On September 20, 2012, Canada’s Competition Bureau published the final version of its Enforcement Guidelines on the abuse of dominance provisions (sections 78 and 79) of the Competition Act. The Competition Bureau’s release of the Enforcement Guidelines replaces all of the Bureau’s previous publications on the abuse of dominance provisions.
Executive Agrees to Go to Jail for Submitting Falsified Documents to the Antitrust Agencies During the Merger Review Process
On May 3, 2012, the Antitrust Division of the Department of Justice (“DOJ”) announced that an executive of Hyosung Corporation, an affiliate of Nautilus Hyosung Holdings Inc. (“Nautilus”), agreed to plead guilty and serve five months in prison in the United States for obstruction of justice charges in connection with the antitrust agencies’ merger investigation of its proposed acquisition of U.S.-based Triton Systems. The transaction was abandoned.
On December 30, 2011, China’s Ministry of Commerce (“MOFCOM”), the government agency tasked with merger review, formally promulgated new rules providing MOFCOM with clear procedural rules (and powers) to investigate and deal with reportable transactions that were not notified. These Provisional Measures on the Investigation and Treatment of Failure to Report Concentration of Undertakings (“Provisional Measures”) went into effect on February 1, 2012.
On June 14, 2011, the European Court of Justice decided that EU law allows third parties, who are suing cartel members for money damages, access to information and evidence gathered in criminal antitrust investigations. The decision may mean the end for leniency procedures, now that cartel members looking for a way out are faced with potential disclosure of the often incriminating information they provide the competition authorities.
Canadian Competition Bureau Blocks First Merger After 6 Years – And It’s A Non-Reportable, Consummated Transaction
On January 26, 2011, in a surprising enforcement action, the Canadian Competition Bureau publically announced its application to the Competition Tribunal for an order to undo the consummated acquisition by CCS Corporation (“CCS”) of Complete Environmental Inc. (“Complete”) and its proposed Babkirk Secure Landfill in northeastern British Columbia (Babkirk”). The Competition Bureau determined, following a thorough review of the transaction, that CCS’s acquisition of Complete would substantially reduce potential competition for the disposal of hazardous waste in northeastern British Columbia. Specifically, the Competition Bureau is seeking an order from the Competition Tribunal dissolving the merger and requiring CCS to divest itself of Complete entirely, or, in the alternative, to divest other appropriate assets to address the Bureau’s concerns.
The European Union recently published new revised rules regarding the assessment of horizontal cooperation agreements (i.e. agreements concluded between competitors). These new modifications primarily concern issues of standardization, information exchange, and research and development (“R&D”). Now, businesses operating in the EU may better assess their compliance with EU antitrust law to avoid penalties and litigation. The new regulations come in two parts: (1) a set of “Horizontal Guidelines” and (2) pair of Block Exemption Regulations (“BERs”).
On September 16, 2010, the United Kingdom’s Office of Fair Trading (“OFT”) and the Competition Commission (“CC”) published the final version of their new joint Merger Assessment Guidelines (“Guidelines”). The Guidelines expand and revise the previous guidance published separately by OFT and CC in various publications and attempt to clarify the 2002 Enterprise Act.
Although the Competition Commission of India (“CCI”) became functional on April 1, 2008, several other provisions of the Competition (Amendment) Act, 2007 (“Competition Act”) have not been notified. According to the Indian legislative process, the Act, even though passed by the Parliament, has to be notified by the President of India to become functional. Section 66 of the Competition Act requires the dissolution of the Monopolies and Restrictive Trade Practices Commission (“MRTPC”), which to this point was the erstwhile competition authority in the country. This section has not been notified. As a result, there has been a multiplicity of regulators. The CCI has already begun seeing cases with is first formal complaint of “cartelization” coming from the Multiplex Association of India against the United Producers and Distributors Forum, Association of Motion Pictures and TV Program Producers; and Film and TV Producers Guild of India. However, the MRTPC is also continuing to take cases (at least 30 a month).
In addition, even though the merger control regulations, under the Competition Act, 2002 were issued in January 2008, they are yet to be enacted. As such there seems to be some overlap regarding the role of the CCI in merger regulations as well.
