Competition Law: INFORMATION, UPDATES AND ANALYSIS, Nov 2017
United States of America (‘US’) - Federal Trade Commission (‘FTC’)
Integra LifeSciences Holding Corporation to acquire Codman Neurosurgery Division subject to divestiture of 5 Medical Device Product lines
September 27, 2017
Integra LifeSciences Holdings Corp. (‘Integra’) and Johnson & Johnson’s Codman Neuro division (‘Codman’) supply a range of devices used in operative neurosurgery, hydrocephalus management and neuro-critical care. FTC had filed a complaint alleging that the proposed $1 billion acquisition by Integra LifeSciences Holdings Corp. (‘Integra’) of Johnson & Johnson’s Codman Neuro division would likely adversely affect the competition in the US market for:
- intracranial pressure monitoring systems, which measure pressure inside the skull. Integra and Codman are the only significant suppliers of these systems in US, together accounting for 94 percent of the market.
- cerebrospinal fluid collection systems, which drain a patient’s excess cerebrospinal fluid and monitor pressures within the fluid. Integra and Codman are two of the only three competitively significant suppliers of these collection systems in the US, together accounting for 71 percent of the market.
- non-antimicrobial external ventricular drainage catheters, which funnel excess cerebrospinal fluid from the brain to cerebrospinal fluid collection systems to relieve intracranial pressure. Integra and Codman are two of the only three competitively significant suppliers of these catheters in the US, together accounting for 46 percent of the market.
- fixed pressure valve shunt systems, which redirect excess cerebrospinal fluid from the brain or spinal cord to another area of the body, usually the abdomen, for reabsorption. Integra and Codman are two of the only three competitively significant suppliers of these catheters in the US, together accounting for 38 percent of the market.
- dural grafts, which are used to repair or replace a patient’s dura mater, the thick membrane that surrounds the brain and spinal cord and keeps cerebrospinal fluid in place. Integra manufactures more than three-quarters of the dural grafts sold in the US, and Integra and Codman together control 75 percent of the market.
In order to settle the FTC charges, Integra and Codman have agreed to sell these medical device product lines to California-based Natus Medical Incorporated, which sells related neurological medical devices. FTC was of the opinion that the said divesture shall effectively remedy the adverse effects of the merger.
India – Competition Commission of India (‘CCI’)
CCI issues cease and desist orders against various film industry daily wage workers associations
October 30, 2017
The Information was filed by one Mr. Vipul A. Shah who is an independent film producer and director. OPs 1-25 were associations and/or trade unions representing different crafts of the film industry. OPs 26-28 were trade unions representing film producers and television content producers. The Information stated that as a film producer and director, the Informant is required to engage spot boys, junior artists, lightmen, cameramen, models, fighters, dancers, sound engineers/ designers, art directors, artists, etc. from time to time. Although initially the producers could directly contact and engage the craftsmen. However, gradually the craftsmen organized themselves in associations. Since the film producers cannot withstand the non-cooperation of OPs 1-25 for a single day, the film producers through OPs 26-28 had entered into an MOU dated 01.10.2010 with the other OPs. The MOU, inter alia, provided that the film producers shall exclusively deal only with members of the association; fixed the work shift timings, wages, rates etc. of the members and detailed out other facilities and amenities to be provided by the producers to the members of the associations. One of the condition of the MOU was that the producers cannot engage any craftsman who is not a member of the associations. Even though the term of the MOU had expired on 28.02.2015 the OPs 1-25 continued the anti-competitive conduct. The associations boycotted the producers who appoint a craftsperson from outside the associations. They made unreasonable demands threatening the film and television content producers that the associations and their members would not work for such film or television content producers, who would not agree to the demands of any of them. The CCI held that the associations have used their position to disrupt competition and fair-play in the market through their anti-competitive conduct. Through the provisions of the MOU, the OPs 1-25 have indulged in anti-competitive conduct such as issuing non-cooperation directives, prohibiting hiring of specialised non-member artists, conducting vigilance checks, stalling shoots for hiring of non-members and levying of penalty. It was noticed by the CCI that the OPs continued to enforce the anti-competitive clauses even after expiry of the term of the MOU. However on noticing that some of the OPs are associations of daily wage earners, the CCI passed only an order of cease and desist to meet the ends of justice in the case.
