Competition Newsletter No. 9/2010

Policy

1 European Commission – Crisis-related state aid measures
The European Commission extended for 2011 its state aid crisis framework (dating in end 2008/beginning of 2009) but under stricter conditions, aiming at gradual return to normal market functioning. The Temporary Framework to support businesses’ access to finance maintains those measures that address ongoing market failures. The new Communication requires that, as of 1st January 2011, every bank in the EU having recourse to state support in the form of capital or impaired asset measures will have to submit a restructuring plan. Until now this was limited to distressed banks.
The full text of the Communications is available at:
http://ec.europa.eu/competition/state_aid/legislation/temporary.html

Agreements

2 Competition Council –Investigation – Market sharing – Exploitation services of heat cost allocators
The Competition Council initiated an ex officio investigation on the Romanian market for the exploitation of heat cost allocators. The investigation deals with allegations regarding a possible market sharing agreement entered into by Elsaco, Ista Romania and Techem Energy Service. The investigation also concerns a possible breach of the Competition Law by the National Regulatory Authority for Community Services Public Utilities (ANRSC). The Competition Council’s investigation will also focus on the analysis of sector specific provisions with possible anti-competitive impact.

3 Competition Council – Investigation – Cigarette market
By order of the President of the Competition Council no. 551/04.11.2010, an ex-officio investigation was initiated on the cigarette market regarding a possible breach of article 5 of the Competition Law and article 101 TFEU by British American Tobacco (Romania) Trading SRL, British American Tobacco Romania Investment SRL, JT International Manufacturing SA, JT International (Romania) SRL, Philip Morris Trading SRL and Philip Morris Romania SRL.

4 Competition Council – Fine - Bid rigging
The Competition Council fined seven undertakings (SC Olanesti Riviera SA, SC Sind Romania SRL, SC Barreco Lary SRL, SC Omicron SRL, SC Tour Alice SRL, SC Hodo SRL and SC Nex SRL) with RON 4. 2 million (around EUR 980,000) for bid rigging within the public tender organised by the National House of Pensions and Other Insurance Rights (CNPAS), by allocating tickets for spa treatment in Baile Olanesti. Within the ex officio investigation initiated in 2009, the Competition Council identified the existence of an agreement through which the seven companies have allocated the number of places and fixed the tariffs offered in the context of the public tender.

5 European Commission – Cargo carriers – Price fixing cartel
The European Commission fined 11 air cargo carriers a total of €799,445,000 for operating a worldwide cartel which affected cargo services within the European Economic Area (EEA) for a period of over six years, from December 1999 to 14 February 2006. The Commission increased the fine for SAS by 50% for its previous involvement in a cartel in the airline sector. All carriers received a reduction of 15% on account of the general regulatory environment in the sector which can be seen as encouraging price coordination. Four carriers were also granted a 10% reduction for limited participation in the infringement. As the fines on two companies would have exceeded the legal maximum of 10% of their 2009 turnover, the amount was reduced to this level. Lufthansa received full immunity under the Commission Leniency Programme.

Abuse of dominance

6 European Commission –Opening of investigation – Google – online search market
The European Commission has opened an antitrust investigation into a potential abuse of dominant position in online search by Google Inc., in violation of Article 102 TFEU. The opening of formal proceedings follows complaints by search service providers about unfavourable treatment of their services in Google's unpaid and sponsored search results, together with an alleged preferential placement of Google's own services.

Merger Control

7 European Commission – Clearance subject to conditions
Manufacture of agrochemical products
The European Commission has cleared the acquisition of the global sunflower seed business of the US company Monsanto by Syngenta of Switzerland. The decision is conditional upon the divestment of Monsanto’s sunflower hybrids, commercialised or under official trial in Spain and Hungary, as well as the parental lines used in the creation of those hybrids. The in-depth investigation confirmed the Commission's concerns with respect to the commercialisation of sunflower seeds in Spain and Hungary, where the transaction would have removed a considerable and innovative competitor to Syngenta, reinforcing the latter's market leader position.
Manufacture of personal care products
The European Commission has cleared the planned acquisition by Unilever of the body and laundry care businesses of Sara Lee Corp of the US, subject to conditions. The Commission's in-depth investigation has shown that the merger would give Unilever a very strong leadership position in a number of deodorants markets by combining the parties' brands, most notably Sanex with Dove and with Rexona, which presently compete against each other. The Commission found that the merger, as initially notified, would raise competition concerns in Belgium, the Netherlands, Denmark, the United Kingdom, Ireland, Spain and Portugal where it would remove an important competitive force and would likely have led to price increases. To remedy these concerns, the merging parties offered to divest Sara Lee's Sanex brand and related business in Europe.