From June 3-5, 2009, Christine A. Varney, the Assistant Attorney General in charge of the Department of Justice’s (“DOJ”) Antitrust Division, will participate in the eighth annual International Competition Network (“ICN”) conference in Zurich, Switzerland. She will join senior government antitrust officials and other antitrust experts from multinational organizations and the private sector.
The conference will address the following issues: unilateral conduct, mergers, cartels, advocacy and competition policy implementation. Created in 2001 by 15 government antitrust agencies from around the world, including the U.S. Federal Trade Commission and U.S. Department of Justice, the ICN includes 107 member agencies from 96 jurisdictions.
On March 12, 2009, the most significant amendments in 20 years to Canada’s Bill-C10 Competition Act and Investment Canada Act received Royal assent. All parts of the Bill C-10 amendment will take immediate effect except the new hybrid/dual track conspiracy provisions which will be delayed for a year. Some of the provisions that will have immediate effect include:
•“two-stage” merger review based on the US
•a size of transaction threshold increase during pre-merger notification
•decriminalization of predatory pricing, price discrimination, and promotional allowances
•a substantial increase in monetary penalties for the abuse of dominance and penalties for deceptive marketing practices and misleading advertising
On December 4, 2008, the French Competitive Council (“Council”) fined four oil companies, Chevron-Texaco, Total, Exxon, and Shell, €41.1 million for their role in price fixing of fuel for Air France flights on the French Indian Ocean island of La Reunion. According to the Council, the four companies violated the European Community Treaty’s Article 81 and a corresponding French law provision.
On November 18, 2008, UK’s Office of Fair Trading (“OFT”) cleared InBev N.V/S.A.’s (“InBev”) $52 billion acquisition of Anheuser-Busch Companies Inc. (“Anheuser”). The new company, Anheuser-Busch InBev, will own InBev’s Stella Artois and Beck’s lager brands and Anheuser’s Budweiser lager brand.
On November 12, 2008, the European Commission (“EC”) imposed a €1.3 billion criminal fine on four car companies, Asahi, Pilkington, Saint-Gobain, and Soliver for their role in illegal market sharing and participating in the exchange of commercial sensitive information. These practices are prohibited under the Commission EC Treaty's and the European Economic Area Agreement's ban on cartels.
After more than a decade of deliberations, the People’s Republic of China promulgated its Anti-Monopoly Law (“AML”) at the Twenty-Ninth Meeting of the Standing Committee of the Tenth National People’s Congress on August 30, 2007. The new law will go into effect tomorrow, August 1, 2008. Like the Indian Competition Act, which will be effective later this year, the AML is based on Europe’s antitrust statutes broadly covering prohibitions on monopoly agreements, abuse of dominant positions and mergers. The law also has a highly controversial clause that prohibits the abuse of “administrative powers.” It also calls for the creation of an Anti-Monopoly Enforcement Authority (“AEA”), an “umbrella” antitrust regulatory agency.
In 1999, the Government of India formed a committee to make recommendations regarding a modern competition law. The new competition law took the form of the Competition Act, 2002 which was enacted and notified in January 2003. It replaced the Monopolies and Restrictive Trade Practices Act constituted in 1970. However, due to some reservations within the legal and business communities, the Competition (Amendment) Act, 2007 (“Act”) was enacted by Parliament in September 2007 and will be notified later this year.
On July 16, 2008, the European Commission (“EC”) announced that it would expand its investigation of the Intel Corporation by filing new antitrust charges. The charges allege that Intel provides inducements, such as discounts, rebates, and marketing payments, to computer manufactures discouraging them to use chips made by Intel’s smaller rival Advanced Micro Devices (“AMD”). Intel’s ubiquitous x86 chips are found in 75 percent of all personal computers and low-cost servers.
THREE EXECUTIVES SENTENCED IN UK’S FIRST OFFICE OF FAIR TRADE’S CRIMINAL PROSECUTION FOR BID RIGGING
On June 11, 2008, Peter Whittle, David Brammar and Bryan Allison pled guilty for running a cartel in UK’s first criminal prosecution for bid rigging. Mr. Allison and Mr. Whittle were both sentenced to three years in prison while Mr. Brammar received a two and a half year sentence. Mr. Allison also had to pay a fine of £25,000.
