German Federal Court of Justice confirms the claims assignment model in the Diesel emission case (and beyond)
On 13 June 2022, the Federal Court of Justice (Bundesgerichtshof) held that the claims assignment model (Sammelklage-Inkasso) is admissible for Swiss purchasers in the so-called Diesel scandal (see the Bundesgerichtshof’s press release of the same day). The decision is a further step after the landmark AirDeal judgment last year, in which the Bundesgerichtshof fundamentally acknowledged the collective opt-in assignment model, i.e. the transfer of claims for damages of numerous victims of the same infringement to a specialised third party for the purpose of bundling and joint enforcement of all claims. This approach from a procedural economy perspective has become increasingly important all over Europe in recent years, especially in competition law cases. In its Diesel emission case, the Bundesgerichtshof now confirms that the model is also open to purchasers from Switzerland.
Seven banks involved in European Government Bonds trading cartel during financial crisis
On 20 May 2021, the Commission found that Bank of America, Natixis, Nomura, RBS (now NatWest), UBS, UniCredit, and WestLB (now Portigon) participated in a cartel in the primary and secondary markets for European Government Bonds (EGB). The collusive behaviour lasted from 2007 to 2011, amidst a financial crisis and affected the European Economic Area in its entirety. Seven banks involved in European Government Bonds trading cartel during financial crisis Nomura, UBS, and UniCredit were fined for EUR 371 million. NatWest, as the whistle-blower, was not fined, while infringements by Bank of America and Natixis fell outside the limitation period. Portigon received no fines as it did not generate any net turnover in the last available business year preceding the decision. EGB are sovereign bonds issued by the central governments of the Eurozone member states and are used to raise funds in international financial markets. They are issued on the primary market, where a limited number of investment banks (“primary dealers”) can bid for the bonds in auctions or acquire them through syndication (a private placement process). The primary dealers can then trade EGB on the secondary market, either with each other or with other investors, such as asset managers, pension funds, hedge funds, and major companies. Typically, large investment banks trade EGB within their EGB desk. The Commission found that the seven banks participated in a cartel through a group of traders working within the EGB desks. EGB traders were in regular contact in multilateral chatrooms on Bloomberg terminals, where their communications showed the following, intertwined and partially overlapping, conduct: attempts to influence the prevailing market price on the secondary market in the function of the conduct on the primary market—namely, traders exchanged information and attempted to coordinate their price strategies for driving the market price of an EGB; attempts to coordinate the bidding on the primary market; attempts to coordinate the level of overbidding on the primary market by disclosing information on the premium that traders intended to pay at an auction; and other exchanges of sensitive information. EGB’s total market size is large. Based on data from the European Central Bank Securities Statistics, also cited by the EC Decision, the outstanding notional value of EGB in the primary market was EUR 4.4 trillion at the start of the infringement period, and increased to EUR 6.3 trillion by the end of the infringement period. Individuals or companies affected by the anti-competitive behaviour have the right to seek damages from nation courts of EU member states. Your contacts: Akos Reger Jakob Rüggeberg
Spain: Point-system highway maintenance providers’ cartel
CNMC, the Spanish Competition Authority, has imposed a fine of EUR 59.67 million on 12 companies providing maintenance and management services for the country’s national highway networks. The firms were found to have manipulated tenders for road maintenance and operation services of the State Road Network between 2014 and 2018. In addition to the fines, the companies involved have been banned from participating in government contracts. Spain: Point-system highway maintenance providers’ cartel The cartelists developed a point system, under which tenders were organised into groups, with common criteria for the submission of bids within each group. Points were allocated to each group of tenders, which were then ‘spent’ by the companies depending on the level of discount on the contracting budget. Following a formula designed by the cartel, offering higher discounts meant ‘spending’ more points. In this way, the cartel limited the number of contracts to which an individual company could offer a high discount, thereby encouraging the cartel members to focus their efforts on winning a limited number of tenders. For the remaining procurements, the same companies offered bids with little to no chances of winning, which turned them into fictitious offers. The cartelists also agreed on a threshold of discounts for the fictitious offers and committed to submitting bids in all the tenders in each group, thereby manipulating the average price of the offers submitted for the tender as well as hindering the possibilities of non-cartel members. This sophisticated system was adapted to subsequent changes in the contract specifications launched by the public administration. According to the CNMC, the total value of tenders won by the cartel members exceeded EUR 530 million, which amounts to 63% of the total budget granted by the Ministry of Development for the maintenance and management of the national motorway network. In total, the companies participating in the cartel were awarded 70% of the State Road Network tenders during the infringement period. Therefore, the anticompetitive practices of the companies most likely had a damaging impact on the public budget. Your contacts: Ben Bornemann Jakob Rüggeberg
Belgium: Pharmaceutical wholesalers sanctioned for collusion
