A central event at this Spring’s ABA Antitrust Section meeting in Washington, DC, was the Chair’s Showcase, ‘Antitrust at the Millennium: Looking Back and Moving Forward.’ James Kanter listened as a panel of speakers celebrated a century of US antitrust enforcement, and discussed the spread of market economies and competition law across the globe

Cartels were very much in the spotlight at the ABA Antitrust Section’s Spring Meeting in Washington DC, with two separate programmes attracting considerable attention from delegates. Sebastian O’Meara listened in.

At the IBA’s Third Latin American Regional Conference in Chile in March, speakers agreed that good competition policy is vital to growth and cross-border cooperation a must. By Sebastian O’Meara

Donald Baker of Baker & Miller argues that proper understanding, explanation and use of Judge Jackson’s decisions should ensure there is no chilling of competitive efforts in dotcom and high-tech sectors

Brian Facey and Dany Assaf of Davies, Ward & Beck, Toronto, explain why online ventures have become a hot topic and how antitrust agencies will go about assessing their effects on competition

Cento Veljanovski of Case Associates, London, and a top advisor to Vodafone AirTouch, offers an insider’s view of the world’s biggest merger, and argues that the EC’s Merger Task Force has taken an unprecedented leap into speculative analysis

Puzzlement, consternation, outrage - Richard Cunningham, a senior international trade partner at Steptoe & Johnson, Washington, DC, describes problems that plagued the ABA’s Joint Task Force on the Relationship of International Trade Law and Competition Law

The European Commission’s Merger Control Regulation is nearly a decade old, and it is up for review in July 2000. The Head of Unit at the Merger Task Force (MTF), F Enrique González-Díaz, spoke to James Kanter about some of the key issues around which reform of the Regulation is likely to focus

Title: Group Counsel

Previous employment:

1980: Graduated from New York University School of Law
1980-81: Clerkship
1981-84: Associate with Webster & Sheffield
1984 to present: American Express

There is intense speculation in Brazil about who will succeed Gesner Oliveira as president of the country’s principal antitrust authority, CADE.

Finnish firm Waselius & Wist has announced the appointment of Inga Pöntynen, an EU competition law specialist, as partner.

Meanwhile, Freshfields has brought the total number of partners in its Amsterdam office up to 14 with the appointment of Onno Brouwer.

Pontus Lindfelt, a prominent Swedish competition lawyer based in Brussels, has been appointed as a partner in White & Case. Lindfelt, 39, has spent over 10 years at the firm and more than eight years in Brussels.

Rebecca Dick, the former Director of Civil Non-Merger Enforcement at the Antitrust Division of the US Department of Justice, has joined Swidler Berlin Shereff Friedman in Washington DC as of counsel. She made the move in late February after spending two decades at the Justice Department, the last five as the ranking career official responsible for civil, non-merger investigations and cases.

PricewaterhouseCoopers has appointed Thomas Hoehn to lead its economics practice in Europe. Hoehn, 46, who was lured away from US-based economic consulting firm LECG, said he was headhunted at a time when he was seeking to work for a 'truly global brand name with a truly global network.' He added that PWC would be an ideal platform for him to pursue his interest in advising multinationals facing regulatory hurdles in different EU Member States.

Robert Young, once an adviser to former UK Prime Minister Margaret Thatcher, is moving from PricewaterhouseCoopers to LECG in to take advantage of the firm’s niche expertise in competition matters. 'Pricewaterhouse does have good capability in the field of competition policy and regulatory policy, but by no stretch of the imagination is it what you might call a core activity,' Young explained. 'The fact that LECG is a niche player in that field, which is my own sphere of interest, is of immense appeal.'

Ali Nikpay, a member of the team that drafted recent reforms to European competition law, has joined Clifford Chance. Nikpay will work in the firm’s European Competition and Regulation Practice in London as a senior associate.