On January 16, 2008 the European Commission (the “Commission”) announced that it launched an inquiry into the pharmaceuticals sector under Article 17 of Regulation (EC) 1/2003. The Commission is concerned that competition within the pharmaceuticals sector may be restricted or distorted. In particular, the Commission highlighted the decline of innovation.
In its announcement, the Commission highlighted that market distortion may be occurring in the patenting or exercise of patenting products, vexatious litigation and/or collusive agreements, which may limit consumer choice, reduce economic incentives to invest in research and development and damage public and private health budgets. The Commission is conducting unannounced inspections to gain immediate access to relevant information and is targeting pharmaceutical suppliers of innovative and generic medicines for human use. In addition, the Commission holds the powers to inspect consumer and professional health care organizations and authorities granting patents and marketing authorizations for drugs. The Commission intends to publish its preliminary report for consultation in autumn 2008 and it expects to publish the final report in spring 2009.
Opera, a Norwegian developer of web-browsers, filed a complaint against Microsoft with the European Commission (the “Commission“) claiming Microsoft is abusing its dominant position by tying its browser, Internet Explorer, to the Windows operating system and by hindering interoperability by not following accepted Web standards. The developer asked the Commission to require Microsoft to unbundle Internet Explorer from Windows and/or carry alternative browsers pre-installed on the desktop and require Microsoft to follow fundamental and open Web standards accepted by the Web-authoring communities. Opera thinks that its requested remedies gives consumers greater freedom and flexibility while, at the same time, ensuring that the Web further develops into a platform for innovation.
On November 28, 2007, the European Commission (“the Commission”) applied the 2006 Guidelines on Fines for only the second time, fining four companies a total of €486.9 million ($720 million). Asahi, Guardian, Pilkington and Saint-Gobain (“the Parties”) were fined for participating in a flat-glass price-fixing cartel that organized price increases, fixed minimum prices and tried to stabilize or raise prices.
The Spanish Government announced on October 8, 2007, that it will bring an action before the Court of First Instance against the Commission’s decision to fine Telefónica. The Spanish Government believes that the Commission’s decision does not respect the Spanish telecoms regulator’s ("CMT") competencies.
On October 8, 2007, the European Commission (the “Commission”) initiated Phase II proceedings into the proposed acquisition of Reuters by Thomson. The in-depth assessment affords the Commission the opportunity to further examine the impact on competition of the proposed acquisition on the affected markets, notably for the supply of financial information.
GERMAN FEDERAL SUPREME COURT REFERS THE BKARTA’S SPRINGER/PROSIEBEN-SAT1 MERGER PROHIBITIONDECISION BACK TO THE HIGHER REGIONAL COURT DÜSSELDORF
In a recent judgment dated September 30, 2007, the Federal Supreme Court held that even after parties abandon their merger plans due to a prohibition decision by the German Federal Cartel Office ("BKartA"), German courts hold jurisdiction to rule on the question as to whether the BKartA was right to prohibit the proposed merger. The parties do, however, need to demonstrate a special interest in such a court review. The Federal Supreme Court acknowledged that such an interest arises in particular if the purchaser is likely to be confronted with similar arguments by the BKartA that led to the relevant prohibition when notifying potential future acquisitions.
On September 19, 2007, the European Commission (the “Commission”) adopted a package of proposals in order to reform the EU electricity and gas regulatory frameworks. The main proposals concerned unbundling, third country ownership and enhancing the power and independence of national regulators.
The Commission considers that existing legislation allowed companies to maintain network operations and supply and generation activities within a single vertically integrated legal entity and that this legislation damages the EU’s competitiveness. The Commission is therefore proposing new directives concerning the electricity and gas internal markets.
On September 17, Thomas O. Barnett, Assistant Attorney General for the Department's Antitrust Division, issued a statement scrutinizing the Court of First Instance of the European Communities (“CFI) decision to affirm the substance of the European Commission's (“EC”) March 2004 decision against Microsoft. Mr. Barnett said that “in light of the United States' own antitrust case and judgment against Microsoft, and the importance of the computer industry to consumers and to the global economy, the United States has a particular interest in the CFI’s decision.” He expressed concern that “the standard applied to unilateral conduct by the CFI, rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition.” He reiterated that there appeared to be a common disconnect between U.S. antitrust enforcement and European antitrust enforcement. "In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors. In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously. U.S. courts recognize the potential benefits to consumers when a company, including a dominant company, makes unilateral business decisions, for example to add features to its popular products or license its intellectual property to rivals or to refuse to do so.” There is a perception that European antitrust regulators are more willing to accept arguments from competitors and seek enforcement remedies that help competitors rather than consumers. The U.S. antitrust agencies are more skeptical of competitor complaints. Mr. Barnett also commented that the DOJ “looks forward to continuing its wide-ranging and positive relationship with the EC on antitrust matters.”
