Competition Law: INFORMATION, UPDATES AND ANALYSIS, Mar 2016

United States of America (‘US’) - Federal Trade Commission (‘FTC’)

Drug Testing Compliance Group, LLC
January 29, 2016

The FTC has approved a final order settling charges that Drug Testing Compliance Group, LLC, an Idaho-based company which provides drug and alcohol testing and other services to commercial trucking companies and their drivers, illegally invited one of its competitors to enter into a customer allocation agreement. Drug Testing Compliance Group, LLC, agreed to settle charges that it illegally invited one of its competitors to enter into a customer allocation agreement in violation of Section 5 of the FTC Act.  The proposed settlement prohibited Drug Testing Compliance Group, LLC from communicating with competitors about rates or prices although it does not bar public posting of rates. The settlement also prohibited the company from soliciting, entering into, or maintaining an agreement with any competitor to divide markets, allocate customers, or fix prices; and from urging any competitor to raise, fix, or maintain prices, or to limit or reduce service.

NXP Semiconductors N.V.
January 29, 2016

The FTC has approved a final order settling charges that NXP Semiconductors N.V.’s $11.8 billion acquisition of Freescale Semiconductor Ltd. would likely harm competition in the worldwide market for RF (‘Radio Frequency’) power amplifiers. NXP Semiconductors N.V. agreed to sell its RF power amplifier assets to settle charges that its proposed $11.8 billion acquisition of Freescale Semiconductor Ltd. would substantially lessen competition in the worldwide market for RF power amplifiers, likely resulting in higher prices and reduced innovation. The proposed consent order preserves competition by requiring NXP Semiconductors N.V.to divest all its assets that are used primarily for manufacturing, research, and development of RF power amplifiers to the a Chinese private equity firm Jianguang Asset Management Co. Ltd. These assets include a manufacturing facility in the Philippines, a building in the Netherlands to house management and some testing labs, as well as all patents and technologies used exclusively or predominantly for the RF power amplifier business, and a royalty-free license to use all other NXP patents and technologies required by that business. The divestiture also includes all of NXP’s RF power amplifier employees and managers.

ArcLight Energy Partners Fund VI, L.P.
February 09, 2016

The Federal Trade Commission has approved a final order settling charges that energy investor ArcLight Energy Partners Fund VI, L.P.(‘ArcLight’)’s acquisition of Gulf Oil Limited Partnership from its parent company, Cumberland Farms, Inc., would likely be anti-competitive. ArcLight agreed to divest its ownership interest in four light petroleum product terminals in Pennsylvania, to settle charges that ArcLight’s acquisition of Gulf Oil Limited Partnership from its parent company, Cumberland Farms, Inc., would likely be anti-competitive in three Pennsylvania terminal markets: Altoona, where ArcLight would own the only terminal handling gasoline and one of two terminals handling distillates; Scranton, where ArcLight would own one of two terminals handling gasoline and distillates; and Harrisburg, where ArcLight would own one of two terminals handling gasoline and one of three terminals handling distillates.



European Union (‘EU’) – European Competition Commission (‘European Commission’) General Court

Alternators and Starters January 27, 2016

The European Commission has imposed fines of € 137 789 000 on Mitsubishi Electric Corporation (‘Melco’) and Hitachi Automotive System Limited (‘Hitachi’) for participating in a cartel for alternators and starters with another firm, Denso Europe (‘Denso’), in breach of EU Antitrust Rules. Denso was not fined as it revealed the existence of the cartel to the Commission. All companies acknowledged their involvement and agreed to settle the case. For more than five years, the three Japanese car parts manufacturers coordinated prices and allocated customers or projects with regards to alternators and starters, two important

components of car engines. The Commission’s investigation revealed that, between September 2004 and February 2010, the companies were in contact on regular basis to limit the competition between them. The companies coordinated their responses to certain calls for tender determining the price to tender and who should get the business. They also shared out vehicle manufacturers and projects between themselves in terms of the supply of the car components. There was also exchange of commercially sensitive information regarding price elements and market strategies. Although contacts associated with forming and running the cartel took place outside the European Economic Area (‘EEA’), the cartel affected European customers as alternators and starters were also sold directly to car manufacturers in the EEA.



