by Lawrence Fox, Joseph Winterscheid, Stephen Wu and Karne Newburn.
A recent New York state appeals court decision highlights the need for suppliers to continue exercising caution when adopting and implementing a resale price maintenance policy.
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by Lawrence I. Fox, Joseph F. Winterscheid and Megan Morley
The Kansas Supreme Court recently determined resale price maintenance is per se illegal under state law, becoming the latest state to reject the rule of reason standard mandated by the Supreme Court of the United States. The decision serves as a reminder that although a supplier’s pricing policies may be permissible under federal law, they may nevertheless be subject to per se condemnation under certain state statutes.
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by Henry L.T. Chen and Frank Schoneveld.
Recently, the Supreme People’s Court of China issued final rules to build a working framework for civil anti-monopoly cases brought under the country’s Anti-Monopoly Law. The rules will take effect on 1 June 2012.
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by Ashley McKinney Fischer and Stephen Wu
Federal antitrust enforcement agencies continue to challenge transactions in the health industry that they view as anticompetitive. This newsletter provides an update on recent public comments by government officials overseeing antitrust enforcement in the health industry and outlines some of the key steps that parties to certain types of transactions with potential competitive implications in the health industry should take to position themselves for defending against a government review.
by Philipp Werner, David Henry and Andrea Hamilton
On April 24, 2012, the UK government took a significant step towards private antitrust actions by publishing a consultation document on how best to encourage private sector challenges to anticompetitive behavior. This consultation must be seen in the broader context of efforts to develop private antitrust enforcement in the European Union. The UK has already established itself as a premier venue for private antitrust actions, and the case law on jurisdiction, privilege and access to leniency documents in follow-on actions is rapidly evolving.
The UK government envisages that new, more effective, measures are to be introduced as a complement to public antitrust enforcement by the UK Office of Fair Trading and the European Commission. In particular, the UK Government is consulting on a host of measures the most salient of which are the following:
The consultation runs until July 24, 2012. A copy of the consultation is available here.
by Henry L.T. Chen and Frank Schoneveld
Recently, the High People’s Court of Guangdong held a public hearing for a high-profile lawsuit involving two software giants and alleged abuse of a dominant market position. This is the first anti-monopoly case accepted by the court, and the claimed amount is RMB 150 million (approximately US$23.8 million). With few judicial precedents in China, this case will be watched closely, and its outcome is expected to have far-reaching implications.
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by Henry L.T. Chen, Frank Schoneveld, Alex An, Brian Fu and Angel Wang
McDermott Will & Emery has released the latest China Law Alert: Focus on Competition, which provides insight on current issues surrounding cross-border antitrust and transactional issues.
China’s New Merger Control Regime Makes Major Progress in Its First Three Years
It is now just more than three years since China’s Anti-Monopoly Law (AML) was introduced. Compared with the well-established practices of US antitrust and EU competition authorities, AML enforcement is still in its infancy. However, China’s AML regulators, especially the authority in charge of merger control, the Ministry of Commerce (MOFCOM), has moved quickly to make its mark on international business. Now, most large, cross-border mergers, acquisitions and joint ventures must also successfully pass the rigors of review by MOFCOM as well as the European Commission and the US Department of Justice (DOJ) and/or Federal Trade Commission (FTC). Read the full article here.
NDRC and SAIC’s Actions in 2011 and Prospects in 2012
China’s National Development and Reform Commission (NDRC) and State Administration for Industry and Commerce (SAIC) are the two authorities in charge of investigation and supervision of “monopoly” agreements and abuses of dominant market position. NDRC focuses on price-related cases while SAIC takes care of non-price related violations of the law. Compared to MOFCOM, which is responsible for merger control, NDRC and SAIC have been relatively quite since China’s AML came into force on 1 August 2008. Read the full article here.
Civil Litigation under China’s Anti-Monopoly Law
Since the introduction of the China AML in August 2008, Chinese courts have experimented with various methods of civil dispute adjudication based on breach of the AML. In general, China’s courts have very limited judicial experience with such cases. A number of civil cases have been brought before the courts, but very few, if any, have resulted in a successful judgment for breach of the AML. Read the full article here.
Might the Ministry of Industry and Information Technology (MIIT) Become A New Enforcement Authority for China’s Competition Laws?
In addition to MOFCOM, SAIC and NDRC, the three major enforcement authorities for the anti-unfair competition and anti-monopoly laws, it seems the MIIT might also become a regulator of competition in the telecommunications sector. In addition to a Draft Regulation on Internet Information Services, published for consultation in January 2012, MIIT released an “Opinion on Regulating the Business Activities of Basic Telecommunications Carriers on Campuses” (the Opinion) on 30 June 2011. Read the full article here.
Last week, Sharis Pozen, Acting Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, spoke at the World Annual Leadership Summit on Mergers and Acquisitions in Health Care, where she affirmed that protection of competition in the health care industry is a top priority of the Division. Pozen highlighted the Division's recent enforcement activities in insurance and provider markets, including challenges to insurance company mergers and contracting practices used by dominant insurers or providers such as Most Favored Nation (MFN) provisions and exclusivity agreements.
