Competition Law: INFORMATION; UPDATES AND ANALYSIS, Jan 2015

United Kingdom

Information Resources Inc. / Aztec Group
December 19, 2014

Information Resources, Inc. (“IRI”) and Aztec Group (“Aztec”) (together, the parties) both supply retail measurement services (RMS) in the UK. IRI acquired the entire issued share capital of Aztec from its owner Aegis on 3 September 2013 (“the Merger”). The Merger was examined by the Office of Fair Trading (“OFT”) and was subject to an application of appeal to the Competition Appeal Tribunal. On 4 July 2014, the OFT’s decision was quashed by agreement between the parties to the appeal and the case was remitted to the Competition and Markets Authority (“CMA”).  The CMA assessed whether there is a realistic prospect that the Merger will lead to a substantial lessening of competition (“SLC”) in the provision of disaggregated convenience electronic point of sale (“ePOS”) data, disaggregated grocery ePOS data, and aggregated ePOS data.

Based on the evidence available to it, the CMA found that there was limited competition between IRI and Aztec pre-Merger in the supply of disaggregated convenience ePOS data, disaggregated grocery ePOS data, and aggregated ePOS data. On the basis of the evidence available to it, the CMA found that the Merger would not lead to a SLC in this regard.

Asda Stores Limited / Co-operative Group Limited (5 stores)
December 22, 2014

Asda Stores Limited (Asda) is acquiring five grocery stores and three petrol filling stations with attached kiosks (the Target) from the Co-operative Group Limited (Co-op). The Parties overlap in the retail supply of fuel and groceries in five local areas in the UK.

The CMA considered whether the Merger would give rise to unilateral horizontal effects in relation to loss of existing competition and loss of potential competition. In relation to loss of existing competition, the CMA found that the Merger will not result in a realistic prospect of a substantial lessening of competition (SLC) in the retail supply of fuel (on national basis as well as local basis) and groceries (on national basis as well as local basis). The CMA found that the Merger will not result in a realistic prospect of a SLC as the proposed store in would be subject to sufficient competitive constraints from other fascia in the local area.



United States of America

United States of America, v. Flakeboard America Limited, Celulosa Arauco Yconstitución, S.A., Inversiones Angelini Y Compañía Limitada, And Sierrapine
November 7, 2014

The United States of America brought a civil antitrust action to challenge unlawful conduct by Flakeboard America Limited; its parent companies, Celulosa Arauco y Constitución, S.A., and Inversiones Angelini y Compañía Limitada; and SierraPine that occurred while the U.S. Department of Justice was reviewing Flakeboard’s proposed acquisition of certain assets from SierraPine.

Flakeboard and SierraPine compete in the sale of particleboard, an unfinished wood product that is widely used in countertops, shelving, and other finished products. In January 2014, Flakeboard agreed to acquire three competing mills from SierraPine. This transaction exceeded the thresholds established by Section 7A of the Clayton Act, and therefore required the defendants to notify the federal antitrust agencies of their proposed acquisition and observe a waiting period before Flakeboard could take control of SierraPine’s business. Instead of preserving SierraPine as an independent business, however, the Complaint alleged that Flakeboard, Arauco, and SierraPine coordinated during the waiting period to close SierraPine’s Springfield mill and move the mill’s customers to Flakeboard. The mill was permanently shut down months before the waiting period expired. Later Flakeboard and SierraPine abandoned their proposed transaction in response to concerns expressed by the Department of Justice about the transaction’s likely anticompetitive effects in the sale of MDF. The Complaint alleged that the defendants’ conduct constituted a per se unlawful agreement between competitors to reduce output and allocate customers in violation of Section 1 of the Sherman Act and a premature transfer of beneficial ownership to Flakeboard in violation of Section 7A of the Clayton Act.

United States of America: Federal Trade Commission 

In the matter of Novartis AG
December 5, 2014

The instant case pertains to a proposed joint venture agreement between GlaxoSmithKline (“GSK”) and Novartis. As per the terms of the proposed joint venture agreement, GSK would control the joint venture and contribute, among other products, its nicotine patch business. On the other hand, Novartis would have a 36.5 percent interest in the joint venture, and without the divestitures required by the proposed order, would continue to own the Habitrol business, which had U.S. sales of more than $58 million in 2013.