United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)
Balmoral Tanks Ltd fined £130,000 by the Competition Appellate Tribunal
October 6, 2017
Balmoral Tanks Ltd. (‘Balmoral Tanks’) is a leading European tank design and manufacturing company. In 2012 Balmoral Tanks entered into the market of supplying cylindrical galvanised steel tanks (‘CGSTs’) which are used as part of a building’s fire suppression sprinkler. In July 11, 2012 a meeting (‘Meeting’) was held amongst members of a cartel being run by companies which were in the business of supplying CGSTs. The members of the cartel allocated customers amongst each other and fixed prices to be charged by the customers. Balmoral Tanks was an invitee to the said meeting held on July 11, 2012. The meeting and phone calls made by one of the participant of the meeting was captured in an audio-visual recording by the CMA. This formed the basis of two infringement decision adopted by the CMA on December 19, 2016 called “Main Cartel Decision” and “Information Exchange Decision”. The companies involved in the cartel were fined under the Main Cartel Decision whereas Balmoral Tanks Ltd. was fined under the Information Exchange Decision. Balmoral Tanks appealed against the Information Exchange Decision before the Competition Appellate Tribunal. The Competition Appellate Tribunal was of the opinion that although Balmoral Tanks had refused to join the cartel at the Meeting, it exchanged confidential information regarding prices and reassured the other participants to the Meeting that Balmoral Tanks will charge prices which would not render the continuation of the cartel by others entirely impossible. The Competition Appellate Tribunal held that the discussion regarding prices constituted an infringement and therefore dismissed the appeal filed by Balmoral Tanks.
The Showmen’s Guild of Great Britain to make binding changes to address CMA’s competition concerns
October 26, 2017
The Showmen’s Guild of Great Britain (‘Guild’) was founded in 1889 to protect the interests of the travelling showmen who depended on funfairs for their livelihoods. The members of the Guild are bound by the Guild rules. The CMA suspecting that the rules of the Guild were having an adverse effect on competition in UK, initiated an investigation into the rules of the Guild. The CMA estimated that 90 per cent of the fairs in the UK were organized by the Guild. The CMA alleged that the Guild rules limit competition at fairs run by the Guilds and between existing Guild fairs and rival fairs. The CMA further found that the rules of membership of the Guild were such that it made it very difficult for non-members to become members of the Guild. The Guild also prevented its members from taking part or attending any fairs that were organized by non-members. To address these allegations, the Guild submitted a binding proposal to the CMA which included opening up Guild-run fairs for non-members and reducing restrictions on rival fairs opening close to Guild fairs. The proposal also provided for making the rules more transparent including publishing them online and laying down objective criterion for membership. According to the CMA, the proposal submitted by the Guild will ensure that non-members are given fair opportunities to participate in funfairs organised by the Guild and will also increase integration of the non-members in the fairs. The CMA was of the opinion that the commitments offered by the Guild address its competition concerns and therefore closed the investigation pending result of a vote of Guild members to confirm the changes.
Republic of India (comprising pronouncements on anti-competitive agreements, abuse of dominant position)
Indian Sugar Mills Association and Ors. v Indian Jute Mills Association and Ors. (MANU/CO/0092/2014)
The present information under section 19(1)(a) of the Competition Act, 2002 was filed by Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories Ltd. and All India Flat Tape Manufacturers Association (collectively ‘Informants’) against Indian Jute Mills Association (IJMA) and Gunny Trade Association (GTA) (‘Opposite Parties’) respectively alleging an anti-competitive agreement between the members of IJMA and GTA with respect to fixing of sale price of jute packaging material by issuing of Daily Price Bulletin (DPB) by GTA for jute bags for the members of IJMA and the GTA to follow.
The Commission found itself in agreement with the findings of the Directorate General (DG) regarding the existence of a tacit agreement by way of action in concert by the members of GTA under the aegis of GTA to determine and control the price by publication of GTA, DPB and as the transacted prices were followed by the members of the GTA and IJMA the Commission held the impugned acts/conduct of IJMA and GTA to be in contravention of the provisions of section 3(3)(a)/ 3(3)(b) read with section 3(1) of the Act. The Commission issued a cease and desist order against the associations and imposed a penalty on IJMA and GTA @ 5% of the average turnover of the last three years. The Commission also imposed penalties on the persons who were members of the Executive Committee of IJMA and the Executive Committee and the DPB Sub-Committee of GTA @ 5% of the average income of the last three financial years.
The Commission also noted that the provisions of the Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987 placing statutory requirement on the sugar mills to undertake sugar packaging using jute bags only, was against the principle of competitive neutrality as the entities manufacturing matching products were denied market access. Such a policy further not only restricted the choice of customers like sugar mills but it also led to escalating the cost which is ultimately borne by the end-consumers. Accordingly, the Commission expects the Government of India to re-assess the current market situation for removing the market distortions arising out of such policy.
