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Antitrust law Q4 / 2017

ECJ approves platform bans

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In a judgment of December 6, 2017 (Az .: C-230/16 - Coty Germany), which is eagerly awaited by both antitrust law practice and online retailers, the European Court of Justice (ECJ) has specified its decision-making practice on the antitrust framework conditions for Internet sales. In essence, the judgment relates to the question of whether and under what conditions a manufacturer of branded products may prohibit its customers at the retail level from selling its products on the Internet via third-party platforms (e.g. eBay, Amazon, etc.) within the framework of a selective distribution system.

The ECJ has ruled that such a ban is not per se contrary to antitrust law and can be justified in selective distribution systems in order to secure the luxury image of a branded product. In addition, the ECJ ruled that such a ban (at least in constellations like the ruled case) is covered by the Vertical Block Exemption Regulation No. 330/2010 (Vertical Block Exemption Regulation).

To the background

The reason for the decision of the ECJ was a request for a preliminary ruling from the OLG Frankfurt a. M. (Decision of April 19, 2016, Ref .: 11 U 96/14 (Kart), we reported on this briefly in the 3rd quarter of 2016 newsletter) in a legal dispute between a supplier of luxury cosmetics and one of its authorized dealers. He had refused to agree to an amendment to his authorized dealer contract, according to which the online sale of the contractual products via third-party platforms should be prohibited. The supplier of luxury cosmetics thereupon filed a lawsuit against the authorized dealer with an application to prohibit him from selling the contractual products via third-party platforms, specifically via the “amazon.de” platform.

After the Frankfurt a. M. (Az .: 2-3 O 128/13) had dismissed the action, the OLG Frankfurt a. M. in the appeal proceedings to ask the ECJ to clarify various preliminary questions of antitrust law that are decisive in the specific case.

The decision of the ECJ

The ruling of the ECJ, in which the ECJ - as often in the past - followed the advocate general's opinion of July 26, 2017 (we reported on this in the 3rd quarter of 2017 newsletter), essentially concerns the following questions:

1. Can specifications on the manner of Internet sales within the framework of selective distribution systems, which are intended to protect the luxury image of the contract products concerned, have a positive effect on competition and can therefore be exempted from the prohibition of cartels in Article 101 (1) TFEU?
2. Is there an exception to the ban on cartels in Article 101 (1) TFEU according to the Vertical Block Exemption Regarding platform bans or do such bans represent core restrictions within the meaning of Article 4 lit. b or c of the Vertical Block Exemption Regulation Exclude exception in general?

In connection with the answer to the first question, the ECJ initially stated in its ruling, with reference to its established case law, that a selective distribution system based on qualitative selection criteria can in principle generate pro-competitive effects. Such a distribution system is therefore not subject to the prohibition of cartels set out in Article 101 (1) TFEU, provided (i) the resellers are selected on the basis of objective criteria of a qualitative nature, (ii) the latter are uniformly defined for all potential resellers and are applied without discrimination and (iii) do not go beyond what is necessary.

In the following, the ECJ convincingly explains why a selective distribution system may also be necessary in the context of the distribution of luxury goods in order to protect the luxury image of the goods in question. The ECJ points out, among other things, that the quality of such goods is not based solely on their material properties, but also on their prestige character, which gives them a luxurious appearance, that this appearance is an essential element for consumers to distinguish them from others similar products, and that damage to this appearance is therefore likely to impair the quality of such goods themselves.

Accordingly, the ECJ comes to the conclusion that a selective distribution system for luxury goods, which primarily serves to ensure the luxury image of these goods, is compatible with Art. 101 (1) TFEU, provided that the above-mentioned conditions (objective selection criteria, non-discriminatory application and necessity) are fulfilled. In principle, the ECJ also considers platform bans to be necessary and appropriate in this context.

Also with regard to the second question, i.e. the question of whether, with regard to platform bans in cases in which there is no selective distribution system or in which the selective distribution system does not meet the aforementioned requirements, an exemption from the ban on cartels pursuant to Art. 101 (1) TFEU under the Vertical BER comes into consideration, the ECJ decided in favor of the manufacturers of branded products. The ECJ states that platform bans are not core restrictions within the meaning of Art. 4 Vertical BER, for which an exemption under the Vertical BER is generally excluded. According to the ECJ, such bans do not constitute a restriction on the customer group to whom the authorized dealer may sell the contractual products (cf. Art. 4 lit. b Vertical Block Exemption Regulation), nor a restriction on sales to end consumers (cf. Art. 4 lit . c Vertical BER).

