United States of America (‘US’) - Federal Trade Commission (‘FTC’)
FTC requires fertilizer companies, PotashCorp and Agrium to divest two production facilities as condition for merger
December 27, 2017
Potash Corporation (‘Potash’) and Agrium Inc. (‘Agrium’) (collectively, ‘Parties’) are fertilizer and chemical companies which have entered into an agreement for merger. According to the FTC, the merger between the Parties would lower the competition in two major areas: (i) highly concentrated form of phosphoric acid known as superphosphoric acid (‘SPA’) which is an essential crop nutrient phosphate; and (ii) “65-67 percent concentration nitric acid” sold to customers near and to the east of the Parties’ nitric acid plants in Ohio. According to the complaint North American market for SPA would be adversely affected due to the merger between the Parties as PotashCorp and Agrium are two of only three firms in North America that manufacture SPA and SPA is rarely imported from overseas. With respect to the “65-67 percent concentration nitric acid” the complaint alleged that the Parties are the two primary suppliers in Ohio, Kentucky, Pennsylvania, Maryland, West Virginia and New Jersey. The customers of the Parties in these areas do not have any effective substitute for the acid. FTC was of the opinion that the merger as proposed would eliminate the competition between the Parties in the market for the said two products and increase the likelihood of the Parties increasing the prices of the said products. To settle the charges the Parties have agreed to divest two of Agrium’s U.S. facilities one each of SPA and nitric acid. The merger has been approved subject to the aforesaid divesture.
United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)
CMA imposes fine of 1.7 million pounds on laundry companies for market sharing
December 20, 2017
Micronclean Limited (‘Micronclean’) and Berendsen Cleanroom Services Limited (‘Berendsen’) are UK’s top specialist laundry services. Micronclean and Berendsen inter alia provide services relating to cleaning of garments worn by people working in ‘cleanrooms’. Cleanrooms are highly sanitized environments used in businesses such as pharmaceutical, medical device and equipment manufacturing and NHS pharmacies. In May 2012 Micronclean and Berendsen entered into reciprocal trademark license arrangements under which they agreed not to compete against each other. Under the agreement, Micronclean served customers in an area north of a line drawn broadly between London and Anglesey, and Berendsen served customers located south of that line. The companies also agreed not to compete for certain other customers, irrespective of their location. CMA charged Micronclean and Berendsen for contravention of competition law by entering into a market-sharing agreement. The arrangement between Mirconclean and Berendsen prevented each of them from providing services beyond their share of market. The CMA was of the opinion that the arrangement between the companies resulted in substantial lessening of competition. The result of which could be substantial lowering of standards of the services provided by them, higher prices, less choice and less innovation in the market. The CMA fined the parties a total of 1.7 million pounds for violation of competition law.
India – Competition Commission of India (‘CCI’)
CCI holds Viacom 18, UFO Movies etc., not in abuse of dominant position
December 29, 2017
Shri Arjun (‘Informant’) is the owner of a cinema hall M/s Prakash Cinema in Madhya Pradesh. The Information filed by him alleged abuse of dominant position by Opposite Parties 1-3 who are film producers, Opposite Parties 4-7 who are engaged in the business of supplying and installing Digital Cinema Equipment (‘DCE’) required in theatres for screening of films. The Information also alleged abuse of dominant position by Opposite Party No. 8 being Film & T.V. Producers Guild of India Ltd. It was alleged that Opposite Party No. 8 has abused its dominance by issuing diktats to all producers to not deal with the Informant. The Informant had entered into an agreement with Opposite Party No. 7 pursuant to which the said Opposite Party had agreed to install DCE at the cinema hall owned by the Informant. It was alleged that the said agreement was wrongly terminated by the said Opposite Party. It was alleged by the Informant that the Opposite Parties were abusing their dominant position by preventing the Informant of his livelihood by not providing DCE which is essential for screening of films in theatres.
