Antitrust Enforcement Actions - September 2023
Rohit Arora🇮🇳
Competition/Antitrust Lawyer | Supporting National & International Clients with Indian Competition Law | Litigation & Compliance Solutions | Comprehensive Antitrust Advisory
Welcome to our comprehensive newsletter on Antitrust Enforcement Actions happening across the globe. Delve into the latest developments in competition law and enforcement, as we explore the dynamic landscape of regulatory interventions by competition authorities worldwide. Starting off with: -
A. European Union🇪🇺
The European Commission carried out unannounced inspections at the premises of a company active in medical devices for cardiovascular applications.
The Commission has concerns that the inspected company may have abused its dominant market position in the relevant market.
Unannounced inspection is a preliminary investigative step into suspected anticompetitive practices. The fact that the Commission carried out such inspection does not mean that the company in question is guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.
The European Commission has re-imposed a fine of around €376.36 million on Intel for abusing dominant position in the market for computer chips.
Intel engaged in a series of anticompetitive practices aimed at excluding competitors from the relevant market in breach of EU antitrust rules.
In 2009, the Commission fined Intel €1.06 billion after finding that Intel abused its dominant position in the market for x86 CPUs. The Commission's decision was based on findings that Intel had engaged in two specific forms of anti-competitive practices namely:
(i) giving wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel (so-called ‘conditional rebates'); and
(ii) paying computer manufacturers to halt or delay the launch of specific products containing competitors' x86 CPUs and to limit the sales channels available to those products (so-called 'naked restrictions').
In 2022, the General Court annulled the 2009 Commission's decision that Intel's conditional rebate practice violates Article 102 Treaty on the Functioning of the European Union (‘TFEU'). At the same time, the General Court confirmed that Intel's naked restrictions amounted to an abuse of dominant market position under EU competition rules.
Following this judgment, the Commission adopted a new decision imposing a fine of €376.36 million on Intel for imposing naked restrictions on computer manufacturers.
The European Commission has fined defence company Diehl €1.2 million for participating in a cartel concerning the sale of military hand grenades together with its rival RUAG.
The Commission's investigation revealed that the two manufacturers had divided national markets across the European Economic Area ('EEA') between themselves for nearly 14 years. As per this arrangement, only the designated manufacturer was authorized to sell military hand grenades in its allocated territory unless the other party granted its consent.
Both companies acknowledged their participation in the cartel and agreed to settle the case. RUAG was not fined as it disclosed the cartel to the Commission under the leniency programme.
B. United Kingdom🇬🇧
In a judgment published on September 18, 2023, the Competition Appeal Tribunal (CAT) unanimously upheld the CMA's finding that pharmaceutical suppliers had charged excessive and unfair prices for hydrocortisone tablets, a generic medicine used in the treatment of Addison’s disease and funded by the NHS.
CAT concluded that the prices charged by Auden/Actavis UK for this life-saving medicine between 2008 and 2018 constituted an abuse of a dominant position, resulting in fines of almost £130 million.
The CMA's investigation revealed that the prices of hydrocortisone tablets had risen by over 10,000% compared to the original branded version of the drug. This led to the prices paid by the NHS for a pack of 10mg tablets soaring from 70p in April 2008 to £72 by March 2016.
While upholding the CMA's findings on liability throughout the relevant period, the Tribunal determined that Actavis UK's former parent company, Allergan, should not be penalized for the period when it owned Actavis UK, due to 'hold separate' commitments. These commitments ensured that Allergan did not exert control over its subsidiary.
Consequently, the total penalties for the abuses were reduced by approximately £26 million, to almost £130 million."
The Competition and Markets Authority (CMA) has today published a report following its initial review of foundation models (FMs) and has proposed principles which aim to ensure consumer protection and healthy competition.
Recent developments in FMs and their rapid adoption across several user applications, such as ChatGPT and Office 365 Copilot, highlight their potential to stimulate innovation and economic growth.