According to the Agency, potential competitors would find it difficult, expensive, and time-consuming to develop new patch products and secure FDA approval, reinforcing the substantial competitive concerns. To preserve competition in the market for nicotine patches, the proposed consent order now requires Novartis to divest Habitrol, as well as its private-label patch business to India-based Dr. Reddy’s, one of the largest sellers of private-label over-the-counter health products to the U.S. market.

The Commission vote to accept the complaint and proposed consent order for public comment was 5-0.

In the Matter of Verisk/EagleView
December 17, 2014

In the instant case, Federal Trade Commission (“Agency”) issued an administrative complaint against proposed $650 million acquisition of EagleView Technology Corporation by Verisk Analytics and alleged that the acquisition would likely reduce competition and result in a virtual monopoly in the U.S. market for rooftop aerial measurement products used by the insurance industry to assess property claims. The agency also authorized staff to seek a temporary restraining order and preliminary injunction in federal court to maintain the status quo pending an administrative trial on the merits. It was further pointed out by the Agency that other providers of rooftop aerial measurement products were distant competitors to Verisk and EagleView. If the transaction was to come through, these providers, and other potential providers, would face significant barriers and would be unlikely to reposition or expand their business.

The Agency vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction in federal district court was 5-0.

In the Matter of Eli Lilly and Company and Novartis AG
December 22, 2014

In the instant case, the Agency’s complaint challenged the proposed $5.4 billion acquisition of Novartis Animal Health by Eli Lilly and Company. However, Eli Lilly and Company has agreed to divest its Sentinel product line of medications for treating heartworm disease in dogs in order to settle Agency’s charges that its proposed acquisition would likely be anticompetitive.

The complaint alleged that, without the divestitures required by the proposed order, the transaction would have eliminated the close competition between Eli Lilly and Novartis Animal Health and substantially decreased competition in the market for canine heartworm parasiticides.

The Agency vote to accept the complaint and proposed consent order for public comment was 5-0.



European Union

Antitrust: European Commission fines five envelope producers over € 19.4 million in cartel settlement
December 11, 2014

The European Commission has found that Bong, GPV and Hamelin, Mayer-Kuvert and Tompla coordinated their market behavior by fixing prices and allocating customers of certain types of envelopes, in breach of European Union (“EU”) antitrust rules. The European Commission’s investigation started with unannounced inspections in September 2010. The investigation showed that the overall aim of the cartel was to allocate customers and coordinate prices for the sale of standard/catalogue and special printed envelopes. These were typically bought by stationary distributors and large companies in Denmark, France, Germany, Norway, Sweden and the United Kingdom. Through a series of multilateral and bilateral meetings orchestrated at top management level, the cartelists coordinated their responses to tenders launched by major European customers, agreed on price increases and exchanged commercially sensitive information. The infringement started in October 2003 and lasted until April 2008. During the infringement period GPV group and Mayer-Kuvert were separate undertakings. After the infringement had ended the GPV group went into liquidation and some of its entities/assets, including those involved in the cartel, were purchased by Mayer-Kuvert. The liability for GPV group’s involvement in the cartel is therefore attributed to GPV France SAS (a subsidiary set up by Mayer-Kuvert to purchase most of GPV group’s envelopes production assets) and Heritage Envelopes Ltd (a direct participant in the infringement and former GPV group entity acquired by Mayer-Kuvert after the infringement). The European Commission has fined Bong, GPV and Hamelin, Mayer-Kuvert and Tompla a total of €19 485 000 for coordinating prices and allocating customers of certain types of envelopes, in breach of EU antitrust rules. The fines were set on the basis of the European Commission’s 2006 Guidelines on fines.



Republic of India (comprising pronouncements on anti-competitive agreements, abuse of dominant position)

M/s Cinemax India Limited (now known as M/s PVR Ltd.) And M/s Film Distributors Association (Kerala)
December 23, 2014

The Cinemax India Limited (“Cinemax”) (having a business of exhibition of films at its cinema halls across the country including Kerala), filed a complaint against Film Distributors Association (Kerala) (“FDA (K)”), which was allegedly imposing revenue sharing pattern upon Cinemax decided all by itself and was thereby not allowing Cinemax to negotiate independently with the individual distributors of the association. It alleged that the FDA (K) was indulging in anti-competitive by behaving like a cartel and exploiting their collective bargaining position to coerce film exhibitors, such as Cinemax, to enter into extremely unreasonable revenue sharing arrangements.