THE COURT OF FIRST INSTANCE ESSENTIALLY UPHOLDS THE EUROPEAN COMMISSION'S DECISION AND FINDS THAT MICROSOFT ABUSED ITS DOMINANT POSITION
In a ruling released on September 17, 2007, the Court of First Instance (the “Court”), the second highest court in Europe, reaffirmed the European Commission’s (“EC”) 2004 decision that Microsoft abused its market power by tying its digital media player to the Windows operating system. By bundling these products together, Microsoft undercut existing competition in the digital media player market and created an anticompetitive market structure. The Court upheld nearly all the key points the 2004 EC decision and, in doing so, delivered a stinging rebuke to Microsoft. The Court’s ruling stated that the EC’s standard of interoperability between the Windows operating system and alternative digital media players was well conceived and that there is no inconsistency between that degree of interoperability and the remedy imposed by the EC.
The Court also upheld the EC directive to share confidential computer code with Microsoft’s competitors, a ruling that contains possible ramifications on other companies that possess market dominance in various software markets. The Court went on to declare that the EUR 497 million ($690 million) fine levied against Microsoft shall stand as is.
On June 26, 2007 the Japanese Government’s Advisory Panel on Basic Issues Regarding the Anti-Monopoly Act (“the Panel”) concluded its series of roundtable discussions. Since 2005, the Panel has met in order to discuss and update the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade. The Panel was directed by the Chief Cabinet Secretary and heard testimony from a wide range of experts and concerned citizens. The statement issued by the Panel, and summarized below, is the culmination of these meetings.
On November 14, the European Commission approved the merger of Gaz de France (“GDF”) and the Suez group. After an in-depth investigation, the Commission initially found that the deal would have anticompetitive effects in the gas and electricity wholesale and retail markets in Belgium and in the gas markets in France. The Commission’s concerns related mainly to the removal of the increasing competitive pressure that GDF and Suez had so far exerted (and would have exerted in the foreseeable future) on each other in both Belgium and France. Given the conditions on the markets, including the very high barriers to entry, their respective dominant positions would have been considerably strengthened by the merger.
Wireless technology giant Qualcomm said on November 10 that the Japan Fair Trade Commission might investigate the company's licensing and business practices. The antitrust regulatory agency notified the company that it might launch an investigation. The agency did not give a start date or disclose which company or companies filed complaints.
On November 9, the European Commission approved the proposed acquisition of Fisher Scientific International Inc. by Thermo Electron Corporation. Both companies are based in the United States and supply products and services for laboratory activities. The Commission's clearance is conditional upon the divestiture of Genevac, Fisher’s subsidiary active in the production and sale of centrifugal evaporators. In light of this commitment, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.
The European Commission cleared the proposed acquisition by the Dutch company Philips of the US-based company Intermagnetics on November 7. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.
Commissioner Kroes welcomes withdrawal of obstacles to Abertis-Autostrade merger and offer of full cooperation
Following her meeting in Brussels on November 7 with Antonio Di Pietro, Italy’s Minister for Public Works, European Commissioner for Competition Neelie Kroes expressed her satisfaction that the Italian authorities removed what the Commission considered to be unjustified obstacles to a merger between Abertis of Spain and Autostrade of Italy. Commissioner Kroes also welcomed Mr Di Pietro’s undertaking to respect in full the EU Merger Regulation and that any further authorization measures concerning the merger would not be implemented without first obtaining the authorization of the Commission in accordance with Article 21 of the EU Merger Regulation.
On October 31st, the European Commission cleared the proposed acquisition of Bayer Diagnostics, the diagnostic division of Bayer Healthcare, a business unit of Bayer AG of Germany, by Siemens AG of Germany. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.
On October 20, the European Commission cleared the proposed acquisition by Hewlett Packard Company of control over the U.S. software company Mercury Interactive Corporation. The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.
