Plus ça change, plus c’est la même chose: Revised EU de minimis notice retains % thresholds, clarifies per se rule

Nothing new: the newly-revised de minimis Notice of the European Commission isn’t that novel

The revised Notice (after its 1997 and 2001 predecessors) retains the 10% and 15% market-share thresholds for agreements between horizontal and non-horizontal competitors, respectively, which create a safe harbor from EC prosecution for an Art. 101(1) violation.  The document merely adds formal color and substance to the issue of what types of agreements fall within its “safe harbor” and which fall outside that umbrella.

Unsurprisingly, the Staff Guidance paper accompanying the Notice explains the prohibited hallmark per se (or “by object”) category of agreements succinctly as follows, also adding minimum-RPM, bid rigging, collective boycotts and particularly injurious information-sharing arrangements:

The three classical “by object” restrictions in agreements between competitors are price fixing, output limitation and market sharing (sharing of geographical or product markets or customers).

Not binding on Member States

Importantly, as its predecessors, the Notice does NOT have binding effect on EU member states’ competition authorities, but ONLY on the EU Commission and its DG COMP.  As the European Court of Justice held in its Expedia judgment (case C-226/11):

27      It also follows from the objectives pursued by the de minimis notice, as mentioned in paragraph 4 thereof, that it is not intended to be binding on the competition authorities and the courts of the Member States.

28      It is apparent from that paragraph, first, that the purpose of that notice is to make transparent the manner in which the Commission, acting as the competition authority of the European Union, will itself apply Article 101 TFEU. Consequently, by the de minimis notice, the Commission imposes a limit on the exercise of its discretion and must not depart from the content of that notice without being in breach of the general principles of law, in particular the principles of equal treatment and the protection of legitimate expectations (see, to that effect, Joined Cases C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P Dansk Rørindustri and Others v Commission [2005] ECR I‑5425, paragraph 211). Furthermore, it intends to give guidance to the courts and authorities of the Member States in their application of that article.

29      Consequently, and as the Court has already had occasion to point out, a Commission notice, such as the de minimis notice, is not binding in relation to the Member States (see, to that effect, Case C‑360/09 Pfleiderer [2011] ECR I‑0000, paragraph 21).

30      Accordingly, that notice was published in 2001 in the ‘C’ series of the Official Journal of the European Union, which, by contrast with the ‘L’ series of the Official Journal, is not intended for the publication of legally binding measures, but only of information, recommendations and opinions concerning the European Union (see, by analogy, Case C‑410/09 Polska Telefonia Cyfrowa [2011] ECR I‑0000, paragraph 35).

31      Consequently, in order to determine whether or not a restriction of competition is appreciable, the competition authority of a Member State may take into account the thresholds established in paragraph 7 of the de minimis notice but is not required to do so. Such thresholds are no more than factors among others that may enable that authority to determine whether or not a restriction is appreciable by reference to the actual circumstances of the agreement.

 

Advertisements

Brussels bar for U.S. American lawyers: “independent” or “employee”?

American attorneys practicing in Brussels/Belgium do not have to switch from employee to independent status

Why is this antitrust-relevant?  Because many U.S. antitrust/competition lawyers practice in Brussels and become members of the so-called Brussels bar “B-List,” or “liste B”…

This piece of news may (1) not be news to some, but is relevant (2) to all who may be directly or indirectly affected by various Brussels bar rules (e.g., as hiring partners considering hiring U.S. attorneys for their BRX office, or directly as American associates or of-counsel etc. moving abroad):

 The [perceived] Belgian prohibition against attorneys having an “employee” status in a law firm – and hence the important, although implicit, requirement that all associates or other non-partner lawyers must be so-called “independents” under Belgian bar rules – does not exist for American lawyers practicing in Belgium.

As long as you are an “American attorney” member of either the E- or B-lists of the BRX bar, you can actually be an employee:  See para. 5 of Art. 6 in Annex 9 (“CONVENTION CONCLUE AVEC L’AMERICAN BAR ASSOCIATION LE 6 AOÛT 1994”) to the Recueil des règles professionnelles (www.barreaudebruxelles.be/pdf/brochures/recueil2010.pdf), copied below (– let me know if you interpret this differently).