Differences of opinion over management strategies were behind last year’s break-up of Hügel Dallmann & Partners, according to former members of the prominent Austrian firm. 'We found that we were just not in the same boat,' said Armin Dallmann, who now heads Dallmann & Partners in Vienna. 'We didn’t share the same ideas about goals, even about staffing.'

Judge David Edward of the European Court of Justice has said that there are 'potential dangers' in the spread of extraterritorial jurisdiction, particularly in the field of merger control. Speaking in April at New York University School of Law, the judge told academics, fellow judges and advocates general that clashes between systems were increasingly likely. 'I think that we have to recognise that there are dangers in everybody claiming to regulate everybody else,' said Judge Edward. 'It’s a major potential problem for the future.'

In our April/May 2000 edition, it was incorrectly reported in the Rating the Regulators survey that the Canadian Competition Bureau rarely uses the 'noncomplex' standard in designating notified transactions.

The United States Department of Justice has launched an investigation into an alleged cartel operating between producers of carbon fibres.

The US Federal Trade Commission is investigating a web venture launched in April by DaimlerChrysler, General Motors and Ford.

Thomson Travel Group, a leading European holiday and leisure group, has agreed to be taken over by Preussag, Europe’s largest package holiday group, in a $2.9 billion deal.

The London Stock Exchange and the Deutsche Börse have been involved in merger talks with the aim of setting up a cross border exchange called iX.

A number of defence mergers cutting across jurisdictions have raised competition issues in recent months. On May 11, the European Commission authorised the merger between Daimler- Chrysler’s aerospace subsidiary DASA, Aérospatiale Matra and CASA (Construcciones Aeronáuticas SA) to form the European Aeronautic, Defence and Space Company (EADS). The merger created Europe’s largest aerospace company.

Since the failed negotiations with Finmeccanica, British Aerospace’s sister company BAE Systems has moved to bolster its position in the US defence market with the acquisition of Lockheed Martin Corp’s Control Systems in a $510 million deal.

Thomson-CSF of France has made a cash bid for the Racal Electronics of the UK. Clearance has been granted under Hart-Scott-Rodino legislation, which addresses US antitrust concerns, and under Exon-Florio legislation, which addresses US national security concerns.

Siemens and Bosch have agreed jointly to acquire Atecs Mannesmann, the holding company of the engineering and automotive businesses of Mannesmann (consisting of Dematic, Demag-Krauss Maffei, Rexroth, Sachs and VDO). The businesses are being divested as a result of the Vodafone/Mannesmann merger, in a deal worth approximately $10 billion.

The proposed $180-billion SmithKline Beecham and Glaxo Wellcome merger, announced on January 17, creates the largest pharmaceuticals company in the world.

VEBA and VIAG are planning a merger that could create the second-largest electricity group in Germany and a key global speciality-chemicals group.

International Paper’s unsolicited bid of $7.3 billion for rival firm Champion International Corporation squeezed out Europe’s UPM-Kymmene, which had made a bid for Champion in February.

Lafarge launched a hostile bid for Blue Circle Industries earlier this year, but Blue Circle’s board members were not wooed - even after an increased offer put forward by Lafarge in late April of $5.54 billion.

Two recent proceedings before the Federal Court of Australia arose out of a request by Seven Cable Television Pty Ltd to gain access to the broadcast carriage services of Telstra Multimedia Pty Ltd to enable it to provide pay television coverage of the Year 2000 Olympic Games, and to provide additional television services on an ongoing basis. The effect of these decisions is that, subject to available capacity, Telstra must provide access to its hybrid fibre-coaxial network to access seekers for the supply of pay-TV services.

Each judge noted that his decision reinforced the object of Pt XIC of the TPA, which is to promote the longterm interests of end-users of listed services by having regard to the objective of promoting competition in markets for services. Both decisions have been appealed to the Full Federal Court.