According to the ECJ, customers of third-party platforms within the group of online customers do not already represent a definable customer group. In addition, there is also no restriction on sales to end consumers, since the dealer can continue to sell the contractual products online via his own shop and at the same time has the opportunity to advertise via online search engines, for example, in order to direct customers to his online shop.

In this respect, the ECJ contradicts the previous view of the Federal Cartel Office and some lower courts, which had argued that platform bans would in any case effectively exclude the dealer's internet sales to a large number of customers, namely those who use third-party platforms. In contrast, the European Commission took the position that platform bans are not a ban on sales to these customers (“whether”), but merely a regulation regarding “how” the sale is made. Therefore, the Vertical BER - and thus also the exemption from the ban on cartels under Art. 101 (1) TFEU - is fundamentally applicable to platform bans.

The ECJ has now followed the latter view.

Assessment and practical consequences

The judgment of the ECJ deserves approval. It brings legal security for those manufacturers of branded products who sell their goods within the framework of a selective distribution system, as well as for their authorized dealers. If platform bans have been agreed in the relevant dealer contracts, it is now assumed that they are effective under antitrust law. It is possible that branded goods manufacturers will endeavor even more in the future to design their distribution as a selective distribution system in order to be able to influence the form of distribution of their goods on the Internet in this way.

For those sales relationships that are not based on a selective sales system, the effects of the judgment are likely to be minimal. According to the decision of the ECJ, a platform ban is neither a restriction of the customer group of the authorized dealer within the meaning of Art. 4 lit. b) Vertical Block Exemption Regulation, nor a restriction on passive sales to end consumers within the meaning of Art. 4 lit. However, since the authorized dealer cannot be prohibited from selling the goods to other resellers in such a constellation, agreeing a platform ban on the authorized dealer does not ultimately represent a suitable means of preventing the sale of the contractual goods via third-party platforms in the long term.

 

Dr. Guido Jansen
partner
Luther Rechtsanwaltsgesellschaft mbH
Dusseldorf
Phone +49 211 5660 24844
[email protected]


Benjamin Schwenker
Senior associate
Luther Rechtsanwaltsgesellschaft mbH
Dusseldorf
Phone +49 211 5660 15864
[email protected]

Claims for damages against Schienenkartell due to arbitration agreement inadmissible

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Regional court Dortmund, judgment of September 13, 2017 (8 O 30/16 [Kart])

A consortium for the construction of a railway line failed with its action for damages against a participant in the rail cartel before the LG Dortmund. In 2003 the plaintiff commissioned the defendant to deliver and lay rails. The parties agreed at the time that all disputes “arising from the contract” should be resolved by an arbitration tribunal, excluding the ordinary legal process. With a second order, the defendant undertook to manufacture and deliver switches. The parties also agreed on an arbitration clause for this contract, this time for disputes “in connection with” this contract.

The defendant (more precisely: its legal predecessor) was fined by the Federal Cartel Office as a participant in the rail cartel. The plaintiff then applied to the Regional Court of Dortmund to determine that the defendant was obliged to compensate her for her loss. The defendant relied on Section 1032 (1) of the ZPO: “If an action is brought before a court in a matter that is the subject of an arbitration agreement, the court must dismiss the action as inadmissible ...”.

“Disputes arising from the contract” does not only cover contractual claims

Since the defendant had raised the objection of the arbitration agreement, the court had to examine the scope of the agreements: Did the parties also want to withdraw antitrust claims for damages from state jurisdiction with the wording “disputes arising from the contract” and “disputes in connection with the contract”?

The court interpreted the arbitration agreements. On the one hand, it took into account the will of the party and on the other hand the case law of the Federal Supreme Court, which in case of doubt gives preference to the interpretation that makes the arbitration clause effective. The court first turned to the clause that assigned disputes “arising from the contract” to an arbitration tribunal. Obviously, such a clause covers contractual claims. In the case of damage caused by cartels, the focus is usually on the special provision of Section 33a (1) GWB, which links the claim for damages not to a breach of contract, but to the commission of an unlawful act. But of course, claims for damages against cartelists can be based on a number of different bases, including Section 280 (1) BGB, which requires the breach of a contractual obligation. These claims are already covered by the wording of the arbitration clause. So it is only interesting whether it also includes the assertion of tortious claims. The LG Dortmund had to clarify this because at the beginning of the process it was not yet clear under which claim bases the circumstances presented by the parties would be subsumed (§ 280 BGB, § 812 BGB, § 823 Abs. 2 BGB in conjunction with § 1 GWB and Art 101 TFEU, Section 33 a GWB, etc.).