Of note, Pozen remarked that the Division undertook a comprehensive evaluation of health insurance markets, the results of which have caused the Division to regard with increasing skepticism the ability of new entry to constrain a merged health insurance firm. Pozen explained that new entrants face obstacles because they need provider discounts to attract enrollees but have difficulty obtaining them without a large number of enrollees. Pozen stated that the Division will focus more attention on entry analysis to protect markets from harmful consolidation, especially markets dominated by one or two plans. Regarding provider markets, Pozen described the Division as "on the lookout for agreements or arrangements purported to improve quality but where the real goal is simply to raise prices." This is especially relevant given the Affordable Care Act's encouragement of provider collaboration in the form of Accountable Care Organizations (ACOs).
Pozen's remarks are available at: http://www.justice.gov/atr/public/speeches/281236.pdf.
Pozen's comments highlight the need for health care companies considering collaborative arrangements with competitors or contracting arrangements such as MFNs or exclusivity agreements to consult counsel and articulate a clear pro-competitive basis for such conduct.
If companies are fined for antitrust infringements, the question arises whether the fines are tax-deductible. Given the high amounts of fines imposed by the European Commission and the competition authorities of European Union (EU) Member States, the importance of the question is obvious.
In several EU Member States such as the Netherlands, France or the United Kingdom, the authorities have already made it clear that antitrust fines are not tax-deductible. This is also the view of the European Commission. However, the question has not yet been settled by the European Court of Justice and has now come up again in Belgium in a recent case.
In 2011 Tessenderlo S.A., a Belgian chemical company, was fined € 83.7 million by the European Commission for breach of EU antitrust rules in an animal feed phosphate cartel case. It now seeks to deduct the amount of the fine from its tax liabilities in Belgium, arguing that the fine amounts to business costs (frais professionnels). This was refused by the Belgian tax administration and Tessenderlo brought the matter to the Brussels first instance court (Tribunal de première instance de Bruxelles), which decided to refer the matter to the Constitutional Court.
The Brussels first instance court seeks to know whether the currently argued interpretation of Belgian tax law is compatible with the Belgian constitutional principle of equality. According to that interpretation, administrative fines such as antitrust fines are included in the list of tax-deductible business costs – as opposed to criminal fines. An official from the European Commission has announced that the Commission will file an amicus curiae brief before the Belgian Constitutional Court, arguing that the deduction of antitrust fines would undermine their deterrent effect.
by Martina Maier and Philipp Werner
Under German law, companies may escape cartel fines by undertaking an internal restructuring. The German competition authority has indicated a willingness to reallocate such cases to the European Commission, which can impose a fine on the corporate group regardless of any internal restructuring. Commission officials speaking at a conference have suggested recently that the Commission would be willing to take over cartel cases from EU Member States, even at a late stage in the proceedings, in order to fine undertakings for their anti-competitive behaviour.
To read the full article, click here.
by Martina Maier and Philipp Werner
Under German law, companies may escape cartel fines by undertaking an internal restructuring. The German competition authority has indicated a willingness to reallocate such cases to the European Commission, which can impose a fine on the corporate group regardless of any internal restructuring. Commission officials speaking at a conference have suggested recently that the Commission would be willing to take over cartel cases from EU Member States, even at a late stage in the proceedings, in order to fine undertakings for their anti-competitive behaviour.
To read the full article, click here.
by Henry L.T. Chen, Frank Schoneveld and James Jiang
Recently China’s Ministry of Commerce (MOFCOM) approved Western Digital’s proposed acquisition of Hitachi’s hard disk drive business on a conditional basis. Containing the most comprehensive clearance conditions ever imposed by MOFCOM, this decision mirrors previous guidance issued by the European Commission and illustrates that at least two authorities in two of the world’s major economies are working toward imposing similar clearance conditions in their respective jurisdictions.
by Veronica Pinotti and Martino Sforza
On March 6, 2012, the members of the Italian Antitrust Association met with the new Chair of the Italian Competition Authority (ICA), Giovanni Pitruzzella. During the meeting, Pitruzella stated that ad hoc qualitative compliance programs will continue to be considered as an effective mitigating factor, confirming the ICA's attitude towards compliance programs and encouraging the use of such programs. However, participation in general online compliance training sessions is unlikely to be considered as a mitigating factor because such sessions are not specifically tailored to a company's needs. To mitigate the risk of potential antitrust infringements, therefore, multinational groups with operations in Italy should consider developing ad hoc antitrust compliance programs in their Italian subsidiaries.
by Henry L.T. Chen, Frank Schoneveld and Brian Fu
China’s National Development and Reform Committee recently imposed the largest fine ever on a sodium hydrosulphite manufacturer for price fixing and other anticompetitive activities.
To read the full article, click here.
by Philip Bentley QC and Philipp Werner
The European General Court (GC) has confirmed a European Commission decision to hold chemical companies EI du Pont de Nemours and Dow Chemical jointly and severally liable for a fine imposed on their 50:50 joint venture (JV) for an infringement of European competition law (EI du Pont de Nemours and Company v Commission T-76/08 and The Dow Chemical Company v Commission T-77/08). In light of this judgment, parent companies would be well advised to check that their 50:50 JVs are compliant with EU competition rules.
To view the full article, please click here.
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