General Court of the EU Dismisses Trioplast Application Seeking Reimbursement of Interest Paid for Being Late in Paying Cartel Fine

With a judgment handed down on 12 May 2016 (Case T-669/14, Trioplast Industrier AB v. European Commission), the General Court of the European Union (GCEU) dismissed an action brought by Trioplast Industrier AB (Trioplast Industrier) claiming the annulment of an alleged decision by the European Commission (EC) to ask Trioplast Industrier to pay interest for the late payment of a fine imposed on it for its involvement in the industrial bags cartel.

The case shows that when handed a fine, interest begins to accrue regardless of whether the fine is altered down the line through appeal.

By way of background, in 2005, the EC found that between January 1982 and June 2002 there had been a cartel on the market for plastic industrial bags consisting in, inter alia, price-fixing, agreements on sales quotas and the allocation of tender contracts. Among the addressees of the EC decision was Trioplast Wittenheim, a company that directly participated in the infringement. Trioplast Wittenheim was a subsidiary of FLSmidth before being purchased by Trioplast Industrier in 1999. The EC imposed a fine on Trioplast Wittenheim of €17.85 million and decided that Trioplast Industrier and FLSmidth should be held jointly and severally liable with Trioplast Wittenheim for the amounts of €7.73 million and €15.30 million, respectively.

Trioplast Industrier and FLSmidth each lodged an appeal before the GCEU seeking the annulment of the EC decision. Shortly afterwards, Trioplast Industrier provided the EC a bank guarantee for €4.87 million.   Continue Reading

Lessons Learned – The State of Affairs in US Merger Review

In the last year, the US antitrust regulators successfully challenged multiple transactions in court and forced companies to abandon several other transactions as a result of threatened enforcement actions. Looking back at the different cases, there are some trends that we see developing in the government’s positioning on mergers, and these should be kept in mind as parties contemplate mergers and acquisitions moving forward.

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District Court Blocks FTC and PA AG Challenge to Hershey-Pinnacle Merger

On May 9, 2016, the US District Court for the Middle District of Pennsylvania denied the motion by the Federal Trade Commission and Pennsylvania Office of Attorney General for a preliminary injunction to enjoin the merger of Penn State Hershey Medical Center and PinnacleHealth System. The decision ends a string of victories by the FTC in recent health care merger litigation.

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Polish Competition Authority Supports UBER

On 5 May 2016, the Polish Office of Competition and Consumer Protection (UOKiK) published a position paper in which it expressed its opinion on Uber’s operations on the Polish market for transportation services.

UOKiK has been monitoring and analysing the effects of the emergence of such online platforms on the Polish market and concluded that Uber (i) encourages competition, (ii) is beneficial to consumers and (iii) provides for innovative solutions.

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FTC Emphasizes Competitive Issues Arising From Partial Interest Acquisitions

On May 9, the Federal Trade Commission (FTC) posted an article summarizing recent developments and areas of competitive sensitivity in the acquisition of partial equity interests.  Most antitrust challenges to mergers or acquisitions involve situations in which an acquiror takes control of the target company.  However, substantive antitrust issues also can arise from acquisitions of less than controlling interests.  The FTC has previously sought substantial remedies in acquisitions of minority interests in a competitor.  These remedies have included imposing firewalls, altering companies’ ownership interests to become passive investors, or seeking divestitures.

The FTC’s post, which can be found here, outlines three ways in which partial-interest acquisitions in a competitor could lessen competition.  First, an entity could use its interest—through representatives on a competitor’s board, for example—to affect decisions of the target.  Second, an acquiring company’s partial ownership in its competitor could reduce the acquiring company’s incentives to compete aggressively.  This feature arises because, by virtue of holding an interest in its rival, a company can still achieve an economic gain even if it does not win a competition or make a sale if the company in which it holds an equity interest obtains that business.  Third, an entity could gain access to non-public, competitively sensitive information of its competitor, increasing the risk of coordinated conduct.

