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Infringements of Competition Law - Notable Decisions

27 Jan 2016

Infringement decisions by UK and EU regulators are binding on the English courts, so those who believe they have suffered as a result of the infringement can bring follow-on actions for damages.

In 2008, the European Commission (“the Commission”) introduced a settlement procedure under which cartelists receive a reduced penalty. However, they cannot settle without admitting the cartel and the scope and duration of their involvement. Settlements may therefore lead to follow-on actions too.

Recent or notable decisions / settlements include the following:    

 

EU: rechargeable batteries

On 12 December 2016, the Commission announced that it had imposed fines totalling €166 million on Sony, Panasonic and Sanyo for coordinating prices and exchanging information on the supply of rechargeable lithium-ion batteries. Samsung SDI also participated in the cartel, but received immunity from penalty as it revealed the existence of the cartel.

The Commission found that between February 2004 and November 2007, the cartelists had bilateral and sometimes multilateral contacts – in Asia, and occasionally in Europe – to avoid aggressive competition. This included agreeing on temporary price increases in 2004 and 2007, triggered by an increase in the price of the raw materials used to produce the batteries. The cartel also exchanged commercially sensitive information, such as supply and demand forecasts, price forecasts or intentions concerning competitive bids organised by specific manufacturers of products such as phones, laptops or power tools.

Click here for the press release.  

 

EU: Trucks

On 19 July 2016, the Commission announced it had imposed fines totalling just under €3 billion on four truck manufacturers – Volvo/Renault, Daimler, Iveco and DAF. A fifth manufacturer, MAN also participated in the cartel, but received immunity for revealing the existence of it. These companies together account for around 90% of European production of medium and heavy trucks.

The infringement covered the entire EEA and lasted 14 years, from 1997 until 2011.

The fines we levied under the Commission’s settlement procedure. A sixth company, Scania, did not settle, and the investigation into its conduct continues.

The five cartelists coordinated:

    • Their “factory” prices for medium (6 to 16 ton) and heavy (16+ ton) trucks in the EEA. The price paid by buyers is usually based on adjustments to the factory price.
    • The timing for the introduction of emission-reducing technologies for such trucks.
    • The passing on to customers of the costs of these technologies.

Click here for the press release.

 

EU: Car alternators and starters cartel

On 27 January 2016, the Commission announced that it had imposed fines totalling €137,789,000 on Melco (Mitsubishi Electric) and Hitachi for participating in a cartel for alternators and starters with another firm, Denso, which – in accordance with the Commission’s leniency programme – was not fined as it revealed the existence of the cartel. Melco’s and Hitachi’s fines were reduced under the leniency programme in light of their cooperation with the investigation, and reduced further because they agreed to settle the case.

The Commission found that, between September 2004 and February 2010 the three Japanese companies coordinated prices and allocated customers or projects for alternators and starters. The cartel was conducted outside Europe, but the cartel affected European customers as the cartelised products were also sold directly to car manufacturers in the EEA.

The Commission found that the cartelists:

    • Coordinated their responses to tenders by car manufacturers.
    • Allocated manufacturers and projects between themselves.
    • Exchanged commercially sensitive information such as pricing elements and market strategies.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision. 

This is the latest in a string of car part cartel findings including automotive glass, bearings, wire harnesses and heaters. Coming so early in 2016, it will be interesting to see if the decision marks an uptick in Commission enforcement activity after a very quiet 2015.

 

EU: Optical disc drives cartel

On 21 October 2015, the Commission announced it had imposed fines totalling €116 million on eight optical disc drive suppliers – Philips, Lite-On, their joint venture Philips & Lite-On Digital Solutions, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc and Quanta Storage.

Unusually, the cartel was specifically targeted, in this case at Dell and Hewlett Packard. The cartelists colluded in procurement tenders for disc drives for laptops and desktops produced by those two undertakings.

Philips, Lite-On and their joint venture company received full immunity for revealing the existence of the cartel. Hitachi-LG received a 50% reduction on its fine for its cooperation in the investigation.

Click here for the press release.

