Antitrust Lawyer Blog Commentary on Current Developments

Articles Posted in International Highlights

On February 26, 2014, the Korea Fair Trade Commission (KFTC) cleared Samsung with no penalty of an accusation made by rival Apple that it has abused its dominance, according a commission press release.

Apple had alleged that Samsung’s prolific litigation against Apple over patents constituted an abuse of dominance. But the KFTC said Samsung’s lawsuits did not interrupt Apple’s business, because Apple had begun filing lawsuits during negotiations between the two companies. It also said Apple did not appear to be as committed as it should have been to making the negotiations a success but that Samsung had shown its intention to negotiate by initiating different types of royalty payments.

Also, the KFTC said it appeared that Apple did not intend to pay any royalties until the lawsuits were settled.

On February 19,2014, the Federal Commercial Court of Moscow upheld the fine given by the Federal Antimonopoly Service (FAS) on the Velikolysk meat plant for its part in a cartel of large meat packers that colluded to raise prices on a government acquisition of meat products. The FAS, in a press release, have also confirmed the rejection of Velikolysk’s complaint.

The court has already confirmed the fines against many of Velikolysk’s co-conspirators, namely IKMA, Kamyshin Sansages Soloviev, and Dubki.

Twenty companies participated in this cartel. They were active in auctions held in July 2009, when Russia’s Ministry of Defense, Ministry of Internal Affairs and other security bodies spent 149.3m rubles (USD 5m) on meat products.

On February 19, 2014, the Japan Fair Trade Commission (“JFTC”) issued a warning to Shigakogen Sakudou Kyoukai, the association of ski lift operators in the Shiga highlands area, over potential violations of regulations prohibiting substantial restraint of competition.

According to the JFTC, the association issued restricted special lift tickets to members of a particular ski resort, in addition to unilaterally determining the price of single fare tickets and school class tickets in the Shiga highlands area. The JFTC believes such an action restricted competition in the area regarding the sale of lift tickets, therefore warranting a warning.

Mark Ye

On February 18, 2014, Russia’s competition authority, the Federal Antimonopoly Service (“FAS”), issued warnings to two business leaders in the oil industry after their comments about a possible increase in the price of petrol. Gennady Shmal, the president of the Oil and Gas Industrialists Union, and Konstantin Simonov, the CEO of the National Energy Security Fund, mentioned to the media that the price of petrol would increase above inflation because of an extraction tax.

The FAS noted that such a comment may violate antitrust law, because it may lead to increased demand for petrol and result in excessive increase in prices. This may result in economic benefits for the members of the associations headed by Shmal and Simonov.

The FAS has been actively using warnings to curb anticompetitive behavior. In 2012, the FAS issued 1423 such warnings in total; as a result, the FAS announced that the number of cases that it was considering in 2013 was much reduced.

On February 19, 2014, Taiwan’s Fair Trade Commission (“TFTC”) conditionally cleared Microsoft’s proposed acquisition of Nokia. The TFTC believed that no obvious impact on the structure of the market will result due to the deal, except for potential incentives to increase patent licensing royalty fees. As a result, the TFTC laid down two conditions before the acquisition could proceed:

  • Microsoft should not engage in unfair pricing and discriminatory treatment involving smartphone-related patent licensing to hinder smart mobile device markers’ free choice of mobile operating system.

  • Nokia should continue to comply with fair, reasonable, and non-discriminatory (FRAND) principles regarding licensing of standard essential patents. If Nokia does transfer these patents to other companies, it must ensure that those companies follow the same principles when licensing.

On February 19, 2014, the Chinese National Development and Reform Commission (“NDRC”), the country’s top economic planning body, launched  an initial probe into the auto parts industry.

Responding to a reporter’s question, Mr. Kunlin Xu, the director genera of the NRDC’s Price Supervision and Anti-Monopoly Bureau said that there has yet been a formal investigation, and currently the bureau is engaged mostly in gathering information on the auto parts industry.  “Sometimes, disclosure of an antitrust investigation would be disadvantageous for us when collecting information,” said Mr. Xu.  He also stated that the NDRC is following closely the progress of foreign monopoly investigation into auto parts.

