Hot topics in competition law

12 February 2014

Prepared by Trudy Feaster-Gee and Jeremy Scholes, Walker Morris LLP

Introduction

‒ Brief reminder of competition

law

‒ The Competition & Markets Authority

‒ Other changes under the ERRA 2013

‒ The cartel offence

‒ Competition law enforcement and regulated sectors

‒ Changes at the Competition Appeal Tribunal

‒ New initiatives on private damages claims

‒ General trends at EU level,

including cartel enforcement

‒ Information exchange

‒ Sectors under particular scrutiny

‒ Cases/decisions to look out for

in 2014

‒ Technology transfer agreements

‒ Changes in the EU merger

control regime

‒ Questions?

1

‒ Prohibition of anti-competitive agreements(Art 101 (1)

TFEU/Ch I CA 1998)

‒ Prohibition of abuse of dominant position (Art 102 TFEU/Ch II

CA 1998)

‒ Cartel offence (EA 2002)

‒ Market investigations (EA 2002)

[EU=sector investigations] Regulation 1/2003

− Merger controls (EU Merger Regulation/EA 2002)

Brief Reminder of Competition Law

2

‒ Established on 1 October 2013

‒ Becomes fully functional on 1 April 2014

‒ Merger of the OFT and Competition Commission

‒ Why?

The Competition & Markets Authority

3

The Competition and Markets Authority

Chair: David Currie Chief Executive: Alex Chisholm

Board

Executive Office, Governance

and International

Strategy, Communications and

Devolved Nations

Enforcement

Directorate

Markets &

Mergers

Directorate

Corporate

Services

Directorate

Project Management Office

Office of the General

Council Office of the Chief Economic

Advisor

4

‒ Enhanced Powers

- investigation

- interim measures

- settlements

- penalties

‒ Priorities

- “more and better enforcement” (and cheaper)

- more prosecutions for the cartel offence as revised

- sort out competition enforcement in regulated sectors

- consumer protection: off to the TSO’s

The Competition & Markets Authority

5

‒ Merger inquiry regime

- New binding time limits for all Phase I cases

- New merger notice form

- New powers on interim orders/undertakings

- (≡ mandatory pre-notification “by the back door”?)

‒ Market studies and investigations

- New time limits:

• 1 year for market studies (Phase I)

• 18 months for market investigations (Phase II)

- Enhanced information gathering powers

Other changes under ERRA 2013

6

‒ Criminal

‒ Individuals (directors and employees)

‒ Dishonest participation in hardcore cartel activity

‒ 7 prosecutions since 2003; one resulting in conviction

‒ Reform as of April 2014

‒ ERRA 2013 removes the requirement for dishonesty ->

easier to convict

‒ Dishonesty requirement replaced by defence of not

concealing/told customer beforehand/legal advice

The cartel offence

7

‒ Competition Act provides for powers of OFT/CMA to be exercised concurrently by various sectoral regulators

‒ Sectoral regulator may consider complaints, carry out investigations, impose interim measures, impose penalties, enforce decisions

‒ Sector regulators’ enforcement records patchy

‒ CMA to sort this out

- CMA will take far more of a lead in these sectors than before

- new “alliance” of CMA and sector regulators: UK Competition Network

- secondments of staff

- annual report

- “use it or lose it”

- expect “creative tension” between CMA and sector regulators

Concurrency

9

‒ CAT = fundamentally, specialist tribunal for appeals against decisions by competition enforcement authorities

‒ + “follow-on” damages claims (s.47A CA1998)

‒ Changes to the processes for appealing against decisions by CMA and sector regulators (streamlining)

‒ Greater role in competition law based litigation between private parties

- “stand-alone” damages claims

- interim and final injunctions

- “fast-track” claims

- new proposals for collective actions

Changes at the Competition Appeal Tribunal

10

‒ Consumer Rights Bill

- “opt-out” collective damages actions

- safeguards against US-style class action “culture”: basically, close supervision by the CAT at each stage

- power for CMA to approve voluntary class compensation schemes

‒ Draft EU directive on damages actions for competition law infringements

- harmonise procedures in national courts of MSS

- draft does not deal with collective actions: instead, separate non-binding recommendation to MSS to set up “opt-in” for “follow-on” claims only

- detailed procedural provisions: disclosure; limitation; passing-on defence; indirect purchasers; quantifying the harm; etc.

- some of these will be a major shock to the system in some MSS

‒ Some new cases in the courts (later)

New initiatives on private damages claims

11

‒ Testing the boundaries of art.101 in “grey areas”

‒ Some big cartel fines

‒ Continued interest in “patent wars” in IT standards cases

‒ RPM and vertical agreements; internet selling v. bricks-

and-mortar

‒ Continued “economicisation” of art.102

‒ Commissioner Almunia clearing his desk

2014: what to expect from DG Competition

12

‒ Higher fines

‒ Cartel settlements

‒ Leniency -> immunity

‒ Global co-operation between competition

enforcement agencies

Trends in cartel enforcement

8

‒ Forum shopping in cartel damages claims: Deutsche Bahn v. Morgan Crucible

‒ Limitation period in “follow-on” cartel damages claims: ditto

‒ Cartel damages claims by indirect purchasers: ditto

‒ Forum shopping again: Ryanair v. Esso Italiana

‒ Effect of LIBOR cartel on individual loan agreements: Deutsche Bank v. Unitech Global

‒ Dominant bank’s obligation not to call default on loans (abuse of dominance)?: Dahabshil Transfer Services v. Barclays Bank

Recent/on-going developments 1

11

‒ Creative use of abuse of dominance to open access to local transport facilities: Purple Parking Ltd. v. Heathrow Airport; Arriva The Shires Ltd. v. London Luton Airport

‒ Non-hardcore “object” agreements by very small market operators: Expedia v. Autorité de la Concurrence

‒ Partners in 50:50 JV liable as parents for competition infringements by JV: Du Pont de Nemours

‒ Effect of UK merger control outside the UK: Ryanair v. CC; Akzo/Metlac

‒ Various challenges to transparency of CC procedures

Recent/on-going developments 2

15

Recent/on-going developments 3

‒ Divestment remedies

- Aggregates, cement and ready-mix concrete: aim: create a 5th UK cement producer

- Private hospitals: aim: create more competition in private hospitals in some areas

‒ Information remedies

- Private hospitals: performance of hospitals and consultants

- Private motor insurance: aim: facilitate shopping around

‒ Other behavioural remedies

- Statutory audit services to large companies: aim: more frequent change of auditors; and change the culture!

Following on from CC market investigations

12

‒ New block exemption due to become

effective on 1 May 2014

‒ One year transitional period

‒ Some changes from the existing block

exemption

‒ Time to review your licences?

Technology transfers

13

‒ A continuing risk area

‒ Recent cases

‒ Key principles

Information exchange between competitors

18

‒ Simplified merger notification process

(with effect from 1 January 2014)

‒ Amends the existing Notice on Simplified

Procedures

‒ Conditions to be satisfied

EU merger regime

14

Regulated Sectors

20

Questions?

21

Contact

Trudy Feaster-Gee, Partner (Barrister)

DD - +44 (0) 113 283 4542

Email – trudy.feastergee@walkermorris.co.uk

Jeremy Scholes, Consultant

DD - +44 (0) 113 283 4419

Email – jeremy.scholes@walkermorris.co.uk

Shaukat Ali, Associate

DD - +44 (0) 1132834412

Email – shaukat.ali@walkermorris.co.uk