Commission approves proposed acquisition of joint control by Arcelor Profil Luxembourg and SNCFL of newly created CFL Cargo
On October 9th, the European Commission cleared the proposed acquisition of joint control by Arcelor Profil Luxembourg and SNCFL of CFL Cargo, by way of purchase of shares. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
On September 13, the competition regulator for the European Union clashed with Microsoft, this time over security upgrades in the company's new Windows Vista operating system. The European Commission, the European Union's executive arm, warned Microsoft against foreclosing competition in computer security by tying new security featrues into its Windows operating system. Both Symantec and Adobe, the U.S. software groups, raised concerns over the inclusion in Vista of software that rivals their own offerings.
On September 12, Deutsche Lufthansa said it would pay $85 million to settle 80 class-action lawsuits in the United States in a price-fixing inquiry involving its air cargo unit. The payment would release the airline and Swiss International Air Lines, which it is taking over, from pending lawsuits in the United States. The settlement is subject to court approval. Lufthansa Cargo is among nine airlines accused of violating antitrust laws by fixing prices in the $50 billion global air cargo market. The European Union and United States authorities requested information from at least 12 carriers in February; the inquiry focused on surcharges for fuel and security risks.
The European Commission (“EC”) enlarged the scope of its antitrust review of Intel on September 12 to investigate whether the company pressured an electronics retailer to exclude chips made by Advanced Micro Devices (“AMD”). The relationship between Intel, the world's largest chip maker, and the retailer, the Media Market division of the German company Metro, was being investigated by the Bundeskartellamt, Germany's competition agency, after a complaint by AMD. However, the EC is taking over the case because it is already looking at whether Intel pressured computer makers to prevent AMD from gaining market share.
On August 10, the Chinese government issued rules outlining the conditions for foreign investment in local companies through share swaps, paving the way for such transactions in merger and acquisition deals. The regulations also cover the entry of foreign investors in local companies through mergers and acquisitions.
The European Commission said on August 8 it would look into the Italian government's move to block a proposed merger between the Italian highway operator Autostrade and the Spanish infrastructure company Abertis. The Italian government and highways regulator rejected the proposed merger, worth nearly 12 billion euros ($15 billion). The deal created the world's largest highway company, operating in 16 countries with a road network of 6,713 kilometers (4,171 miles).
On August 3rd, European Union antitrust regulators asked Spain to explain why it attached conditions to German energy company E.On AG's $34 billion bid for the Spanish utility Endesa SA. Spain's National Energy Commission said last week that it would permit the 26.9 billion euro deal only if E.On sells about a third of Endesa's power generation assets.
On July 21, China International Marine, Inc. and Netherlands-based Burg Industries stated that their merger announced in February, which would have created one of the world’s largest container makers, would be scrapped. This merger, valued at approximately $104 million, would have effectively combined the two companies under a single holding company.
China International said that the decision to terminate the deal was made after “judging the process for European Union regulators to review the transaction.” However, Burg Industries CEO Cees Van der Burg reportedly held that the EC notified China International and Burg to terminate the deal out of concerns that the proposed joint venture would become a monopoly in the market for the manufacture of tank containers for liquid cargos.
The EC investigation, launched in March, marked the first EC antitrust investigation into a Chinese company. The Chinese National Development and Reform Commission had already given its approval to the deal in April after the proposed merger was given a nod by the Chinese Ministry of Commerce.
On July 26, Oji, Japan's largest paper manufacturer said it would go ahead with a tender offer for sixth-ranked Hokuetsu in a deal that could exceed $1.4 billion, a rare attempt at a hostile takeover in a society where deals are generally more cautious and consensus-led. An Oji-Hokuetsu merger would create the world's fifth-largest paper manufacturer. In a move to prevent Oji Paper Co.'s hostile takeover bid, Nippon Paper Industries Co. started purchasing large amounts of Hokuetsu Paper Mills Ltd.’s shares.
On July 18, Britain’s House of Lords overturned the Court of Appeal’s decision in Inntrepreneur Pub Company and others v Crehan, the first case in which a UK court awarded damages for harm suffered as a result of a competition law infringement. As a result, there is now no longer any UK law precedent in which damages for loss suffered as a result of an infringement of competition law have been awarded.