On August of 2013, the spokesperson for China’s Automobile Dealers Association said he was not aware of any NDRC investigation specifically targeting the auto industry. However, during December, the Chinese state media accused foreign car makers of charging more for repairs in China than in other markets, which may have prompted the NDRC to begin its investigations.  Over the past year, the NDRC have embarked upon investigations into many Chinese and foreign companies in industries ranging from jewelry to winery.

On February 18, 2014, Germany’s competition authority, the Bundeskartellamt (BKartA) fined three sugar producers,  Pfeifer & Langen GmbH & Co. KG Südzucker AG, and Nordzucker AG a total of €280 million over their role in a sugar cartel that fixed sugar prices, production volumes, quotas, and sales areas.

According to BKartA’s investigations, the companies have colluded long before the beginning of its investigations in 2009—some arrangements dated back to the 1990s. Under the cartel’s arrangements, no company will sell sugar outside of its designated product area, and any surpluses would be exported. The cartel’s members also kept in close contact with each other over changes in their operations that may affect the existing sales area arrangements, such as plant closures, expansion strategies, the allocation of quotas and agreements on prices for processing and industrial sugar.

The companies used the European quota system, the minimum price guarantee and the resulting high market transparency to collude and to limited competition, according to BKartA chief Andreas Mundt, who added that the case is an example of how extensive market regulation can help to restrict competition to the detriment of customers.

On February 15, 2014, the spokesperson of the Chinese Ministry of Commerce (MOFCOM) Danyang Shen, in a recent MOFCOM press conference, said the U.S. government is “irresponsible” to list China and Chinese companies on the “Notorious Market” list issued unilaterally by the United States Trade Representative (USTR). According to Mr. Shen, the inclusions is especially unfair given the recent progress that Chinese company made on intellectual property protection, and the lack of concrete evidence that went into the “Notorious Market” report. The use of anecdotal terms such as “reportedly” and “right users indicate” in the report to describe Chinese companies suggest a lack of research into the actual state of IP compliance among these countries.

In the 24th session of China-U.S. Joint Commission on Commerce and Trade in December of last year, China had expressed its concerns over notorious market reports. The U.S. government committed to making several improvements to communications with the Chinese government and enterprises regarding increased transparency for the notorious market report.

Mark Ye

On Feb. 13th, 2014, the Chinese Ministry of Commerce (MOFCOM) unveiled its long-awaited Interim Rule on Applicable Standards for Simple Merger Review Cases. While many interested groups hailed this development as a positive step taken by the MOFCOM towards a comprehensive “fast-track” review procedure for simple cases which exists in the U.S. and in the EU, they recognize that much work still needs to be done based on the paucity of relevant information revealed by the current document.

The Interim Rule explains only the circumstances that define a simple case, but makes no mention of any special filing methods for simple cases or even how simple cases will be processed differently, if at all.

However, current competition lawyers in China, some of whom have engaged in consultations with the MOFCOM, suggest that the MOFCOM will exercise its discretions and internally process certain simple cases differently. This is due both to MOFCOM’s heavy workload making less time available to implement the simplified procedure, as well as possible dissent that still exist within the MOFCOM regarding the finer details of the simplified procedure. In the end, MOFCOM decided to publish the non-controversial Interim Rule to show its commitment instead of keeping silent altogether, while continue to fine tune the actual procedures internally, sources said.

On February 13, 2014, the heads of the antitrust agencies of the U.S, Canada and Mexico—Chairwoman Edith Ramire of the FTC, Assistant Attorney General Bill Baer of the DOJ’s Aititrust Division, Canadian Commissioner of Competition John Pecman, and President Alejandra Palacios Prieto of the Mexican Federal Competition Commission—met in Washington, D.C. to discuss mutual efforts to “ensure continued effective antitrust enforcement cooperation in [U.S., Canada and Mexico’s] increasingly interconnected markets.”

The discussions during the meeting covered a variety of topics, including “recent enforcement developments, mutual support and cooperation, and priority setting and efficiency in resource-constrained environments,” according to the FTC press release.

The three countries already have antitrust cooperation agreements, with the U.S.-Canada agreement coming in place in 1995, the U.S.-Mexico agreement in 1999, and the Mexico-Canada agreement in 2001. This meeting is intended to build upon the foundations laid by these existing agreements.

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