to offer tickets on the parties' flights (reducing competitors' frequency disadvantage) and to get better access to the parties' connecting traffic. Finally, the parties committed to submit data concerning their cooperation, which will facilitate an evaluation of the alliance's impact on the markets over time, barriers to entry and expansion, new and existing competitors would have been unable to challenge the market power of the parties.

  5. The General Court partially annuls the EC’s Decision relating to a cartel on the marine hoses market:

    EC has found 11 companies; including Parker ITR Srl, Parker-Hannifin Corp., Trelleborg Industrie SAS, Trelleborg AB and Manuli Rubber Industries SPA to have participated in a cartel on the marine hoses market. The cartel, regarded by the EC as having lasted from April 1986 to May 2007, had the objectives of the allocation of tenders, price-fixing, quota-fixing, the fixing of sales conditions, the sharing of geographic markets, and the exchange of sensitive information. EC imposed a fine of €24.50 million on Trelleborg Industrie, for €12.20 million of which Trelleborg was jointly and severally liable. The fine imposed on Parker ITR amounted to €25.61 million, for €8.32 million of which Parker-Hannifin was jointly and severally liable. A fine of €4.90 million was imposed on MRI. The five companies have brought actions before the General Court seeking either the annulment of the EC’s Decision or a reduction in the fines imposed on them. Further, the fine imposed on Parker ITR was reduced by €25.61 million to €6.40 million inasmuch as the EC could not find that company liable for the whole duration of the infringement. As regards Trelleborg Industrie and Trelleborg AB it was observed that that the error made by the EC as regards the continuing nature of the infringement did not therefore have any effect on the duration of the cartel which served as a basis in calculating the amount of the fine.

  6. EC fines Lundbeck and other pharma companies for delaying market entry of generic medicines:

    The EC has imposed a fine of € 93,8 million on Danish pharmaceutical company Lundbeck and fines totaling € 52,2 million on several producers of generic medicines. In 2002, Lundbeck agreed with each of these companies to delay the market entry of cheaper

    22. http://europa.eu/rapid/press-release_CJE-13-60_en.htm
    23. http://europa.eu/rapid/press-release_IP-13-563_en.htm
    generic versions of Lundbeck's branded citalopram, a blockbuster antidepressant. These agreements violated EU antitrust rules that prohibit anticompetitive agreements (Article 101 of the TFEU). These generic companies were notably Alpharma, Merck KGaA/Generics UK, Arrow and Ranbaxy. Instead of competing, the generic producers agreed with Lundbeck in 2002 not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros. Lundbeck paid significant lump sums, purchased generics' stock for the sole purpose of destroying it, and offered guaranteed profits in a distribution agreement. The agreements gave Lundbeck the certainty that the generic producers would stay out of the market for the duration of the agreements without giving the generic producers any guarantee of market entry thereafter. These agreements are very different from other settlements of patent disputes where generic companies are not simply paid off to stay out of the market.

  7. EC fines producers of wire harnesses € 141 million in cartel settlement:

    The EC fined the car parts suppliers Sumitomo, Yazaki, Furukawa, S-Y Systems Technologies (SYS) and Leoni a total of € 141 791 000 for operating five cartels for the supply of wire harnesses to Toyota, Honda, Nissan and Renault. Wire harnesses conduct electricity in cars, for instance to start the motor, to open the window or to switch the air-conditioner on. They are often described as the 'central nervous system' of the car. The cartels covered the whole European Economic Area. Further, Sumitomo was not fined for any of the five cartels as it benefited from immunity under the EC's 2006 Leniency Notice for blowing the whistle on the cartel. All other companies received reductions of their fines for their cooperation in the investigation under the EC's leniency programme. Since the companies agreed to settle the case with the EC, their fines were further reduced by 10%. The companies coordinated the prices and allocation of supplies of wire harnesses to the respective car manufacturers. The cartel contacts took place both in Japan and in the EEA:

    a. For Toyota and Honda, the participants rigged a series of tenders for the supply of wire harnesses, including all tenders for supplies to the European manufacturing facilities published during the cartel period.

    24. http://europa.eu/rapid/press-release_IP-13-673_en.htm
    b. For Nissan and Renault, the participants rigged – or attempted to rig – single tendering procedures for some individual models.

