Table of Contents
- European Commission Imposes Fine for Collusion to Prevent Competing Entry
- Top EU Court Confirms EU Merger Review Applies to “Gap” Cases
- International Chamber of Commerce Publishes Updated Antitrust Compliance Toolkit
- UK CMA Publishes Geographic Details of Warning and Advisory Letters
European Commission Imposes Fine for Collusion to Prevent Competing Entry
On 23 October 2024, the European Commission (EC) announced a fine totaling €48.7 million on České dráhy (ČD) and Österreichische Bundesbahnen (ÖBB), the Czech and Austrian rail incumbents, for infringing EU competition law rules by colluding to prevent a new entrant. The EC emphasised that attractive rail passenger services are key to reducing the EU’s carbon footprint, and the collusion limited the development of these. Nevertheless, the activities amounted to a type of cartel, and the fine level reflected that.
ČD and ÖBB provide rail passenger transport services in Czechia and Austria. In 2011, RegioJet entered the long-distance rail passenger transport market in Czechia, largely relying on used wagons.
According to the EC, between 2012 and 2016, ČD and ÖBB colluded to maintain their market position and impede the expansion of RegioJet as a competitor in Czechia and on the international rail route between Prague and Vienna. They did so by coordinating their actions in sales processes related to used ÖBB wagons to prevent RegioJet from buying them. ÖBB’s wagons were particularly relevant for RegioJet, because of their quality and modern features and because they already were approved for operations in Czechia.
The EC found that ČD and ÖBB:
- collusively timed wagon sales so that RegioJet could not buy ÖBB’s used wagons;
- rigged ÖBB’s used wagon sales procedures so that ČD could buy the wagons instead of RegioJet;
- agreed on a suitable buyer other than RegioJet for ÖBB’s used wagons that ČD was not interested in; and
- exchanged confidential information about the bids and degree of interest of other bidders participating in the sales.
The investigation included dawn raids at the companies’ premises. ÖBB subsequently cooperated with the EC under the leniency programme and received a 45% fine reduction. ČD obtained no reduction, likely because it would not or could not provide useful additional information to the EC.
As is normal in these cases, the EC pointed out that third parties affected by the behaviour can seek damages in an EU national court. If it has not done so already, RegioJet will likely take this course or seek a settlement without proceeding to trial.
Top EU Court Confirms EU Merger Review Applies to “Gap” Cases
On 4 October 2024, the European Court of Justice (ECJ), the EU’s top court, upheld a 2019 EC merger control decision that prohibited a joint venture between Tata Steel and ThyssenKrupp. The judgment confirms the EC’s ability to prohibit a transaction on the basis it would give rise to anticompetitive effects without a finding that the resulting company would be dominant or that there would be coordinated behaviour among the remaining companies in the market.
Such cases, in which the anticompetitive effects are found to result from likely noncoordinated behaviour among the remaining nondominant companies in the market — for example, due to the removal of an important independent competitive constraint in an oligopolistic market — are the “gap cases.” As with other types of transactions under EU merger rules, the court confirmed that the EC has broad discretion to find anticompetitive effects in these cases and that the standard of proof is “more likely than not.”
The joint venture would have combined the flat carbon steel and electrical steel activities of ThyssenKrupp and Tata Steel in the European Economic Area (EEA). ThyssenKrupp was the second largest producer of flat carbon steel in the EEA and Tata Steel the third largest. Both companies were significant producers of steel products.
The EC had concerns that the transaction as notified would have resulted in a reduced choice in suppliers and higher prices for European customers of metallic coated and laminated steel products for packaging and automotive hot dip galvanised steel. The joint venture likely would result in anticompetitive effects by eliminating an important competitive constraint in the relevant markets and/or in some of those markets by creating a dominant position. The parties offered to divest automotive and packaging steel plants in certain countries to address these concerns, but the EC deemed those remedies inadequate.
ThyssenKrupp challenged the EC’s prohibition decision before the EU General Court (GC). In a June 2022 judgment, the GC dismissed the appeal and upheld the EC’s decision in full. ThyssenKrupp appealed to the ECJ but lost on all points.
International Chamber of Commerce Publishes Updated Antitrust Compliance Toolkit
The International Chamber of Commerce published the second edition of its “Antitrust Compliance Toolkit.” This is a more concise, user-friendly update of its 2013 edition and the 2015 small and medium-sized enterprise version. It is intended to provide practical tools and guidance to build a credible corporate antitrust/competition compliance programme.
The toolkit is for companies of all sizes and in any industry and is drafted principally for in-house legal teams, compliance officers and business leaders as well as audit and finance staff. It is supported by the EC, whose director general for competition wrote the foreword.
The toolkit complements existing materials. It emphasizes the importance of the “tone from the top” and risk identification and assesssment. The principles and many of the practical points apply to other types of compliance programmes such as data protection and antimoney laundering.
The toolkit recognizes the significant changes to the competition law risk and compliance landscape that occurred since 2013. For example, it points out that risk identification and assessment should evolve and cover emerging risks including cooperation on sustainability issues, algorithmic/AI collusion, and HR-related issues including discussions on wages and “no poaching” agreements with other companies, not only competitors. It notes that, if a dawn raid happens, IT colleagues are critical because the inspectors will want and expect immediate access to systems, including remote-, cloud- and third party-operated systems. No device — professional or personal — communication platform or message application is exempt from immediate digital forensic review.
The toolkit also refers to the potential use of active AI-based screening as a complementary tool to support companies in internal investigations when concerns have been raised as well as in general monitoring, prevention and detection of anticompetitive practices. It notes that compliance is improved when AI is used not least due to its “dissuasive effect on employees.”
Like its predecessor, the toolkit will become recognised as a standard publication in antitrust/competition law compliance and often referenced.
UK CMA Publishes Geographic Details of Warning and Advisory Letters
The UK Competition and Markets Authority (CMA) issues warning and advisory letters to businesses if it has concerns about possible lawbreaking and to promote compliance. From 2018 to 2023, the CMA sent 557 letters to businesses across the UK covering multiple sectors — including household goods, technology products, heating equipment and clothing. The most common practice the CMA writes to businesses about is resale price maintenance. A public register is available.
These letters often are sent after the CMA receives complaints or other intelligence about businesses that may be breaking competition law. The CMA commonly sends similar letters to different businesses operating in the same market sector.
Although receipt of one of these letters from the CMA doesn’t mean there necessarily has been an infringement of the law, it is a prompt to the business to review practices to make sure it is compliant. Failing to act on warning letters can result in greater fines later. For example, the CMA applied a 35% increase as part of the fine calculation for Dar Lighting after it failed to act on two warning letters.
On 2 October 2024, the CMA published, for the first time, heat maps illustrating where it has issued warning and advisory letters to businesses in the UK. The maps display the number of letters sent to each region compared to its share of the UK business population.
Based on head office location and adjusted for relative shares of UK registered companies, Scotland received the most letters. The best performing region was London, followed by South East England.
Additional EU and UK competition law news coverage can be found in McGuireWoods’ news section.
U.S. Antitrust
McGuireWoods publishes bulletins on U.S. antitrust developments, as well as regular publications on numerous other topics.