Claims for tort are legally independent of claims for breach of contract. However, the same behavior can establish a contractual and a tortious claim at the same time. The BGH has accordingly recognized that arbitration clauses for disputes “from the contract” cover tortious claims in any case if the behavior can also constitute a breach of contract. In the opinion of the Regional Court of Dortmund, such a congruence existed here: The unlawful act (cartel agreement) only triggered the damage alleged in the lawsuit when the orders were concluded. There was also nothing to suggest that the parties would have wanted jurisdiction to be split up for the same act when they concluded their arbitration agreement (contractual claims before an arbitration tribunal, tortuous claims before a state court). Since the arbitration clause agreed for the first order was thus fulfilled, this applied all the more to the arbitration clause that was further formulated "in connection with the order".

No contradiction to the ECJ judgment CDC / Evonik

From the point of view of the plaintiff, such a result violated the ECJ judgment Evonik / CDC of May 21, 2015 (C-352/13 see competition law newsletter Q3 / 2015). There the court had ruled that a choice of court agreement was only applicable to cartel damage claims if it was foreseeable for the injured party at the time the agreement was approved that it would also cover claims arising from a violation of the cartel prohibition. The foreseeability is only given if the jurisdiction agreement "relates to disputes arising from liability due to an infringement of competition law". An agreement on the place of jurisdiction "which relates in an abstract way to legal disputes arising from contractual relationships", in the opinion of the ECJ, generally makes it impossible to foresee its application to antitrust claims. Because the cartel participation is usually not known to the injured party at the time of approval. He therefore fundamentally does not assume that the legal dispute (antitrust claim for damages) is based on the contractual relationships.

The LG Dortmund is of the opinion that the judgment of the ECJ is not relevant for arbitration agreements. At that time, several companies from different EU member states in Germany (also before the LG Dortmund) were sued for damages because of a jointly operated cartel. The only defendant based in Germany later left the proceedings. At the time, the ECJ examined the European Jurisdiction and Enforcement Regulation (EuGVVO, also known as "Brussels I Regulation") and came to the conclusion that the jurisdiction of the state courts of a member state, once established, would not subsequently cease to exist. In the case now decided by the Regional Court of Dortmund, however, the question was not which Member State court had jurisdiction. Rather, the question was whether the parties could effectively exclude state courts from settling their disputes. The LG Dortmund accordingly referred to Art. 1 Para. 2 d) EuGVVO, according to which the regulation is not applicable to arbitration. Therefore, the applicability of German law remained, which, as shown above, gave the jurisdiction of the arbitral tribunal chosen by the parties priority over the jurisdiction of state courts.

classification

The ruling focuses on arbitration proceedings as a practical means of enforcing antitrust claims. The EU Damages Directive (2014/104 / EU, Recital 48) also points to the increased importance of out-of-court dispute resolution: it expressly welcomes arbitration as a means of settling damage caused by a violation of competition law. Reference should also be made to the possibility for the parties to contact an anti-trust authority.

On the matter, the LG Dordmund can hardly be contradicted: If a buyer has purchased products from a cartelist, then it would be incomprehensible why an arbitration clause should differentiate between the claims of the injured party according to the legal dogmatic bases. This is also otherwise not the case in civil law: the parties submit the facts to the court, the court examines the legal basis on which the claim is justified or not (“da mihi facto, dabo tibi ius”). The opposite opinion should consequently lead to the result that the identical facts may be asserted before an arbitral tribunal and before a state court - which, however, speaks against the procedural principle that the same case cannot be brought before two different courts. The interests of the parties at the time of the conclusion of their arbitration agreement as well as the procedural interests of the state and the private arbitration tribunal speak in the typical constellation of facts for the result of the LG Dortmund.