The CMA's report highlights the potential benefits for people and businesses if the development and use of FMs are successful. The impact of FMs could also enable a wider range of firms to compete effectively and challenge existing market leaders. This vibrant competition and innovation would benefit the economy as a whole by enhancing productivity and generating economic growth.
However, the report also cautions that weak competition between developers could potentially harm people and businesses. In the long run, a few firms might leverage FMs to establish or reinforce positions of market power and provide sub standard products and services at high prices.
The proposed principles aim to guide the ongoing development and use of FMs, ensuring that people, businesses, and the economy fully reap the benefits of the innovation and growth that FMs can offer. Those principles are: -
In the upcoming months, the CMA will engage extensively with various stakeholders across the UK and globally to further develop these principles
C. France🇫🇷
The investigation services of the Autorité de la concurrence carried out a dawn raid at the premises of a company suspected of having implemented anticompetitive practices in the graphics cards sector.
This is part of the focus put on the cloud by the Autorité de la concurrence, which was the subject of an opinion on competition in its sector published on 29th June 2023.
Following a leniency application and dawn raids, the Autorité de la concurrence fined six companies in the engineering, maintenance, decommissioning and nuclear waste treatment services for engaging in anticompetitive agreements during calls for tender issued by the French Alternative Energies and Atomic Energy Commission.
The six companies, all active in the remediation and decommissioning of nuclear sites, were found exchanging commercially sensitive information with a view to respond to certain calls to tender organised by the CEA for different installations in Marcoule, in order to agree on the price levels to be offered and share out the contracts.
The Autorité noted that the participants in the anticompetitive agreement exchanged information on a regular basis, using different communication channels such as email, text message and physical meetings to review the status of the agreement.
The Autorité therefore imposed a total penalty of 31,239,000 euros. It also ordered the cartel members to publish a summary of the decision in the printed versions and on their official websites.
D. Greece🇬🇷
A complaint was made by a number of agents against Organization of Football Prognostic SA (OPAP) for imposing non-compete and exclusivity clause on the agencies.
The Hellenic Competition Commission (HCC) found that the economic power of the OPAP was significant throughout the period under consideration (2017 – 2021) resulting in the company’s position of economic strength in the relevant market which objectively enabled it to impede effective competition; behave independently of its competitors, customers and, ultimately, consumers.
HCC held that OPAP S.A. engaged, inter alia, in non-compete practices in all the relevant markets concerned as well as in tying practices with respect to services concerning
(a) bill payment and
(b) mediation for telecom firms’ product sale and marketing since the entry into force of the 2017 Agency Agreement.
Resultantly, a fine totaling EUR 24,562,249.05 was imposed on OPAP.
In the context of the Ex Officio investigation, officials of the Directorate General for Competition (DGC) conducted on-site inspections (dawn raids) at the premises of ARGOS Press Distribution Agency S.A (ARGOS) as well as at the premises of the other parties involved.
While investigating, HCC discovered that ARGOS had engaged in anti-competitive practices concerning sub-distributors and sub-agents by dividing the market/customers within the selective distribution network. ARGOS had also imposed 'single branding' and non-compete obligations on sub-distributors and agents, restricting them to specific points of sale, network members, and geographical areas.
The overall evidence pointed towards ARGOS applying exclusionary abusive practices by enforcing exclusivity clauses on publishing companies operating at an upstream economic level, as well as on the members of the selective distribution network (sub-distributors/sub-agents), operating at a downstream level within each level of the press distribution chain in the Greek territory.
Consequently, ARGOS was fined EUR 339,152.52.
E. Italy🇮🇹
The Italian Competition Authority has launched a sector inquiry into the hearing aid markets in Italy.
In the Authority's view, the current market conditions do not seem to guarantee full price transparency for products and related services. The inquiry is aimed at investigating the competitive dynamics of the relevant markets, also taking into account the technological innovations introduced and the recent changes in the relevant legislation.