Gaire Blunt/Jenny Zaverdinos
Allen Allen & Hemsley
Sydney

As of January 1 2000, Austria has reformed a number of aspects of its competition law. The most important changes relate to merger control, the abuse of a dominant position, the prohibition of concerted practices, and general procedural rules.

Stefan Köck and Axel Reidlinger
Bruckhaus Westrick Heller Löber
Vienna

As predicted in a previous report (see GCR February/March 2000 page 29), it is now clear that the liberalisation of the Belgian Electricity market has not yet become effective and that the deadline of February 19 2000 was not met. However, the deal put together by the government seems to provide evidence of a strong political will to speed up the process. This agreement has reinforced the electricity regulator’s power, as it is probably felt by the authorities that a strong regulator will enhance the prospects for a sucessful liberalisation process. However, the agreement creates some uncertainties, as it seems that implementation may require the amendment of the only recently adopted Belgian Electricity Law.

Florence Melchior
Freshfields Deringer
Brussels

The Canadian Commissioner of Competition has responded to his poor showing in Global Competition Review’s ‘Rating the Regulators’ survey.

The Commissioner is supporting some private members bills which would significantly amend the Competition Act and has released a new version of the Intellectual Property Guidelines.

John F Clifford and Jeffrey P Roode
McMillan Binch
Toronto

The draft amendment to the Danish Competition Act has been tabled in the Danish Parliament, but not yet approved.

The Minister for Industry has also tabled a bill on control in cases of state aid reflecting the procedural rules in Council Regulation (EC) No. 659/1999 laying down detailed rules for the application of Article 88 of the Treaty.

More on these proposals will follow in the next issue of Global Competition Review.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

Paradoxically, the Court’s judgment increases the importance for companies of ensuring that the European Commission defines the market correctly first time round - as such decisions will not be subject to appeal if the ultimate decision is in the applicant’s favour. Furthermore, although changing market conditions must be taken into account, and previous decisions will not constitute binding precedent, it is difficult to see how the Commission and other competition authorities will not be influenced by previous findings on market definition, dominance or control. Unless there are some far-reaching changes in the market place, it looks as if Coca-Cola will have to live with a finding of dominance in the British cola market for some time to come.

Alicia Van Cauwelaert
Freshfields Deringer
Brussels

The Airtours/First Choice ruling had a successor when the Finnish Competition Authority imposed conditions on the acquisition of the Finnish tour operator Finnmatkat by the UK’s Thomson Group on grounds broadly similar to those adduced in the ruling of the Commission in the earlier case. In its decision the Authority found that the concentration resulted in a position of joint dominance being acquired by Thomson and the seller Finnair Corporation, which through the transaction was divesting part of its tour operator activities. The decision is of significance in that it is the first time the Finnish Competition Authority has applied the joint dominance doctrine in assessing a concentration.

Christian Wik & Jenni Lukander
Roschier-Holmberg & Waselius
Helsinki

The draft merger bill establishes precise rules for the control of mergers in France. The proposal intends to: (i) make filing with the Ministry of Economy mandatory; (ii) suspend a proposed transaction pending the assessment by the French competition authorities; and (iii) shorten the timetable for obtaining a final decision on a merger case.

The French version of the draft regulation is available on the French Assemblée Nationale website at: assemblée- nationale.fr, draft 2250

Jacques-Philippe Gunther
Freshfields
Paris

The new FCO notice is modelled closely on the leniency notice of the European Commission and thereby contributes to the harmonisation of national and European antitrust regimes.

The German notice also reflects the previous practice of the FCO in following the practices of other nations, especially the United States, which are already using whistle-blowing systems successfully in their attempts to combat major cartels. More especially, the general non-imposition of fines in cases in which the FCO has not yet started investigations does create a significant incentive for minor cartel members to disclose their knowledge of the cartel to the authorities.

August-Carel Maske
Freshfields Deringer
Cologne

The decision is a significant example of the Competition Office’s recent ‘permissive’ practice.

