Economic Undertakings

Deutsche Telekom: Antitrust Bites – Newsletter April 2021

European Commission publishes new guidelines on the application of the referral mechanism provided for in Article 22 EUTMR on merger control

At March 26, 2021, after a public consultation on merger control, the European Commission published guidance on the application of the referral mechanism provided for in Article 22 of Council Regulation (EC) No 139/2004 (EUMR).

The European Commission analyzed the period from 2016 to today to examine the effectiveness, efficiency, relevance and consistency of procedural and judicial aspects related to merger control in the EU. In particular, the Commission has examined the effectiveness of the thresholds based on turnover provided for by the EUMM for the identification of mergers subject to the obligation of prior notification to the Commission and of the referral mechanism provided for in the EUMR. art. 22 STREET.

The analysis carried out by the Commission has shown that, although these thresholds have generally been effective in capturing transactions with a significant impact on competition in the EU internal market, a number of cross-border transactions which could have an impact on competition. potentially significant impact on competition, especially in the digital and pharmaceutical sectors, escaped scrutiny by the Commission and Member States.

In view of this, the Commission considered that it is also important to encourage and accept referrals under Article 22 EUTMR in cases where mergers do not reach national or EU thresholds. . These cases mainly concern (i) startups or recent entrants with high competitive potential and low turnover; (ii) innovators or companies carrying out potentially important research; (iii) significant actual or potential competitive forces; (iv) companies with access to significant competitive assets; and (v) companies providing key products or services to other industries.

Once the referral has been made, the Commission will examine whether or not the concentration significantly affects trade between Member States and constitutes an effective threat to competition in the territory of one or more Member States.

As regards procedural aspects, the referral is made within six months of the completion of the concentration. However, the Guide specifies that in exceptional situations “a subsequent referral may also be appropriate, depending, for example, on the extent of the potential competition concerns and the potential detrimental effect [of the concentration] on consumers“.

Annual Competition Law: Italian competition authority proposals for modification of Law no. 287/90 and powers of the Authority

At March 23, 2021, the Italian competition authority (ICA) has submitted to the government its proposals for an annual competition law concerning, among others, proposed amendments to law no. 287/1990 and to the powers of the Authority (paragraph VII of the report).

In particular, the ICA offers:

  • The introduction of changes to the provisions relating to merger control, including the introduction of the obligation to notify, at the request of the ACI, also transactions below the notification thresholds which appear relevant for competition, and ‘extension of the deadline for the conclusions of investigations from 45 to 90 days;
  • introduce a relative legal presumption of economic dependence in business relationships with companies providing intermediation services for digital platforms that play a crucial role in reaching end users and / or suppliers;
  • grant the ACI the power to classify companies operating in several markets as companies of “primary importance for competition” and to prohibit designated companies from certain “particularly distorting” practices unless they demonstrate that their behavior is objectively justified;
  • the introduction of a procedure for settling antitrust proceedings;
  • strengthen the power of the ICA to acquire documents and information also outside the framework of investigations, thus enabling the ICA to impose fines in the event of refusal or delay in providing information and documents or when the information is either omitted or misleading; and
  • designating the ACI as the sole competent authority to fight against the offenses identified by Directive 2019/633 on unfair commercial practices in relations between companies in the agricultural and food chain.
  • court rejects the actions brought by Slovak Telekom and Deutsche Telekom against the judgments of the General Court relating to anti-competitive practices in the Slovak telecommunications market

    With the judgments of March 25, 2021, (Cases C-152/19 and C-165/2019), on Court of Justice of the European Union (CJEU) dismissed complaints filed by Slovak Telekom (ST) – the largest telecommunications operator in Slovakia – and Deutsche Telekom (DT) – which was the parent company of ST at the time of the investigations – against the judgment of the General Court which largely confirmed the decision adopted by the European Commission to October 15, 2014.

    By this decision, the Commission imposed fines on both ST and DT, as they had abused ST’s dominant position in the Slovak broadband internet services market by setting abusive conditions for access to its loop local and thus limiting the access of competitors.

