Table of Contents
- European Commission Closes Disparagement Investigation by Accepting Commitments
- European Commission Investigates First No-Poach and Anti-Competitive Agreement Resulting From Minority Holding
- Apple Forced by European Commission to Open iPhone to Other Wallets
- UK Subsidy Control Act Used to Challenge Loans to Competitor
European Commission Closes Disparagement Investigation by Accepting Commitments
Under EU and many national competition laws, illegal abuse of a dominant position can take many forms. One such abuse is disparagement, the dissemination of misleading information about a competitor’s products.
On 22 July 2024, the European Commission (EC) accepted commitments from pharmaceutical company Vifor to address the EC’s concerns about potential disparagement by Vifor of Monofer, a treatment marketed by Pharmacosmos that is the closest competitor of its flagship intravenous iron medicine Ferinject.
The EC found that Vifor may have a dominant position in the market for the provision of intravenous iron medicines in several EU countries. This preliminary conclusion was based on several factors, such as market share.
The EC also found, again without reaching a firm conclusion, that for many years, Vifor may have restricted competition in these markets by disseminating potentially misleading information about the safety of Monofer. Vifor’s messages primarily were targeted to healthcare professionals and, according to the EC, may have unduly hindered Monofer’s uptake in the EU to shield Ferinject from competition.
To end the investigation without admitting liability, Vifor agreed to wide-ranging commitments over 10 years designed to wind back the company’s comments about Monofer. Vifor committed to launch a communication campaign to rectify and undo the past messages, which Pharmacosmos and other third parties may use when contacting healthcare professionals. The campaign includes disseminating via email, mail and in-person meetings a factual clarificatory communication to a significant number of healthcare professionals in the relevant countries. The communication also will be published on Vifor’s website and in leading medical journals.
Vifor also agreed not to engage in promotional or medical communications, in writing or orally, about Monofer’s safety profile using information that is neither based on Monofer’s label nor derived from clinical trials specifically designed to compare Ferinject and Monofer. Compliance measures include internal mechanisms to ensure that all relevant external promotional and medical communications and internal training materials are in line with the commitments prior to their use, and annual internal training of staff and a system to certify compliance.
Disparagement is not a new issue, but this case shows that it is a real risk and needs to be covered in competition compliance programmes when a company may be in a dominant position, in pharmaceuticals or other industries. The commitments agreed to by Vifor, in particular the requirement to launch a communication campaign, are intrusive and may result in unwelcome damage to its reputation in the industry.
European Commission Investigates First No-Poach and Anti-Competitive Agreement Resulting From Minority Holding
The EC announced on 23 July 2024 an investigation into possible anti-competitive arrangements in the online food delivery sector. The case is the EC’s first formal investigation into employee no-poach agreements between competitors and its first into anti-competitive agreements that may have occurred in the context of a minority shareholding by one company in a competitor.
The case concerns Delivery Hero and Glovo, two of the largest food delivery companies in Europe. From July 2018, Delivery Hero held a minority share in Glovo, and in July 2022 it acquired sole control.
The EC is investigating whether, before the full takeover, Delivery Hero and Glovo may have allocated geographic markets and shared commercially sensitive information (CSI) on matters including commercial strategies and prices, considered cartel activity. The EC is also investigating whether the companies may have agreed not to poach each other’s employees. In the EC’s view, all these practices could have been facilitated by Delivery Hero’s minority share in Glovo.
The EC, along with national competition regulators in many jurisdictions including the UK, has recently increased its focus on labour markets. It wants to ensure that employers do not coordinate their relations with actual and potential employees, particularly through wage-fixing and no-poach agreements or exchange of CSI on employment issues. The case indicates that this remains an enforcement priority.
The link identified by the EC between the minority shareholding held by Delivery Hero in Glovo and the potential types of cartel activity is an important reminder that, even with such a link, companies are considered competitors for the purposes of competition law enforcement. As such, they must compete independently and not share CSI as they would if there were no structural link between them.
Apple Forced by European Commission to Open iPhone to Other Wallets
The EC uses various tools in its ongoing battle against large technology companies, including the EU competition law ban on abuse of a dominant position. The EC announced on 11 July 2024 that, following an investigation, it accepted commitments from Apple to open access to the “tap and go” technology on iPhones.
