Legal Updates

EU & Competition Newsletter 1/2022

We are pleased to provide you with this Quarterly EU & Competition Newsletter, which summarises selected key highlights and recent developments in Finnish and EU competition law. This newsletter covers the areas of Antitrust & Mergers, Public Procurement, State Aid and the Internal Market. We hope our newsletter will help you stay on track and welcome you to contact us for any questions or comments.

 

ANTITRUST & MERGERS

European Union

  • General Court upheld fine of 2.4 billion euros imposed on Google

On 10 November 2021, the General Court of the European Union largely dismissed the action by Google against the decision of the European Commission finding that Google had abused its dominant position by favouring its own comparison shopping service over competing comparison shopping services.

The European Commission found in a decision of 27 June 2017 that Google had abused its dominant position on the market for online general search services in 13 countries in the European Economic Area. According to the Commission, the breach consisted of favouring Google’s own comparison shopping service on its search engine’s general results pages. The results from competing comparison services were displayed and positioned less favourable by means of ranking algorithms. As Google was considered a dominant undertaking in the relevant market, it should have allowed competition on the merits. Google’s subsequent offer to enhance the quality of the display of the competitors’ comparison shopping services in return for payment did not change the Commission’s position.

The General Court established that the Commission correctly found harmful effects on competition. The Commission assessed, e.g., specific traffic data and the correlation between the visibility of a result and the traffic to the website from which that result comes. In this way, the Commission established the link between Google’s conduct and the decrease in traffic to competing comparison shopping services and the significant increase in traffic for its own comparison shopping service. Google has filed an appeal against the Judgment (T-612/17) with the Court of Justice of the European Union (C-48/22 P).

The press release of the General Court is available here: https://curia.europa.eu/jcms/upload/docs/application/pdf/2021-11/cp210197en.pdf

A link to the Judgment: CURIA – Documents (europa.eu)

  • General Court annulled the fine of one billion euros imposed on Intel

On 26 January 2022, the General Court of the European Union annulled the fine of one billion euros imposed by the European Commission on Intel for abuse of a dominant position between 2002 and 2007 on the worldwide market for x86 processors, by implementing a strategy intended to exclude competitors from the market. Notably, the General Court concluded that the Commission’s analysis is incomplete and does not make it possible to establish to the requisite legal standard that the rebates at issue were capable of having, or likely to have, anticompetitive effect.

The case (T-286/09) concerned loyalty rebates that Intel granted to four strategic original equipment manufacturers (Dell, Lenovo, Hewlett-Packard and NEC). The rebates were conditional on these customers purchasing all or almost all of their x86 central processing units (CPUs) from Intel. Similarly, Intel was found to have awarded payments to a European retailer of microelectronic devices, which were conditional on the retailer selling exclusively computers containing Intel’s x86 CPUs. The Commission relied on the assumption that the loyalty rebates granted by an undertaking in a dominant position are by their very nature capable of restricting competition. Therefore, the Commission held that it was not necessary to analyse all the circumstances of the case in detail or to carry out an as-efficient-competitor test.

The action brought by Intel against the Commission’s decision was dismissed in its entirety by the General Court by judgment of 12 June 2014. By judgment of 6 September 2017, on the appeal brought by Intel, the Court of Justice set aside that judgment and referred the case back to the General Court.

In its second judgment of 26 January 2022, the General Court annulled the Commission’s decision as far as it concerned the loyalty rebates. The General Court found, in particular, that in the light of the arguments put forward by Intel, the Commission should have assessed more carefully whether the loyalty rebates were capable of having foreclosure effects on as-efficient competitors.

The General Court considered that it could not identify the amount of the fine, which related to the annulled part of the decision and set aside the fine in its entirety.

The press release of the General Court is available here: https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-01/cp220016en.pdf

A link to the Judgment: CURIA – Documents (europa.eu)

  • Dawn raid by the European Commission of large Finnish forest industry companies

The European Commission conducted unannounced inspections in several Member States in companies active in the wood pulp sector on 12 October 2021. In Finland, the inspections were carried out at the premises of Metsä Fibre, Stora Enso and UPM. The Commission has concerns that the inspected companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices. Further details on the content of the investigation are not yet available.

The Commission’s press release is available here: Antitrust: unannounced inspections in the wood pulp sector (europa.eu)

  • The European Commission conditionally approved merger between Cargotec and Konecranes – merger subsequently blocked by CMA

The European Commission announced on 24 February 2022 its conditional approval, under the EU Merger Regulation, the proposed merger between two Finnish publicly listed companies Cargotec and Konecranes, both global leaders of container and cargo handling equipment. The approval followed an in-depth investigation and is conditional on the divestment of Konecranes’ Lift Truck business and Cargotec’s Kalmar Automation Solutions.

Subsequently, the Competition and Markets Authority of the UK blocked the proposed merger after its in-depth investigation identified substantial competition concerns. Thus, the companies announced on 29 March 2022 their decision to cancel the proposed merger that was first published in October 2020.

