Competition Law Newsletter August 2013 :
INFORMATION; UPDATES AND ANALYSIS
Covering April, May, June and July 2013
- Legal Pronouncements
- United States of America
- European Union
- United Kingdom
- Republic of India (comprising pronouncements on anti-competitive agreements, abuse of dominant position)
- Market Developments
- United States of America
- European Union
- United Kingdom
- Republic of India (including combinations approved by CCI)
United States of America
Panasonic and its subsidiary Sanyo agree to plead guilty in separate price-fixing conspiracies involving automotive parts and battery cells and L.G. Chem Ltd. agrees to plead guilty to price-fixing conspiracy involving battery cells, first
charges filed in battery cell investigation
July 18, 2013
Panasonic Corp. and its subsidiary, SANYO Electric Co. Ltd., have agreed to plead guilty and to pay a total of $56.5 million in criminal fines for their rolesin separate price-fixing conspiracies involving EOR projects implemented in the oil sector.
automotive parts and battery cells. LG Chem Ltd., a leading manufacturer of secondary batteries, has agreed to plead guilty and to pay a $1.056 million criminal fine for price fixing involving battery cells.
Osaka, Japan-based Panasonic agreed to pay a $45.8 million criminal fine for its role in the automotive parts conspiracy. SANYO agreed to pay a $10.731 million criminal fine for its role in the battery cells anti-competitive conduct in the cylindrical lithium ion battery cell industry.
The three-count felony charge against Panasonic was filed in U.S. District Court for the Eastern District of Michigan. Separate one-count felony charges were filed against SANYO and LG Chem in U.S. District Court for the Northern District of California. As part of the plea agreements, which are subject to court approval, the charged companies have agreed to cooperate in the department’s on-going antitrust investigations.
Panasonic has agreed to plead guilty for its role in a conspiracy to fix prices of switches, steering angle sensors and automotive high intensity discharge (HID) ballasts installed in cars sold in the United States and elsewhere. SANYO and LG Chem Ltd. have agreed to plead guilty for their roles in a conspiracy to fix the prices of cylindrical lithium ion battery cells sold worldwide for use in notebook computer battery packs.
Including Panasonic, 11 companies and 15 executives
conspiracy. The guilty pleas against SANYO and LG Chem are the first in the According to the first count of a three-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Panasonic participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of steering wheel switches, turn switches, wiper switches, combination switches and door courtesy switches sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. in the United States and elsewhere. According to the court document, Panasonic and its co-conspirators carried out the conspiracy from at least as early as September 2003 until at least February 2010.
The second count charges that Panasonic, during this same time period, participated in a conspiracy to rig bids for, and to fix, stabilize, and maintain the prices of steering angle sensors sold to Toyota in the United States and elsewhere. The department said that Panasonic and its co-c0- have pleaded guilty or agreed to plead guilty and department’s on-going investigation into
conspirators agreed, during meetings and conversations, to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize, and maintain the prices of steering angle sensors sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. in the United States and elsewhere.
According to the third count of the charge, from at least as early as July 1998 and continuing until at least February 2010, Panasonic and its co-conspirators participated in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing, during meetings and conversations, to rig bids for, and to fix, stabilize, and maintain the prices of automotive HID ballasts sold to Honda Motor Co. Ltd. and American Honda Motor Co. Inc., Mazda Motor Corp. and Mazda Motor of America Inc., and Nissan Motor Co. Ltd. and Nissan North America Inc. in the United States and elsewhere.
have agreed to pay a total of more than $874 million in criminal fines as a result of the auto parts investigation. Additionally, 12 of the individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. The three additional executives have agreed to serve time in prison and are currently awaiting sentencing.
According to the one-count felony charge filed in the U.S. District Court for the Northern District of California in San Francisco, SANYO and LG Chem engaged in a conspiracy to fix the price of the cylindrical lithium ion battery cells used in notebook computer battery packs from about April 2007 until about September 2008. Cylindrical lithium ion battery cells are rechargeable batteries that are often incorporated in groups into more powerful battery packs commonly used to power electronic devices.
According to the charges, SANYO, LG Chem and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and conversations to price cylindrical lithium ion battery cells for use in notebook computer battery packs to customers at predetermined levels and issuing price quotations to customers in accordance with those agreements. The department also said that SANYO, LG Chem and their co-conspirators collected and exchanged information for the purpose of monitoring and enforcing adherence to the agreed-upon prices and took steps to conceal the conspiracy.