The Italian Competition Authority (AGCM) has opened an investigation against Ryanair DAC for allegedly abusing its dominant position by engaging in exclusionary practices.
Ryanair DAC is an air carrier that offers scheduled air transport services to passengers on national and international flights.
According to AGCM's initial assessment, Ryanair DAC is utilizing its dominant position in various air transport markets to expand its market influence into tourist services, including hotels and car rentals.
Specifically, Ryanair is restricting travel agencies from purchasing airline tickets through their own websites. Simultaneously, Ryanair is allowing the purchase of airline tickets by traditional travel agencies through the GDS platform owned by Ryanair. As a result, Ryanair is subjecting travel agencies to significantly less favorable conditions in terms of pricing, available service options, and post-sale management of airline tickets.
The actions of Ryanair aim to hinder travel agencies from selling airline tickets, a pivotal initial step in holiday planning and a critical entry point for the sale of additional services.
The Italian Competition Authority (AGCM) opened an investigation into a possible abuse of dominant position by Robert Bosch GmbH in the European market for drive systems for electric bicycles.
In particular, it appears that Bosch does not allow electrical and digital interoperability between its drive systems and the ABS for electric bicycles developed by Blubrake S.p.A., without valid justifications.
This behaviour could exclude the only competitor of Bosch from the nascent European market for ABS for electric bicycles and thus, adversely affect competition.
F. Netherlands🇳🇱
The Netherlands Authority for Consumers and Markets (ACM) has levied a fine of nearly 8 million euros on LG Electronics Benelux Sales (LG).
During the period from 2015 to 2018, LG engaged in illicit price-fixing agreements with seven major retailers regarding the online retail prices of television sets.
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LG provided price recommendations to retailers selling LG television sets and insisted that they implement these prices. LG consistently confronted retailers if they charged retail prices that were lower than the recommended prices. LG also requested retailers to refrain from automatically following lower prices of other retailers.
LG utilized online monitoring tools to check whether retailers were charging prices below the recommended rates.
Furthermore, retailers filed complaints with LG when they believed that competitor retailers were offering excessively low prices. LG responded by confronting the concerned retailers, seeking an 'explanation,' and pressuring them to raise their prices.
Given the continuous communication from LG to the retailers, it is evident that retailers were aware that adhering to LG's pricing would not lead them losing their competitive edge in the market. In this manner, LG directly and unfairly interfered with competition among retailers. Through this price coordination, LG safeguarded both its own and the retailers' profit margins. Consequently, the television sets were not sold at the most competitive prices, ultimately disadvantaging consumers.
ACM has launched an awareness campaign to warn suppliers and retailers about prohibited vertical price restraints under the title “Who determines the price” (in Dutch). In its campaign, ACM explains to market participants what rules they need to comply with.
G. Australia🇦🇺
The Federal Court has directed Swift Networks Pty Ltd (Swift) to pay a fine of $1.2 million for forming a cartel to manipulate bids while competing for technology infrastructure and service contracts for three Pilbara mining village projects.
Swift admitted that it manipulated the bidding process by reaching an understanding with a competitor, DXC Connect Pty Ltd, and DXC Technology Australia Pty Ltd, wherein one of the parties would propose a higher price than the other in response to bid requests.
H. Portugal🇵🇹
The Portuguese Competition Authority (AdC) is investigating a business association for setting minimum prices for condominium management and administration services. The investigation began in January 2023, and unannounced inspections were conducted at the association's headquarters in February of the same year.
During the investigation, evidence surfaced indicating that the association regularly imposed minimum prices on its member companies for providing condominium management and administration services from 2015 to 2023.
The AdC sent a Statement of Objections to the association, outlining the raised concerns. The association has been given a reasonable time to respond to the issues, evidence, and potential sanctions before a decision is made.
The Lisbon Court of Appeal has upheld the competition infringement fine imposed on Super Bock by the AdC in July 2019, including the full 24 million euros penalty.