On July 18, Jacques Barrot, the European Commission’s (“Commission” or “EC”) Vice-President in charge of transport, announced the Commission’s intention to improve legislation in relation to the single market for aviation. While the Commission believes that the liberalization of the airline industry brought considerable benefits to consumers, such as reduced air fares, increased routes and greater access to remote regions, it notes that there is room to improve price transparency and the consistent application of legislation.
On July 17, the Commission published its second Interim Report in relation to the retail banking part of its sectoral inquiry into the financial services sector in the Community. The first Interim Report dealt with the payment cards and the second Report covers Current Accounts and Related Services.
On July 13, 2006, the European Court of First Instance (“CFI”) reversed a July 18, 2004 decision by the European Commission allowing a merger between music groups Sony and BMG.
This decision was reached in the wake of an application made by the Independent Music Publishers and Labels Association (“Impala”), an international association representing the interests of 2,500 independent music production companies, on December 3, 2004, after the Commission reversed an earlier decision stating that a combination would increase concentration and was incompatible with European Community law.
On July 12, 2006 the European Commission (EC) imposed a fine of €280.5 million ($350.6 million) on Microsoft due to Microsoft’s failure to comply with measures outlined in the EC’s infringement decision of March 2004. This penalty marks the first time that the EC used its powers under Article 24 of Regulation 1/2003 to fine a company for a failure to comply with an Article 81 or 82 decision.
On June 28, the European Commission (“EC”) announced new guidelines that would increase fines for antitrust violations. This decision is part of an effort by the EC to more severely punish cartel leaders, repeat offenders, and companies whose large financial reserves made a mockery of the old antitrust fine scheme. The new guidelines, which will not take effect for several months, will fine companies up to 30 percent or based on a percentage of the company’s sales in whatever market the regulators found was illegally manipulated. Under the current EU rules, companies that are found to have serious antitrust offences are fined at least €20 million.
In 1996, Conway (then known as McLane) submitted a complaint to the Spanish Competition, the Servicio de Defencia de la Competencia (“SDC”) authorities, alleging that the former public tobacco monopoly, Tabacalera (now known as Altadis) abused its dominant position by not allowing Conway to distribute Tabacalera tobacco brands. A 2002 SDC decision found that Tabacalera had a dominant position in the tobacco manufacturing market as well as the wholesale distribution market.
Two Spanish banks entered the US banking market in June. Spain’s second-largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), purchased two Texas-based banks -Texas Regional Bancshares and State Regional Bancshares- supplementing a southern-California based bank that it had previously acquired. This deal will give BBVA access to the lucrative market for remittances from Latin American workers in Texas to Latin America. Meanwhile, Spain’s largest bank, Banco Santander Central Hispano, has been steadily increasing its stake in Philadelphia-based Sovereign Bancorp, approaching 24.99% of outstanding shares. Several analysts have speculated that Santander will eventually make a bid for the bank as a way of expanding into the lucrative U.S. market.
Reports surfaced on June 19 that the Italian banking sector may be ripe for consolidation. This speculation began to emerge after Governor Mario Draghi of the Bank of Italy had signaled his intention to open up the Italian banking market to merger activity once the bank's merger veto had been transferred to Italian antitrust authorities. The Bank of Italy, however, still reserves the power to overturn mergers since it is still responsible for regulating the purchase of stakes in regional and national banks. The first domestic merger is expected to involve Banca Intesa and Capitalia; Italy's second and fifth-largest banks. There are also rumors of third-placed SanPaolo IMI and fourth-largest Banca Monte dei Paschi di Siena entering into a merger.
On June 14, the Nihon Keizai Shimbun reported that the Japanese Ministry of Economy, Trade and Industry (METI) had asked the Fair Trade Commission (FTC) to revise its criteria in approving corporate mergers to encourage firms to reorganize and boost their competitiveness. Under current rules, the FTC allows mergers to proceed if the domestic market share held by the firms after the deal is 35 percent or less, although market shares above this threshold are analyzed on a case-by-case basis.
On June 8, it was reported that the Chinese State Council had approved draft legislation of the so-called Antimonopoly Law. This legislation aims to provide a free and fair competitive environment to all enterprises. The new law, which is expected to be passed in March 2007, contains articles regulating monopoly agreements, abuse of dominant market status and large-scale consolidation. Furthermore, the law defines a "monopoly" as either a single operator controlling half or more of an industry's overall market share; two operators colluding to hold two-thirds; or three operators holding three-quarters.