The Commission’s press release is available here: Commission clears the merger of Cargotec with Konecranes (europa.eu)

The CMA’s press release is available here: CMA blocks planned Cargotec / Konecranes merger – GOV.UK (www.gov.uk)

Finland

  • Market Court: the FCCA must state reasons for a decision not to investigate a complaint

Under Competition Act, the Finnish Competition Authority (the “FCCA”) prioritises its tasks. There is no obligation for the FCCA to investigate a complaint, e.g. if it cannot be deemed likely that there exists an infringement. On this basis, the FCCA decided not to investigate two complaints concerning membership of certain forest industry companies in FSC, an Association for Responsible Forestry, as well as the application of FSC-certificates by these companies.

According to the Administrative Procedure Act, the grounds for a decision shall indicate the circumstances and evidence that influenced the decision. The Market Court found that the FCCA had stated reasons for the conclusion that the membership in FSC was not problematic under the Competition Act. However, the FCCA should also have analysed the nature of the companies’ activities in FSC. Therefore, the Market Court annulled the FCCA’s decision and referred the cases back to the FCCA.

The decisions of the Market Court are available here (in Finnish):

https://www.markkinaoikeus.fi/fi/index/paatokset/kilpailu-javalvonta-asiat/mao2202021.html

https://www.markkinaoikeus.fi/fi/index/paatokset/kilpailu-javalvonta-asiat/mao2212021.html

  • Updated guidelines on immunity from and reduction of penalty payments in cartel cases

The FCCA has on 27 January 2022 published updated guidelines on the application of the Competition Act in leniency cases relating to unlawful cartels in connection with the implementation of the ECN+ Directive into national law. The guidelines have been updated due to the sections of the Competition Act concerning leniency having become more detailed. Both the Competition Act and the guidelines contain clarifications on ap­pli­cants’ co­op­er­a­tion oblig­a­tion in investigations. As regards penalties, the first company to provide evidence on the car­tel may be exempted from the penalty payment and the penalty payment for other companies party to the cartel may be reduced with a maximum of 50 per cent.

The updated guidelines are available here: Guidelines on immunity from and reduction of penalty payments in cartel cases – Finnish Competition and Consumer Authority (kkv.fi)

  • Consultation on the assessment memorandum on changing the current merger control thresholds

The Ministry of Economic Affairs and Employment has prepared an assessment memorandum on the need to reduce the current merger control thresholds under the Competition Act and the notification of transactions below the turnover limits. The assessment is based on a report published by the FCCA in June 2021 (please find a short summary of the report in English here). In total 17 statements were obtained during the consultation process, which lasted until 11 February 2022.

The assessment memorandum and submitted statements are available here (in Finnish): Lausunto – Lausuntopalvelu

 

PUBLIC PROCUREMENT

European Union

  • European Commission has revised the thresholds for public supply, service and works contracts

The thresholds for the application of Directive (EU) 2014/24 on public procurement must be revised every two years in accordance with the World Trade Organisation Agreement on Government Procurement (GPA). The thresholds shall be calculated on the basis of the average daily value of the euro. This time the amount of increase remained low, i.e. 0,5–0,7 %.

The new EU thresholds as of 1 January 2022 are as follows:

– 140,000 euros for public supply and service contracts and design contests (central government authorities);
– 215,000 euros for public supply and service contracts and design contests (other authorities) and
– 5,382,000 euros for public works contracts.

The revision does not concern national thresholds which remain the same as before (e.g., 60,000 euros for public supply and service contracts and design contests and 150,000 euros for public works contracts).

The applicable thresholds are available here: EU and national thresholds – Ministry of Economic Affairs and Employment (tem.fi)

Finland

  • Legal precedent regarding amendments to the tender specifications

In a recent case constituting a legal precedent, the Supreme Administrative Court found that although certain limited amendments can be made to the tender specifications, the amendments must not be so substantial that they could have attracted potential tenderers which, in the absence of such changes, would not be in a position to submit a tender. The Court referred to the judgment of the Court of Justice of the EU in case C-298/15, ‘Borta’ UAB, where such amendments were found to be against the principles of equal treatment and non-discrimination and the obligation of transparency under Articles 49 and 56 TFEU. Consequently, the mandatory requirements of the request for tenders must not be lifted during the process, even if the reason would be (as claimed in this case by the contracting authority) to attract more tenderers. If such amendments are considered necessary, a new tender process must be arranged.

The decision is available here (in Finnish): KHO:2022:1 5.1.2022/H2 – Korkeimman hallinto-oikeuden ratkaisuja – FINLEX ®

Read our news update here: Waselius successfully represented Ascensia Diabetes Care before the Supreme Administrative Court in a legal precedent case « Waselius (ww.fi)

  • Contracting authorities must ensure observance of the corporatization obligation

According to the Local Government Act, when a municipality carries out economic activity it must, as a rule, assign these tasks to be performed by a limited liability company, cooperative, association or foundation. Taking part in a public tender is clearly an economic activity and requires, with certain exceptions, corporatization of the service. The reason behind the legislation is that municipalities enjoy certain privileges (tax advantages and exclusion of bankruptcy legislation), which distort competition contrary to the EU’s state aid rules in a competitive market environment.