The Evonik / CDC ruling does not give rise to any other considerations either. In fact, it does not deal at all with the question of whether it must be foreseeable for the injured party that the arbitration clause should also cover damages for antitrust violations. The process before the LG Dortmund got a special twist, however, because it was precisely this court that caused the judgment through its questions referred to the ECJ.And in the questions referred, it not only addressed the complex decided at the time (resignation of the only defendant based in the court state), but also asked questions about the arbitration clause that the ECJ did not answer. Thus, with its current judgment, the LG Dordmund indirectly stated that it did not have to ask the question referred to the arbitration clause because - the finding in the current proceedings - it did not fall under the EuGVVO. The fact that the LG Dortmund asked this question at the time is irrelevant for the current judgment.

The judgment does not deal with the constellation that the injured party and the cartelist agree to take their dispute to an arbitration tribunal after the cartel infringement becomes known. Such agreements can be effectively concluded regardless of the decision of the LG Dortmund. Here, the advantages and disadvantages of arbitration and state court proceedings must be carefully weighed against each other.

An appeal has been lodged against the judgment.

Dr. Helmut Janssen, LL.M. (London)
partner
Luther Rechtsanwaltsgesellschaft mbH
Brussels / Düsseldorf
Telephone +32 2 62 77763 / + 49 211 5660 18763
[email protected]


Tim Börker
Luther Rechtsanwaltsgesellschaft mbH
Brussels
Telephone +32 2 627 77 67
[email protected]

EU merger control - on the requirement of full functionality in the event of a change of control of joint ventures

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In its decision of September 7, 2017, the ECJ responded to the submission of an Austrian court on the question of whether the Merger Control Ordinance (hereinafter: FKVO) is to be interpreted as meaning that even if the type of control over an already existing company with sole control of joint control only brings about a merger if the resulting joint venture is fully functional.

The decision is particularly relevant in practice because no case law has yet existed on this issue and the Commission's decision-making practice was inconsistent.

starting point

According to the FKVO, a merger is essentially brought about by one or more persons who already control at least one company acquiring (joint) control over another company. In the case of the establishment of a joint venture, such a merger is only effected according to the FKVO if it fulfills “all functions of an independent economic unit in the long term” (also referred to as full functionality). So far it was unclear whether the requirement of full functionality also exists if there is no establishment of a joint venture in the sense of the creation of a new legal unit, but a simple change from sole control to joint control within an already existing legal unit.

Background of the decision

In the case to be decided by the ECJ, Austria Asphalt GmbH & Co. KG and Teerag Asdag AG intend to jointly found a company under Austrian law (both with shares of 50 percent). This is to acquire the Mürzzuschlag asphalt mixing plant (target company), which has so far been controlled exclusively by Teerag Asdag AG. The process would result in a change from a control exercised exclusively by Teerag Asdag AG to a joint control of Teerag Asdag AG and Austria Asphalt GmbH & Co. KG over the target company. According to the referring court, the target company cannot be qualified as a full-function company. The joint venture resulting from the acquisition process also lacks the feature of full functionality, since the greater part of the production is intended for the two controlling groups.

Austria Asphalt GmbH registered the merger project with the Federal Competition Authority (Austria's national antitrust authority). The Federal Cartel Prosecutor then submitted an application for examination to the Cartel Court (Austria). The Austrian antitrust court declared that it was not competent because of the assumption that it was a matter of a merger within the meaning of the FKVO. Austria Asphalt GmbH & Co. KG appealed against this before the Supreme Court (Austria) with the argument that the establishment of a joint venture would only constitute a merger within the meaning of the FKVO if it was a full-function joint venture. However, this is not the case with the planned process. The Supreme Court (Austria) then referred the question to the ECJ for clarification.

Applicability of the merger control only with full functionality / change of the market structure

The ECJ has now made it clear that a joint venture that results from the change from sole to joint control must be fully functional in order to fall within the scope of the FCVO. According to its recitals, the FKVO is intended to ensure that restructuring of companies does not cause permanent damage to competition. Union law therefore applies to concentrations which are capable of significantly impairing effective competition in the internal market. The concept of a concentration must therefore cover those processes which would result in a permanent change in control of the companies involved and thus of the market structure. Such a change in the market structure exists in the case of the establishment of a joint venture if the established company fulfills all the functions of an independent economic unit in the long term, and is therefore fully functional.