The EC’s investigation is predicated on the assumption that Apple has significant power in the market for smart mobile devices through the iPhone and a dominant position in the in-store mobile wallet market on its operating system iOS through Apple Pay, which is integrated into the iPhone. Apple Pay has been the only mobile wallet that may access the standard near-field-communication (NFC) hardware and software (NFC input) on iOS to make payments in stores.
The EC views this as a problem because Apple has allegedly refused to supply the NFC input on iOS to competing mobile wallet developers, which means iPhone users can only pay with the “tap and go” function with Apple Pay.
The EC’s preliminary view is that this is an abuse of Apple’s dominant position that excluded Apple Pay’s rivals from the market and led to less innovation and choice for iPhone mobile wallets users.
In order to close the case without admitting liability, Apple agreed to a range of commitments over 10 years, including allowing access to the “tap and go” function on iPhones to rival payment apps so that they can compete with Apple Pay. According to the EC, this will provide a “choice between multiple secure payment apps for iPhone users” and result in “innovative payment app features.”
These commitments are without prejudice to Apple’s current or future obligations under other regulations, in particular relating to other use cases and functionalities within the scope of the Digital Markets Act (Regulation 2022/1925) (DMA) and the eventual implementation of the digital euro.
The EC pointed out that the decision concerns business practices covered by the DMA — in-store payments with iPhones using NFC technology — and that it “shows that antitrust enforcement goes hand in hand with the DMA.” However, the commitments go beyond what is required by the DMA, including monitoring and dispute resolution mechanisms. Apart from the general principles applied under competition law, the outcome of the case points to a clear alignment between the two frameworks and is an attempt to avoid double jeopardy through the use of both.
UK Subsidy Control Act Used to Challenge Loans to Competitor
As reported in the July 2024 European Competition Law Newsletter, the second challenge before the UK Competition Appeal Tribunal (CAT) to a public sector subsidy under the UK Subsidy Control Act 2022 has been announced. The case has formally been launched, and details have been published by the CAT.
The Subsidy Control Act, which came into effect on 4 January 2023, established a system of subsidy oversight and control within the UK to replace the EU State aid regime, to which the UK is no longer subject following its exit from the EU. The system operates alongside the UK’s obligations under its free trade agreements with other countries, notably the provisions of the UK-EU Trade and Cooperation Agreement, the World Trade Organization rules on subsidies and the relevant provisions within the Northern Ireland Protocol, also agreed to with the EU.
The case concerns alleged loans granted by the Greater Manchester Combined Authority (GMCA), a local authority, to the Renaker Group, a property developer. Competitor the Weis Group claims that total overall lending to Renaker by GMCA and its affiliates amounts to £745 million at state-subsidised lending rates.
The claim will focus on whether there were manifest breaches of lending terms between the UK government and GMCA, including unusual overexposure to one entity. According to Weis, the best practice for lenders under commercial lending norms is not to exceed 10% of its loan book to one borrower or group. In this case, Weis claims, the figure is closer to 70%.
The claim will also examine the judiciousness of such loans, given Renaker has allegedly made the case before the GMCA planning committee that its schemes are “unviable” and do not meet market standard profits tests.
The CAT’s notice refers to a number of additional points of particular interest. These include that the alleged subsidies (loans) to Renaker Group were apparently identified by Weis from a document on the GMCA’s website. That document makes no reference to the act, which is curious given the extensive guidance to public bodies on the issue. The market allegedly impacted is expressly identified as local (“property investment and developments services in Manchester“). Finally, the claim refers to the additional alleged financial support to Renaker and indicates that Weis will seek to prove this through disclosure of documents by GMCA during the case, implying that just pleading this additional issue at the initial stage may be enough to bring it into play.
This second claim under the Subsidy Control Act shows the possibilities for third parties to challenge a potential illegal subsidy to a competitor in the UK under the act. The CAT’s stated desire for these appeals, which are likely to be numerous, is that they are “fast, cheap and simple.” The formal launch of the case will allow competitors to identify in more detail how challenges will operate in practice before the CAT.
A related issue that will likely become increasingly important is the impact that challenges under the act will have on public sector legal budgets. Although this is only the second private challenge that reached court, there are likely to be other cases in which initial correspondence changed the public body’s mind but it nevertheless incurred costs. In the first challenge (lost by the private sector competitor), the public body incurred recorded (pre-assessment by the court) external legal fees of around £230,000 through to trial and judgment (although was reimbursed for part of that by the unsuccessful challenger on the basis of the “loser pays” principle that is applied in UK courts).
Additional EU and UK competition law news coverage can be found in McGuireWoods’ news section.
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