After the Directorate General’s investigation, the Competition Commission of India (“Commission’) agreed that FDA (K) was directly involved in directing, imposing and implementing the fixed uniform revenue sharing pattern in the market of Malayalam film exhibition among its members and multiplex film exhibitors in Kerala. The Commission noted that FDA (K) stopped the screening of all movies in the theatres that did not accept its terms /directions of the revenue sharing pattern and also imposed fines on its members, which did not implement the terms imposed by it and asked its members to pay the contribution for violating the terms and conditions of business directed by it. In view of the findings, the Commission concluded that FDA (K) was indeed indulging in anti-competitive activities and was therefore, directed FDA (K) to cease and desist from indulging in all such acts/ conduct which were in contravention of the provisions of the Competition Act, 2002.



United States of America

United States of America
December 19, 2014

In order to ensure competition is maintained in 59 communities throughout the United States, Service Corporation International (“SCI”) was ordered to divest a funeral home in Auburn, California by the FTC.  The order was for settling charges that SCI’s acquisition of Stewart Enterprises, Inc. would be anticompetitive.  The FTC has approved the application SCI to divest as required under the FTC’s order. 

The Commission vote to approve the divestiture of Lassila Funeral Chapel to Claney Oatmeyer Semenyuk, Inc., and to extend the time by which it must be completed, was 5-0



Republic of India

Notice under Section 6 (2) of the Competition Act, 2002 given by Sun Pharmaceutical Industries Limited and Ranbaxy Laboratories Limited
December 05, 2014

Notice was filed with the Commission pursuant to (a) a scheme of arrangement approved by the respective board of directors of Sun Pharma and Ranbaxy under Sections 391-394 and other applicable provisions of the Companies Act, 1956 and the Companies Act, 2013 (b) Transaction agreement executed between the Parties and (c) Investor agreement executed between Sun Pharma and Daiichi Sankyo Company Limited, which holds approximately 63.40 per cent of the outstanding shares of Ranbaxy.

The Commission approved the combination subject to the Parties carrying out modifications, including divestiture by Sun Pharma and Ranbaxy in specific medicines respectively, to the proposed combination. The Commission opined that the modification by way of divestitures by Parties to the proposed combination aimed to preserve competition in the relevant markets in India.

Notice u/s 6 (2) of the Competition Act, 2002 (“Act”) given by Essex Development Investments (Mauritius) Limited
December 05, 2014

The proposed combination relates to acquisition of 260 million equity shares constituting around 15.4 per cent of the equity share capital of HPL by Essex from WBIDC. Essex is a part of the Chatterjee Group (“TCG”), which through its affiliate/associate companies namely CPMC, India Trade (Mauritius) Limited (“ITML”) and Winstar India Investment Company Limited, PCC (“Winstar”) holds 39.54 percent of equity share capital of HPL. The shareholding of TCG in HPL, post combination, would increase to around 55 per cent.

After careful perusal of facts on record and the details provided in the notice given under the Act and the assessment of the combination Commission was of the opinion that the proposed combination was not likely to have any appreciable adverse effect on competition in India and therefore the combination was given a go ahead.

Notice under section 6(2) of the Competition Act, 2002 given by Indian Express Newspapers (Mumbai) Private Limited and Pune Infoport Private Limited
December 05, 2014

Notice was filed with the Commission for the proposed merger of Pune Infoport into Indian Express by way of a scheme of amalgamation under the provisions of the Companies Act, 2013, as approved by the respective board of the Parties. Post combination, only Indian Express would remain in existence after the merger.  After reviewing facts on record and the details provided in the notice given under the Act, the Commission was of the opinion that the proposed combination was not likely to have an appreciable adverse effect on competition in India and therefore, the Commission the combination was approved.

Notice u/s 6 (2) of the Competition Act, 2002 (“Act”) given by  Prime Focus Limited (“PFL”) and Reliance MediaWorks Limited (“Reliance Media”)
December 08, 2014

On 2nd July 2014, Reliance Media and the Promoters, inter alia, caused a public announcement to be issued under the relevant provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 for acquisition of up to 26 per cent of the equity share capital of PFL by way of a mandatory open offer. As stated in the notice, the Open Offer was a part of the proposed combination. It was observed by the Commission that the combined market shares of the Parties were less than ten per cent in each of VFX (visual effects) and post-production services (being the relevant services). Further, in equipment rental services, their composite market share was less than twelve per cent, which was also not significant. In conclusion, the Commission was of the opinion that the proposed combination was not likely to have an appreciable adverse effect on competition in India and therefore, the combination was approved by the Commission.

