Competition Currents February 2021: The Netherlands, Poland and Italy
Ensuring the markets work well in 2021
In 2021, the Netherlands Authority for Consumers and Markets (ACM) will focus on three areas: the effects of COVID-19, the digital economy, and the energy sector’s transition to sustainable energy. The digital economy and the energy sector’s transition had already been included on the 2020-2021 ACM agenda. In those areas, many actions have already been taken that will be continued and expanded in 2021. Attention to COVID-19’s effects on the economy is a logical expansion of ACM’s agenda.
For example, ACM allows close collaborations in the health care sector in the fight against COVID-19. In 2021, ACM says it will pay more attention to vulnerable consumers, who are hit harder by the virus. For example, additional educational efforts will be initiated to remind these consumers of their rights. ACM will also launch an exploratory study into the effects of the coronavirus crisis on brick-and-mortar stores. The increase in online shopping, which started during the coronavirus crisis, is expected to be permanent to some degree. This means that, in the near future, more brick-and-mortar stores and shopping malls will stay vacant. ACM will examine whether it can play a role in finding a solution to this problem.Martijn Snoep, Chairman of the Board of ACM, says: “The coronavirus pandemic has enormous consequences for the economy. Some sectors are hit hard, such as the hospitality industry, the events industry, the public-transport sector, and the travel industry. We want to help combat the negative effects of the pandemic on the economy, and to prevent markets from becoming permanently disrupted. As an independent government agency, we have a social responsibility to help find solutions to social problems. The laws that we enforce offer opportunities to do just that.”
The Netherlands is focusing on transitioning to sustainable energy, with the task of achieving carbon neutrality by 2050. ACM will offer system operators opportunities for experiments that promote the energy transition, including, for example, experiments with hydrogen. ACM also foresees that the energy transition will lead to higher costs. In addition to sustainability, energy affordability for consumers is paramount. Accordingly, ACM will launch a study into energy affordability for consumers, including long-term affordability.
The digital economy offers many benefits, such as ease of product comparison and ordering. Although ACM endeavors to ensure that fast broadband connection is widely available, digital markets do not always work well for all. In 2021, ACM will take enforcement action against misleading practices involving online products. In addition, ACM will launch an investigation into the access of payment apps to NFC chips on mobile phones, and it will complete its investigation into the terms and conditions for app stores. A sector inquiry into IT systems in the health care sector will be published in 2021.
What More will ACM do in 2021?
Besides these focus areas, ACM will make additional efforts to ensure that markets work well. For example, ACM will focus on excessive prices of prescription drugs. In addition, ACM will launch follow-up studies into the prices of foodstuff in its agricultural monitor and ACM will complete an investigation into a possible buyer cartel in the agricultural sector. ACM will also complete investigations this year into suppliers that put undue pressure on retailers to raise their prices. ACM will also study the effectiveness of online communications that improve transparency.
Further investigation needed into acquisition of gas company Primagaz by rival company Benegas.
In the face of the gas company Benegas’s intent to acquire rival company Primagaz Nederland, the ACM has concluded that a further investigation is needed into the potential market for lightweight gas bottles in order to ensure sufficient competition remains in the market after the proposed acquisition.
Both companies supply propane in bulk storage tanks and in gas bottles. Propane gas is used for various purposes, including, for example, heating purposes, and propane gas in bottles is used for diverse consumer and commercial uses.
ACM has determined that, after the acquisition, sufficient competition will remain with regard to the selling and supply of bulk propane gas. ACM is investigating whether, in the leisure segment, sufficient competition will remain for smaller and lighter gas bottles. If both companies decide to continue to pursue the proposed acquisition and file an application for an acquisition license with ACM, ACM will launch a follow-up investigation into the effects of the planned acquisition. The follow-up investigation will include, among other steps, further questions to market participants and consumers about the potential consequences of the acquisition.
Planned amendment to Polish Act on Competition and Consumer Protection significantly impacts liability principles
On Jan. 14, 2021, the draft amendment (Draft) to the Polish Act of 16 February 2007 on Competition and Consumer Protection (Competition Act) was published. The Draft aims to implement Directive 2019/1, adopted by the European Parliament and the Council on 11 December 2018 (ECN+ Directive). The Draft introduces several changes, and certain new principles regarding liability for competition law infringements are noteworthy.
