Welcome to the latest issue of our monthly EU, Competition & Regulatory Update.  This update focuses on developments within the sector during
August/September 2009. 

Contents 

	Time for Private Action seminar
	Cartel Update
	-	Calcium carbide cartel
	-	Music labels accused of singing the same tune
	UK
	-	Director disqualification threshold set to drop
	-	OFT publishes Financial Services Plan
	EU
	-	France Télécom limits competition in overseas markets
	-	Consultation on EU supply and distribution rules draws to a close
	-	Reform of European rules on jurisdiction
	International
	-	Shake-up for Indian competition regime
	-	Virgin Atlantic CEO 'aware' of price-fixing
	-	Breaking the ties between Apple and Google
	-	Online Compliance
	Contact us

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Time for Private Action seminar, Tuesday 6 October

Maclay Murray & Spens is pleased to invite you to a seminar hosted jointly with the Scottish Competition Law Forum on the fast-evolving area of private enforcement in competition law.  The event will take place at 17.00 on Tuesday 6 October 2009 at our offices in Edinburgh.  Speakers attending the event are Sir Gerald Barling (President of the Competition Appeal Tribunal), Robin Noble (Oxera Economic Consulting) and Aidan Robertson QC (Brick Court Chambers).  We would be delighted to welcome you to the seminar - please click below for further information about this event.

Click here to view the "Time for Private Action" seminar invite.

Cartel Update
Calcium carbide cartel
In July, the European Commission fined nine calcium carbide companies a total of €61 million for price fixing and market sharing throughout large parts of the EU between 2004 and 2007. 

Akzo Nobel 'blew the whistle' on its fellow cartelists and received immunity from fines.  Evonik Degussa, on the other hand, saw its fine increased by 50% due to its previous involvement in an animal feed (methionine) cartel.

Calcium carbide powder and magnesium granulates are essential products in the steel production process, often used to increase the quality and strength of steel.  Users of such products can take action to recoup any losses incurred from four years of potential overcharge.

Music labels accused of singing the same tune
Regulating online sales, in particular in the music industry, is often in the headlines.  Following the recent Pirate Bay case (in which the Swedish operators of a file-sharing website were sentenced to a year in prison for breach of copyright laws), Sweden is again in the centre of the action. 

Chilirec, a Swedish online music service provider, filed a complaint with the Swedish competition authority, alleging that major record labels such as Universal, Sony and Warner illegally coordinated their behaviour in negotiations with Chilirec.

It is not yet clear whether the authority will launch an investigation but the complaint itself highlights what a contentious area online music provision is.  Moreover, irrespective of whether the record labels have breached Swedish or EU competition law, the appearance of coordinated behaviour - when all companies indicated within a few days of each other that they did not want their content to feature - has triggered Chilirec's action. 

When cartel investigations are launched, companies with robust records to explain what may have been innocent contact with competitors (or indeed unilateral conduct) are in a stronger position.  Whether this complaint amounted to collusion or coincidence remains to be seen.

UK
Director disqualification threshold set to drop
Company directors should already be aware that they can be disqualified from acting as directors for up to 15 years if the company is involved in a breach of competition law.  However, in August the Office of Fair Trading ("OFT") published proposed changes to its guidance on director disqualification which would effectively lower the bar on when such action will be taken. 

The current guidelines indicate that the OFT will focus on cases where a director was directly involved in a breach of competition law.  Under the proposed changes, however, the OFT would widen its focus to cover instances when a director should have taken steps to prevent a breach or where a director ought to have known of a breach but did not.  This represents a significant shift in policy, illustrating that the OFT will no longer accept the turning of a blind eye (see Virgin Atlantic case discussed below). 

It is, of course, difficult always to be aware of what may be going on at lower levels of a company.  It is for this reason that robust compliance policies are so important, both in attempting to avoid any infringement in the first place and mitigating risks in the event something slips through the net.  As such risks look set to become much more 'personal', engendering a culture of compliance is in the interests of both company and director.

The OFT's proposals are being consulted upon until 20 November 2009.  Should you have any comments, please do get in touch to discuss (catriona.munro@mms.co.uk). Details of the Maclay Murray & Spens LLP online compliance training programme can be found below.

Click here to read OFT press release and consultation document.
 
OFT publishes Financial Services Plan
Following the financial rollercoaster of the past 18 months and the OFT's April 2009 consultation on financial services strategy, the OFT has recently published its Financial Services Plan.  The Plan outlines the OFT's proposed short and medium term approach to the financial services sector, with a focus on two key themes: the OFT's role as an advocate of choice and competition in the industry, both in the UK and internationally; and promoting fairness and responsibility between the credit industry and its customers.  With three high-level objectives, the Plan is framed to cover regulatory reform, government intervention in the banking sector and an evaluation of competition in financial markets.

