The days are getting shorter and the traffic jams longer – the summer is reaching its end. A good time to look back on a number of important developments in competition law this summer and to look ahead to the coming autumn and new year.
This summer witnessed a first in the ruling practice of the Netherlands Authority for Consumers & Markets (“ACM”). In determining the fine to be imposed in the vinegar cartel, ACM granted an unprecedented 10% discount to the company and individuals involved because they expressly acknowledged the practices. That made it possible for ACM to follow the simplified procedure in handling the case.
The Trade and Industry Appeals Tribunal (the “CBb”) furthermore gave ACM the go-ahead in two rulings to use information obtained from telephone taps as evidence in establishing a cartel infringement. In doing so the CBb ruled against the Rotterdam Court, which had previously prohibited the use of telephone taps. The CBb’s rulings were based on two decisions of ACM regarding building companies in Limburg and collectors of sea vessel waste. The CBb referred both of the cases back to the Rotterdam Court.
The Rotterdam Court ruled in favour of ACM, in the form of a second interlocutory judgment in the bell pepper cartel. The court found that ACM had sufficiently substantiated that two grower cooperatives and two sales companies must each be regarded as infringers and fined accordingly. The court did, however, instruct ACM to redetermine the amount of the fine, to ensure that members/bell pepper growers would not be doubly fined.
Follow-on cartel claims
The Amsterdam Court of Appeal addressed the question (often raised in this type of case) whether the Dutch court had jurisdiction to hear and decide on a follow-on claim based on the sodium chlorate cartel. A number of defendants had challenged the jurisdiction of the Dutch court because the parties had made a choice of forum and had agreed on arbitration. The Amsterdam Court of Appeal confirmed, as did the Court, that the Dutch court nevertheless has jurisdiction because “the aggrieved companies cannot be deemed to have made a choice of forum or agreed on arbitration to resolve the dispute regarding reimbursement of the loss incurred by them as a result of the supplier’s participation in the unlawful cartel”.
The Air France/KLM case before the Amsterdam Court caused a greater stir. It was the first time a “Dutch torpedo” was accepted in that type of case. The court rejected Deutsche Bahn’s petition to deny the request filed by Air France, KLM and Martinair (“Air France/KLM”) to issue a negative declaratory judgment. The judge found that no abuse of procedural law was involved because requesting a negative declaratory judgment served a legitimate purpose for Air France/KLM, as well as serving the interest of legal certainty.
Abuse of a dominant position
A number of European supervisory authorities have taken action in cases involving abuse of a dominant position. The European Commission, for instance, is investigating possible abuse of power by Qualcomm, consisting of loyalty discounts and predatory prices. The British Competition & Markets Authority is accusing Pfizer and Flynn Pharma of charging excessive and unfair prices for epilepsy medicines.
The preliminary ruling that the German court requested of the Court of Justice of the European Union (“ECJ”) in the Huawei/ZTE case was also issued this summer. The question presented was whether and, if so, in what circumstances Huawei’s proceedings against ZTE could be considered abuse of a dominant position when ZTE had stated that it wished to purchase a licence on FRAND conditions. In its judgment of 16 July 2015 the ECJ found that the holder of a standard-essential patent (“SEP”) that has irrevocably undertaken towards a standardisation organisation to grant third parties a licence on FRAND conditions is not abusing its dominant position by requesting an injunction on (alleged) infringing practices in legal proceedings if:
- the patent owner has informed the alleged infringer of the infringements; and
- the patent owner has offered the alleged infringer a specific and written licensing agreement on FRAND conditions and has thereby specifically explained the royalty and the manner in which it has been calculated; and
- the infringer continues to use the patent in question and fails to promptly make use of the offer in accordance with common business practice and in good faith. The latter must be determined on the basis of objective elements and means that no delaying tactics are involved.
This summer ACM also made its voice heard with regard to the regulation of the railway sector. On 2 July 2015 it decided in response to a complaint filed by the Federation of Mobility Companies in the Netherlands (Arriva, Connexxion, Syntus and Veolia) that ProRail had to reduce its rail tariffs for 2015 and 2016. ACM found, among other things, that ProRail’s user fee insufficiently took into account the weight characteristics of the train equipment used by Arriva, Connexxion, Syntus and Veolia. A few weeks later, on 21 July 2015, ProRail was more successful. ACM rejected a complaint filed by Arriva and Connexxion. They had both requested ACM to investigate ProRail’s capacity allocation on the Arnhem-Didam route, arguing that their operations were being harmed by ProRail’s actions. ACM expressly took into account in rejecting the claim that ProRail had offered alternative transport during the period in which work was performed on the rail between Arnhem and Didam.
