UK: CMA secures its first director disqualification for breach of competition law

The Competition and Markets Authority has secured its first disqualification of a company director for a competition law infringement: see here. The individual was managing director of a company that operated online and used automated repricing software to implement an illegal cartel.

Europe: European Commission says Fiat and Starbucks received selective tax advantages in breach of state aid rules

In June 2013 the European Commission began investigating the tax ruling practices of certain Member States; its inquiry broadened to all Member States in December 2014. The extent to which such practices breach state aid rules has been a major focus. Today the Commission announced its position regarding the selective tax advantages given to Fiat in Luxembourg and Starbucks in the Netherlands: they are illegal under the state aid rules, see here. The full decisions have not yet been published.

Other investigations taking place, in the context of state aid, include Apple in Ireland and Amazon in Luxembourg.

UK: Consumer Rights Bill introduced in Parliament

The Consumer Rights Bill was introduced in Parliament today. A copy of the Bill, as introduced, is available here (pdf). Explanatory notes are available here or here (pdf). The main purpose of the Bill is to consolidate and amend the law in respect of the principal consumer rights covering contracts for goods, services, digital content and the law relating to unfair terms in consumer contracts.

UK: Competition and Markets Authority - guidance published on exercise of powers

Guidance was published today by the Competition and Markets Authority regarding the manner in which it proposes to exercise some of its powers (including the power to impose penalties) when it formally comes into existence in April this year: see here. For further information about the role of CMA, see here.

Europe: competition law - undertakings - parent company liability for subsidiary company infringements

Last year, in Gosselin Group and Stichting Administratiekantoor Portielje v Commission (Joined Cases T-208/08 and T-209/08), the General Court held that a parent company of an undertaking which had infringed Article 81 of the EC Treaty (now Article 101 of the Treaty on the Functioning of the European Union) could not be penalised by a decision implementing Article 81 if it was not an undertaking itself. The Commission appealed and yesterday Advocate-General Kokott delivered her opinion: see Commission v Stichting Administratiekantoor Portielje and Gosselin Group NV (Case C-440/11 P). In her opinion, which is not binding on the Court of Justice, the Advocate General took the view that the General Court had erred in law when it found that the parent company must itself be regarded as an undertaking. In this regard she stated (paras. 36 to 38):

For the penalisation of an undertaking for infringing the cartel rules, on the basis of Article 81 EC (now Article 101 TFEU) in conjunction with Article 23(2)(a) of Regulation No 1/2003, it is, however, irrelevant whether all the natural or legal persons who legally comprise that undertaking are themselves economically active and are therefore each to be regarded as undertakings individually. The only decisive factor is that – viewed as a whole – one undertaking has committed the infringement and that all natural or legal persons on whom a fine is imposed as the penalty for the infringement are principals of that joint undertaking, since the aim of the penalties imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 is to ensure that those persons who have a decisive influence on the undertaking involved in a cartel are called to account in accordance with the principle of personal responsibility and that the undertaking does not commit such infringements again. In terms of that objective, it is irrelevant whether the aforementioned natural or legal persons are engaged in an economic activity otherwise – that is to say, irrespective of their influence over the undertaking involved in the cartel."

UK: England and Wales: anti-competitive acts, corporate groups and the imputation of knowledge

Judgment was given by the Court of Appeal in KME Yorkshire Ltd. v Toshiba Carrier UK Ltd. [2012] EWCA Civ 1190 last week. The case concerned an unsuccessful appeal against the trial judge's decision (at [2011] EWHC 2665 (Ch)) to dismiss an application to strike out a claim for damages for breach of the anti-cartel provisions in Article 101 of the Treaty on the Functioning of the European Union. The judgment contains some interesting discussion, albeit obiter, on the circumstances in which the anti-competitive acts of a parent company can be imputed to its subsidiary companies in the context of Article 101. Etherton LJ (with whom Tomlinson and Ward LJJ agreed) observed (at paras. [37] to [39]):

... it is clear that, save in a case where the parent company exercises "a decisive influence" (in the language of EU jurisprudence) over its subsidiary or the same is true of a non-parent member of the group over another member, there is no scope for imputation of knowledge, intent or unlawful conduct.