 

EU: Blocktrains (or unit-trains) cartel

On 15 July 2015, the Commission announced it had imposed fines totalling €49,154,000 on Express Interfracht, part of the Austrian rail incumbent Österreichische Bundesbahnen, and Schenker, part of the German rail incumbent Deutsche Bahn, for operating a cartel in the market for “blocktrain” services. A third cartelist, Kühne+Nagel was granted immunity from penalty as it revealed the existence of the cartel. The other two had their fines reduced by 10% for agreeing to settle the case.

“Blocktrains” are trains in which all wagons are shipped from the same origin to the same destination without being split. Typically, they are carrying a single commodity such as fossil fuels or cars for a single, high-volume supplier. The commodity has multiple destinations but, for efficiency, the train makes a nonstop run to a designated hub without the need for any uncoupling and recoupling en route.

The blocktrains covered by the cartel were "Balkantrain", which connects Western and Central Europe with Southeast Europe, and "Soptrain", which connects Central Europe with Romania.

The three cartelists fixed prices and allocated customers for nearly eight years from 2 July 2004 to 30 June 2012 and the geographic scope of the infringement was Union-wide for its entire duration.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision.

 

EU: Retail food packaging cartels

On 24 June 2015, the Commission announced it had fined eight manufacturers and two distributors of polystyrene foam and polypropylene trays for food packaging €115,865,000 for having participated in one or more of five cartels to fix prices and allocate customers for those products.

The manufacturers are Huhtamäki of Finland, Nespak and Vitembal of France, Silver Plastics of Germany, Coopbox, Magic Pack and Sirap-Gema of Italy and Linpac of the UK. The distributors are Ovarpack of Portugal and Propack of the UK. Linpac, who had participated in all five cartels, received full immunity for revealing the existence of them. Other companies received reduced fines for their co-operation or based on their inability to pay.

Click here for the press release, which includes details of the five cartels including their participants and durations, and the individual companies’ fines and reductions.

Click here for a summary of the decision.

 

EU: Parking heater producer in cartel

On 17 June 2015, the Commission announced it had found that, from September 2001 to September 2011, two German companies, Eberspächer and Webasto, participated in a cartel to coordinate prices and allocate customers for two types of car and truck heater:

    • auxiliary heaters, which support the heating systems of efficient modern vehicles that do not produce enough waste heat to keep passenger compartments warm; and
    • fuel-operated heaters which heat parked vehicles, and which almost all trucks with sleeping compartments have.

The two companies were the only producers in the EEA of these heaters and, when they received requests for quotations from car or truck manufacturers, they discussed various price elements, agreed which of the two would submit the lower bid, and exchanged other commercially sensitive information.

The Commission fined Eberspächer €68,175,000, including a 45% reduction under the leniency programme to reflect its cooperation and a 10% reduction for settlement. Webasto was not fined as it benefited from immunity for revealing the existence of the cartel.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision.

 

EU: Paper envelopes cartel

On 11 December 2014, the Commissions fined Bong (of Sweden), GPV and Hamelin (of France), Mayer-Kuvert (of Germany) and Tompla (of Spain) a total of €19,485,000 for coordinating prices and allocating customers of envelopes.

The coordination included both standard envelopes and those with bespoke printing to customer specifications. The cartel lasted from October 2003 to April 2008, and covered Denmark, France, Germany, Norway, Sweden and the UK.

All cartelists except Bong received some (differing) reduction in their fines to reflect their cooperation with the Commission investigation. All received a further 10% reduction for agreeing to settle.

Two of the cartelists, whose identities are not disclosed in the non-confidential decision, were given reductions in their fines on the grounds of ability to pay. Moreover, after the infringement ended, GPV went into liquidation and some of its entities, including those involved in the cartel, were purchased by Mayer-Kuvert. The liability for GPV’s involvement in the cartel is therefore attributed to Mayer-Kuvert.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision.

 

EU: RBS and JPMorgan Swiss franc LIBOR cartel

On 21 October 2014, the Commission found that RBS and JPMorgan had participated in an illegal bilateral cartel between March 2008 and July 2009. The cartel had tried to distort the normal course of pricing of interest rate derivatives denominated in Swiss francs through the exchange of information on trading positions and intended prices, and the discussion of future Swiss franc LIBOR submissions.

Customers purchase such derivatives in order to manage the risk of interest rate fluctuations. Purchasers of the affected derivatives during the cartel period may have suffered loss.