On June 2, Euronext and the New York Stock Exchange announced a merger that would create the world’s largest stock exchange, and the first cross-Atlantic bourse. At the same time, Deutche Börse is also rumored to be seeking another partner for the merger, looking at OMX AB, the operator of Scandinavian and Baltic exchanges, or even Borsa Italiana, which is itself rumored to be a potential target for a combined NYSE-Euronext.
On June 2, the European Commission approved a €25 billion bid for Luxembourg-based steel company Arcelor by Netherlands-based Mittal, the world’s largest steelmaker, noting that a merger “would not significantly impede effective competition” in the European Union. This approval was provisional based on a divestiture of two Arcelor heavy and medium steel mills in Italy and Germany, as well as a Mittal mill in Poland, without which the combined entity would become the dominant manufacturer of heavy section beams.
On May 23, the South Korean Fair Trade Commission ("KFTC") rejected an objection lodged by Microsoft in March over a ruling that the company should unbundle its media player and messaging service from Windows software, echoing a similar decision made by the European Commission in 2004 that it unbundled its media player and messaging program in its European software packages. In December 2005, the KFTC fined Microsoft approximately $34.3 million, the largest fine ever imposed on a foreign firm.
On May 22, it was announced that the government of New Zealand was reviewing the Commerce Act, which encompasses its antitrust laws that cover mergers and acquisitions in order to ensure that New Zealand companies would be able to compete globally. Commerce Minister Lianne Dalziel reportedly said that the government may consider granting increased powers to the Commerce Commission, which functions as the New Zealand antitrust regulator, to approve deals that could have a broader public benefit even if such deals reduce competition. Dalziel also told reporters that there were concerns within the New Zealand business community that businesses could not achieve significant scale to compete globally. The announcement was welcomed by economists and competition lawyers within the country.
On May 16 and May 17, the Japanese Fair Trade Commission (FTC) raided approximately 20 contractors over bid-rigging allegations in projects ordered by the Japanese Defense Facilities Administration Agency as well as engineering and construction works at a U.S. military facility in Iwakuni, Yamaguchi Prefecture in conspiracy with officials of the Defense Facilities Administration Agency.
On May 16, the European Commission raided 20 gas companies across five countries following suspicions that the targeted firms restricted “access to pipeline and storage facilities” and engaged in certain “concerted practices between incumbents that can be described as market-sharing,” according to an EC spokesperson. Among the companies raided were Germany’s RWF, France’s Gaz de France, Austria’s OMV, and Belgium’s Fluxys. Companies in Italy were also raided.
On May 12, the DOJ’s Antitrust Division announced that it reached a settlement agreement with Mittal Steel Company N.V. regarding its offer to acquire Arcelor S.A. The agreement would resolve potential antitrust concerns in the event that the Antitrust Division concludes the combination of Mittal and Arcelor raises anticompetitive concerns. Under the agreement, the DOJ will continue to investigate the competitive implications of the combination of Mittal and Arcelor -- the world's two largest steel producers. The agreement requires Mittal to divest Dofasco Inc., currently owned by Arcelor, to ThyssenKrupp AG in the event the DOJ determines the combination of Mittal and Arcelor is likely to result in a substantial lessening of competition. If Mittal acquires Arcelor but is unable to divest Dofasco, the agreement requires Mittal to divest certain alternative assets to a buyer acceptable to the DOJ. The DOJ has determined that the divestiture of either Dofasco or the alternative assets would address the potential competitive problem identified by the Antitrust Division.
On May 11, Italy’s antitrust authority ruled that Prime Minister Berlusconi did not violate conflict of interest rules when his government approved subsidies to Italians who purchase digital television decoders. While critics of the subsidies claimed that they favored Mediaset SPA, Berlusconi’s own television broadcasting empire, the antitrust authority found that the €10 million ($12.7 million) went to two of Italy’s 20 regions and were to pay for only certain types of decoders, meaning that the overall financial impact on the market was minimal. The European Commission is also investigating the matter due to concerns that the grants distort fair business competition because they are available only for traditional broadcast television and not satellite broadcasts.