    By rejecting the appeals of ST and DT, the CJEU clarified the scope of its Bronner judgment, in particular as regards the conditions which must arise to be qualified as abusive, within the meaning of art. 102 TFEU, the refusal of access to infrastructure owned by a dominant company. One of the conditions is the indispensable nature for competitors of access to such infrastructures.

    ST and DT also indicated that the Tribunal erred in law in considering that the Commission was not required to demonstrate, for the purposes of art. 102 TFEU, that access to T&C infrastructure was essential for competitors, as was otherwise in the Bronner case.

    The General Court in fact specified that, given that ST was subject to the regulatory obligation to grant access to the network and therefore could not and indeed did not refuse to grant access to the network, and that the sanctioned practices did not constitute a refusal of access to ST’s local loop, but referring to the conditions of such access, the conditions set in the Bronner judgment cannot apply in the present case. Therefore, the General Court correctly asserted that the Commission would not prove the “indispensable character” of ST’s infrastructure.

    European Commission launches public consultation on state aid for research, innovation and development

    As part of what is known as the State Aid Fitness Check, that is to say a broad assessment started in 2019 and aimed at verifying the effectiveness of European competition rules in the face of a constantly evolving market, on April 8 the European Commission launched a public consultation with the aim of aligning the European framework for State aid for research, development and innovation (the R & D & I framework, contained in Commission Communication 2014 / C 198/01 ) with the new strategic objectives of the EU.

    In particular, among the priorities of the consultation, the Commission indicated the following objectives:

  • Improve and update existing definitions of research and innovation activities eligible for support under the R & D & I framework;
  • Introduce new provisions to allow public support for technological infrastructure in order to stimulate investment in R & D & I;
  • Simplify certain rules (by introducing, for example, a simplified methodology for calculating indirect costs to determine eligible costs), in order to facilitate the practical application of the R & D & I framework, when the evaluation has identified possible excessive administrative burdens for companies and managing authorities.
  • The consultation is open to individuals, NGOs, companies, associations and public authorities.

    Contributions and comments on examination proposals must be submitted online to the Commission no later than June 3, 2021.

    The adoption of the new European framework for state aid for research, development and innovation is scheduled for the second half of 2021.

    EU Court of Justice definitively rejects the disputes relating to the “Lundbeck” case on the late payment agreements

    With judgments of March 25, 2021, the court definitively closed the Lundbeck case, concerning the agreements which the Danish pharmaceutical company had concluded in 2002 with certain manufacturers of generics concerning the antidepressant drug containing the active principle known under the name of “citalopram”.

    In particular, when its basic patent on this molecule expired, Lundbeck only had a certain number of secondary patents giving it more limited protection; in return for the generic manufacturers’ pledge not to enter the citalopram market, Lundbeck granted them substantial payments and purchased their stocks of generic products.

    By its decision to June 19, 2013, the European Commission found that Lundbeck and the generic manufacturers concerned were at least potential competitors and that the agreements in question constituted restrictions of competition “by object” within the meaning of Article 101 TFEU.

    In particular, the Commission found that the sums paid by Lundbeck to prevent generic manufacturers from entering the market for citalopram roughly corresponded to the profits they could have made had they successfully entered the market. The Commission therefore imposed a total fine of € 93.7 million on Lundbeck and a total fine of € 52.2 million on generic manufacturers.

    The Tribunal of the EU upheld the Commission’s decision in judgments of the September 8, 2016.

    The court of Justice upheld the decisions of the General Court, affirming in particular the merits (i) of the assessment that Lundbeck and the generics traders were in a potentially competitive relationship; (ii) the assessment of whether the agreements qualified as “by object” agreements. In this latter regard, the Court essentially indicated that such a qualification must be confirmed when, under the terms of the agreements in question, the transfer of value from the original manufacturer to the generic manufacturer can only be explained by the interest common business of the parties not to compete on the merits. Such agreements, where payments induce generic manufacturers not to continue their attempts to enter the market, belong to the category of practices which are particularly harmful to competition.

    The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

    © Mondaq Ltée, 2021 – Tel. +44 (0) 20 8544 8300 –, The source Company briefing

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