INDIA

  1. CCI approves DENSO Corporation and Pricol Corporation Joint Venture:

    The Competition Commission of India (CCI or Commission) has approved Japan's auto component maker Denso Corporation's proposed joint venture with Pricol Ltd, saying the deal would not have an adverse impact on competition. Following the joint venture agreement, on February 14, 2013, Denso had approached CCI for its approval. The proposed deal involves transfer by auto component maker Pricol, of its 'Denso Technology Instrument Cluster Undertaking', relating to the four-wheeler personal passenger vehicles in Coimbatore and Gurgaon, to its subsidiary Pricol Components Ltd (PCL). According to the agreement, upon the transfer, Denso would acquire 51 per cent stake in PCL.

  2. CCI rejects market abuse charges against Airtel, Vodafone, Apple:

    CCI dismissed charges of anti-competitive practices and abuse of dominant market positions in agreements signed by telecom majors Airtel and Vodafone with global technology giant Apple with regard to the sale of iPhone smartphones in India. The order follows an over one-and-a-half years probe by its investigative arm into complaints that Bharti Airtel, Vodafone, US-based Apple Inc and its Indian subsidiary abused the dominant positions in their respective markets for smartphones and GSM cellular services. The CCI probe was focussed on a particular variant of iPhone, iPhone 3G/3GS and it was alleged that Apple had entered into “some secret exclusive contracts/agreements” with Airtel and Vodafone for sale of iPhone in India, even prior to its launch.

  3. CCI approves Titan International-Titan Europe deal

    CCI received a notice under section 6(2) of the Act on 4th February, 2013 by Titan International, Inc. (Titan International or Acquirer) and Titan Europe PLC (Titan

    25.http://www.cci.gov.in/May2011/OrderOfCommission/CombinationOrders/C-2013-02-110.pdf
    26.http://cci.gov.in/May2011/OrderOfCommission/242011.pdf
    Europe) as regards acquisition of the entire share capital of Titan Europe by Titan International, as a consequence of which Titan International has indirectly acquired 35.91 per cent equity share capital of Wheels India Limited. Along with the notice, the parties also submitted an application for condonation of delay as the notice was given to the CCI beyond the time period specified in the Competition Act, 2002 (Act) and the Commission decided to levy penalty under Section 43A of the Act. The parties however, replied that the Combination was based in the United States of America and United Kingdom, respectively and the acquisition of 35.91 per cent equity share capital in Wheels India was an indirect acquisition. The parties’ omission to comply with Section 6(2) of the Act in the instant matter was altogether inadvertent and unintentional and not guided by any mala fide intentions. The CCI noted that any person or enterprise, who or which proposes to enter into a combination, has to mandatorily give a notice to the Commission prior to entering into a combination. In the instant case, the parties had reached an agreement on the terms of the recommended share offer and therefore, Acquirer ought to have given the notice to the Commission within thirty days of reaching the said agreement, which he failed to do and accordingly, a maximum penalty of 145 crores was calculated.

    However, considering that the a) parties were based outside India b) combination resulted from the acquisition of one foreign enterprise by another foreign enterprise c) parties did give notice to the commission voluntarily though delayed, the commission took a lenient view and ordered a penalty of only Rs 1 Crore. It was further observed that, in India, there was no horizontal overlap in the business activities of Titan International and Wheels India, as Titan International has no significant presence in India except its indirect stake in Wheels India, hence, the combination was approved considering no adverse effects was caused.

  4. CCI gives nod to Mylan Laboratories and Unichem Laboratories combination deal

    The CCI received a notice under section 6(2) of the Act by Mylan Laboratories Limited (Acquirer) for acquisition of a newly established Finished Dosage Forms (FDFs) manufacturing facility located in a Special Economic Zone in Dhar district in M.P., from Unichem Laboratories Limited (“Unichem”). The notice was filed pursuant to the execution of a Business Transfer Agreement on 11th March, 2013 between Unichem and Mylan. The proposed combination fell under Section 5 (a) of the Act. Mylan was stated to be a pharmaceutical company having 11 manufacturing facilities in India and established R&D facilities, whereas, Unichem was stated to be a pharmaceutical company having 7 manufacturing facilities and FDFs formed the core of Unichem’s business. It was observed that the proposed combination will not affect any market in India as Mylan is neither acquiring any shares, voting rights or control in Unichem nor any brands or intellectual property rights from Unichem and will not give rise to any adverse competition concern in India. Hence, approval was given without prejudice to any other legal/statutory obligations as applicable.