Establishment even when changing from sole to joint control

For a change in the market structure, it is not decisive whether the joint venture is created through the original act of formation or through the change from sole to joint control. In the opinion of the ECJ, the concept of the establishment of a joint venture within the meaning of the FKVO also includes the creation of a joint venture through the change from sole to joint control. In the opinion of the ECJ, the contrary view of the Commission leads to an unjustified unequal treatment between newly founded companies, which only come under the concept of a merger if they are fully functional, and previously existing companies that would be jointly controlled in the future. The latter would then be covered by the merger concept of the FKVO regardless of whether there is full functionality. In the opinion of the ECJ, however, this result contradicts the purpose of the Merger Regulation, which, according to its recitals, is only intended to cover “significant structural changes”.

Applicability of the prohibition of cartels and national law

In addition, the ECJ emphasizes in this context that its interpretation does not mean that any behavior by companies that does not result in structural changes is beyond the control of the Commission as a whole. The prohibition of cartels in Art. 101 TFEU applies regardless of the question of the existence of full functionality.

Summary

In its judgment, the ECJ broadly interprets the term “establishment of a joint venture” within the meaning of the FKVO. It thus creates legal certainty that the precondition for the applicability of merger control in the event of a change from sole to joint control is the full functionality of the resulting joint venture, since only then does the change in the market structure required for the application of the FKVO occur.

Practice consequences

According to the decision of the European Court of Justice, in future not only every newly established joint venture but also every acquisition of joint control over a company must be checked to determine whether the joint venture that has been created is fully functional. If this is not the case, there is no merger in the sense of the FKVO. The project is then not subject to EU merger control. However, there may be a notification requirement under German merger control law. The existence of a merger under national law does not depend on the question of whether the joint venture is fully functional.

Almuth Berger, LL.M. (Birmingham)
Luther Rechtsanwaltsgesellschaft mbH
Dusseldorf
Phone +49 211 5660 24990
[email protected]

Cartel participation through joint venture

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In its judgment of September 14, 2017, the ECJ dealt with questions on the liability of parent companies for cartel violations by their subsidiaries. In this context he commented on the question whether, with regard to the rights of the defense, a fine against the parent company could only be considered if proceedings were also brought against the subsidiary at the same time. The ECJ also decided which sales are to be included in the calculation of the fine and under which conditions companies can invoke the principle of equal treatment in cartel proceedings.

background

In the proceedings before the European Court of Justice, LG Electronics Inc. (LGE) and Koninklijke Philips Electronics NV (Philips) defended themselves against a judgment of the General Court of the European Union (ECJ), which ruled out the actions of the LGE and Philips for the annulment of a decision by Commission of December 5, 2012 had rejected. The Commission's decision alleged that the groups were involved in cartels on the markets for various cathode ray tubes ('cathode ray tubes', 'CRT') through their subsidiaries up to 2001. In addition, LGE and Philips had also participated in cartels in the CRT area through 2006 through the LPD group, which was jointly founded in 2001. The Commission therefore fined LGE and Philips for the infringements of their subsidiaries up to 2001. The groups were also jointly and severally liable for the LPD group's participation in the cartels in the CRT area.

Proceedings before the ECJ

LGE and Philips based their actions against the judgments of the CFI primarily on a possible violation of their rights of defense. The exercise of the rights of the defense depends to a large extent on whether and how the subsidiary is involved in the proceedings. Proceedings against the LPD group could possibly have produced evidence useful in the defense of the parent companies. Furthermore, when calculating the fine, the Commission wrongly included sales of CRT that were incorporated into an end product within the same group (direct sales). However, these are not sales of cartel-abused CRTs, but of processed products. The result is that the calculated fine is too high. Furthermore, the Commission did not take into account such direct sales in a decision against Samsung, which led to a breach of the principle of equal treatment.

Decision of the ECJ

The ECJ confirmed the decision of the ECJ and thus the decision of the Commission. In order to safeguard the rights of the defense, the Court of Justice has consistently ruled that the undertaking should be given the opportunity to comment on the existence and relevance of the facts and circumstances relied on by the Commission. On the other hand, the rights of the defense do not result in the obligation to forward the objections to a company against which an infringement is not even supposed to be found. With regard to direct sales, the ECJ found that such must always be included in the calculation of the fine if the company concerned is an economic entity. He argued that it would be contrary to the objective of Regulation No 1/2003 if, in the case of cartel participants that were vertically integrated in this way, such direct sales were not taken into account in the calculation of the fine.