Notice u/s 6 (2) of the Competition Act, 2002 given by GlaxoSmithKline plc and Novartis AG
December 12, 2014

 As per the information provided in the notice, the proposed combination related to the following three inter-conditional and inter-dependent transactions:

  1. Acquisition of the global human vaccines business of Novartis (excluding its influenza vaccines business) by GlaxoSmithKline (“GSK”);
  2. Formation of a consumer healthcare joint venture (“J.V.”), in which GSK would own an equity interest of 63.5 per cent and Novartis, would own the remaining 36.5 per cent equity interest; and
  3. Acquisition of GSK’s business relating to a portfolio of oncology products (excluding manufacturing) by Novartis.

After reviewing the facts on record and seeking expert opinion from leading hospitals on possible adverse effects on ‘Vaccine Transactions’, ‘Consumer Healthcare Transaction’ and ‘Oncology Transaction’ due to the combination, the Commission was of the opinion that the proposed combination was not likely to have an appreciable adverse effect on competition in India and therefore, the combination was approved by the Commission.

Notice u/s 6 (2) of the Competition Act, 2002 given by Globalfoundries U.S. Inc.
December 23, 2014

Notice was given to the Commission pursuant to execution of a Master Transaction Agreement (“MTA”) between GF and International Business Machines Corporation (“IBM”)

The proposed combination involved acquisition by Globalfoundries (“GF”) of certain assets, and assuming the liabilities, of IBM’s microelectronic business (“Target Business”) pursuant to the MTA. GF is a pure-play semiconductor foundry with headquarters in Santa Clara, California, United States. It offers a full range of wafer fabrication services and technologies to a wide range of third party IC suppliers and original equipment manufacturers.  Being a pure-play foundry, GF does not market, design or produce integrated circuits products. IBM is incorporated in the United States and involved in delivering innovative solutions through provision of Information Technology infrastructure and software to improve client outcomes.

As regards the foundry services for manufacturing of integrated circuits in India, the Commission noted that the industry is in a nascent stage and there is no domestic manufacturing of chips being undertaken in India and entire consumption is met through imports. Also, there was a limited overlap in the businesses of GF and IBM in relation to the Target Business. Therefore, the Commission was of the opinion that the proposed combination was not likely to have an appreciable adverse effect on competition in India and therefore, the combination was approved by the Commission.



United Kingdom (UK)

The Competition and Markets Authority (CMA) provisionally announced its plans to carry out a full market investigation in July, and will now proceed following support from “most respondents” to its consultation. The investigation will also consider whether commitments made by banks providing services to small and medium-sized enterprises (SMEs) following a 2002 report by former regulator the Competition Commission continue to be effective, according to the announcement.

 

The CMA said that it was concerned about the low numbers of customers shopping around and switching current account providers; and how difficult it was for customers to compare products, particularly given the complexity of overdraft charges on personal current accounts. Continuing barriers to entry and expansion restricting the ability of smaller and newer providers to develop their businesses were also a continuing concern, as well as limited movement over time in the market shares held by the four largest banks. These control 77% of the personal current account market and 85% of the business current account market, according to the CMA.

 

The market reference group will be appointed shortly, and would publish a timetable for the various stages of its investigation, the CMA said in its announcement.



European Union (‘EU’)

Mergers: European Commission clears acquisition of Taminco by Eastman
November 26, 2014

The European Commission has approved under the European Union (“EU”) Merger Regulation the acquisition of Taminco Corporation by Eastman Chemical Company, both of the United States. Taminco is a global specialty chemicals company that produces amines primarily for the agriculture, water treatment, personal & home care, animal nutrition and oil & gas end-markets. Eastman is a global specialty chemicals company that produces a broad range of advanced materials, chemicals, and fibres. The European Commission concluded that the proposed acquisition would raise no competition concerns because of the companies’ moderate combined market shares on the markets concerned.