On 18 February 2022, the Belgian Competition Authority (BCA) sanctioned two pharmaceutical wholesalers, imposing a total fine of EUR 29.8 million on Pharma Belgium-Belmedis SA, after a 40% reduction for cooperation. Febelco CV received immunity from fines for having disclosed the existence of the cartel. Belgium: Pharmaceutical wholesalers sanctioned for collusion This is the BCA’s first hybrid case, in which both companies were granted a 10% reduction for participation in the settlement procedure, while a third company, CERP SA (a Belgian subsidiary of Astera), decided not to participate in the settlement. The BCA’s procedure against CERP SA still continues. Febelco CV and Pharma Belgium-Belmedis SA participated in a cartel violating both national and EU competition rules. Between April 2003 and November 2016, the pharmaceutical wholesalers were involved in two separate infringements related to (i) transfer orders and (ii) influenza vaccines. Transfer Orders Pharmaceutical laboratories (producers) can distribute pharmaceutical products by selling their products in two ways: directly to pharmacists or indirectly via the transfer orders system managed by pharmaceutical wholesalers. In the latter case, a pharmacist places an order at the price proposed by a laboratory, but this system is managed by wholesalers, who prepare and execute the order from their own stocks. Under these circumstances, the infringers agreed to apply the same commercial conditions to the distribution via the transfer orders system—more specifically, by applying the same pricing to laboratories. The objective of the conduct was to limit direct sales to pharmacists by pharmaceutical laboratories and to fix margins for distribution via the transfer orders system. Influenza Vaccines Influenza vaccines are produced each year and must be administered during autumn to ensure effectiveness. As such, purchases of vaccines by pharmacists from wholesalers are based on a system of pre-sales, in which a certain quantity of vaccines needs to be pre-ordered before they are put on the market. The infringers agreed to apply the same commercial conditions for pre-sales. Certain wholesalers, including Febelco and Pharma Belgium-Belmedis, agreed to not grant discounts to pharmacists and to not accept returns of unsold vaccines ordered during the pre-sale period. They also agreed on the duration of the pre-sales periods. Potential Damages Estimates based on a study by the European Center for Disease Prevention and Control (ECDC) indicate that approximately 2–3 million doses of flu vaccines are purchased in Belgium each year. As such, the anti-competitive conduct of Pharma Belgium-Belmedis and Febelco may have had a major impact on the pharmaceutical market in Belgium. Your contacts: Akos Reger Jakob Rüggeberg
Trucks cartel: AG Szpunar clarifies the application of Article 5 of the EU Damages Directive to documents to be created ex novo
On April 7, 2022, AG Szpunar delivered its opinion in the context of a request for a preliminary ruling made by the Commercial Court 7 of Barcelona to the CJEU concerning, i.a, the interpretation of Article 5(1) of Directive 2014/104/EU on the disclosure inter partes of evidence.
Jedi Blue Agreement (Google / Facebook)
On 11 March, the European Commission and the Competition and Markets Authority of the United Kingdom announced investigations into a suspicious agreement between Google and Facebook (not yet Meta at that time) in September 2018 related to online advertising. Both agencies believe that the agreement may have breached their respective competition rules on anti-competitive agreements and abuse of dominance. Jedi Blue Agreement (Google / Facebook) The agreement in the spotlight was code-named by Google as “Jedi Blue” and may have had a widespread impact on the market, resulting in suboptimal outcomes of bidding processes that match advertisers with online advertisement space (inventory) owners. The agreement was an attempt to halt the development of header bidding solutions. So, in order to understand the negative effects of “Jedi Blue”, we first need to understand header bidding. Header bidding was developed by publishers and competitors of Google in the ad-tech field to (partially) circumvent Google’s ad exchange gatekeeper position in real-time online auction processes. By running the bidding in the invisible header field of the page opened by viewers, header bidding allows publishers to have more control over the bidding process by inviting multiple ad exchanges to compete for their inventories simultaneously. As shown in US antitrust documents — quoting Google employees on “fighting off” header bidding — Google considered header bidding an existential threat. As a result of the rapid increase of header bidding, Google developed its own solution called Open Bidding (based on practically the same idea as header bidding). But it was not enough: header bidding was becoming more popular. When Facebook also considered supporting header bidding solutions, Google responded and offered the agreement code-named “Jedi Blue”. The agreement provided that Facebook refrain from participating in developing header bidding. In exchange, Google offered advantages to Facebook in auctions via its Open Bidding platform. In essence, Facebook enjoyed some advantages vis-à-vis other advertisers when using Google’s ad-tech platform. Based on the antitrust documents filed in the US, these advantages relate to preferential fees, longer timeouts to bid, direct billing relationships to publishers, more useful user data, and information about which impressions are likely targeted to spam. Google gave Facebook a potentially anti-competitive advantage in the ad-bidding process because none of these advantages were given to other bidders. Furthermore, Google and Facebook agreed to refrain from fierce competition when bidding together in Open Bidding (note, Google is a bidder and auctioneer simultaneously). This included, among other things, a 10% minimum “win rate” of Facebook in the auctions. Due to its restrictive nature, “Jedi Blue” may have caused online publishers, advertisers, and consumers significant financial damages. If Facebook had chosen header bidding, the market would likely have been more competitive, and the position of Google in ad-tech might have been challenged. CDC will closely follow the development of these cases. Your contacts: Akos Reger Jakob Rüggeberg
Interest on cartel damages
Suppose that in 2002, a cartel caused EUR 1,000 in damages to a victim. Is the victim 20 years later entitled to only EUR 1,000? Of course not. The amount must be adjusted for interest. EU law is clear on this point, along with the requirement that interest must accrue as of the time the damage occurred. Other modalities, however, are left to national laws. When working out interest in any concrete case, several common issues should be considered. The following attempts to foster systematic treatment of this interesting (sic!) topic.
