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Lights Back On: Territorial Limits in EU Cartel Damages Claims

Good and Bad News for Follow-On Actions in France

State Aid Post-Brexit

New 2018 Turnover Thresholds for Mergers and Acquisitions in Italy

Expansion of Digital Markets and Restrictions

Lights Back On: Territorial Limits in EU Cartel Damages Claims

The Court of Appeal has ruled that iiyama's 1bn EUR cartel damages claims, against the participants of the cathode ray tube ("CRT") market and liquid crystal display ('LCD') cartels, may proceed to trial, overturning the High Court's finding that indirect purchases made outside the EEA do not fall within the territorial scope of EU competition law.

As reported in our articles, "Lights Out? Territorial limits in EU cartel damages claims" and "Update on iiyama Cartel Damages Proceedings", iiyama's claim against cartelists in the CRT and CRT glass market was struck out by the High Court. The judge at that hearing considered that the claimants' lengthy supply chain (where the cartelised goods were sold by the Defendants to purchasers in Asia, and then sold on by those innocent third party purchasers to the claimants in the EEA) could not amount to implementation of the cartel in the EEA — the claim therefore fell outside the territorial scope of EU competition law.

In a separate strike out application in relation to iiyama's claim against the LCD cartelists, the High Court agreed with the previous ruling that such a lengthy indirect supply chain could not amount to implementation of the cartel in the EEA. iiyama's claim survived, however, as they argued that 'but for' the LCD cartel being implemented in the EEA, LCD products would have been available at a non-cartelised price which the claimant could (and would) have bought.

iiyama appealed these decisions, asking the Court of Appeal to clarify whether indirect purchases of products outside the EEA that were subsequently re-sold in the EEA could amount to implementation of the cartel in the EEA, and/or whether a claim based on such circumstances fell within the territorial scope of EU competition law.

In answering this question, the Court of Appeal considered the Court of Justice of the European Union's recent decision in Intel. This judgment addressed whether the European Commission had jurisdiction to enforce Article 102 TFEU in connection with rebates made to companies outside the EEA. The rebate agreements concerned the sale of goods manufactured and sold outside the EEA, which were incorporated (outside the EEA) into computers. The court in that case considered that the Commission could have jurisdiction in such cases, where the anticompetitive behaviour had an "immediate, substantial and foreseeable effect in the EU" (referred to as the "Qualified Effects doctrine").

The Court of Appeal considered that Intel supported the Claimants' arguments that a worldwide cartel (such as the CRT and LCD cartels) which was intended to significantly affect the market for those products in the EU could, subject to full examination of the intended and actual operation of the cartel, satisfy the Qualified Effects doctrine. It was therefore inappropriate for the High Court to have made a strike out ruling before a fuller examination of the facts, including through disclosure, which may shed light on the intended and actual operation of the cartel. As such, the Court of Appeal overturned the High Court's earlier rulings, allowing iiyama's actions for damages to proceed towards trial.

The Court of Appeal's judgment will provide encouragement to claimants seeking damages in the English courts for losses suffered as a result of indirect sales of cartelised products into the EEA.

Good and Bad News for Follow-On Actions in France

By Kathie Claret and Emmanuelle Mercier

Follow-on private enforcement actions (by which victims seek compensation for damages incurred as a result of anti-competitive practices, as determined by a prior decision) are on the rise in France. However, a 20 December 2017 decision of the Paris Court of Appeal* shows that it is not easy to prevail in such follow-on suits when the French Competition Authority (“FCA”) had merely rendered a decision compelling the defendants to comply with their proposed commitments.  

The facts of the case under consideration date back to 2006 when DKT International (“DKT”), a company working in the waste collection and recycling sector, requested the FCA to investigate alleged anti-competitive practices carried out by two other companies in the same sector, namely Eco Emballages and Valorplast. In a decision dated 27 September 2010, the FCA accepted the commitments proposed by Eco Emballages and Valorplast to alleviate compensation concerns, made those commitments compulsory and closed the matter.