8 European Commission – Unconditional approvals
Automotive industry
The European Commission has approved the proposed acquisition of certain businesses of the German car manufacturer supplier Karmann, currently under insolvency administration by Volkswagen. Under the proposed transaction, Volkswagen would acquire the following Karmann businesses: car and components development, contract manufacturing, plant engineering and the development and production of equipments. As Karmann acts as a supplier to the car industry, the transaction mainly leads to vertical links. Given the presence of other considerable suppliers and the moderate market share of Karmann, the Commission concluded that car manufacturers will continue to have sufficient alternative suppliers after the transaction.
Electronic devices
The European Commission has cleared the proposed acquisition of the sale and distribution activities of branded colour TVs in China of the Dutch company Koninklijke Philips Electronics N.V. by TPV Technology Limited, a manufacturer of monitor displays and colour TVs based in Bermuda.

9 Competition Council – Unconditional approvals
Logistic services for transportation
The Competition Council cleared the economic concentration performed through the acquisition of sole control by Delamode Logistics over Exel Delamode Logistic. The economic concentration was notified under the simplified procedure, giving its specific nature: Exel Delamode previously jointly controlled by Delamode Logistics and Exel Overseas Limited has become subject to the sole control of Delamode Logistics. Parties concerned perform support activities for transportation. The relevant market was defined as the market for contract logistics services. The Competition Council cleared the operation, finding that it does not lead to any changes on the market, and the business activity of the target company remains unchanged.

10 Competition Council – Merger analysis
Online gaming market
The Competition Council examines the merger by absorption of Bwin Interactive Entertainment AG by PartyGaming PLC. Bwin Interactive Entertainment AG provides online services in the field of sports betting, poker, casino and games. PartyGaming PLC offers a wide range of online games, including poker, casino, bongo and sports betting.
Packaging sector
The Competition Council examines the takeover of sole control of Amplast CO SA by Greiner Packaging SRL. Both companies are active in the business related to the manufacturing of packaging made of plastic.

State Aid

11 European Commission – Spain - Failure to recover illegal state aid – Referral to Court
The European Commission has decided to refer Spain to the European Court of Justice for failure to respect a ruling to recover illegal aid. The aid consisted of tax credits of 45% on investments exceeding EUR 15 million and of tax holidays providing for substantial tax reliefs to startup firms during the first four financial years in which they make a profit. As Spain has still not completed the recovery of the incompatible aid, the Commission has decided to ask the Court to impose fines composed of a daily penalty payment of EUR 236, 044.8 from the date of the second Court ruling until compliance with the state aid decisions, and a lump sum corresponding to EUR 25, 817.4 per day from the date of the first Court ruling until the second Court ruling.

12 European Commission – Opening of formal investigations
Germany – Electricity price-subsidisation schemes
The European Commission has opened an in-depth investigation into a scheme relieving German producers of non-ferrous metals of part of their electricity costs. Germany intends to grant operating aid totalling €40 million to compensate energy intensive non-ferrous metal producers for a large part of the CO2 costs included in their electricity prices for the second half of 2009.
Malta – Investment aid – Electricity
The European Commission has opened an investigation into Maltese plans to grant € 15.5 million aid to the Delimara Power Station which is operated by State-owned Enemalta to support the modification of boilers at the power station. Such aid would reduce the investment costs of meeting the existing environmental standards applicable to large combustion plants across the EU. At this stage, the Commission has doubts whether the investment subsidy is necessary and well designed to perform a service of general economic interest, as is argued by the Maltese authorities.
Source: European Commission & Romanian Competition Council