Article 6 : CONDUITE ET PRIVILÈGES

5. L’indépendance des avocats américains étant garantie par les règles professionnelles qui leur sont applicables comme membre des barreaux des Etats-Unis, il ne leur sera pas interdit, par le fait de l’inscription à l’une des listes des avocats étrangers ou pour d’autres motifs, d’avoir le statut d’employé dans un cabinet ou une association.

This may have implications for all U.S. firms hiring or moving American associates or of-counsel to their Brussels location.  Previously, as I have understood past practice, firms have required their U.S. non-partner attorneys to become ‘independents’ under the Brussels bar rules, which may be a wholly unnecessary (and HR-costly) step.

If you have questions, e-mail me.

Almunia: EU Antitrust damages directive “most significant”

St. Gallen International Competition Law Forum Remarks Highlight Civil Competition-Law Enforcement & Cartel Victims’ Access to Evidence as Top-of-Agenda for Outgoing Commissioner

Joaquin ALMUNIA, Vice President of the European Commission responsible for Competition policy & enforcement, made the following (excerpted) remarks at the 2014 International Competition Law Forum held in St. Gallen.

From a practitioner’s perspective, the Commissioner’s emphasis on cartel victims’ access to evidence, his subtle reminder that the Directive merely sets a “minimum standard“, and the parallel observation that the upcoming collective redress Recommendation will be applicable across all policy (and legal) fields are important highlights of the prepared remarks.

I will start with the Directive on antitrust damages actions, which I regard as one of the most significant developments in the competition-policy domain in the current mandate.

Infringements of EU competition law are not only bad for the competitiveness of our economy. They also harm companies and consumers directly.

We recognise that every individual consumer and business has the right to be compensated for this damage. However, given the legal systems of EU countries, only a few victims obtain compensation in practice.

The time has come to translate our principles into actual practice.

Last year the Commission tabled a proposal to remove existing obstacles in national rules and make it easier for victims to obtain compensation across the EU through private enforcement.

The European Parliament and the Council have seized the opportunity and reached a political agreement with remarkable speed.

The Parliament voted the final text by an overwhelming majority, and the formal approval by the Council is expected before or shortly after the summer.

This outcome is a major success for a number of reasons.

First, from the perspective of victims, the Directive will make it easier for them to get hold of the evidence they need to prove the damage, because national courts will be empowered to order disclosure of relevant evidence.

The Directive also allows victims to rely on decisions taken by national competition authorities when these find an infringement.

Moreover, it introduces clear rules on several aspects of competition litigation, thus reducing the existing uncertainties, which have a cost for all parties.

From the perspective of the internal market, the Directive sets a minimum standard in all Member States, which means more legal certainty and a more level playing field throughout the EU.

Finally, from the perspective of competition authorities, the Directive fine-tunes the interaction between their work and the compensation claims by private parties. This is thanks to rules that preserve the incentives of companies to cooperate in antitrust investigations.

In parallel to the Directive, the Commission has also adopted a Recommendation inviting Member States to introduce collective redress mechanisms at national level by mid-2015.

The Recommendation includes basic principles that would ensure fair, timely and affordable procedures across the EU. The Recommendation is not limited to competition law but covers all policy fields.

European Union DG COMP report for FY 2013

The European Commission just published its 2013 competition policy report, commending its own initiatives and their effect on the internal market.

Spoiler alert: according to the horse’s own mouth, the Commission has found that its competition-law accomplishments (cartels/antitrust enforcement, merger control, the EU-specific notion of state aid, etc.) were stellar.  The EU internal market is now — 10 years into the EC’s antitrust regulation no. 1/2002 — a model of competitiveness, according to the Report, available here in PDF.

The Report takes a slightly different tack from prior years, focussing more on IP issues (FRAND, SEPs, yet still no mention of Non-practicing Entities (NPEs)/patent trolls).  It also revels in legislative “milestones,” both historical and current:

2013 saw two important milestones for EU competition policy. Firstly, Regulation 1/2003, when adopted, ushered in a new era in the enforcement of EU antitrust rules and has now, a decade later, led to a stocktaking and reflection for further improvements. Secondly, on 11 June, the Commission adopted a Proposal for a Directive on antitrust damages actions – a long-awaited measure by stakeholders and a policy priority for the current Commission.