In July 2019, the AdC fined Super Bock Bebidas S.A., its manager, and a company director over 24 million euros for fixing minimum prices and other transaction terms on the resale of their products namely beers, waters (flat and sparkling), soft drinks, iced tea, wines, sangrias and ciders in hotels, restaurants and cafésto, spanning for more than a decade (2006-2017).
This case impacted crucial consumer markets, involving the distribution of various beverages in hotels, restaurants, and cafes, which essentially covered all out-of-home consumption.
The Lisbon Court of Appeal confirmed the AdC's decision, considering: -
In September 2019, the AdC fined EDP Produção for misusing its dominant position in mainland Portugal's secondary regulation band market.
The AdC found that EDP Produção manipulated its teleregulation service offering, limited the capacity supply from CMEC plants, and simultaneously benefited from both the CMEC regime and non-CMEC plant revenues, causing harm to consumers.
By inflating the secondary regulation band prices, EDP Produção increased energy costs for consumers, alongside a rise in the portion funding compensation under the CMEC regime.
The secondary regulation band, or teleregulation, ensures a balance between electricity production and consumption, guaranteeing a continuous power supply for households and businesses.
Challenging the AdC's decision, EDP Produção appealed to the Lisbon Court of Appeal (TRL).
The TRL upheld the AdC's decision, emphasizing that EDP Produção's capacity restrictions led to market inefficiencies, significantly driving up regulation band prices and burdening electricity consumers with higher network access tariffs and retail energy prices.
The TRL adjusted the fine to account for the duration of the infringement, reducing it from 48 million euros to 40 million euros, considering the violation lasted four years and three months, not five years.
I. United State of America🇺🇸
J&J Korea Inc. (J&J Korea), a South Korean-based company, has been directed to pay a nearly $9 million criminal fine for engaging in bid rigging related to subcontract work at U.S. military bases in South Korea.
According to court documents, J&J Korea and several co-conspirators defrauded the U.S. Department of Defense (DOD) by manipulating bids, securing lucrative repair and maintenance subcontracts at U.S. military hospitals in South Korea. These subcontracts were linked to a U.S. Army Corps of Engineers (USACE) contract that oversees operational and maintenance support services at various global military facilities, including those in South Korea. Despite the USACE contract's requirement for competitive bidding, J&J Korea and a co-conspirator company colluded to submit rigged bids, ensuring J&J Korea's consistent win of the majority of the subcontracted work in South Korea under the USACE contract.
The scheme, which persisted from November 2018 to March 2021, resulted in the DOD overpaying approximately $3.6 million for J&J Korea's services. As part of the sentence, the company has been fined $5 million and ordered to pay $3.6 million in restitution. This conviction and penalty mark the initial outcome in an ongoing investigation into bid rigging and associated fraudulent activities at U.S. military installations in South Korea.
The Justice Department has filed a civil antitrust lawsuit against Agri Stats Inc. for orchestrating and overseeing the exchange of anticompetitive information among broiler chicken, pork, and turkey processors.
Agri Stats violated antitrust laws by gathering, integrating, and disseminating sensitive information on prices, costs, and production levels among competing meat processors. Such actions detrimentally affect customers, including grocery stores and American households.
For years, Agri Stats has been generating detailed weekly and monthly reports for participating meat processors, who utilize this data to determine pricing and production levels.
These extensive reports, spanning hundreds of pages, contain up-to-date information on sales prices, costs such as worker and farmer compensation, and production figures, often broken down by facility or company. The participating processors represent a substantial share of the broiler chicken, pork, and turkey sales in the United States.
Agri Stats was aware that meat processors utilized these reports for anticompetitive purposes and, in some cases, even encouraged them to raise prices and reduce supply. While freely distributing this sensitive information among participating processors, Agri Stats withheld these reports from meat purchasers, workers, and American consumers, resulting in an information asymmetry that exacerbates the detrimental effects of Agri Stats' information exchanges on competition.
This lawsuit marks the latest action by the Antitrust Division to combat unlawful information exchanges.