RBS received immunity from fines for revealing the existence of the cartel. JPMorgan’s fine of €61,676,000 was reduced to reflect its cooperation with the investigation. It also received a 10% reduction for agreeing to settle the case with the Commission.

Click here for the press release.

Click here for a summary of the decision.   

Click here for the decision.

 

EU: Cartel on bid-ask spreads on Swiss franc interest rate derivatives 

On 21 October 2014 the Commission found that four banks: RBS, UBS, JPMorgan and Crédit Suisse had operated a cartel in relation to “bid-ask spreads” on Swiss franc interest rate derivatives between May and September 2007.

The bid-ask spread is the difference between the price at which the banks were willing to sell the affected derivatives and the price at which they were willing to buy them. The cartelists agreed to quote to third parties wider spreads than those which they quoted to each other. Purchasers of the affected derivatives during the cartel period may therefore have suffered loss.

Competition Commissioner Joaquín Almunia, said: "Unlike in previous cartels we found in the financial sector, this one did not involve any collusion on a benchmark. Rather, the four banks agreed on an element of the price of certain financial derivatives. This way, the banks involved could flout the market at their competitors' expense."

RBS received immunity from fines for revealing the existence of the cartel. The other banks have been fined a total of €32,355,000. UBS’s and JPMorgan’s fines were reduced to reflect their cooperation with the investigation. All banks received a 10% reduction for agreeing to settle the case.

Click here for the press release.

Click here for a summary of the decision. 

Click here for the decision.

 

EU: Anticompetitive arrangement in the setting of MasterCard’s transaction fees

On 11 September 2014, the European Court of Justice upheld a 2007 decision by the Commission that Multilateral Interchange Fees (or “MIFs”), ultimately paid by retailers on MasterCard transactions, have been too high. The Commission’s decision has therefore become binding.

Various retailers are already suing MasterCard to reclaim the overcharge. Visa is also being sued as its MIFs were probably too high in the past as well, although there is no decision to that effect as Visa gave Commitments to reduce its MIFs.

Click here for the decision against MasterCard.

Click here for our explanation of MIFs, including the MasterCard decision, the Visa Commitments and the ongoing litigation against both. 

Click here for LexisNexis’s interview with Stephen Critchley, our head of competition law, concerning the strike-out on limitation grounds of a large part of the claim in the Visa litigation (paywalled).

 

EU: Cartel in “smart card” chips; used in SIMs, pay TV cards, bank cards, ID cards and passports

In September 2014, the Commission found that, from 2003 to 2005, four companies - Infineon, Philips, Samsung and Renesas, at the time a joint venture of Hitachi and Mitsubishi - colluded through a network of bilateral contacts to determine their responses to customers' requests to lower prices, including the exchange of sensitive commercial information. The cartel was in the EEA.

Fines totalled €138,048,000, with Renesas being granted full immunity under the leniency programme for revealing the existence of the cartel. Settlement was attempted, but efforts were discontinued for lack of progress.

Click here for the press release.

 

EU: Canned mushrooms cartel

On 25 June 2014, the Commission found that Lutèce, Prochamp and Bonduelle participated in a cartel to coordinate prices and allocate customers of canned mushrooms throughout the EEA, with a focus on Western Europe. The cartel lasted from at least 1 September 2010 until 28 February 2012.

Lutèce revealed the existence of the cartel, so received immunity under the Commission’s leniency programme. The other two cartelists were fined a total of €32,225,000, which reflected a 10% reduction for settlement.

A fourth seller of canned mushrooms, Riberebro, did not settle. On 6 April 2016, the Commission found that it had also participated in the cartel, and fined it €5,194,000 for its role. 

Click here for the initial press release.

Click here for a summary of the decision against the settling parties.

Click here for that decision. 

Click here for a summary of the decision against Riberebro.

 

EU: Steel abrasives cartel

In April 2014 the Commission found that four companies - Ervin, Winoa, Metalltechnik Schmidt and Eisenwerk - had, for six years, participated in a cartel to coordinate prices in Europe for the steel particles in industrial-use abrasive surfaces. Fines totalling €30,707,000 were imposed. The cartel introduced common surcharges at agreed times to combat fluctuations in the price of the scrap metal used to manufacture the abrasives, as well as agreeing not to compete with one another on price with certain customers.