In re: Collective boycott/refusal to deal by the Chemists & Druggists Association, Goa (CDAG), M/s Glenmark Company and M/s Wockhardt Ltd. (MANU/CO/0086/2014)
M/s Varca Druggist & Chemists and others had filed an information with the then Director General (Investigations & Registrations), Monopolies and Restrictive Trade Practices Commission against Chemists & Druggists Association, Goa, (‘CDAG’ / the ‘Opposite Party No. 1)’) for its alleged anti-competitive practices. After repeal of the Monopolies and Restrictive Trade Practices Act, 1969, the said case was transferred to Competition Commission of India. The Commission passed an order under Section 27 of the Competition Act on 11.06.2012. Subsequently, the Commission was informed by Mr. Mario Vaz (the ‘Informant’) that CDAG had not complied with the above said order of the Commission and was restraining pharmaceutical companies such as M/s Glenmark Pharmaceuticals Limited (‘Opposite Party No. 2’) and M/s Wockhardt Limited (‘Opposite Party No. 3’) from doing business with his company. It was alleged that under the guidance of CDAG, all stockists of the Opposite Party No. 3 appeared to have formed a cartel and stopped receiving goods from the Opposite Party No. 3 so as to compel it to stop dealing with the Informant. It was also alleged that under the influence of CDAG, the Opposite Party No. 2 and the Opposite Party No. 3 stopped supplies to the Informant.
Commission observed that CDAG clearly disregarded the Commission’s order dated 11.06.2012 and indulged in anti-competitive conduct. By forcing pharma companies to discontinue supply through non-authorized stockist like the Informant, it continued to carry on its anti-competitive practices. Further, it forced pharmaceutical companies like M/s Glenmark Pharmaceuticals Limited and M/s Wockhardt Limited to follow its mandate by threatening the other stockists in Goa to stop taking supplies or suspend receiving supplies from them till such time they stopped supplies to the informant. The Commission directed CDAG to seize and desist from indulging in the anti-competitive practices and imposed a penalty of INR 10,62,062/-, calculated at the rate of 10% of the average receipts of CDAG for three financial years.
Shri Bijay Poddar v M/s Coal India Limited and its subsidiaries, (MANU/CO/0087/2014)
Shri Bijay Poddar (‘Informant’) alleged that the terms and condition of Spot e-Auction Scheme 2007 (‘the Scheme’) introduced by M/s Coal India Limited and its subsidiaries (‘Opposite Parties’) were in contravention of the provisions of the Competition Act. Informant further alleged that the forfeiture clause under the Scheme is arbitrary and illegal and in abuse of monopolistic power enjoyed by the Opposite Parties.
The Commission observed that the stipulations provided in clause 9.2 of the Scheme is in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act whereby a buyer is saddled with penalty by way of forfeiture of EMD for non-lifting of coal after successful participation in the e-Auction without any corresponding liability upon Opposite Parties for failure to deliver coal in respect of accepted bids. Such arrangement in the Scheme was noted to be a result of market power exercised by the Opposite Parties. Accordingly, the Commission held the Opposite Parties to be in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act for imposing unfair conditions upon the bidders under the Scheme. Apart from issuing a cease and desist order, the Commission ordered modification of the terms and conditions of the Scheme suitably.
M/s Sai Wardha Power Company Ltd. v M/s Western Coalfields Ltd. [MANU/CO/0085/2014]
The information under Section 19(1)(a) of the Competition Act, 2002 (‘Competition Act’) was filed by M/s. Sai Wardha Power Company Ltd. (‘the Informant’) against M/s. Western Coalfields Ltd. and M/s. Coal India Ltd. (collectively, ‘the Opposite Parties’) alleging contravention of the provisions of Section 4 of the Competition Act. In order to procure the supply of coal for its power plant, the Informant after having obtained linkage and letter of assurance on cost plus basis from the Opposite Parties, had entered into three Fuel Supply Agreements (‘FSAs’) for supply of coal from three different identified cost plus coal mines under the control of the Opposite Parties. The Informant stated that the Opposite Parties enjoy virtual monopoly over production and supply of coal in India. The Informant alleged that the Opposite Parties, by abusing its dominant position, had forced the Informant to enter into one sided, anti-competitive FSAs under which the Informant had no bargaining power or power to negotiate whatsoever and in the absence of any alternative option for procurement of coal, the Informant was compelled to
accept the dictated terms and conditions stipulated in the FSAs.
The Commission established that the Opposite Parties operate independently of market forces and enjoy undisputed dominance in the relevant market of “production and supply of non- coking coal to the thermal power producers in India”. The Commission further held the Opposite Parties to be in contravention of the provisions of section 4(2)(a)(i) of the Competition Act for imposing unfair conditions in FSAs with the power producers for supply of non-coking coal. Commission directed the Opposite Parties to cease and desist from indulging in the conduct found to be in contravention of the provisions of the Competition Act and to make necessary modifications in FSAs in light of the observations and findings recorded by it.