The Bundeskartellamt has conducted unannounced dawn raids at the German premises of cable manufacturers
In January 2022, the Bundeskartellamt conducted unannounced dawn raids at the German premises of cable manufacturers and other companies active in the market of cable manufacturing. According to the statements published by the companies, these inspections concern the undertakings Nexans, Leoni, and Prysmian. The undertakings declared their willingness to cooperate with the Bundeskartellamt. The Bundeskartellamt has conducted unannounced dawn raids at the German premises of cable manufacturers The investigation concerns the suspicion of the illegal coordination between cable manufacturers and related companies relating to the calculation of industry-standard metal surcharges in Germany. Germany is one of the most crucial cable manufacturing markets in Europe. And the companies targeted by dawn raids are among the most important players in German and European markets. Companies purchasing cables from the undertakings concerned by the investigation might see themselves harmed by the alleged collusion between manufacturers. The CDC reminds that claiming the damages caused by the breach of competition rules is the victim’s right protected at the national and EU levels. Your contacts: Jakob Rüggeberg Juraj Siska
Spain: collusion in the markets related to football rights acquisitions
On 27 December 2021, the Spanish appeal court confirmed an earlier decision of the Spanish Competition Authority fining Telefónica and Distribuidora de Television Digital (DTS) for colluding in the acquisition of football rights and adjacent downstream markets. The Spanish court also upheld the imposed fine of 15.5 million euros. Spain: collusion in the markets related to football rights acquisitions According to the decision, Telefónica and DTS colluded during the acquisition and resale of the UEFA Champions League and Spanish national football rights for the seasons between 2012 and 2015. The court found collusive behaviour in two agreements in August 2012. The decision is uncommon because it is based largely on circumstantial evidence for concerted practice between Telefónica and DTS. Because sports rights are one of the last “crown jewels” of linear television, acquiring them is an important feature of the broadcasting business. When UEFA sold the broadcasting rights of the Champions League for the seasons between 2012 and 2015, Telefónica refrained from bidding to the advantage of DTS (who won the rights). In exchange, when DTS organised a bidding process in Spain, the tender conditions were such that Telefónica was the only broadcasting company that could successfully bid for the rights of the Champions League. The second agreement — on the broadcasting rights of La Liga and Copa del Rey for the same period — had slightly less restrictive features and outcomes. By exploiting the existing business relationship between Telefónica and DTS in 2012, Telefónica also had an informational advantage vis-á-vis other bidders, like Orange or Euskaltel. The companies coordinated their behaviour in the acquisition, wholesale, and retail parts of the supply chain. According to the court, Telefónica and DTS colluded to jointly increase their economic power and prevent competition from third-party operators, especially in the market for resale of audiovisual football rights. Further effects are identified in the acquisition of broadcasting rights, the pay-TV content market, and the general electronic communications (tv, mobile, internet) market. The concerted practices led to anti-competitively high subscriber revenues for both DTS and Telefónica, while other operators were, consequently, less successful. Telefónica and DTS argued that their business conduct was rational and did not negatively affect competition. The court, however, did not accept this argument. Supported by the decision of the court, affected companies, and third-party channel operators, retail telecom services providers can seek damages from the courts. The practice of DTS and Telefónica may have negatively impacted the realised profits of these market players, at least between 2012 and 2015. Your contacts: Akos Reger Ben Bornemann
General Court entirely dismisses Scania’s appeal and confirms Scania’s participation in the Truck Cartel
On 2 February 2022, the General Court of the European Union rendered its judgment in the Case T-799/17, Scania and Others v Commission. The Court dismissed in its entirety the appeal brought by Scania AB, Scania CV AB, and Scania Deutschland GmbH, against the decision of the European Commission of 27 September 2017 in Case AT.39824 – Trucks imposing a fine of EUR 880 million on Scania for its participation in the European Trucks Cartel. The General Court confirmed Scania’s involvement in the single and continuous infringement and rejected all arguments presented by Scania.