CCI held that in terms of the Act only one entity could hold a dominant position. Thus, the contention of the Informant regarding abuse of dominant position by all the Opposite Parties collectively could not be accepted. With respect to the unlawful termination of the agreement by Opposite Party No. 7 the CCI held that besides the said Opposite Party there are various other players in the market offering DCE for instance Opposite Parties No. 4-7, Interworld, Prasad Extreme Digital Cinema Network Pvt. Ltd etc. The CCI was of the opinion that the presence of so many players prima facie suggests that the market is competitive and constrains Opposite Party No. 7 from acting independently of the market forces in the relevant market. Opposite Party No. 7 therefore could not be said to be in a dominant position or in abuse thereof. With regards to the allegations against Opposite Party No. 8, the CCI noted that there was no evidence to substantiate allegations levelled against the said Opposite Party. The Information was therefore ordered to be closed.
Shri Vijay Menon v. Maharashtra State Power Generation Co. Ltd
November 30, 2017
The Opposite Party had floated a tender for appointment of supervision, monitoring and coordination agency for the work of supervision of rake movement, coal quality monitoring and loading of quality coal and movement of sized coal for various thermal power stations of the Opposite Party by rail mode from coal companies. The Informant was aggrieved by the condition incorporated in the tender document which sought to disqualify bidders against whom an inquiry is pending before the CCI or who have been penalized by CCI or other competent court of law for anti-competitive conduct including cartels and abuse of dominant position. The Informant alleged that such a condition is in violation of the object of the Competition Act, 2002 (‘Act’) and is a result of abuse of dominant position. The CCI was of the opinion that no competition issue is revealed from the facts alleged in the information. The Opposite Party being a consumer, retains the discretion to disqualify the bidders as per the experience gained and the exigency of the requirement. The CCI was therefore of the opinion that no case of contravention of the provisions of the Act is made out against the Opposite Party.
European Union (‘EU’) – European Competition Commission (‘EC’)
EC approves Lufthansa’s proposed acquisition of Air Berlins assets through Luftfahrtgesellschaft Walter GmbH (‘LGW’) subject to conditions
December 21, 2017
In terms of the proposed acquisition Lufthansa will inter alia acquire various slot portfolios at several EU airports in particular in Austria, Germany and Switzerland. The EC therefore assessed whether the slot portfolio to be acquired by Lufthansa at different airports would prevent its competitors from entering or expanding their presence in the markets for passenger air travel to and from these airports. The EC found that the increase in Lufthansa’s slot portfolio at Düsseldorf airport in Germany as a result of the acquisition was likely to adversely affect passengers in terms of fares and/or choice of services. EC did not find any concerns at the other airports where Lufthansa acquired slots either because the said airports were not as congested or the increase of slots for Lufthansa at the said airports was not much. To address EC’s competition concerns Lufthansa agreed to limit the transfer of slots at Düsseldorf airport for the summer season to the number of slots used by two aircrafts. As a result of this, the increase of Lufthansa’s slot at the said airport would be only 1% and 50% of slots will be held by Lufthansa’s competitors. Therefore the effects of Lufthansa’s acquisition of LGW would be limited. EC therefore concluded that the proposed transaction, as modified by the final commitments, would no longer raise competition concerns.
EC approves acquisition of global aerospace suppliers Zodiac Aerospace by Safran
December 21, 2017
EC examined the proposed acquisition of Zodiac Aerospace by Safran (collectively, ‘Parties’). The Parties are engaged in the business of supplying aircraft electrical systems all over the world. The proposed acquisition was approved by EC without any conditions. The EC did not find any serious competition concerns in the relevant market for aircraft electrical systems as it was found that the merged entity would continue to face stiff competition from other established suppliers. With respect to the markets where the Parties are present at different stages of the supply chains the EC concluded that the merged entity would not have the ability to foreclose competition because alternative suppliers will continue to be available. Even with respect to the markets where the Parties will be present at the same stage of supply chain the EC concluded that the merged entity would not have ability to foreclose competition. The EC therefore concluded that the acquisition would not dampen the competition in the relative market and approved the said acquisition.