In addition, the principle of equal treatment requires that a uniform calculation method be used for the determination for all companies involved. In the present case, however, that is what happened, and with regard to Samsung the Commission merely misjudged the existence of an economic entity. However, this violation of the law does not lead to a violation of the principle of equal treatment. The principle of equal treatment must be reconciled with compliance with the requirement of lawful conduct, according to which no one can invoke an infringement committed in favor of another to his advantage.

Practice consequences

The decision of the ECJ simplifies the procedure against the parent companies of a joint venture. In future, a fine can be imposed on the parent company even if the Commission does not intend to initiate proceedings against the subsidiary. When calculating the fine, those sales that have arisen through direct sales must also be taken into account.

A company can only invoke the principle of equal treatment if different calculation methods were used with regard to the companies involved in the antitrust violation. On the other hand, it is not possible to invoke a violation of the law in favor of another in order to prove a violation of the principle of equal treatment.

Almuth Berger, LL.M. (Birmingham)
Luther Rechtsanwaltsgesellschaft mbH
Dusseldorf
Phone +49 211 5660 24990
[email protected]

Speakers Corner

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Is digitization eating away at antitrust law?

Digitization is advancing at a rapid pace. Nothing and nobody is safe from their disruptive change processes. So it is no wonder that the question is now being raised as to the extent to which antitrust law is affected by digitization or is even becoming completely obsolete. A particularly clear example are dynamic price adjustment algorithms (dynamic pricing). In this way, retailers in particular pursue a pricing strategy with which the sales and profit potential of their customers can be optimally exploited. Data is abundant today (especially when it comes to online sales). Dynamic pricing represents a central component of so-called speed retailing business models. Speed ​​retailing is understood to be a need-oriented, continuous and rapid adjustment of sales parameters in order to optimally meet customer requirements. Ultimately, it is a paradigm shift from competitive to customer-oriented pricing. The desired goal is no longer the lowest price, but the best price for the respective customer, at the right time, in the right place and at the right price. This enables the seller to take full advantage of the fact that customers are willing to pay a higher price at certain times (e.g. for firewood in the event of a cold snap or for ice cream in hot temperatures) or that one customer is willing to pay more than another . The aforementioned considerations now even play a role in stationary retail, where progressive retailers are already considering setting up electronic price tags in order to be able to implement dynamic pricing in practice.

Antitrust aspects

The use of these dynamic price adjustment algorithms is initially not questionable under antitrust law. However, dynamic pricing becomes an antitrust problem when the facts of a price agreement or a concerted practice are met. Several scenarios are conceivable here.

Firstly, it would be possible to use price algorithms to enforce a previously agreed price agreement between manufacturers or dealers. This was the case with the so-called poster cartel, which was prosecuted by both the US Department of Justice and the British authorities.

Second, it is also conceivable that competitors use price algorithms and data sets from the same third-party provider. Here, the involvement of a third party ensures that pricing is uniform. One example was the ECJ case "Eturas", in which the travel agencies concerned were able to coordinate in a manner contrary to antitrust law due to the shared use of a uniform IT system (ECJ, Case C-74/14 - Eturas, ECLI: EU: C: 2016: 42).

A third variant, in which competing providers use their own algorithms without the involvement of a third party, proves to be particularly problematic. With a high degree of market transparency and a corresponding homogeneity of products, it is entirely possible that algorithms can be used to simulate price behavior as in an oligopoly. In this case, the algorithms would be set in such a way that computers, taking into account numerous market data, in particular price and quantities, and an actual or anticipated behavior of the competitors, ultimately determine a price that would be above a price of free competition. Even without digitization, it was already established in the oligopoly (e.g. on the basis of game theory) that the oligopoly price level can be higher than the competitive level.In such a case, of course, the question arises as to whether this is already an improper concerted practice. An exchange of information in an oligopoly is known to be extremely problematic in most cases. But what applies when a lot of data is stored transparently and digitally so that it no longer has to be technically "exchanged"? Everyone knows everything and everyone knows everything. Here it may be very difficult to draw a line between the permissible parallel behavior.