Panasonic, SANYO and LG Chem are each charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.
Apple Inc. found to be in violation of antitrust laws by fixing retail e-book prices2
July 10, 2013
On April 11, 2012 the Attorney General of the U.S. brought civil antitrust action
against Apple Inc., Hachette Book Group, HarperCollins Publishers, Verlagsgruppe Georg von Holtzbrinck Publishers, LLC d/b/a Macmillan, the Penguin Group, a division of Pearson plc and Penguin Group (USA), Inc. and Simon & Schuster, Inc., to obtain equitable relief to prevent and remedy violations of Section 1 of Sherman Act. It was alleged that the said parties, i.e., the defendants, have engaged in a conspiracy and agreement in unreasonable restraint of interstate trade and commerce, constituting a violation of Section 1 of the Sherman Act. It was found that the conspiracy and agreement consists of an understanding and concert of action among defendants and their co-conspirators, (i.e., various persons who are not named as defendants to raise, fix, and stabilize retail e-book prices, to end price competition among ebook retailers, and to limit retail price competition among the publisher defendants, ultimately effectuated by collectively adopting and adhering to functionally identical methods of selling e-books and price schedules.
Based on the trial record, the Southern District Court, New York found that Apple conspired to restrain trade in violation of Section 1 of the Sherman Act and relevant state statutes to the extent those laws are congruent with Section 1.,
European Commission fines producers of wire harnesses € 141 million in cartel settlement3
July 10, 2013
The European Commission has fined the car parts suppliers Sumitomo, Yazaki, Furukawa, S-Y Systems Technologies (SYS) and Leoni a total of € 141 791 000 for operating five cartels for the supply of wire harnesses to Toyota, Honda, Nissan and Renault. Wire harnesses conduct electricity in cars, for instance to start the motor, to open the window or to switch the air-conditioner on. They are often described as the ‘central nervous system’ of the car. The cartels covered the whole European Economic Area (EEA).
Sumitomo was not fined for any of the five cartels as it benefited from immunity
under the Commission’s 2006 Leniency Notice for revealing the existence of the cartels to the Commission. All other companies received reductions of their fines for their cooperation in the investigation under the Commission’s leniency programme. Since the companies agreed to settle the case with the Commission, their fines were further reduced by 10%.
The companies coordinated the prices and allocation of supplies of wire harnesses to the respective car manufacturers. The cartel contacts took place both in Japan and in the EEA:
– For Toyota and Honda, the participants rigged a series of tenders for the supply of wire harnesses, including all tenders for supplies to the European manufacturing facilities published during the cartel period.
– For Nissan and Renault, the participants rigged – or attempted to rig – single tendering procedures for some individual models.
Sumitomo, Yazaki, Furukawa, SYS and Leoni were involved in one or several of the infringements. The duration of the cartels varied.
The fines were set on the basis of the Commission’s 2006 Guidelines on fines.
In setting the level of fines, the Commission took into account the companies’ sales of the products concerned in the EEA, the very serious nature of the infringement, its geographic scope and its duration.
Sumitomo received full immunity for revealing the existence of the cartel and thereby avoided a fine of € 291 638 000 for its participation in all five infringements.
All parties benefited from reductions under the 2006 Leniency Notice. Furukawa, Yazaki, SYS and Leoni received reductions of fines ranging from 20 to 50% for their cooperation. The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the respective cartels.
Moreover, under the Commission’s 2008 Settlement Notice, the Commission reduced the fines imposed by 10% as the companies concerned acknowledged their participation in the cartel and their liability in this respect.
United Kingdom (UK)
Investigation into agreements in the pharmaceutical sector4
April 19, 2013
In August 2011, the Office of Fair Trading (‘OFT’) opened an investigation into certain patent dispute settlement agreements relating to paroxetine, a medicine used in the treatment of disorders such as depression and anxiety disorder.
On April 19, 2013 the OFT issued a Statement of Objections alleging that certain pharmaceutical companies have infringed competition law in relation to the UK supply of paroxetine.
The OFT alleges GlaxoSmithKline (GSK) concluded agreements which infringed competition law with each of Alpharma Limited (Alpharma), Generics (UK) Limited (GUK) and Norton Healthcare Limited (IVAX) (‘the generic companies’), over the supply of paroxetine in the UK. The OFT also alleges GSK’s conduct amounted to an abuse of a dominant position in the same market5.