Under the Commission's settlement procedure the fines imposed on all the undertakings were reduced by 10% as they acknowledged their participation in the cartel. Ervin received a 100% reduction having revealed the existence of the cartel to the Commission.

Click here for the press release.

Click here for a summary of the decision. 

Click here for the decision.

The Italian company, Pometon S.p.A. chose not to settle and, on 25 May 2016, the Commission announced that it had found Pometon participated in the cartel and would be fined €6,200,000.

Click here for the press release about Pometon.

 

EU: Power cables cartel

In April 2014 the Commission found a cartel to share markets and allocate customers amongst most of the world’s producers of the underground and submarine cables that connect power stations to the national grid, or national grids between countries. The cartel, which operated for almost 10 years from 1999, was fined a total of €301,639,000.

The cartelists were ABB, Nexans, Prysmian (previously Pirelli), J-Power Systems (previously Sumitomo Electric and Hitachi Metals), VISCAS (previously Furukawa Electric and Fujikura), EXSYM (previously SWCC Showa and Mitsubishi Cable), Brugg, NKT, Silec (previously Safran), LS Cable and Taihan. ABB received full immunity for revealing the cartel.

Click here for the press release. 

Click here for a summary of the decision.  

 

UK: Cartel in the supply of prescription medicines to care homes

On 20 March 2014 the OFT issued a decision finding a market sharing agreement in the supply of prescription medicines to care homes between May and November 2011. The cartelists agreed that Tomms Pharmacy would not supply prescription medicines to Lloyds Pharmacy customers. In return, for at least some of the time, Lloyds agreed not to supply prescription medicines to Tomms' customers. Lloyds reported the cartel and escaped a fine under the OFT’s leniency policy. The penalty for Tomms’ parent company, Hamsard 3149 Limited was reduced from £646,426 to £370,226 to reflect Hamsard's admission and agreement to co-operate.

Click here for the CMA’s case page.

Click here for the OFT press release.

 

EU: Automotive bearings cartel

In March 2014 the Commission found that two European companies - SKF and Schaeffler - and four Japanese companies - JTEKT, NSK, NFC and NTN - operated a cartel in the EEA from 2004 to 2011 in the bearings used to reduce friction between moving parts in numerous truck and car components.

The cartel coordinated the passing-on of steel price increases to their automotive customers, and colluded in responding to customers’ tenders (called “Requests for Quotations”) including the Annual Price Reductions usually demanded by customers to reflect increased efficiencies over time. The Commission imposed fines totalling €953,306,000. JTEKT received full immunity for revealing the existence of the cartel and thereby avoided a fine of €86,037,000, whilst several of the companies had their fines reduced for their cooperation, and all the companies received a 10% reduction for having admitted liability.

Click here for the press release.

Click here for the Commission’s introductory remarks on the bearings cartel

Click here for a summary of the decision.

Click here for the decision.

 

EU: Polyurethane foam cartel

In January 2014 the Commission found that the four major producers of the flexible foam used in sofas and mattresses - Vita, Carpenter, Recticel and Eurofoam - participated in a cartel to coordinate sales prices, the aim of which was to reduce price competition between the cartelists and pass on raw material price increases to customers. The cartel operated from October 2005 until July 2010 in 10 EU Member States, including the UK.

The Commission imposed fines totalling €114,077,000. Vita was not fined as it revealed the existence of the cartel to the Commission. The other companies received reductions of their fines for their cooperation in the investigation under the Commission's leniency programme. All agreed to settle the case with the Commission and their fines were further reduced by 10%.

Click here for the press release.

Click here for the summary of the decision.

Click here for the decision.

 

EU: EURIBOR and Yen LIBOR cartels

In December 2013, the Commission settled with a number of banks in relation to their manipulation of the EURIBOR and LIBOR interest rate benchmarks. The banks in each case are identified in the press release.

Anyone whose investment performance or borrowing was pegged to either benchmark may have suffered loss, but LIBOR rates in currencies other than Yen were outside the scope of settlement; as was any systemic understatement of LIBOR during the financial crisis, which is the period where it is believed the benchmark was by far the furthest removed from where it ought to have been.