Problem of detecting digital tampering

Regardless of the legal assessment problem, the question also arises of how such behavior - once assumed to be inadmissible - should be detected and prosecuted in practice in the future. To this end, the antitrust authorities must also be digitally upgraded in order to keep track of relevant price developments. It has already been proposed to set up a “market transparency office for online markets” (analogous to the already existing market transparency offices for electricity, gas and fuels according to §§ 47a ff. GWB). In this area, too, the technical development is far ahead of the legal assessment or the access of the prosecuting authorities. Nevertheless, these questions will have to be asked in the near future.

We have the following questions for our readers in this context:

1. How do you assess the technical development of dynamic pricing?

2. Will the use of pricing algorithms lead to a serious antitrust problem in the future?

3. Should such a serious antitrust problem exist in principle, in what form can correspondingly inadmissible behavior be detected and prosecuted effectively and promptly?

Dr. Thomas Kapp, LL.M. (UCLA)
partner
Luther Rechtsanwaltsgesellschaft mbH
Stuttgart
Phone +49 711 9338 12893


News soon

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European Court of Justice: Agreements between producer organizations can constitute a cartel in terms of competition law

In a preliminary ruling procedure, the ECJ ruled that behavior between several producer organizations or associations of producer organizations (EO / VEO) cannot escape the ban on cartels. That applies all the more if the agreements involve organizations which are not recognized by a Member State in the context of the implementation of the common agricultural policy in the sector concerned. It is true that the common agricultural policy under the TFEU deserves priority over competition law provisions. The PO / VEO are therefore withdrawn from the prohibition of cartels under Union law. However, this does not create a non-competitive area. Competition law always remains applicable if the conduct does not pursue the objectives with which the PO / VEO in question was entrusted. In particular, behavior that would not take place within one PO / VEO but between several PO / VEO went beyond what is necessary to fulfill the tasks mentioned.

Court of Justice of the European Union (EGC): Limited execution ban for public takeovers does not apply to situations in which de facto control is mediated

In a decision, the CFI confirmed that the Commission had imposed a fine of EUR 20 million on Marine Harvest ASA (Marine Harvest) for violating the prohibition on enforcement (so-called “gun jumping”). Marine Harvest had taken over 48.5% of the shares in Morpol ASA and completed the takeover eight months in advance of its registration. Marine Harvest invoked the restriction of the execution ban in cases of public takeovers without success. The court upheld the Commission's view that this exemption from the prohibition of execution does not apply in cases where the acquirer has de facto control of the company. For an infringement, it is also not important that the acquirer actually exercises the control obtained. The mere possibility of influencing is already sufficient for a violation of the prohibition on enforcement.

European Commission: Statement of Objections to AB InBev for obstruction of cheap beer imports into Belgium

In a statement of objections, the European Commission accused the Belgian brewer AB InBev of having exploited its dominant position on the Belgian beer market. AB InBev had previously deleted the French text on cans in the Netherlands and the Dutch text on cans in France. According to the Commission, this was done in order to prevent supermarkets and wholesalers from buying AB InBev's products at lower prices in France and the Netherlands and importing them into the French and Dutch-speaking parts of Belgium. In addition, AB InBev partially exempted Dutch retailers from certain special promotions when there was an opportunity to import into Belgium. The Commission is now investigating whether this behavior infringes Article 102 TFEU, which prohibits the abuse of a dominant position.

European Commission: Measures to protect intellectual property rights

On November 29, 2017, the European Commission published a communication on the EU's handling of standard-essential patents. The published measures are intended to create a fair and balanced system of standard essential patents (SEP). The Commission believes that the communication will clarify interpretative issues relating to the application of the 2004 Intellectual Property Rights Enforcement Directive, thereby creating a predictable legal framework. From an antitrust law perspective, the explanations by the Commission on injunctions against potential licensees of standard-essential patents are particularly interesting. Obtaining an interim injunction by the owner of an SEP against such potential licensees always constitutes the abuse of a dominant position and thus a violation of Article 102 TFEU if the user of the SEP is willing to conclude a license under FRAND conditions.