  5. COMPAT directs cement firms to deposit Rs 630 cr:

    Information was filed by Builders’ Association of India against the Cement Manufacturers’ Association and 11 other cement manufacturing companies alleging violation of the provisions of Sections 3 and 4 of the Act. It was alleged that said cement manufacturers in connivance with their representative body Cement Manufacturers Association indulged in collusive price fixing for which they have divided the territory of India into five zones so as to enable themselves to control the supply and determine or fix exorbitantly high price of cement by forming a cartel in contravention of provision of Section 3. The appellants collectively held more than 57.23% of the market share in India and thus enjoyed the position of dominance. The CCI deduced that these companies had contravened the provision of the Act more particularly under Section 3 of the Act. The aggrieved filed an appeal before the Hon’ble Competition Appellate Tribunal (COMPAT) and prayed for passing of the blanket stay order in view of their objections to the legality of the impugned order passed by the CCI. However, the tribunal refused to agree that the so called procedural irregularities are inextricably connected with the individual merits of the claims made in these appeals by the cement manufacturing companies. The tribunal chose to grant stay on the penalties, however, with a condition that the appellants deposit 10% of the penalties inflicted.

    27.http://compat.nic.in/upload/PDFs/mayordersApp2013/17_05_13.pdf
  6. COMPAT finds explosives manufacturers guilty of violating the Competition Act, 2002 (Act):

    The CCI had found Gulf Oil Corporation, Ideal Industrial Explosives, Solar Industries India, Blastec India, Indian Explosives, Emul Tek, Regenesis Industries & Techno Blasts India, Black Diamond Explosives, and Keltech Energies guilty of a collective boycott of the electronic reverse auction for procurement of explosives conducted by Coal India Limited (CIL), in violation of Section 3(3)(d) of the Act. Pursuant to information filed by CIL, the CCI had conducted a detailed investigation, following which it passed an order imposing a total fine of approximately Rs 60 crores on the ten explosives manufacturers. The COMPAT dismissed the appeals upholding the violation of the Act, but considering various mitigating factors, reduced the fine payable to 10% of the fine imposed by the CCI. The COMPAT passed a final order dismissing the appeals filed by various explosives manufacturers against the CCI’s order dated 16 April 2012, unanimously finding them guilty of a contravention of section 3 of the Act.

SOUTH AFRICA

  1. South Africa Fines Contractors $151 Million for Bid Rigging:

    The Competition Commission of South Africa (Competition Commission) has fined 15 construction firms a total of more than $151 million as part of agreements reached last month that settle bid-rigging claims related to at least $4.8 billion worth of projects. The companies colluded to create the illusion of competition by submitting sham tenders ('cover pricing') to enable the other fellow participants to win the tenders. The investigation which spanned over three years revealed more than 300 incidents of collusive tendering, including on contracts related to six World Cup soccer-stadium projects, such as the $460-million Green Point venue in Cape Town.

    28.http://compat.nic.in/upload/PDFs/aprilordersApp2013/18_04_13.pdf
    29.http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/Construction-Fast-Track-Settlement-Process-Media-Release.pdf
  2. South Africa’s Telkom to pay 200 million penalty to Competition Commission:

    South African integrated communications provider Telkom has agreed to pay a 200 million administration penalty to resolve complaints of the company abusing its dominance in the telecommunications sector. Settlement included the reduction of its wholesale services used by internet service providers to IP virtual private networks (IPVPSs) and internet access services between the 2014 to 2016 financial years. Over the course of three years, Telkom has also agreed to pay a 200 million rand administration penalty. Between June 2005 and July 2007, the Competition Commission received five complaints against Telkom from Internet Solutions Pty Ltd, the internet division of Multichoice Subscriber Management Services Pty Ltd, Verizon Pty Ltd and the Internet Service Providers Association. The complaints revealed that Telkom through exorbitant pricing of its high bandwidth national transmission lines (HBTLs) and undersea international cable lines had created a “margin squeeze” . The company’s prices for wholesale services to first tier internet service providers to build their internet access and IP VPNs prevented competition with Telkom Retail’s own internet access and IP VPN services.