How a BRICS country defeats EU Commission & the rule of law

A parallel post from sister blog AfricanAntitrust.com:

South Stream pipeline

South Stream pipeline

According to various reports, the European Commission (specifically, its top management in the energy DG [Oettinger] and its president [Barroso], as well as others) has caved to the Russian energy powerhouse GAZPROM.

How does this relate to competition?  The pending antitrust investigation by Mr. Almunia, already hamstrung, is clearly hampered by this development from its adjacent energy DG. One Commissioner has caved, and another (a lame duck by now, who has already announced his retirement from the entire realm of politics) will not even bring a conclusion to his DG’s investigation into GAZPROM. Putin and his friends at the gas giant have (now successfully) challenged the European energy and competition ministers, effectively saying to them: “We will break your laws, and there isn’t a thing you can do about it.”

This is the story of how a BRICS country state-owned enterprise (or at least de facto SOE) is fully capable of defeating the “rule of law” that European proponents of the superiority of Western legal systems often tout. Is EU law hard and fast? Unbreakable? Strictly enforced? Without exceptions, for special friends (or powerful foes)?

Banana Republic Brussels

The answer to the rhetorical questions posed above is – quite clearly as of today at least – a resounding “no“:

The EU has caved. EU laws can be broken. Without any consequences.

Until recently, the GAZPROM contracts for its “South Stream” Project violated EU law, according to prior statements of the relevant EU Commissioners and their spokespeople. The main concerns (here from the energy perspective, not the competition issues) were:

  • ownership unbundling rules violated by Gazprom being both a producer and a supplier of gas that owns simultaneously production capacity and its own transmission network
  • 3d-party non-discriminatory access endangered by Gazprom being exclusive shipper
  • South Stream’s pricing structure violates EU energy tariff rules

Yet, after some diplomatic prodding and economic threats, the Commission now has changed its tune and is literally giving GAZPROM a “get-out-of-jail-free card.”

“Gunther Oettinger, the European Commissioner for Energy, told Vedomosti newspaper that Moscow and Brussels will find a solution to honor previous intergovernmental agreements Gazprom has made with European transit countries.” (Source: Vedomosti newspaper, as quoted by rt.com)

Contrast this with what Mr. Oettinger said back in 2011 (note that he also (1) called South Stream a “phantom project” and essentially didn’t believe the Russians would go ahead with its construction in 2012, and (2) was quite clear in his understanding of how market participants operate: “money talks,” baby!):

I understand that certain EU Member States entered into bilateral agreements with the Russian Federation which may partially contradict these principles. If this is true, these Member States will nevertheless have to apply the internal market rules and they are under an obligation to bring their IGAs in line with the EU legislation. (Source: His own speech)

Even more tellingly, contrast the green light now given to the project with Mr. Oettinger’s spokespersons’ statements from December 2013 and even August 2013:

“The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law,” Borchardt said.

“That is the reason why we have told these states that they are under the obligation, either coming from the EU treaties, or from the Energy Community treaty, that they have to ask for re-negotiation with Russia, to bring the intergovernmental agreements in line with EU law,” he added. (Source: EurActiv)

Lesson (not) learned

How to wrap up a piece that essentially sounds the death knell of the rule of law in the EU, especially in Brussels? The key take-away here may be this:

Very simply put: any BRICS or BRICS-like country negotiator dealing with an official EU delegate as his or her counterparty should keep the “GAZPROM incident” in mind when faced with a lecture on the superiority and objectivity of EU law over whichever domestic judicial system may be at issue.

Revamped Belgian Competition Authority: A more powerful national enforcer?

Whether or not this month’s revamping of the Belgian Competition Authority will create a more effective enforcer remains to be seen.

From personal experience, Belgian bureaucrats are neither the most efficient, nor the most diligent, as government employees go… And the national authority pales in comparison with the EU’s DG COMP, of course, which is housed only a few kilometers away in the European Quarter of Brussels, yet one of the leading antitrust enforcers worldwide…

Yet, the changes to the watchdog and its powers include several important structural elements that may herald a more streamlined process: for instance, removal from the oversight of the economic ministry, the elimination of the external tribunal that used to have the final say in the agency’s decisions, as well as a new settlement procedure and a potentially shorter investigative process.  In addition, individual financial (not criminal, though) liability may be incurred by participants in hardcore restrictive practices, such as price-fixing cartels or market allocation.