The generic companies were each attempting to supply a generic paroxetine product in competition to GSK’s branded paroxetine product, Seroxat. However, in each case, GSK challenged the generic companies with allegations that their products would infringe GSK’s patents. To resolve these disputes, each of the generic companies concluded one or more agreements with GSK.
The OFT’s provisional view is that these agreements included substantial payments from GSK to the generic companies in return for their commitment to delay their plans to supply paroxetine independently.
The OFT considers that if companies act to delay the potential emergence of generic competition the NHS may be denied significant cost savings.
Republic of India
Anti-competitive agreements including cartels
May 08, 2013
In M/s ShriAshtavinayak Cine Vision Limited vs. PVR Picture Ltd. and Ors., the Competition Commission found Northern India Motion Pictures Association (NIMPA) in contravention of the provisions of Section 3(3)(b) read with section 3(1) of the Competition Act. The Commission has directed NIMPA to cease and desist from the practices of pressurizing the distributors to settle the monetary disputes with its members. Further, the Commission in three other cases, directed NIMPA inter alia to suitably modify its Articles of Association, rules and regulations to remove the condition of compulsory registration of films as a pre-condition for release of any film.
On May 08, 2013 the Commission considered the matter in its ordinary meeting. An undertaking has been filed by NIMPA before the Commission in pursuance of the directions of the Commission inter alia stating that the Association shall have no rules and regulations governing registration/release of the pictures;discriminatingregistration and release between regional or non regional films; or discriminating in respect of language of film(s); and or discriminating in respect of the number of screens relating the release of the films.
Abuse of dominant position
Section 2(l) and the extra territorial jurisdiction of the Commission
May 31, 2013
In Dhanraj Pillay and others vs. M/s Hockey India7 the Competition Commission has analysed the scope of jurisdiction of the Competition Act over sports federation. The Commission considered inappropriate to examine the issue of jurisdiction in detail and considered the international jurisprudence and literature on sports sector to draw relevant broad principles, and also the provisions of the Competition Act.
On the basis of principles emerging from international jurisprudence, the provisions of the Competition Act and a holistic consideration of all relevant factors, the Commission opines that the National Sports Federations do not have any immunity under the Act and the Competition laws are applicable to these bodies. Therefore the Commission concluded that it has jurisdiction over Hockey India.
The Commission concluded that there is no contravention of Section 3(3)(b), 3(4), 4(2)(a), 4(2)(c) and 4(2)(e) of the Act.
On the contrary, as per Hon’ble member R. Prasad in a dissenting order, it was held that Hockey India is in contravention of Section 4(2)(e) of the Act and therefore, liable to pay penalty of Rs. 25 Lacs.8
|As on 31st March, 2013 out of total 347 cases only 8% cases are pending before the CCI. It seems that CCI is emerging as an effective and efficient regulator of competition laws in India. (Source- Fair Play, Vol. 4, Jan-March, 2013)
United States of America
U.S. Department of Justice, Antitrust Division reaches a settlement with Anheuser-Busch InBev SA/NV (ABI) and Grupo Modelo S.A.B. de C.V.9
April 19, 2013
The U.S. Department of Justice, Antitrust Division, reached a settlement with Anheuser-Busch InBev SA/NV (ABI) and Grupo Modelo S.A.B. de C.V. that requires the companies to divest Modelo’s entire U.S. business including licenses of Modelo brand beers, its most advanced brewery, Piedras Negras, its interest in Crown Imports LLC and other assets to Constellation Brands Inc., in order to go forward with their merger. The department said the proposed settlement will maintain competition in the beer industry nationwide, benefitting consumers.
The settlement requires ABI and Modelo to divest Modelo’s entire U.S. business
to Constellation or to an alternative purchaser if for some reason the transaction with Constellation cannot be completed. Specifically, the settlement requires ABI and Modelo to divest: the Piedras Negras brewery, Modelo’s newest, most technologically advanced brewery; perpetual and exclusive licenses of the Modelo brand beers for distribution and sale in the United States; Modelo’s current interest in Crown – the joint venture established by Modelo and Constellation to import, market and sell certain Modelo beers into the United States; and other assets, rights and interests necessary to ensure that Constellation is able to compete in the U.S. beer market using the Modelo brand beers, independent of a relationship to ABI and Modelo.