On 15 July 2015 ACM reported that it prohibited the merger between the Albert Schweitzer Hospital and Rivas Zorggroep. That was the first time ACM ruled against a merger between hospitals. ACM found that the merger would significantly restrict the competition between the parties in question, despite the presence of other hospitals in the area. One of the main reasons why ACM arrived at that ruling appears to be the changing attitude of healthcare insurers to hospital mergers. The ruling again confirms that healthcare insurers can usually rely on it that ACM will lend them a ready ear. More information on this development can be found here. The hospitals have already announced that they will file an appeal against the ruling.
At the end of July 2015 the Dutch Healthcare Authority (“NZa”) exercised for the first time its power under Section 45 of the Wet marktordening gezondheidszorg (Healthcare Market Regulation Act) to adopt mandatory rules regarding the contracting process. Before that time NZa had merely drawn up GCP’s (Good Contracting Practices). The GCP’s are not obligatory and cannot be enforced by NZa, unlike obligations that apply under a scheme based on Section 45 of the Healthcare Market Regulation Act. This scheme based on Section 45 of the Healthcare Market Regulation Act will enter into force in 2016. The scheme in question imposes only four obligations on healthcare insurers and consists almost entirely of open standards. Healthcare providers have explained to NZa in vain that such a scheme is effective only if it imposes sufficiently specific obligations on the healthcare insurers. NZa brushed aside those objections. That was remarkable, since one of the reasons why NZa adopted the scheme in the first place was that healthcare insurers insufficiently complied with the GCPs (due to their voluntary nature and the open standards). Partly in light of that experience NZa might have been expected to comply with the objections of the healthcare providers; it therefore remains to be seen what added value the scheme will offer.
The CBb passed two noteworthy rulings in the field of energy in the past few months. In its ruling of 28 July 2015 on an application for exemption regarding a closed distribution system it answered the question when one single electricity or gas transport network is deemed to exist. According to the CBb such a network exists only if the mains intended for the transport are physically connected. In another ruling the CBb assessed the determination of the weighted average cost of capital (“WACC”) for TenneT. The CBb found that ACM had insufficiently substantiated on certain points why it had departed from earlier regulation periods in determining the WACC and instructed ACM to repair the defects and to issue a new ruling.
ACM also made its voice heard in the field of energy this summer, by imposing an order subject to a penalty on network manager Delta. ACM found that Delta could no longer use the same name and the same logo as the commercial divisions of its parent company, to prevent the commercial business from profiting from the network manager’s public profile. ACM also gave a warning to four energy suppliers for providing prospective customers with obscure and misleading information on their websites regarding the price and the expected costs. Finally, the Minister of Economic Affairs sent ACM a letter on 1 July 2015 requesting it to permit situations in which owners’ associations fail to comply with the Warmetewet (Heating Supply Act) and in which adjustment factors are applied. That letter followed an earlier letter from the Minister to the Lower House, to which we drew attention in an earlier blog.
Several interesting developments also occurred in the telecommunications sector this summer. In June, for instance, ACM withdrew the Unbundled Local Loop (“ULL”) Market Analysis draft decision from the European notification. In response to that consultation ACM concluded that a further substantiation of the ULL draft decision was required. ACM published its new draft decision on 17 July 2015.
KPN has offered Virtual Unbundled Local Access (“VULA”) to other telecom providers since 24 July 2015. That type of access is an alternative for MDF and SDF access. Because KPN no longer offers MDF and SDF access, it is able to improve its copper network. In that light ACM published its letter to KPN of 28 July 2015, in which it stated that it accepted “the result agreed on between KPN and telecom providers as a newly regulated access form”. When offering VULA (as a regulated access service) KPN must comply with the obligations in the ULL market analysis decision.
The CBb also issued several rulings in the field of telecommunications law. In appeal proceedings against a dispute resolution decision of ACM, it requested a preliminary ruling of ECJ. European Directory Assistance (“EDA”) had previously requested ACM to settle the dispute between it and Tele2, Ziggo and Vodafone. EDA is a Belgian company that offers subscriber information services and an electronic telephone directory. Those products can be accessed only from Belgium. The dispute related to the refusal of Tele2, Ziggo and Vodafone to provide EDA with subscriber data. EDA believed that it was indeed entitled to those data on the grounds of a provision of a national regulation (the implementation of Article 25(2) of the Universal Service Directive). ACM had previously decided that EDA could indeed rely on the national regulation and that Tele2, Ziggo and Vodafone had to provide EDA with the requested data on reasonable, objective, cost-oriented and non-discriminatory conditions. The CBb presented questions on this issue to the ECJ.
In a high-profile judgment the CBb furthermore clarified the appeal proceedings against the WPC-IIa decision that the interests of the parties involved must be weighed in answering the question whether ACM can fix rates retroactively. The CBb found in that specific case that ACM had not sufficiently proven that a higher surcharge (for Tele2 et al.) “would be so detrimental to the available financial margin of the wholesale customers (…) in competing and making investments” that fixing maximum rates retroactively conflicted with the objective of the Telecommunications Act of stimulating competition. In the CBb’s opinion, retroactive effect was therefore permitted.