From this month onward, the internal Competition College will not only hear the case but also make a final decision, after the Authority’s separate investigative team has concluded its investigation and made its recommendation for how to dispose of the case.  The NCA body (“Autorité belge de la concurrence” or “Belgische Mededingingsautoriteit“) will, of course, remain on the innately inefficient side of things, as it will have to be multi-lingual, accounting for proceedings to be held French, Flemish/Dutch, and German.

On the personnel front, Jacques Steenbergen will remain the president and Alexis Walckiers the chief economist.  The current in-house counsel and auditor at Dexia bank, Veronique Thirion, will be appointed the NCA’s general prosecutor.

Huh? German merger law changes go into effect “unnoticed” by Federal Cartel Office?

Either the Bundeskartellamt is missing something, or yours truly is — …

…but why is the 8. amendment to the German antitrust statute (allegedly in effect since 1 July 2013) not mentioned anywhere on the BKarta/FCO’s web site? A reference to the revised law is nowhere to be found.

For starters, let’s just take one example from the German legislature’s amendments (the “8. GWB-Novelle”): the change-over from the “creation or strengthening of a dominant position” test in German merger control to the common “significant impediment to effective competition” (SIEC) test used by the European Commission since 2004. Arguably, this change is not quite substantive in nature, and the former is still used as a prime example (“Regelbeispiel”) of the latter, but the change is — sorry to say — in the law, and the FCO doesn’t even mention it?! Not even in its “news” archive? Nor does it update its online reprint of the governing law?

If you look at the FCO’s web page dealing directly with its merger control regime, you will see no reference whatsoever to the new SIEC test. Equally (or more) troubling is that its related “Merkblatt” (roughly, guideline) on merger control is completely out of date, being asterisked with a cute “(wird derzeit überarbeitet)” (“is currently being revised”) note, which has been there for at least a year if not more.

Someone, please tell me that I am wrong and that the Bundeskartellamt actually has things under control. What am I missing here?

(Note: this post is valid as of 10 July…)

Report: Bundeskartellamt releases 2-year antitrust enforcement statistics

The Bundeskartellamt (German Federal Cartel Office) has released its “Tätigkeitsbericht 2011/2012” (a summary report of its most recent two-year activity).

What stands out to me is that the BKartA/FCO initiated only 28 second-phase reviews of notified mergers in 2011 and 2012 (out of 1108 and 1127, respectively). That’s merely 1.25% of in-depth reviews. 6 proposed deals were prohibited and 2 allowed with “strict conditions imposed.”

On the cartel front, the agency found infringements in 34 cases, yielding fines of 190m and 360m Euros in 2011 and 2012, respectively.  By far the highest fine was doled out in the rail track cartel, amounting to 124.5m Euros thus far (with further investigation in related markets ongoing).

The Bundeskartellamt also investigated 67 abuse-of-dominance cases and initiated several sectoral inquiries, as well as pushing forward its central “gasoline price transparency” project.

European Union Competition Report released by EU Commission

EU Commission

EU Commission releases 2012 “Competition Report”

The Commission has released its 43rd Report on Competition, including an instructive Staff Working Paper.  The Report itself is similar in nature to the US DOJ Antitrust Division’s Annual Report.

Worth a read to any competition law practitioner…

Draft E.U. Commission paper on private antitrust damages leaked?

Final Commission guidance on private AT actions imminent?

BusinessWeek’s Stephanie Bodoni reports that Bloomberg has obtained “draft plans” by the European Commission to level the playing field across Europe when it comes to private damages actions (often follow-on cases, but also conceivably stand-alone claims) brought by plaintiffs in the national courts of the E.U. member states.

According to the report, the draft “stop[s] short of forcing nations to allow group lawsuits,” thereby evading the tricky question whether or not to “import” U.S.-style class actions or the less-drastic collective-action mechanism of some E.U. members states (e.g., the UK, NL).

It’s about time.

Any such paper, if real, has been in the making for years, given the history of the E.U. Commission’s (lackluster, because so delayed?) efforts in this regard. The Green Paper came out in 2005, the subsequent White Paper in 2008. We’re now 5 years into … nothing.