None of these theories are new, and they are contained in the 2010 FTC / DOJ Horizontal Merger Guidelines.  Nevertheless, the FTC’s posting provides a helpful reminder for companies contemplating transactions that they need to evaluate not only the obvious anticompetitive effects raised by acquisitions of control, but also the less obvious theories of competitive harm.

When Customer Supply Contracts Lead to Trouble: Exclusive Dealing Provisions Result in FTC Monopolization Action against Invibio

The Federal Trade Commission (FTC) continues to aggressively enforce the antitrust laws. On April 27, 2016, the FTC took action against Victrex, plc and its wholly owned subsidiaries, Invibio, Inc. and Invibio Limited (collectively, Invibio) because of exclusivity terms in its supply contracts. The consent order requires Invibio to cease and desist from enforcing most of the exclusivity terms in its current supply contracts and generally prohibits Invibio from requiring exclusivity in future contracts. Invibio is also prohibited from using other pricing strategies, such as market-share discounts, that would effectively result in exclusivity.

Exclusive dealing by a monopolist may be challenged and prohibited when the acts allow the monopolist to maintain its monopoly power. Total foreclosure is not a requirement for unlawful exclusive dealing—it simply must foreclose competition in a substantial share of the relevant market so as to adversely affect competition.

The FTC’s complaint alleged that Invibio’s exclusive dealing provisions in its customer contracts foreclosed a substantial share of the market from two entrants despite those entrants offering a similar product at lower prices. In addition to using exclusivity terms in its long term supply contracts to impede its competition and maintain its monopoly power in the worldwide market for implant-grade polyetheretherketone (PEEK), the FTC complaint also alleged that Invibio used strategies to “coerce or induce device makers to accede to exclusivity terms, including threatening to discontinue PEEK supply or to withhold access to regulatory support.” Continue Reading

EU: Merger case cleared following offer of FRAND technology license

On 20 April 2016, the European Commission (Commission) cleared, under its merger control rules, the acquisition of Equens and PaySquare by Worldline subject to, amongst others, a commitment to license technology to any customer interested, at Fair, Reasonable and Non-Discriminatory (FRAND) conditions.

Worldline is a French provider of payment services and terminals, financial processing and software licensing and e-transactions services. Equens offers a number of services across the value chain of both payments processing and cards processing services. Its fully-owned subsidiary, PaySquare, provides merchant acquiring services.  This transaction combines two large payment systems operators, active across the full value chain in both payment processing and card processing services.

The EU antitrust regulator was concerned that the acquisition would have raised certain issues with respect to, in particular, merchant acquiring services in Germany.  The Commission’s market investigation revealed that Worldline’s Poseidon software and modules are used by the majority of German network service providers (including PaySquare), there are no other readily available alternatives to Poseidon and post-transaction, Worldline would have the ability and the incentives to favour its new subsidiary PaySquare, in terms of price and quality, over other network service providers relying on Poseidon.

In order to address the Commission’s concerns, the companies offered a commitment to grant licenses for the Poseidon software on FRAND terms during a period of 10 years. Specifically, this commitment consists of the following elements:

  • The granting of a license for Poseidon and its modules to third-party network service providers under FRAND terms and capping of the maintenance fees
  • A monitoring mechanism to ensure compliance with FRAND terms by a licensing trustee and by a group composed of network service providers
  • Giving access to the Poseidon source code under certain conditions
  • Transferring the governance of the ZVT protocol, on which most German point of sale terminals run, to an independent not for profit industry organisation

The Commission’s decision to accept this commitment is interesting for a number reasons; the Commission generally has a strong preference for structural rather than behavioural undertakings, FRAND obligations are typically applicable to technologies that are standardised, and this case presents the first time that a commitment to licence on FRAND terms has been used as a remedy under the EU Merger Regulation.