J. South Africa🇿🇦
The Competition Commission (Commission) confirms that on 12 September 2023 initiated a complaint against Johnson & Johnson (Pty) Ltd and its subsidiary company Janssen Pharmaceutica (Pty) Ltd.
The initiation is based on information in the Commission’s possession that gives rise to a reasonable suspicion that the Johnson & Johnson and Janssen Pharmaceutica may have engaged in exclusionary practices and excessive pricing in the provision of Bedaquiline (trading as Sirturo®) which is a drug used in the treatment of tuberculosis (“TB”).
The matter is currently under investigation and as such, the Commission is not accepting any media engagement until the matter is finalised.
K. Brazil🇧🇷
The Administrative Council for Economic Defense (CADE) has found seven companies and fifteen individuals guilty of participating in a cartel related to public procurement for bin bags.
The investigation was initiated after CADE received documents from a special group. This group conducted telephone surveillance and carried out search and seizure operations at the headquarters of several companies.
Evidence revealed that the involved parties frequently communicated with each other, aiming to manipulate prices and terms in public procurement to limit competition.
It was proven that the cartel members operated through a bid rotation scheme, taking turns submitting winning proposals for each procurement. This anticompetitive behavior occurred between 2008 and 2014, affecting numerous municipalities in various Brazilian states.
The CADE Tribunal has ordered the companies to pay fines totaling BRL 11.5 million, while the convicted individuals are required to pay fines amounting to BRL 3 million.
Additionally, the CADE Tribunal has barred the companies from participating in procurements or entering into contracts with the Federal, State, or Local Governments, including the Government of the Federal District, for a period of five years. Furthermore, the offenders are obligated to publish, at their own expense, a summary of the conviction judgment in the newspapers "O Estado de São Paulo" and "Gazeta do Povo" for two consecutive days over two consecutive weeks, each in a half-page format.
The Office of the Superintendent General of CADE granted an interim measure against the Brazilian Association of High Complexity Private Hospitals of the State of Goiás (AHPACEG) and its members to cease from fixing fees for health service, price rises, and trading conditions with health insurance companies.
The enquiry was launched based on a complaint brought by Unimed Goiânia who alleged that Ahpaceg and its members fixed prices of daily rates, medical supplies, medicines, fees, enteral and parenteral nutrition, diagnostic support services, and orthotics and prosthetics (OPME).
The allegations involve both price-rigging and boycotts in response to procedural changes recommended by health insurance companies.
The investigation aims to identify if the accusations of collusive practices against Ahpaceg and its members are extended to other health insurance companies or not.
L. Court of Justice of European Union🇪🇺
Acting on information received concerning geo-blocking of certain PC video games on the Steam platform, the Commission began an investigation.
By decisions of 20 January 2021, Commission found that the operator of the Steam platform, Valve and five games publishers, namely Bandai, Capcom, Focus Home, Koch Media and ZeniMax, infringed EU competition law by restricting cross-border sales of certain PC video games during different periods between 2010 and 2015.
Valve brought an action before the General Court of the European Union, seeking annulment of the decision in so far as it related to it.
The General Court found that the Commission was able to establish the existence of an agreement or concerted practice between Valve and each of the five publishers. The object of the agreement was to restrict parallel imports of video games through geo-blocking of keys which enable activation of the games.
That geo-blocking was aimed to prevent the video games, distributed in certain countries at low prices, from being purchased by distributors or users located in other countries where prices were much higher.
The General Court also ruled on the relationship between EU competition law and copyright. In particular, it observed that copyright is intended only to ensure protection of the right to exploit commercially the marketing or the making available of the protected subject matter, by the grant of licencees in return for payment of remuneration. However, it does not guarantee the copyright holder the opportunity to demand the highest possible remuneration or to engage in anti-competitive conduct such as to lead to artificial price differences between the partitioned national markets.
On the basis of the above, the General Court upheld the decision of the Commission.
Well that's all for the month of September 2023.
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