Thereafter, in 2011, DKT sued Eco Emballages and Valorplast for the damages it incurred as a result of the anti-competitive practices which had given rise to the above commitments. In a decision dated 30 March 2015, the Paris Court of First Instance, having had access to documents derived from the FCA investigation file, held Eco Emballages and Valorplast liable for anti-competitive practices and granted damages to DKT.

However, in the recent decision under consideration, the Paris Court of Appeal overturned the decision of the Paris Court of First Instance. It held, in short, that the alleged anti-competitive practices were not established. In other words, even though the FCA decided to render the commitments undertaken by Eco Emballages and Valorplast compulsory on the grounds that they were raising competition concerns, this alone was not sufficient to establish the alleged anti-competitive practices of these two companies since the FCA did not carry out a complete assessment of the alleged practices. 

That being said, such a situation could not occur in the case of a final and binding decision of the FCA holding a company liable for anti-competitive practices, as opposed to a decision acknowledging the company’s commitments. In such case, article L. 481-2 of the Code de commerce (the French Commercial Code), in effect since 2017, provides that the anti-competitive practice is deemed indisputable.

* Paris Court of Appeal, 20 Dec. 2017, No. 15/07266

State Aid Post-Brexit

By Robert Bell and Roman Madej

The EU State aid rules are designed to protect the free market between EU member states. They do this by ensuring that Governments do not distort companies and markets using public money, and favouring national champions. The UK has mostly been a keen protector of the EU State aid framework, and its continued compliance with the rules post-Brexit has been looked at as a given for some time. What was not confirmed explicitly was which UK agency post Brexit would regulate and police the rules in the UK, as currently that role is reserved exclusively for the EU Commission.

On 28 March 2018, the Department for Business, Energy and & Industrial Strategy confirmed what many had suspected, that the UK’s Competition and Markets Authority (the ‘CMA’) would adopt this role. The news was confirmed by Andrew Griffins, the Minister for Small Business who stated in a letter in a response to a question from the House of Lords that: “the Government has concluded that at the point an independent UK State aid authority is required, the Competition and Markets Authority (CMA) would be best placed to take on the role of State aid regulator. This reflects its experience and understanding of markets as the UK’s competition regulator and the independence of its decision-making from Government.”

As part of the  UK’s transition to a post Brexit world: “the EU State aid rules will be transposed under the European Union (Withdrawal) Bill – as is the case for EU rules more broadly under this Bill. The transposition of the existing rules will apply to all sectors, including agriculture, fisheries and transport and will replicate any existing exemptions from State aid rules.

The UK Prime Minister Mrs May confirmed in her speech of 2nd March that the UK wanted to follow and align its self closely with the EU on competition and state aid policy. As far as we are aware, the above announcement is the first official confirmation of that stance..  Following this confirmation the CMA will no doubt be looking for more additional funding to take on this role. This is likely to be in addition to the Government’s commitments already announced for extra funding to meet its additional competition law obligations post Brexit. 

The above news signals that although the decision making authority will be the CMA rather than the European Commission, it is likely that there will continue to be a consistent interpretation of the rules post-Brexit.

More detailed obligations to this effect are likely to be included in any EU/UK free trade deal.

New 2018 Turnover Thresholds for Mergers and Acquisitions in Italy

By Gabriele Bricchi

The Italian Antitrust Authority reviews and modifies the amounts of the Italian merger and acquisition thresholds each year by an amount equivalent to the increase in GDP price deflator index.

Although the new wording of section 16 (1) of Law no. 287 of 10 October 1990 entered into force only on 29 August 2017, the Italian Antitrust Authority already published on 12 March 2018 the annual amendment.

Only the first threshold regarding the combined national turnover of all undertakings concerned, was raised by Euro 3 million. The second threshold remains unchanged.

Section 16 (1) of law 287/1990 now provides that concentrations referred to in section 5 shall be notified in advance to the Italian Antitrust Authority if:

- the combined aggregate domestic turnover of all the undertakings concerned exceeds Euro 495 million, and

- if the aggregate domestic turnover of each of at least two of the undertakings concerned exceeds Euro 30 million.