The Plan is a strong indicator of the OFT's intention to focus on the promotion of competition in the financial services sector during the year ahead, working with Government and regulators to ensure that any measures taken to tackle the financial crisis do not unduly distort competition in the long term.  This, combined with the OFT's stated intention to conduct further work on evaluating competition in the financial markets, serves as a reminder that competition law applies to the financial services sector and is perhaps more relevant in the current financial crisis than ever before.

Click here to read the Financial Services Plan 

EU
France Télécom limits competition in overseas markets
The French competition authority recently fined France Té lé com €27.6 million for abusing its dominant position by blocking alternative telecoms operators from France's overseas territories, engaging in both anticompetitive conduct in winning back clients, and excessive pricing.  The fine represents 8% of the €370 million in revenue the group made in the French overseas territories in 2007.

The investigation was launched following complaints filed with the French competition authority by Outremer Télécom and Mobius which objected to the tactics used by France Télécom.

France Télécom is reported to have hindered new operators from emerging in the fixed telephony and broadband market in Martinique, Guadeloupe, Guyana and Reunion between 2001 and 2006.  According to the authority's decision, France Télécom put in place a number of measures aimed specifically at weakening its competitors and raising the cost of entry on the markets.

Having previously sanctioned France Télécom for similar behaviour (the latest fine being the company's eleventh for competition infringements), the authority increased the fine by 50% but then reduced it by 20% in recognition of the operator's cooperation and willingness to correct its business practices.

Consultation on EU supply and distribution
rules draws to a close
The Commission is inviting final comments on its proposals for a revised Block Exemption Regulation and Guidelines on supply and distribution agreements (vertical restraints) as the current regime is due to expire in May 2010.

The Commission considers that the current rules are "working well" and should not be "fundamentally modified".  The main suggestions for amendments intend to take into consideration recent market developments, particularly the increased buyer power of big retailers and the increase of internet sales.

The most significant change in the draft Regulation is the further limitation of the "safe harbour".  The current Regulation creates a safe harbour for vertical restraints where the supplier's market share does not exceed 30%.  The Commission now proposes that the 30% market share threshold should apply to both the supplier and buyer.  This is in response to the growing pressure on the Commission to give closer consideration to the economic effects of buyer power.

Key changes to the Guidelines focus mainly on selective distribution as a means to protect brand value and control the online retailing of products.  In relation to internet sales in particular, the draft Guidelines have classed as hard core restrictions (i) any limitations on the proportion of overall online sales; and (ii) any requirements that a distributor pay a higher price for products intended to be resold online.  The proposed Guidelines do, however, allow a supplier to "require its distributors to have a brick and mortar shop or showroom before engaging in online distribution".

The draft Guidelines also retain resale price maintenance (RPM) as a hardcore restriction, but set out limited circumstances in which RPM may have pro-competitive effects, for example when introducing a new brand or entering a new market.

The consultation is open until 28 September 2009.  The final draft is due to be published before the end of 2009.

Click here to access the draft revised Block Exemption Regulation and Guidelines.

Reform of European rules on jurisdiction
Earlier in the year, the European Commission launched a review of Council Regulation (EC) No 44/2001, the so-called 'Brussels Regulation', in a move which could have implications for parties considering bringing private damages actions for breach of competition law.

The Brussels Regulation contains rules to settle conflicts of jurisdiction and facilitate the recognition and enforcement of judgments and court settlements in civil and commercial matters in the European Union.  In April 2009 the Commission launched its consultation process by publishing a report and Green Paper on the application of the Regulation.

A key area of reform is the proposal to extend quite substantially the scope of the jurisdictional rules in the Brussels Regulation to apply in cases where the defendant is domiciled outside the EU.  In such cases at present, it is the national law of the courts where an action is raised which applies (with only limited exceptions to this rule). However, the Commission's report has found that as national laws regarding jurisdiction vary substantially across member states, this has resulted in unequal access to justice for EU citizens, and in particular can be a hindrance to victims seeking to raise damages claims following competition law infringements.  The Green Paper suggests eradicating this inequality by extending the application of the rules on jurisdiction to defendants domiciled in non-EU states.

The Commission is currently inviting responses to the consultation.  Following a review of feedback received, the Commission is expected to submit a draft regulation revising the Brussels Regulation to the European Parliament and the Council of Ministers early next year. The inclusion of proposals to extend the jurisdiction rules to defendants domiciled outside the EU would likely have the effect of lowering the barriers to pursuing private damages actions in an EU member state against non-EU domiciled defendants.

The consultation period for comments on the Commission's report and Green Paper is currently open and submissions are welcome. Should you have any comments, please contact Catriona Munro (catriona.munro@mms.co.uk).

Click here to read the European Commission's report.

Click here to read the European Commission's Green Paper.