Republic of India – Competition Commission of India (‘CCI’)

CCI dismisses information against Uber, Case No. 96/2015
February 10, 2016

The Information filed by Meru Travels Pvt Ltd (‘Meru Cabs’) against Uber group alleged that, with the help of funding received from various venture capital and private equity investors, Uber Group adopted various anti-competitive practices in the market like predatory pricing etc in order to eliminate competitors from the market and consolidate its dominant position. It was also alleged that the huge discounts and incentives offered by Uber to its drivers are in the nature of loyalty inducing schemes and are likely to have an exclusionary effect in the relevant market. For the analysis of the alleged anti-competitive conduct of Uber, the CCI defined the relevant market as the market for Radio Taxi Services in Delhi. The CCI noted that the research report relied on by the Informant to substantiate its allegation of Uber being in a dominant position in the relevant market in India was unreliable. It was further held by the CCI that the radio services market in Delhi appears to be competitive and that Uber does not seem to be holding a dominant position in the relevant market in India. Therefore, the allegations of abuse of dominant position were discounted, Uber not being a dominant position in the relevant market. The allegations of an exclusive arrangement between Uber and its drivers being unsubstantiated were also dismissed. According, the case was closed under Section 26(2) of the Competition Act, 2002 (‘Act’).

CCI Dismisses Allegations of Anti-Competitive Conduct by IndiGo, Case No. 108/2015
February 10, 2016

Air India, the Informant has approached the CCI with allegation that IndiGo (‘OP’) is indulging in predatory recruitment of pilots trained by the Informant for its proposed expansion and inducing them to breach contractual and other obligations resulting in the cancellation and delays of the Informant’s flights. It was alleged that the OP was flouting the directions issued by the Director General of Civil Aviation (‘DGCA’) which made it mandatory for pilots to obtain a ‘No Objection Certificate’ from their previous employer and that the pilots hired by them serve the six month notice period. The CCI observed that the allegations levelled against the OP by the Informant do not prima facie raise any competition concerns as the said conduct does not bring about any structural changes in the operations of the market. It was also observed that the allegations made by the Informant are more of an employment issue rather than a competition issue. The matter was accordingly closed under the provisions of Section 26(2) of the Competition Act, 2002.



United States of America (‘US’)- Federal Trade Commission (‘FTC’)

FTC Requires Drug Marketer Hikma Pharmaceuticals PLC to Divest Rights to Five Generic Injectable Drugs as a Condition of Acquiring Certain Drug Products from Ben Venue Laboratories, Inc.
February 19, 2016

The Federal Trade Commission has required generic drug marketer Hikma Pharmaceuticals PLC to divest its rights and interests in five generic injectable pharmaceuticals, as part of a settlement resolving charges that Hikma’s $5 million acquisition of the rights to various drug products and related assets from Ben Venue Laboratories, Inc. was found to be anticompetitive. Under the terms of the proposed settlement, Hikma is required to divest the five generic injectable drug assets to Amphastar Pharmaceuticals, Inc., a California-based specialty pharmaceutical company that sells generic injectable and inhalation products.

According to the Complaint, Hikma’s purchase of certain generic injectables from Ben Venue, a U.S. subsidiary of Boehringer Ingelheim Corporation, is to likely harm future competition in the U.S. markets for the following products:

  1. Acyclovir sodium injection
  2. Diltiazem hydrochloride injection
  3. Famotidine injection
  4. Prochlorperazine edisylate injection
  5. Valproate sodium injection

FTC Puts Conditions on Generic Drug Marketer Lupin Ltd.’s Proposed Acquisition of Gavis Pharmaceuticals LLC
February 18, 2016

 Generic drug manufacturers Lupin Ltd. (‘Lupin’) and Gavis Pharmaceuticals LLC (‘Gavis’) will have to sell the rights and assets for two generic drugs, one used to treat bacterial infections and the other to treat ulcerative colitis, in order to settle FTC charges that Lupin’s proposed $850 million acquisition of Gavis is anticompetitive. The proposed consent order preserves competition by requiring the companies to divest these products to the New Jersey-based generic pharmaceutical company G&W Laboratories (‘G&W’).

In the interim, Lupin will supply G&W with the finished product for two years. Gavis and Lupin also are required to transfer all confidential business data related to both divested products, and provide access to knowledgeable employees, so that G&W can obtain all necessary FDA approvals in a timely manner.



Republic of India – Competition Commission of India (‘CCI’)

CCI Approves Acquisition of Sabarmati Gas Limited (‘SGL’) C-2015/12/361
February 10, 2016

The CCI was notified of the proposed combination on December 29, 2015 vide joint notice given by Gujarat State Petroleum Corporation Limited (‘GSPCL’), Gujarat State Petronet Limited (‘GSPL’) and Bharat Petroleum Corporation Limited (‘BPCL’) (collectively known as ‘Acquirers’). The proposed combination relates to the acquisition of 49.86% of the issued and paid up capital of SGL which are presently held by various funds. Post the proposed combination, the Acquirers who already hold 50% of the shares of SGL will hold a total of 98.86% of the issued, subscribed and paid up capital of SGL. The CCI noted that the proposed combination envisages the exit of Investors. However, keeping in view the nature of the existing affirmative veto rights already enjoyed by the Acquirers, the CCI noted that the exit of the existing Investors is not likely to result in a change in competition dynamics in the market. The proposed combination was therefore approved under Section 31(1) of the Competition Act, 2002.