The new thresholds are applicable since 12 March 2018.

Expansion of Digital Markets and Restrictions

Author: Robert Bell

The European Commission has been closely following the developments in e-commerce. As more and more goods and services are sold online, the Commission finds itself inevitably drawn into regulating the competition rules in this increasing important sector.

On 22 March 2018, the Director General of Competition, Mr Laitenberger, set out the Commission's views on the key challenges it faces in dealing with ecommerce and how it proposes to deal with them in the future.

Geo-blocking and price monitoring software
The Commission's sector inquiry into e-commerce markets demonstrated that digital services have changed the dynamics and incentives of companies in the distribution chain. Vertical restrictions impacting online sales remain widespread across industries. Therefore while digital services have enormous potential to boost cross-border trade, companies are taking steps to implement vertical restrictions, for example through geo-blocking practices. E-commerce also allows manufacturers to monitor the setting of retailers' prices and intervene to dampen price pressure. These practices enable manufacturers and suppliers to compartmentalise national markets and keep prices artificially high.

In this regard there has been an explosion in the use of price tracking software. Many online retailers use this software to automatically adjust retail prices to those of competitors. In its recent e-commerce market study, the Commission found the majority of respondents to the Commission's survey admitted to using competitor price tracking software and adjusting their own prices to those of their competitors.

MFN clauses

In the context of e-commerce markets, the Commission is particularly concerned about vertical restraints which are widespread in a particular sector. This is particularly true of most favoured nation clauses (MFN) which typically bind a supplier to giving its most favourable price it offers to third parties to particular buyer. Although these clauses have been widespread in commercial contracts in the past, the very wide scope and universal geographical coverage provided by the internet gives these clauses extra potency in affecting competition on the market. The effect of these terms may lead to foreclosure of other suppliers or buyers, facilitate collusion at the supplier or buyer level, or directly lead to a reduction of intra-brand price competition through retail price maintenance.

Online platform intermediaries

Access to online market places is becoming of increasing importance to small and medium sized businesses. These companies are now less likely to have a bricks and mortar shop, but much more likely to have market access through online marketplace platforms.

In the past the Commission’s guidance on the Vertical Agreements Block Exemption had permitted suppliers to ban their retailers from selling on such platforms in certain limited circumstances to protect the supplier's brand. This was particularly so in luxury goods markets. The recent Coty judgement by the European Court of Justice has leant further support to this position. However certain member states, in particular Germany, are in the vanguard of trying to open up access for SMEs to online market platforms. Several German cases have seen restrictions on using online market places struck down as being unlawful. So there is a tension between the Commission's view and that of certain Member States. This is leading the Commission to re-examine its treatment of online intermediary platforms and meant the Commission had to consider how to qualify intermediary agreements.

In addition the increased use of online market places by SMEs had focused the Commission on the market power enjoyed by those online platforms. The assessment of intermediary markets would be important for the competition law assessment of market power, and noted that these markets are currently being assessed by the European Commission to see whether there is an imbalance of bargaining power between online platforms and business users.


The Director General concluded by noting that the Commission was very closely following market developments, and would continue monitoring market evidence to tackle practices that are detrimental to open markets, competition and consumer welfare.

Expect to see increasing activity from the Commission on e-commerce in the future. As internet commerce becomes more and more part of our everyday lives, its importance in consumer welfare is going to take centre stage for competition regulators. Coming to grips with the rapid deployment of new technology and whether the existing regulatory tools under competition law are adequate is a continuing debate.

On 28th March 2018 the EU Commission appointed several special advisers to advise it on future challenges of digitisation for competition policy in an effort to stay on top of developments. This is upon the initiative of Commissioner Vestager, the EU Competition Commissioner. The task of these new advisers is to advise on what the key upcoming digital changes are that will affect markets and consumers, and on their implications for competition policy. An open conference to obtain a wide range of contributions is expected to be held in Brussels in January next year with their report expected to be delivered by 31 March 2019. 

This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.