Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Almunia discusses significant areas of EC competition enforcement, (Sep 19, 2014)

By Linda O’Brien, J.D., LL.M.

The Directorate-General for Competition is encouraged to keep cartels as an enforcement priority while adapting to the challenges of the internationalization of business and the expansion of cartels beyond the usual sectors, Joaquin Almunia, European Commission (EC) Vice President of the European Commission for Competition Policy, stated in an address before the International Bar Association’s 18th Annual Conference in Florence, Italy today.

Almunia began his remarks, entitled "Some highlights from EU competition enforcement," by noting cartel enforcement was his top priority and has been a priority of the EC since the late 1990s, when the first leniency program, guidelines on fines, and dedicated teams of enforcers were set up. Two main trends have been observed—the increase in global cartel cases and the uncovering of more cartels outside traditional industrial sectors. To address the increase in global cartels, the EC has strengthened its links with other competition authorities around the world, launched common investigations, and adapted its investigative tools.

An industry that has kept the EC’s cartel’s teams busy is finance, Almunia noted. The most prominent decisions in that sector have involved financial institutions that colluded to manipulate LIBOR and EURIBOR benchmark rates. One case—in which several large banks accepted a settlement and €1.7 billion fine—sent a clear message that the EC is determined to fight and punish these practices, which cause widespread damage to European Union (EU) economies and effect millions of consumers.

The Commission has many cartel cases in more traditional sectors. Almost €9 billion in fines have been imposed since 2010 in cases involving a broad range of markets, including airfreight, detergents, steel abrasives, and power cables. In antitrust, the EC has been active in various sectors that are important for the Single market, such as energy, telecommunications, transportation, and payment services, according to Alumina.

The official noted that a significant development in the EC’s enforcement has been the interaction between competition enforcement and intellectual property rights. A main concern that has been identified is the use of patent settlements in pay-for-delay deals in the pharmaceutical sector. Reports show that patent settlements can be a useful and a completely legitimate tool in more than 90 percent of the cases. In fact, there has been an increase in the number of total settlements, and a decrease in the amount of potentially problematic agreements. Over the past year, the Commission has imposed fines in three pay-for-delay cases, two of which involved patent settlements. Other investigations are ongoing.

Intellectual property rights also can be used in an anti-competitive manner in another area—the so-called smartphone wars. Here the practices that distort the intellectual property system are not bogus settlements and acquisitions between companies, but involve court injunctions and standard-essential patents. Almunia indicated his strong support Intellectual property rights and his belief that patents are vital for innovation. He noted that it was totally legitimate for companies to apply for patents and have them enforced, and settle litigations. However, in some cases, patent holders distort the system and exclude rivals due to their deep pockets rather than the strength of their patents.

There are two important areas in the EC’s enforcement of State aid rules—the control of public support of banks in distress and corporate taxation. The new State aid guidelines and procedures are designed to support Europe-wide efforts to boost growth and create jobs and to promote measures that improve the quality of public spending – and fairness in the way taxes treat companies operating under similar circumstances.

In addition to the State aid reforms, the EC has introduced changes to its policy tools, including the new Directive on antitrust damages actions, Almunia stated. The Directive has been approved by the European Parliament and European Council of Ministers and will be formally adopted in the coming weeks. When it becomes operational, it will empower the victims of antitrust infringements to be compensated for the harm suffered. The private enforcement of competition law will become more effective in Europe and more equal across its territory, and will better interact with public enforcement. Additionally, small companies and individuals will benefit the most and will be able to better rely on the decisions taken by the Commission and the national competition authorities.

Competition policy is more important than usual in the recent years of recession and economic difficulties, he said. As a necessary condition to return to a sustainable growth path, the EU needs to come together and rekindle its confidence in the Single Market. Tearing down the remaining barriers, deepening the internal market in growth-promising sectors, and resisting protectionism are the first orders of business, Almunia concluded.

News: Antitrust