EFTA Court to Rule on The Interpretation of Restriction of Competition by Object

A recent request by the Supreme Court of Norway for an advisory opinion from the European Free Trade Association Court may define the legal test for determining whether or not an agreement between competitors restricts competition “by object.”

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Microsoft Antitrust Suit Against InterDigital Stands, Judge Says

On April 13, 2016, the US District Court for the District of Delaware denied InterDigital’s motion to dismiss an antitrust suit filed by Microsoft (Microsoft Mobile, Inc. v. InterDigital, Inc., Case No. 15-cv-723-RGA).  In the suit, Microsoft alleged that InterDigital engaged in an unlawful scheme to acquire and exploit monopoly power over standard essential patents (SEPs) required for 3G and 4G cellular devices.  Specifically, Microsoft asserted that InterDigital falsely promised to license its 3G and 4G SEPs on Fair, Reasonable, and Non-Discriminatory (FRAND) terms in order to ensure its SEPs were included in standards set by the European Telecommunications Standards Institute (ETSI).  According to the complaint, InterDigital failed to live up to its commitment to FRAND licensing terms, and instead acquired monopoly power in the 3G and 4G cellular technology markets and used that power to demand supra-competitive royalties, “double-dip” royalty demands, and has pursued “baseless” International Trade Commission litigation against Microsoft and others.

In its motion to dismiss, InterDigital asserted that Microsoft failed to adequately plead a Sherman Act § 2 monopolization claim, namely that Microsoft failed to show that InterDigital possessed and exercised monopoly power and failed to adequately allege injury.  The court disagreed, finding Microsoft’s allegations to be materially similar to those found to be sufficient by the Third Circuit in Broadcom Corp. v. Qualcomm Inc. (2007).  With respect to monopoly power, the court found that Microsoft’s allegations as to the necessary technology standards, market entry barriers, and InterDigital’s market share to be sufficient.  The court found that allegations of an “intentional false promise” to license technology on FRAND terms, which was relied upon in selecting the technology for inclusion in mandatory standards, and breach of such promise was “sufficient to show anticompetitive conduct.”

As to injury, InterDigital asserted that its litigation activity was protected by the Noerr-Pennington doctrine.  The court held that injury was sufficiently pled, and that the Noerr-Pennington doctrine did not immunize InterDigital as its scheme, as alleged by Microsoft, would have been “ineffective without the threat of litigation” and therefore it was properly included in Microsoft’s anticompetitive scheme allegations.

This latest ruling demonstrates that prospective licensees may be able to raise antitrust claims against SEP holders when negotiations fail and litigation ensues.

Baer to Serve as Acting Associate Attorney General

On Monday, April 11, the U.S. Department of Justice (DOJ) confirmed in a press release that Bill Baer will serve in the DOJ’s third-highest ranking position effective April 17, 2016. Baer will be stepping in for Acting Associate Attorney General Stuart Delery.

Attorney General Loretta Lynch praised Baer’s record at the Antitrust Division, noting that he has worked to obtain $400 million in relief for consumers in a case against Apple for the price-fixing of e-books, achieved a record level of fines from large banks in the LIBOR scandal, and defended consumers in industries from beer and wine to airlines and phone companies.

Baer was nominated by President Obama and was confirmed to lead the Antitrust Division in December 2012. It has been widely reported that Renata Hesse, Deputy Assistant Attorney General for Criminal and Civil Operations, will take the reins upon Baer’s departure.  Hesse previously served as Acting Assistant Attorney General for a short time preceding Baer’s confirmation.

Practitioners do not expect Baer’s move to affect the Division’s track record of aggressive enforcement in recent years. On Friday, at the American Bar Association Antitrust Spring Meeting, Baer stated that the federal government has shown it is serious about stopping what it sees as competition-reducing mergers. Baer emphasized that the government is looking at the overall market as well as the individual pieces, and that lawyers should not “get lost in the weeds as you’re advising your clients about the antitrust merits.”

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