M/s HT Media Limited Informant v M/s Super Cassettes Industries Limited, (MANU/CO/0080/2014]
M/s. HT Media Limited (‘the informant’) filed information under Section 19(1) (a) of the Competition Act, 2002 (‘Competition Act’) against M/s. Super Cassettes Industries Limited (‘the Opposite Party’) alleging inter alia contravention of Sections 3 and 4 of the Competition Act.
The Informant, a leading media companies had launched an FM radio channel called Fever 104. Opposite Party is engaged in manufacture, production and publication of music and videos. The Informant alleged that the Opposite Party has abused its dominant position by (i) charging excessive amount as license fees/royalty from the Informant for grant of rights for the broadcast of the Opposite Party’s music content on Fever 104 radio station; (ii) imposing minimum commitment charges (‘MCC’) to be paid to the Opposite Party per month irrespective of actual needle hour of broadcast of the Opposite Party’s music content by the Informant and (iii) making conclusion of licensing arrangements with the Opposite Party subject to the acceptance of license fees and MCC imposed by them. The Informant alleged that such imposition of exorbitant license fees and MCC by the Opposite Party is an unfair condition imposed by it for granting license to broadcast its music content on radio under the Competition Act which limits and restricts the right of the Informant to broadcast its music content of other music companies/composers thereby limiting the choice of music for the end consumers to only the opposite party’s music content and results in denial of market access for other music companies (publishers, copyright societies etc.) with less market share and bargaining power.
Commission held opposite party to be in contravention of Section 4(2)(a)(i) of the Competition Act. The Commission directed opposite party to cease and desist from formulating and imposing the unfair condition of MCC in its agreements and to suitably modify such unfair conditions within 3 months of the date of receipt of the Order. The Commission also imposed penalty at the rate of 8% of average turnover of the last three years of the Opposite Party amounting to INR 2,83,28,000.
Republic of India – Competition Commission of India (‘CCI’)
Vodafone and Idea get approval for propose combination from CCI
October 3, 2017
The combination related to the merger and amalgamation of telecommunication business of Vodafone India Limited (‘VIL’), Vodafone Mobile Services Limited (‘VMSL’) Idea Cellular Limited (‘Idea’) (collectively, ‘Parties’). VIL is a wholly owned subsidiary of Vodafone Group Plc, which is listed on London Stock Exchange and VMSL is a wholly owned subsidiary of VIL. Both VIL and VMSL are licensed telecom service providers (‘TSPs’) and provide a range of telecommunication services in India. While VIL provides services in Mumbai circle, VMSL provides services across the other 21 telecom circles in India. Idea is a TSP which is a part of Aditya Birla conglomerate and provides a range of telecommunication services across all 22 telecom circles in India. The CCI inter alia examined the effect of the merger on the competition in the Retail Mobile Telephony Services market. The CCI observed that the merged entity would have a significant market share and increased concentration in 14 of the 22 telecom circles. However, the CCI noticed that even after the proposed merger the said market would have at least five private TSPs including Bharti Airtel, RCOM & Aircel, Jio, Tata, the merged entity and one state owned TSP i.e., BSNL/MTNL in all telecom circles. After examination of the size and resources of these competitors, CCI was of the opinion that the said competitors would be in a position to exercise adequate competitive constraints on the merged entity and to eliminate any likelihood of appreciable adverse effect on competition resulting from the proposed merger. Further, the CCI noticed that approximately two third of customers tend to have multiple SIMs and therefore can easily switch from primary to secondary SIM. Moreover, the Mobile Number Portability Regulations, 2009 which enables the customers to seamless change their TSP with minimal or no charge would ensure that there is price competition amongst the TSPs to retain customers. Even in other service segments like mobile wallet services, enterprise services, ISP services the CCI did not find that the proposed combination would have an adverse effect on competition and therefore the proposed combination was approved.