Antitrust: European Commission sends Statement of Objections to Pometon for suspected participation in a steel abrasives cartel
 December 04, 2014

The European Commission has informed Pometon S.P.A. that it suspects the company of having colluded with competitors on the pricing of steel abrasives in the European Economic Area (“EEA”), in breach of European Union (“EU”) antitrust rules. The sending of a statement of objections does not prejudge the outcome of the investigation. Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy and petrochemical industries. The European Commission has concerns that Pometon may have coordinated on a key price component of steel abrasives, the “scrap surcharge”, and that this coordination with other market participants affected the whole EEA market. Moreover, the European Commission takes the preliminary view that Pometon may have agreed with other participants not to compete on price with respect to individual customers. If established, such behaviors violate Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 53 of the European Economic Area (“EEA”) Agreement that prohibit anti-competitive business practices.

Mergers: European Commission clears acquisition of aviation fuel supplier Statoil Fuel & Retail Aviation by rival BP
December 15 2014

The European Commission has concluded that the acquisition of aviation fuel supplier Statoil Fuel & Retail Aviation (“SFRA”) of Norway by its rival BP, a UK based integrated gas and oil company was in line with the EU merger regulation. The decision is conditional upon the divestment of SFRA’s activities at the airports of Stockholm, Malmö, Gothenburg and Copenhagen. The companies’ activities overlap in the provision of fuel to airplanes at the airports of Stockholm, Gothenburg, Malmo and Copenhagen. The proposed transaction, as originally notified, would have combined two large into-plane suppliers of aviation fuel at these airports and would have reduced the number of suppliers from 3 to 2 at Stockholm, Gothenburg and Malmö and from 4 to 3 in Copenhagen. The European Commission’s investigation showed that the barriers to entry the market for new players and even for the expansion of already active suppliers are high, due to difficulties in gaining access to the necessary infrastructure and differences in supply chain costs. Moreover, most airlines appear to have insufficient buyer power to counteract the consequences of an increased concentration in the supply of aviation fuel at these airports. The European Commission therefore had concerns that the proposed transaction would have led to price increases for airlines. In order to address the European Commission’s concerns, BP committed to divest the target’s activities at the four airports concerned. These divestments would remove the entire overlap with regard to the supply of aviation fuel. Moreover, the divestments would allow the entry of an additional aviation fuel supplier at these four airports.

Mergers: European Commission approves acquisition of Lafarge by Holcim
December 15, 2014

The European Commission has found the proposed acquisition of Lafarge of France by Holcim of Switzerland to be in line with the European Union (“EU”) Merger Regulation. Both companies are active worldwide in the manufacture and supply of cement, ready-mix concrete, aggregates and other construction materials. The decision is conditional upon the divestment of Lafarge businesses in Germany Romania and the United Kingdom and of Holcim operations in France, Hungary, Slovakia, Spain and the Czech Republic. The European Commission had concerns that the transaction, as originally notified, would have had a detrimental effect on competition in a significant number of markets in the European Economic Area (“EEA”). The proposed transaction concerns assets worth several billion euros and will create the world’s largest cement producer with operations in 90 countries. The European Commission has carefully reviewed its impact on competition in Europe. As most construction materials, such as cement, aggregates, ready-mix concrete, are sold within a short distance from the site where they are manufactured, the European Commission has focussed its assessment on the transaction’s specific impact on customers located near Holcim and Lafarge’s production facilities.

The European Commission’s assessment has revealed that the merged entity would have faced insufficient competitive pressure from remaining players in many markets. This would have brought a risk of price rises. In order to prevent a negative impact on competition, the companies committed to divesting most of the operations where their activities overlap. This comprises assets as well as the services necessary for the viability of the assets. 

Mergers: European Commission clears acquisition of S-Oil by Saudi Aramco
December 03, 2014

The European Commission has approved under the European Union (“EU”) Merger Regulation the acquisition of S-Oil of South Korea by Saudi Aramco of Saudi Arabia. Saudi Aramco is engaged in the exploration, production and marketing of crude oil and in the production and marketing of refined products. S-Oil produces and markets refined products. Both companies sell their products in the European Economic Area (“EEA”). The European Commission concluded that the proposed acquisition would not raise competition concerns, in particular because of the limited overlaps between the companies’ activities. The operation was examined under the simplified merger review procedure.



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Doc ID: CL/09/14

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