United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)
CMA approves merger of Just Eat and Hungryhouse
November 16, 2017
Just Eat PLC (‘Just Eat’) and Hungryhouse Limited (‘Hungryhouse’) both are web-based food ordering platforms in the UK. The companies facilitate transactions between final consumers and restaurants willing to offer home delivery services. The CMA investigated into the proposed acquisition of Hungryhouse by Just Eat. CMA found that Hungryhouse presently provides limited competition to Just Eat because it is much smaller in size and does not provide a variety of options as Just Eat. Due to this, Hungryhouse has a substantially smaller consumer base than Just Eat. It was also found that Hungryhouse has been making losses for a number of years and CMA doubted the company’s ability to improve its performance in the increasingly competitive market of web-based food ordering services. The CMA was also of the opinion that the web-based food delivery market has strong competition from Deliveroo, and UberEats. These companies generally present a greater competitive challenge to Just Eat than Hungryhouse. CMA found that in areas where Deliveroo and UberEats do not operate Hungryhouse is particularly weak. In addition the consumers always have the option of directly placing their order at the restaurant either on phone or on their website or by walking in. In view of the above, CMA was of the opinion that the acquisition of Hungryhouse by Just Eat would not result in a substantial lessening of competition (‘SLC’) in the relevant market.
Republic of India – Competition Commission of India (‘CCI’)
CCI approves proposed combination of Airtel and Tata Teleservices Limited
November 16, 2017
The proposed combination related to acquisition of 100% of the consumer mobile business currently run by Tata Teleservices Limited (‘TTSL’) and Tata Teleservices (Maharashtra) Limited (‘TTML’) (collectively, ‘Tata’) by Airtel (‘Proposed Combination’). The CCI although noted that Airtel’s spectrum holding in Bihar may exceed the spectrum caps assigned in the Bihar telecom circle, however the CCI found that the spectrum holding of all the telecom service providers in the other telecom circles is fairly even. Further, the CCI found that there is significant amount of unsold spectrum in every telecom circle which can further remove any competition concerns on this front. CCI also found that Tata is not a close competitor of Airtel nor an effective competitor going forward. This was based on the following findings: (i) Tata provides only limited services i.e. 2G and 3G, it does not provide nor does it intend to provide 4G services; (ii) the Diversion Ratio from Airtel to Tata is negligible, although the diversion from Tata was found to be significant, however the diversion was equal between Airtel, Vodafone and Idea and (iii) the market share of Tata has been steadily declining. The CCI also considered the constraints imposed on telecom service providers by the buyers as they have the option of using multiple SIMs and number portability. The CCI also noted that even after the combination Airtel would continue to face competition from the existing telecom service providers including Aircel, RJio, Vodafone-Idea in all telecom circles. The CCI was therefore of the opinion that the proposed combination would not cause appreciable adverse effect on competition in India and therefore the combination was approved.
Notice regarding exemptions to all cases of combinations involving Central Public-Sector Enterprises (‘CPSEs’)
November 22, 2017
The Central Government in exercise of the powers conferred by clause (a) of Section 54 of the Competition Act, 2002 (‘Act’) has exempted all cases of combinations under Section 5 of the Act involving (CPSEs) operating in the Oil and Gas Sectors under the Petroleum Act, 1934 and the rules made thereunder or the Oilfields (Regulation and Development) Act, 1948 and the rules made thereunder, along with their wholly and partly owned subsidiaries operating in the Oil and Gas sector, from the application of the provisions of Sections 5 and Section 6, for a period of five years from the date of the publication in the Official Gazette (i.e. November 22, 2017).
In house contributors:
Avsi Malik Sharma
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Doc ID: CL/24/18