    The Competition Commission’s investigation also found out that Telkom bundled their products by participating in anti-competitive conditional selling of their internet access and IP VPN services, which were priced lower than the equivalent access services customers would purchase when comparing costs with other licensed operators.

  3. Investigation into glass cartel in South Africa:

    The Competition Commission asked Competition Tribunal of South Africa, to which it referred its findings, to impose an administrative penalty of 10% of yearly turnover on each of the firms involved following a 2010 investigation into cartel activity. The six firms are all facing allegations of price-fixing, market allocation and the fixing of trading conditions for float, laminated and toughened glass. The six companies involved were, Glass South Africa, National Glass, Northern Hardware and Glass, Furman Glass, McCoy’s Glass and AF-FSL Glass. McCoy’s Glass will pay a reduced fine of just under R2.5 million and will testify about the “boys’ club” of six glass manufacturers and distributers: Glass South Africa,

    30.http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/Commission-reaches-settlement-agreement-with-Telkom.pdf
    31.http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/Commission-refers-glass-cartel-case.pdf
    National Glass, Northern Hardware & Glass, Furman Glass, AF-FSL Glass and McCoy’s itself.

    The Competition Commission originally regarding its findings of cartel-like conduct against the companies following an investigation which started in 2010, after receiving information from lenient applicant AF-FSL Glass. AF-FSL was granted conditional leniency from prosecution.

THE UNITED KINGDOM

  1. OFT issues decision in mobility scooters case:

    The Office of Fair Trading (OFT) issued a decision finding that Roma Medical Aids Limited (Roma), a manufacturer of mobility scooters based in Bridgend, Wales, and some of its online retailers, flouted the applicable competition laws. The OFT found that Roma had entered into arrangements with seven UK-wide online retailers which prevented them from selling Roma-branded mobility scooters online and from advertising their prices online. The OFT found that these practices limited consumers' choice and obstructed their ability to compare prices and get value for money. The OFT found these practices occurred over various periods in relation to different retailers between 2011 and 2012 and prevented, restricted or distorted competition in the supply of mobility scooters in the UK. The OFT has directed the parties to cease and desist from entering into the same or similar arrangements in the future.

  2. CC to break up UK cement market:

    The Competition Commission of U.K. (CC) has provisionally found that coordination between the three major producers of cement - Lafarge Tarmac, Cemex and Hanson is likely to result in higher prices for all cement users. A fourth manufacturer, Hope Construction Materials, is a new player in the market, and was set up as a result of the merger of the Lafarge and Tarmac businesses. The finding does not mean that there has

    31.http://www.oft.gov.uk/news-and-updates/press/2013/57-13#.UkmThdL7BN0
    32.http://www.competition-commission.org.uk/media-centre/latest-news/2013/may/cc-looks-to-break-open-cement-market
    been explicit collusion on prices, rather that, with only four manufacturers the conditions have been created which allow three of them to coordinate their conduct, thereby increasing the certainty in the market and resulting in higher prices for consumers. The CC is now looking at a wide range of possible remedies to increase competition, including requiring the major producers to divest cement plants; the creation of a cement buying group; prohibiting generalized price announcement letters to customers; and restrictions on making available other information which can aid coordination.

  3. CC provisionally clears AEG/Wembley Arena deal:

    The proposed deal involves Wembley Arena, which was previously operated by Live Nation Entertainment. AEG is the current operator of three indoor live entertainment venues in London: The O2 Arena, the Hammersmith Apollo, and IndigO2, and has been recently awarded a five-year contract to deliver summer concerts at Hyde Park. Following the merger, AEG will operate the two largest London indoor venues: The O2 Arena and Wembley Arena. AEG is also a promoter, AEG Live (UK) Limited, and owns a ticketing service, AXS.com. The CC also stated that, while the merged entity might have the ability to use its position as a promoter, ticket and venue operator to harm its competitors in different parts of the supply chain, either by reducing the supply of its services or by supplying its services on worse terms, it would not have the financial incentive to do so. Specifically, the CC found that, if the merged entity tried to harm its competitors in these ways, it would suffer significant short-term losses in pursuit of very uncertain long-term gains. Therefore, the CC concluded that the merger would not result in a substantial lessening of competition in the markets for the provision of venue space to promoters, provision of sponsorship opportunities or the provision of other event-related services such as catering.