First, according to the Draft, both infringing entrepreneurs and entrepreneurs that exercise decisive influence over them will be liable for entering prohibited agreements or abusing a dominant position. This liability will be independent of guilt, which means that the mere fact of violation by a dependent entrepreneur may trigger the liability of the entrepreneur that exercises decisive influence. The turnover of entrepreneurs exercising decisive influence will also be taken into account when calculating the basis for the fine (the fine amounts to 10% of turnover). The Polish Competition Authority (UOKiK) will be authorized to impose a joint fine on the direct infringer and the entrepreneur exercising decisive influence over it. In such a situation, their liability will be joint and several.
Second, there is a change concerning the liability of business associations. Such associations may already be held liable for competition law infringements, but the fine is calculated on the basis of the association’s turnover. However, under the Draft, if an association’s infringement relates to the activity of its members, the fine imposed on it cannot exceed 10% of the total turnover of all its members who conduct activity in the market impacted by the infringement. In case of the insolvency of a business association, the Draft obliges the association to call on its members to make contributions to cover the penalty. If the contributions are not made within the period of time set by UOKiK, it may require the fine to be covered by all entrepreneurs whose representatives were members of the association’s decision-making bodies.
Besides the above, the Draft also includes procedural amendments such as regulations regarding legal professional privilege as well as structural ones such as terms of office of the president of UOKiK.
The Draft is currently undergoing consultation and is expected to enter into force in Q1 2021.
Italian Competition Authority (ICA) authorizes Poste Italiane’s acquisition of Nexive, subject to behavioral remedies
By decision published on ICA’s Official Journal on Jan. 11, 2021, the ICA conditionally authorized Italian postal incumbent Poste Italiane’s (PI) acquisition of its main competitor, Nexive.
The merger was approved pursuant to Article 75, Law Decree n. 104/2020, a coronavirus-related provision, according to which ICA may not prohibit mergers seen as in the interest of public economy (nor may ICA impose structural remedies). Such limitation of the merger control rules applies to mergers involving labor-intensive companies that have borne losses for three consecutive years and incur the risk of their business ceasing. Mergers affected by said provision must be cleared within 30 days of the notification.
In the decision, ICA noted that the merger is likely to affect competition in the postal services market in Italy because (i) the target was the only competitor of PI equipped with an end-to-end network, thus representing the only constraint on the incumbent and (ii) post-merger PI will find itself in a monopoly position in certain markets, such as the one for postal services in favor of business users.
In order to mitigate these concerns, the ICA imposed behavioral remedies on PI, including (i) a commitment to maintain service levels with existing customers and (ii) an obligation to grant access to its storage points for unreturned registered mail to smaller competitors not equipped with an appropriate territorial organization.
ICA imposes fine for abuse of dominant position in the market for sale of tickets for live music events
On Jan. 19, 2021, ICA imposed a fine of over 10 million euros on the CTS Eventim-TicketOne group (TicketOne) for an abuse of a dominant position under Article 102 TFEU.
According to the ICA, TicketOne implemented a complex abusive strategy of an exclusionary nature which prevented competing ticketing operators from selling, by any means and through any channel, a particularly high quota of tickets for live music events. ICA highlighted that such a strategy was articulated in a series of actions implemented at least since 2013, which consisted of: (i) the stipulation of exclusive contracts with producers and organizers of live light music events; (ii) the acquisitions of several companies active as national promoters; (iii) the imposition of exclusivity clauses on local promoters; (iv) the stipulation of commercial agreements with smaller or local ticketing operators; and (v) retaliatory and boycotting behavior towards competitors.
Interestingly, in its decision, ICA assesses the acquisition of another operator as giving rise to a violation of Article 102 TFEU, at least where this acquisition is combined with other potentially anticompetitive conduct (such as the conclusion of exclusivity agreements). ICA’s decision thus confirms that antitrust rules (i.e., Articles 101 and 102 TFEU) continue to apply to M&A operations even where the national thresholds for a notification under merger control rules are not exceeded.
Edoardo Gambaro, Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Hans Urulus, Dawn (Dan) Zhang, Mari Arakawa, Filip Drgas, Simon Harms, Marta Kowanacka, Pietro Missanelli, Massimiliano Pizzonia, Anna Rajchert, Jose Abel Rivera-Pedroza, Ippei Suzuki and Rebecca Tracy Rotem also contributed to this article.