However there have been decisions by financial services (as opposed to competition) regulators relating to LIBOR in other currencies and during the financial crisis, including findings by the FCA against Barclays, RBS and Lloyds. Potential victims may view these decisions for evidence to support standalone actions for damages; although click here for our article in the New Law Journal concerning the difficulties of such actions.

Some institutions refused to settle with the competition regulator. Consequently:

    • on 4 February 2014, the Commission fined ICAP - the only non-settling party for Yen LIBOR - €14,960,000 for facilitating the cartel; and
    • on 7 December 2016, the Commission fined the three non-settling parties for EURIBOR - Crédit Agricole, HSBC and JPMorgan Chase - a total of €485,000,000. 

Click here for the press release about the settlements.

Click here for the summary of the decision pursuant to the settlements. 

Click here for the decision pursuant to the settlements.

Click here for the press release about the LIBOR decision against ICAP.

Click here for the press release about the EURIBOR decision against Crédit Agricole, HSBC and JPMorgan Chase.

 

UK: Care home access-control and alarm systems cartel

In December 2013, the OFT found that a cartel unlawfully conspired to rig bids for contracts to install access-control and alarm systems. The cartelists were Cirrus Communications Systems, Glynn Jackson Communications, Peter O’Rourke Electrical and Owens Installations. All 65 victims were retirement or care homes named on pages 76 to 234 of the OFT’s decision. The cartel operated between November 2005 and November 2009. In each case, Cirrus and one of the other cartelists colluded in setting their prices in response to tenders, with Cirrus submitting the lower bid. The OFT believes that the other companies were compensated in subcontracts from Cirrus.

Cirrus revealed the existence of the cartel, so was granted immunity from financial penalty under the OFT's leniency programme.

Click here for the decision.

Click here for our article in Caring UK.

 

EU: Cathode ray tubes cartel

On 19 November 2013 the Commission published a summary of its decision of 5 December 2012 to fine seven companies and their subsidiaries a total of €1.47 billion for participation in two distinct cartels in the supply of cathode ray tubes for televisions and computer monitors. The cartel, operated worldwide including the EEA from December 1997 to November 2006 to fix prices, allocate market shares and restrict output.

The cartelists are more fully defined in paragraph 2 of the decision but, essentially, were Chunghwa, Samsung SDI, Koninklijke Philips, LG Electronics, Panasonic, Toshiba, MT Picture Display and Technicolor.

Chunghwa was the first company to submit evidence of the cartel and therefore avoided any sanction. Samsung, Phillips and Technicolor reached agreements with the Commission for a reduction in their fines under leniency procedures.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision.  

 

EU: Automotive wire harnesses cartel

In July 2013 the Commission fined car parts suppliers Sumitomo, Yazaki, Furukawa, S-Y Systems and Leoni a total of €141,791,000 for operating five cartels to coordinate price and allocation of supplies to Toyota, Honda, Nissan and Renault of the wire cable assemblies that transmit signals or electricity between on-board computers and vehicle components. The aim of the cartel was to keep the incumbent suppliers in the position of market share that they had previously enjoyed. Sumitomo received a 100% reduction in its fine for having first submitted evidence of the cartel to the Commission, while the other companies received reductions in their fines for cooperating with the investigation and agreeing to settle with the Commission.

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision. 

 

EU: Lundbeck "pay for delay" Citalopram infringement

In June 2013, the Commission imposed fines totalling €146 million on Lundbeck and other medicine producers; notably Alpharma, Merck, Generics UK, Arrow and Ranbaxy.

In 2002, Lundbeck agreed with the other producers that, after its patent expired for the antidepressant, Citalopram, they would not enter the market with generic equivalents. Instead, they received substantial payments and other inducements from Lundbeck. These so-called “pay for delay” deals affected various EU territories including the UK.

The value transfers took the form of settlement agreements in purported patent disputes between Lundbeck that the others. According to Joaquín Almunia, then Competition Commissioner, these transfers gave the generics the equivalent of what they would have earned if they had entered the market, so they effectively shared the monopoly rents among themselves.

Click here for our LexisPSL knowhow on “pay for delay” settlements (paywalled).

Click here for the press release.

Click here for a summary of the decision.

Click here for the decision.

 

Additional information