  4. CC clears soft drinks merger:

    Barr and Britvic are both active in the manufacture and supply of a range of carbonated and non-carbonated soft drink brands: IRN-BRU is the largest Barr brand and has a

    34.http://www.competition-commission.org.uk/media-centre/latest-news/2013/Sep/cc-formally-clears-aeg-wembley-arena-deal
    35.http://www.competition-commission.org.uk/media-centre/latest-news/2013/Jul/cc-clears-soft-drinks-merger
    particularly strong presence in Scotland. Other Barr brands include Orangina, KA and Rubicon. Britvic’s brands include Robinsons, J2O, Fruit Shoot, Tango and Pepsi. The CC after assessing the terms of the merger concluded that the proposed acquisition is not expected to result in a substantial lessening of competition and would not cause wholesale prices to increase significantly. The CC’s assessment, and the views of most retailers and other customers of the merging companies, suggested that the two companies’ brands were not close competitors. The CC also did not consider that the increased size of the merged company would mean new entrants and smaller companies would be disadvantaged significantly in obtaining listings at retailers.

THE UNITED STATES OF AMERICA

  1. Barry Diller to Pay $480,000 Civil Penalty for Violating Antitrust Premerger Notification Requirements:

    The Corporate investor Barry Diller will pay an amount of $480,000 as civil penalty to settle charges that he violated premerger reporting and waiting requirements when he acquired voting securities of The Coca Cola Company. The Department of Justice (DOJ), at the request of Fair Trade Commission (FTC) filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Diller for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the department filed a proposed settlement that, if the same is approved by the court, the department is willing to settle the charges.

    The HSR, an amendment to the Clayton Act, imposes notification and waiting period requirements on individuals and companies over a certain size before they consummate acquisitions resulting in holding stock or assets above a certain value, which at the time of Diller’s violations ranged from $63.4 million to $68.2 million and is currently $70.9 million.

  2. Hospital Authority and Phoebe Putney Defendants Agree to Court Order Barring Them from Further Integration of Hospitals Pending Administrative Trial:

    36. http://www.ftc.gov/opa/2013/06/phoebe.shtm
    The Hospital Authority of Albany-Dougherty County, Georgia, and Phoebe Putney defendants have agreed bring to a standstill the integration of the former Palmyra Park Hospital -- now known as Phoebe North -- with Phoebe Putney Memorial Hospital, due to the reason that a complaint challenging the merger as anticompetitive has been filed. The defendants also agreed to maintain the viability of Phoebe North until the completion of a full administrative trial on the merits and all related appeals. The order extends a similar temporary restraining order issued by the District Court last month. The District Court considered the complaint for preliminary relief filed by the FTC, which alleged that the deal would reduce competition substantially and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, harming patients and local employers and employees. The Commission’s complaint was previously dismissed by the District Court, and the dismissal was subsequently affirmed by U.S. Court of Appeals for the Eleventh Circuit. However, on February 19, 2013, the Supreme Court unanimously ruled in favor of the FTC, reversing the Court of Appeals by finding that the state action doctrine did not immunize the hospital acquisition from the federal antitrust laws, and remanded the case to the District Court.

  3. Investment Firm of MacAndrews & Forbes to Pay $720,000 Penalty to Resolve FTC Allegations Related to Premerger Filing Requirements:

    MacAndrews & Forbes arrived a settlement with the Federal Trade Commission regarding the charges that it violated the agency’s premerger filing requirements, and will pay a $720,000 civil penalty. The HSR requires that parties notify the FTC and the DOJ of most large acquisitions. After doing so, parties must observe a waiting period before closing their transaction, while one of the agencies determines whether the transaction may result in a substantial lessening of competition.

    According to the complaint, in 2012, MacAndrews & Forbes violated the HSR with respect to the acquisition of voting securities of Scientific Games Corporation (SG). Based on a previous acquisition in February of 2007, MacAndrews & Forbes could acquire voting securities of SG for five years without making a new HSR filing – until February 9, 2012. MacAndrews & Forbes failed, however, to make a new HSR filing prior to acquisitions

    37. http://www.ftc.gov/opa/2013/06/macandrews.shtm
    that took place in June 4 and 5, 2012, of 800,000 shares of SG, which occurred after the five year grace period, had expired. The complaint also noted that MacAndrews & Forbes had previously made a corrective filing in connection with the acquisition of voting securities of SIGA Technologies Inc. in 2011, but does not charge them with a violation in connection with this filing.