Ministry of Corporate Affairs Issues Notifications with respect to the Competition Act, 2002
March 04, 2016

On March 4, 2016, the Central Government in exercise of powers under Section 54(a) of the Competition Act, 2002 exempted the following categories of enterprises from notification before the CCI.

  1. De minimus Exemption Enterprises having asset value of not more than three hundred and fifty crore rupees in India or turnover of not more than one thousand crore rupees in India are exempt from the provisions of Section 5 of the Competition Act, 2002 (which deals with notification before the CCI) for a period of 5 years from the date of publication of the said notification in the official gazette.
  2. Enhancement of jurisdictional asset/turnover thresholds under Section 5 of the Competition Act, 2002

The value of assets and turnover for the purposes of Section 5 of the Competition Act, 2002, which prescribes the asset/turnover threshold for mandatory notification before the CCI has been increased by one hundred percent.



United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)

First TransPennine Express / TransPennine Express Franchise Merger Inquiry
January 18, 2016

CMA has cleared the Phase-1 of the acquisition of TransPennine Express franchise by First TransPennine Express (collectively, ‘Parties’) on 14th March, 2016 using the ‘de minimus’ exception. CMA considered the result of the transaction in the Substantial Lessening of Competition (‘SLC’). CMA issued notice under section 96(2A) of the Enterprise Act, 2002 to the Parties and initiated the inquiry on 18th January, 2016. The franchise provided inter-urban services in north England, offering direct connections between five cities along with cross-border routes from north-west of England to Scotland. It was observed that rail service provided by Northern Rail on the line between Selby and Hull provided competition to the franchise, due to which, the transaction did not give rise to SLC. It was also observed that the transaction could affect the bus services, thereby leading to the combination of the bus services provided by Huddersfield and Marsden with the franchise, resulting into a major market share of FirstGroup in the public Transport Services. However, CMA using its discretion, applied the ‘de minimis’ exception for the same and gave clearance for the franchise.

Ampco-Pittsburgh / Åkers AB Merger Inquiry
January 22, 2016

CMA has cleared the acquisition by Ampco-Pittsburgh Corporation of Åkers AB and certain of its affiliates (collectively, ‘Parties’) on 11th March, 2016. Ampco-Pittsburgh Corporation and Åkers AB are leading producers of forged and cast rolls for the steel and aluminium industries. CMA issued notice to the Parties under Section 96(2A) of the Enterprise Act, 2002 and initiated the inquiry on 22nd January, 2016, pursuant to the merger notice provided by K&L Gates LLP regarding the anticipated merger of the Parties. CMA is now considering the effect of the transaction in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, then whether the creation of that situation would result in substantial lessening of competition within any market(s) in the U.K. for goods or services.



European Union (‘EU’) – European Competition Commission (‘European Commission’)

European Commission Approves Acquisition of Allergan Generics by Teva, Subject to Conditions
January 21, 2016

The European Commission has approved under the EU Merger Regulation the proposed acquisition of the generics business of Allergan of Ireland, by Teva of Israel, subject to conditions. Both companies are among the top four generic pharmaceutical manufacturers worldwide. The Commission had concerns that the merged entity would have faced insufficient competition from the remaining players for a number of generic pharmaceuticals as well as regarding overall generic business in the UK, Ireland and Iceland.

To address the Commission’s concerns, the companies offered comprehensive remedies including divestment of:

  1. Each of the marketed molecules and molecules in development pipeline.
  2. Teva’s portfolio of marketed molecules and molecules in development pipeline in
  3. Thegreat majority of Allergan Generics   marketed generics activities and generics activities in development pipeline in Ireland and the United Kingdom.

The above commitments addressed the concerns and concluded that it would raise no competition concerns. The decision was conditional upon full compliance with the commitments.



Disclaimer

The information in this private circulation is not legal advice and should not be treated as such. The information is taken from public domain and is purely for private and non- commercial purposes. We do not represent that the information is correct, accurate, complete or non- misleading.

This disclaimer will be governed by and construed in accordance with laws of India, and any disputes relating to this disclaimer will be subject to the exclusive jurisdiction of the courts of the Republic of India.

Doc ID: CL/13/16

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