The jurisprudence on this aspect is, in my view, plain and settled. Article 101 is concerned with agreements, decisions and concerted practices by and between undertakings. An undertaking for this purpose is any entity engaged in economic activity, regardless of its legal status and the way in which it is financed. Furthermore, in this context the concept of an undertaking includes an economic unit which may consist of more than one legal or natural person, such as a group of companies. Where, for example, a company does not decide independently on its own conduct on the market, but in all material respects carries out the instructions given to it by its parent company, having regard to the economic, organisational and legal links between them, the unlawful conduct of the subsidiary will be imputed to the parent company. In such a situation, in the language of EU jurisprudence, the parent exercises a "decisive influence" over its subsidiary. The subsidiary is not absolved from its own personal responsibility, but its parent company is liable because in that situation they form a single economic entity for the purposes of Article 101. In EU jurisprudence, the (rebuttable) presumption is that a parent company exercises a decisive influence over the market conduct of a wholly owned subsidiary and that they therefore constitute a single undertaking within Article 101 ... By contrast, the mere fact that the share capital of two commercial companies is held by the same person or the same family is insufficient in itself to establish that those two companies are an economic unit with the result that, for the purposes of Article 101, the actions of one company can be attributed to the other."

UK: reform of the competition regime and the creation of the Competition and Markets Authority

The Government has confirmed its plans for the reform of the competition regime, including the creation of the Competition and Markets Authority: see here (pdf).

UK: OFT provisionally decides that there are competition problems in the audit market

In a statement published earlier today - see here - the Office of Fair Trading announced that it had provisionally decided that there are competition problems in the audit market (e.g., features of the market that restrict, distort or prevent competition) which pass the statutory test for a referral to be made to the Competition Commission under Section 131 of the Enterprise Act (2002). However, the OFT has not decided whether it should exercise its discretion to make such a referral because it needs to consider further whether there is a reasonable chance that there will be appropriate remedies available to the Commission.

The Financial Reporting Council has welcomed the OFT's announcement, noting in a statement issued today - see here - that "it has become clear to us that the competition authorities are better placed than audit regulators to tackle competition concerns".

UK: England and Wales: competition law, undertakings and separate legal personality

A summary of the Court of Appeal decision Cooper Tire & Rubber Company Europe Ltd. v Dow Deutschland Inc. [2010] EWCA Civ 864 has recently been provided by the ICLR as part of its (free) WLR(D) Service: see here. To quote from the summary:

Once the Commission of the European Communities had found that an undertaking had participated in anti-competitive practices the undertaking could not rely on the English domestic law concept of separate corporate entity to argue that the undertaking as a whole or a parent company in the group had not participated in those practices. Where it was alleged in a claim against the defendants that representatives of those alleged to have been party to the anti-competitive behaviour had had discussions to co-ordinate that behaviour and that those discussions had led to each of the defendants co-ordinating their anti-competitive behaviour, that was sufficient to allow the claim against the defendants to continue even if none of the defendants fined by the commission was domiciled in England.

LONGMORE LJ giving the judgment of the court said that in English domestic law, which proceeded on the basis that corporate bodies are all separate legal personalities, one could not say that the act of one company in a group of companies, all controlled by a holding company, was automatically the act of any other company in that group. The position in EU law was however, different at least in the area of competition law and alleged breaches of art 81EC of the EC Treaty [now Article 101 of the Treaty of the Functioning of the European Union, see here (pdf)]. What concerned EU law was the activity of 'undertakings' which might comprise a number of separate corporate entities. The question under art 81EC was whether an 'undertaking' had participated in anti-competitive practices and it would not avail the undertaking to say that because a corporate entity which was part of the undertaking was a party to anti-competitive practices, either the undertaking as a whole or a parent company in the group did not participate in those practices. Otherwise evasion of art 81EC would be too easy".