  4. FTC Challenges Pinnacle Entertainment’s Proposed Acquisition of Rival Casino Operator Ameristar:

    The FTC challenged Pinnacle Entertainment, Inc.’s proposed $2.8 billion acquisition of rival casino operator Ameristar Casinos, Inc., alleging that the proposed deal would reduce competition and lead to higher prices and lower quality for customers in the St. Louis, Missouri and Lake Charles, Louisiana areas. The FTC issued an administrative complaint against the two companies alleging that the deal would violate U.S. antitrust laws. The FTC also authorized staff to seek a temporary restraining order and preliminary injunction if, and when, necessary to prevent the consummation of the acquisition pending the administrative trial on the merits.

    Pinnacle and Ameristar are both Nevada-based companies that own and operate casinos in a number of markets throughout the country. Pinnacle owns and operates nine casinos and horse racing facilities in five states, while Ameristar owns and operates eight casinos in six states and is in the process of building its ninth casino.

    The FTC’s complaint alleged that the combination of the two companies would result in increased prices and lower quality for customers in the St. Louis area, where Pinnacle and Ameristar are direct competitors, and in the Lake Charles area, where the parties will directly compete beginning in 2014. In particular, the transaction would result in increased prices (less favorable hold rates, rake rates, table game rules and odds, and lower player reinvestments) and lower quality of services and amenities to the detriment of casino customers in the St. Louis and Lake Charles markets. Additionally, in the St. Louis market, the complaint alleges that the transaction substantially increases the likelihood of coordinated interaction as it would lead to reduction in the number of casino service providers from four to three. The parties’ combined market share and

    38.http://www.ftc.gov/opa/2013/05/pinnacle.shtm
    the post-merger market concentration levels in St. Louis make the transaction presumptively unlawful in that market.

    The complaint, hence, alleged significant barriers to entry for a new casino in each of these markets as there are only a limited number of casino licenses available in each state and that all such casino licenses have been issued coupled with the fact that state laws and regulations limit the expansion of existing facilities.

  5. Graco, Inc. Settles FTC Charges That Its Acquisitions Illegally Harmed Competition in the U.S. Market for Fast Set Equipment:

    Graco, Inc. pled guilty of violating the antitrust laws by buying Gusmer Corp. (Gusmer) in 2005 and GlasCraft, Inc. (GCI) in 2008, its two closest competitors in the North American market for fast set equipment (FSE) used by contractors to apply polyurethane foams and polyurea coatings. The consent order settling the FTC’s charges was designed to restore competition to the FSE market that was lost as a result of Graco’s acquisitions. It incorporated a private litigation settlement between Graco and Polyurethane Machinery Corp. (Gama/PMC) that required Graco to license certain technology to Gama/PMC. The consent order also contains provisions that provide Gama/PMC and other competitors easier access to distributors, so they that could distribute competing FSE products effectively in the North American market.

    The FTC’s complaint alleged that the acquisitions eliminated head-to-head competition among Graco, Gusmer, and GCI and the entire market was monopolized by Graco. After the acquisitions, Graco raised prices for its FSE products, reduced product options, reduced innovation, and raised barriers to entry for firms seeking to compete with Graco, and restricted distributors from dealing in other products. In addition to the requirement that Graco execute the settlement it negotiated with Gama/PMC, the consent order also requires Graco to stop implementing any arrangement with distributors that will preclude them from dealing with Graco’s FSE competitors. The order also prohibits Graco from discriminating, coercing, threatening, or in any other way distorting the distribution network by pressuring its distributors not to carry its competitors’ FSE products.

    39.http://www.ftc.gov/opa/2013/04/graco.shtm
    The agreement, though final, is subject to public comment and the FTC will publish a description of the consent agreement package in the Federal Register once it is final.
G.R. BHATIA is a Partner, KANIKA CHOUDHARY is a Senior Associate & NIDHI SINGH and TRIPTI MALHOTRA are Associates with the Competition Practice Group at Luthra & Luthra Law Offices, India at its New Delhi office.
 
 
© 2007 India Law Journal   Permission and Rights | Disclaimer