European Commission opens proceedings against Bulgarian Energy Holding and its subsidiariesBulgargaz and Bulgartransgaz10
July 05, 2013
The European Commission has opened formal proceedings to investigate whether Bulgarian Energy Holding (BEH), its gas supply subsidiary Bulgargaz and its gas infrastructure subsidiary Bulgartransgaz might be hindering competitors from accessing key gas infrastructures in Bulgaria, in breach of EU antitrust rules. The Commission has concerns that the Bulgarian energy incumbent BEH and its subsidiaries may be abusing their dominant market position on the natural gas markets in Bulgaria, in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU).
In particular, the Commission has concerns that these companies may be preventing potential competitors from accessing the Bulgarian gas transmission network and the gas storage facility by explicitly or tacitly refusing or delaying access to third parties. In addition, these companies may be preventing competitors from accessing the main gas import pipeline by reserving capacity that is consistently not used, without releasing it on the market. Without access to this key infrastructure, it is impossible for any companies to compete with Bulgargaz on the Bulgarian gas supply markets.
European Union and Switzerland sign Cooperation Agreement in Competition Matters
May 17, 2013
The European Union and the Swiss Confederation have signed an agreement that will strengthen co-operation between their respective competition authorities, the European Commission and the Swiss Competition Commission. This is the fifth such agreement signed by the EU after agreements concluded with the United States, Canada, Japan and Korea. An innovative feature of the agreement with Switzerland is that it will enable the two competition agencies to exchange information they have obtained in their
investigations. The signature took place subject to ratification: the agreement will enter into force once it has been approved by the European Parliament and the Swiss Parliament.
The Agreement provides a framework for co-ordination and co-operation of enforcement activities. It enhances co-operation for an effective implementation of competition rules and provides for regular contacts in order to discuss policy issues and enforcement efforts and priorities. It also provides for the mutual notification of enforcement activities affecting each other’s important interests. Under the agreement the EU and Switzerland may request the other party to start enforcement actions against anti-competitive behaviour carried out in the territory of the other party and both sides have to take into account the important interests of the other party.
Unlike other cooperation agreements the agreement with Switzerland also includes provisions on the exchange of evidence obtained by the competition authorities when they investigate the same case. CCI approved Mylan’s proposed acquisition of Unichem’s FDF facility14
June 06, 2013
On June 06, 2013 CCI approved Mylan’s proposed acquisition of a newly established Finished Dosage Forms (‘FDF’) facility of Unichem Laboratories Limited with the intent to export products to be manufactured at the said facility. Mylan Laboratories had filed a notice under Section 6 of the Competition Act for the proposed acquisition.
Our next issue: December 2013
Guides’, one aimed at businesses and one aimed at individuals. Under the OFT leniency programme, businesses that come forward and report their involvement in cartel activity may avoid a financial penalty or have the penalty reduced substantially. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002.
The revised guidance replaces the OFT’s previous leniency handling guidance, OFT803, ‘Leniency and no-action’ and will apply from today to all leniency applications made to the OFT.
Republic of India
MOU signed between Competition Commission of India and AustralianCompetition and Consumer Commission (ACCC)13
June 03, 2013
On June 03, 2013, Competition Commission of India (CCI) and Australian Competition and Consumer Commission (ACCC) signed a Memorandum of Understanding (MOU) on Cooperation at Canberra, Australia. The MOU provides for sharing information on substantial developments in competition policy and enforcement developments in the respective jurisdictions. It is recognized that it may be in common interest of both the parties to work together in technical cooperation activities as well as cooperate in appropriate cases, consistent with the respective enforcement interests, legal constraints, and available resources. It is planned to evaluate the effectiveness of the cooperation under the Memorandum on a regular basis to ensure that the expectations and needs are being met. MOU is expected to further strengthen existing cooperation between CCI and ACCC.
Idemitsu group finds gas-condensate off Vietnam
June 7, 2013
Idemitsu Oil & Gas Co. Ltd., Tokyo, has made a gas-condensate discovery at the third well drilled on blocks 05-1b and 05-1c offshore 300 km southeast of Ho Chi Minh City, Vietnam. Idemitsu signed a production sharing contract with Petrovietnam on October 28, 2004. Operator Idemitsu holds a 35% stake in the venture, JX Nippon Oil & Gas Exploration Corporation. has 35%, and Teikoku Oil (Con Son) Co. Ltd. has 30%.