Higher Regional Court of Düsseldorf: start of the proceedings for the "sausage cartel"

The 6th Cartel Senate of the Düsseldorf Higher Regional Court has scheduled the start of the main negotiation in the proceedings over the so-called "sausage cartel" for December 19, 2017. A total of 40 days of negotiations have been scheduled until May 2018. The proceedings are about price agreements between 22 sausage manufacturers. Between November 2013 and July 2014, the Federal Cartel Office imposed fines totaling around EUR 338 million. Of these, proceedings relating to fines totaling around EUR 238 million had to be discontinued due to a loophole in the GWB (so-called “sausage loophole”). This loophole, which made it possible to avoid fines through internal company restructuring, is now likely to have been closed by the 9th amendment to the GWB.

Bundeskartellamt: Prohibition of exclusive agreements between CTS Eventim and organizers as well as advance booking offices

In administrative proceedings, the Bundeskartellamt has prohibited CTS Eventim from using so-called exclusive agreements that the company has concluded with event organizers and advance booking offices. With the exclusive agreements that oblige the contracting parties to sell their tickets exclusively via the CTS Eventim ticket system, CTS Eventim is exploiting its market power to the detriment of the competition. In the future, the contractual partners of CTS Eventim must be able, in accordance with the requirements of the Federal Cartel Office, to convey at least 20 percent of their annual ticket volume to customers via other ticket systems, provided the contracts run for more than two years. The current contracts are now to be adjusted by CTS Eventim within four months.

Bundeskartellamt: Prohibition of the merger between CTS Eventim and Four Artists

The Federal Cartel Office has prohibited the planned merger of CTS Eventim and Four Artists, a concert and event agency. Four Artists represent numerous national and international artists, so that the already dominant position of CTS Eventim would have been further strengthened by the merger. There would therefore have been a significant impediment to effective competition in the affected markets, so that the merger had to be prohibited.

Bundeskartellamt: easing the requirements for purchasing tickets for the 2018 World Cup

The Federal Cartel Office has discontinued administrative proceedings against the German Football Association (DFB) on suspicion of abuse of a dominant market position. The background to the procedure was the regular membership in the DFB's fan club required to purchase a ticket from the DFB's contingent for the European Championship 2016 or away games as part of the World Cup qualification, which should also be required for the purchase of tickets for the 2018 World Cup. The application for a ticket for the 2018 World Cup is now possible after the agreement reached between the Federal Cartel Office and the DFB if ​​a so-called "tournament membership" is acquired for 10 euros. From the perspective of the DFB and the Federal Cartel Office, the reason for the need for such a membership in the DFB's fan club is security considerations.

Bundeskartellamt: review of Lufthansa prices

Following the insolvency of Air Berlin, there was a sharp rise in flight prices, especially on domestic German routes. The Federal Cartel Office is now examining whether the price increase by Lufthansa represents the abuse of a dominant market position. To this end, Lufthansa was asked to provide the Federal Cartel Office with information about its pricing. A decision should then be taken to initiate a procedure. Lufthansa justifies the increased prices with the significantly higher demand. Falling prices are only to be expected if the sale of parts of the insolvent Air Berlin to the Lufthansa subsidiary Eurowings and the British competitor Easyjet is approved by the European Commission.

Bundeskartellamt: merger of Airbus and Bombardier cleared

The Federal Cartel Office has cleared the takeover of the C-Series Aircraft Limited Partnership (CSALP), a subsidiary of Bombardier Inc., by Airbus SE. The merger will not significantly impede significant competition. While Airbus SE mainly manufactures aircraft with a seating capacity of over 150 seats, the CSALP acquired has a strong market position on the global market for smaller aircraft with 100 to 150 seats. For European and especially German airlines, aircraft in this seat category are of subordinate importance. According to the Bundeskartellamt's investigations, it was a minor market, so the merger had to be approved. However, the merger project is still pending with various other competition authorities.

Bundeskartellamt: Schwenk KG refrains from taking over the Karsdorf cement plant

Schwenk KG has given up plans to take over the Karsdorf cement plant from Opterra GmbH. The Bundeskartellamt had previously expressed competition law concerns. According to the Federal Cartel Office, the merger was expected to significantly impede effective competition and should therefore have been prohibited. Opterra GmbH is the closest and most active competitor of Schwenk KG. The merger would have eliminated the competitive pressure exerted on Schwenk KG by Opterra GmbH. That would have been particularly worrying because the cement markets are already characterized by high barriers to entry and a high degree of transparency. Therefore, the Bundeskartellamt also rejected an offer of undertaking by Schwenk KG, which had as its object the transfer of cement capacities from Karsdorf, as unsuitable.

Dates & literature

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