RJIO gets approval from CCI to acquire 800 MHZ frequency band from RCOM and RTL
October 3, 2010
The combination related to acquisition, in 800 MHz frequency band, by RJIO of the (i) right to use of certain spectrum; and (ii) option to acquire right to use of certain spectrum, from Reliance Communications Limited (‘RCOM’) and Reliance Telecom Limited (‘RTL’). RJIO, a wholly owned subsidiary of Reliance Industries Limited, is engaged in providing telecommunication services in India. RCOM is a company incorporated in India, RTL is a wholly owned subsidiary of RCOM. RCOM and RTL directly and/or through their other subsidiaries, provide telecommunication services in India. CCI examined spectrum holding of different telecom service providers in all the telecom circles. The CCI came to the conclusion that spectrum holding of RJIO in 800 MHz band and its overall spectrum holding, post-acquisition, when examined along with the spectrum holding of other telecom service providers, is not likely to result in an appreciable adverse effect on competition in any of the markets that may be affected by the combination. The approval to the combination was however given subject to the condition that any future acquisition(s) of the spectrum under the RCOM/RTL option agreements not completed within one year from the date of the decision of the CCI would require fresh approval. This condition was imposed by CCI after taking into account the capability of each spectrum acquisition transaction to affect market dynamics and fast changing competition dynamics.
United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)
CMA approves acquisition of Amec Foster Wheeler plc by John Wood Group plc with conditions
September 12, 2017
The John Wood Group plc (‘Wood Group’) had agreed to acquire Amec Foster Wheeler plc (‘Amec’). Wood Group and Amec (collectively, ‘Parties’) both provide engineering services to upstream offshore oil and gas sector in the UK Continental Shelf. The CMA was of the opinion that the merger as proposed if carried forward may result in substantial lessening of competition in the UK in relation to the supply of (i) engineering and construction (‘E&C’) services; and (ii) operations and maintenance (‘O&M’) services to upstream offshore oil and gas companies in the UK Continental Shelf. In order to address CMA’s competition concerns, the Parties offered to divest Amec’s upstream offshore oil and gas business in the UK and serving UK customers, including E&C, O&M, hook-up and studies services and duty holdership capability, as well as its onshore pipeline business located in the UK and serving UK customers. The Parties also offered to divest substantially all of Amec’s assets, personnel and liabilities that contribute to these businesses. The CMA was of the opinion that the proposal made by the Parties is appropriate to mitigate or prevent the competition concerns highlighted by the CMA. The proposal of the Parties was therefore accepted and the merger was not referred for an in-depth phase 2 investigation.
Euro Car Parts Limited to sell local depots in 9 areas to maintain competition
October 31, 2017
Euro Car Parts Limited (‘ECP’) and Andrew Page Limited (‘AP’) (collectively, ‘Parties’) overlap in the supply of car parts to independent motor trade and to retails customers through a network of depots across the UK. They also supply garage equipment to independent motor trade and market car parts under a number of private label brands. On October 4, 2016, ECP acquired 101 AP local depots, AP’s stock, its brand and certain customer and supply contracts. The CMA identified nine areas in the UK where the parties were close competitors and where the merger could significantly reduce competition. The nine areas identified were Blackpool, Brighton, Gloucester, Liphook, Scunthorpe, Sunderland, Wakefield, Worthing and York. The CMA on investigation found that the merger is likely to increase prices and/or reduce levels of service for customers in these nine areas. The CMA concluded that divesture of either the AP or ECP depot in each of the nine affected areas to a suitable purchaser within agreed timescales would be effective remedy to address its competition concerns.
Europe – European Competition Commission (‘EC’)
EC approves conditional acquisition of FTE by Valeo
October 13, 2017
EC has approved the proposed acquisition of FTE by Valeo subject to conditions. Both Valeo and FTE (collectively, ‘Parties’) are suppliers of automotive equipment. On investigation the EC found that the acquisition as proposed is likely to adversely affect competition in the markets for the supply of: (i) passive hydraulic actuator modules and components for light vehicles to original equipment manufacturers in the European Economic Area (‘EEA’); and (ii) concentric slave cylinders for light vehicles in the independent spare part market in Croatia, Greece, Hungary, Latvia, Slovenia and the UK. The EC was of such an opinion considering the high market shares of the merged entity in these markets, the difficulties for customers to switch to other suppliers and the lack of sufficient buyer power to offset the merged entity’s market power post-transaction. In order to address the competition concerns raised by the EC, Valeo offered to divest its entire passive hydraulic actuator business with the exception of its Korean activities. The divestiture consists of the business of development, production and supply of passive hydraulic actuators in Mondovi, Italy and the manufacturing plant in Gemlik, Turkey. The divestiture also includes the business of production and supply of passive hydraulic actuators in China and the assets for the production and supply of passive hydraulic actuators in India. The divested assets were proposed to be purchased by Italian car part manufacture Raicam, which has a strong presence in the EEA. The EC found that the proposed remedies would adequately address the competition concerns as it would ensure that the number of suppliers in the markets affected remain the same.
In house contributors
Avsi Malik Sharma
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Doc ID: CL/23/17