The Supreme Administrative Court found that if the tenderer is a municipality or a joint municipal authority, a contracting authority has an obligation to request the tenderer to explain why the activity has not been corporatized. The Court found that the corporatization obligation is an unambiguous requirement of the Local Government Act, and its ignorance would breach the principles of equal treatment and non-discrimination, which are an inherent part of the public procurement rules.

The decision is available here (in Finnish): KHO:2021:191 – Korkein hallinto-oikeus

 

STATE AID

  • European Commission has adopted new guidelines on State aid for climate, environmental protection and energy

The new guidelines, published on 27 January 2022, contribute to the EU’s objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas. The guidelines provide the conditions according to which the Member States can grant aid to meet these objectives without unduly distorting competition within the EU.

For further information, please visit our website: The European Commission has adopted new Guidelines on State aid for climate, environmental protection and energy « Waselius (ww.fi)

The guidelines are available here: https://ec.europa.eu/competition-policy/sectors/energy-and-environment/legislation_en

  • Covid-19 exceptions to State aid rules continue to apply until 30 June 2022

The Commission announced on 18 November 2021 that it prolongs the State aid Temporary Framework for the fourth time. The framework provides several aid measures that can help Member States to alleviate the economic consequences of the Covid-19 outbreak. Since the adoption of the framework on 19 March 2020, the Commission has made more than 600 decisions approving national aid measures under the framework.

The amendment also introduces two new tools. Investment support measures are targeted at the investment gap left behind by the crisis and enable aid to investments promoting green and digital transition. Solvency support measures aim at leveraging additional new investments from private funds by means of public guarantees.

The Commission’s press release is available here: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6092

The amended Temporary Framework: Microsoft Word – Temporary Framework_6th amendment_Consolidated Version.docx (europa.eu)

  • Amendment of State Aid Rules because of the Russian Aggression in Ukraine

The European Commission adopted the communication “Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia” on 23 March 2022. The Commission considers that the war, sanctions and counter measures taken have had and will have severe effects on the economy of the Member states, e.g., significant economic uncertainties, disrupted supply chains and large price increases. Thus, the Commission considers that the following aid measures will be compatible with the common market until the end of this year:

  • Limited amount of aid. The maximum aid amount is 400 000 euros per undertaking and can be granted to undertakings that have been affected by the crisis. Aid can be granted also to the primary production of agricultural products but in that case the aid ceiling is 35 000 euros.
  • Guarantees and loans on favourable terms.
  • Aid for additional costs due to exceptionally severe increases in natural gas and electricity prices. Member States are “invited to consider” setting requirements related to environmental protection or security of supply before granting this compensation.

The publication of the framework does not give Member States any automatic right to grant aid, but Member States have to first notify the aid measures to the Commission, which will assess the measures in accordance with the framework.

For further information, please visit our website: Sanctions against Russia hit the economy hard – the Commission relaxed State aid rules « Waselius (ww.fi)

The Temporary Crisis Framework: EUR-Lex – 52022XC0324(10) – EN – EUR-Lex (europa.eu)

 

INTERNAL MARKET

  • The European Commission employs a new procedure to remove obstacles to the free movement of goods

In order to facilitate better application of the principle of mutual recognition, a new procedure was introduced to Regulation (EU) 2019/515 on the mutual recognition of goods lawfully marketed in another Member State. If any Member State rejects market access of a product which is legally marketed in another Member State, a company may start so called SOLVIT-procedure, which now involves a legal opinion by the Commission. This procedure is lighter and swifter than the traditional infringement procedure and can potentially become an important tool for companies facing difficulties in the internal market concerning the free movement of goods.

For further information, please visit our website: The European Commission employs a new procedure to remove obstacles to the free movement of goods « Waselius (ww.fi)

  • Court of Justice of the European Union (CJEU): Finland does not have to apply reduced rates of excise duty to beer brewed by small cooperating breweries

According to the Finnish Act on the taxation of alcohol and alcoholic beverages, the alcoholic beverage tax payable on the beer is to be reduced by 10–50 % if the brewery is legally and economically independent on other undertakings in the same sector and the volume of beer produced by that undertaking in a calendar year does not exceed 10 000 000 litres. The Supreme Administrative Court asked the CJEU whether the Directive 92/83/EEC on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages requires that the reduction must also apply to cooperating breweries whose combined annual production does not exceed 10 000 000 litres.

The CJEU stated that as the directive provides only a possibility to treat two or more cooperating small breweries as a single independent small brewery, it is up to the Member State to decide whether to apply the reduction to cooperating small breweries (joined cases C-221/20 and C-223/20).

The judgment and the request for a preliminary ruling can be found here: CURIA – List of results (europa.eu)

 

For more information, please contact our EU & Competition team:

 

Jonna Rask

Associate (on leave of absence/court training)