In its decision, the Office argued that even though the contemplated transaction qualified as a concentration in the sense of Section 23 (1) of the Hungarian Competition Act, it should be cleared because it did not create or strengthen a dominant position and did not prevent the development, maintenance or expansion of efficient competition on the relevant market. The Office established that taking into consideration Medicor Röntgen’s high market share (80 per cent) in the traditional x-ray equipment market - the market share (19 per cent) in the remote- controlled x-ray outlets market after the acquisition being of minor importance - a dominant position might be established. However, the Office found that, taking into account the specific features and specific sales conditions in the relevant market, such as the obligatory public procurement procedure, the future potential competition would create a strong competitive environment even for a competitor with such a high market share.

This and similar decisions of the Hungarian Competition Office could lead to severe conflicts in competition due to the existence of large number of undertakings in dominant position in different market sectors in Hungary.

Ádám Máttyus & Ágnes Bogdán
Bruckhaus Westrick Heller Löber
Budapest

The proposed competition law will ensure that public monopoly does not lead to abuse of dominance. Dominance by public sector undertakings which is against the consumer interest will attract scrutiny under the proposed competition law.

Atul Y Chitale
A Y Chitale & Associates
New Delhi

The judgment by the Consiglio di Stato defines the boundaries of judicial review by ensuring that judges do not substitute the Competition Authority’s discretionary assessment of the merits of a case with their own assessment. Indeed, it must be recognised that, because of their technical competence, independent authorities are better placed to judge the merits of a case than the administrative courts. Conversely, the judgment could not be interpreted as limiting the scope of parties to appeal. In fact, scrutiny of the decisions of the Autorità Garante remains stringent. The judges of the Consiglio di Stato confirmed that, in order to avoid exceeding its powers, the Authority must conduct a thorough market analysis, omitting no circumstance which is relevant to the definition of a case, and give a full account of the grounds upon which it bases its decision. The scope of judicial review of the Italian Administrative Courts in competition cases thus appears consistent with that of the European Courts under Article 230 (ex 173) of the EC Treaty.

Salvatore Lamarca
Freshfields
Milan

G-Star, one of the two market leaders in fashionable jeans in the Netherlands, has been fined for imposing a restriction on reselling in its general sales conditions. The restriction prohibited the resale of jeans in other stores than those G-Star had initially supplied. In its analysis, the Dutch Competition Authority ruled that in the fashion sector interbrand competition may be limited and for this reason intrabrand competition is essential. An appeal on the increasingly lenient policy of the European Commission vis-à-vis vertical restraints could not save G-Star from being fined.

Pepijn van Ginneken
Allen & Overy
Amsterdam

The New Zealand government intends to lower the threshold at which mergers and acquisitions are prohibited under the Commerce Act. The existing ‘dominance’ test would be replaced with a ‘substantial lessening of competition’ test so as to take into account the potential for collusion in concentrated industries.

Elizabeth Welson and Giles Kennedy
Simpson Grierson
Wellington

It is important to note that the CNMV is of the view that - on a literal reading of the relevant Spanish rules - it is not possible to subject public takeover bids to the condition of obtaining merger clearance from the European Commission where the bid must be notified to Brussels under the EC Merger Regulation. This view privileges public bids which are subject to the domestic merger control regime over bids which are subject to the EU merger control regime. The problem is particularly acute in the case of competing bids as there could be clear discrimination in the treatment, with one party being able to launch the takeover subject to conditions but not the other. In fact, the bid launched by Unión Fenosa for Hidrocantábrico, which is subject to the domestic merger control regime, was launched as a rival bid to the initial takeover bid made by the US company Texas Utilities, which was subject to the EU merger control regime. This could put cross-border competing bids at a clear disadvantage vis-àvis domestic bids in so far as the former might not be conditional while the latter could be. This appears to run counter to the basic EU legal principles of supremacy over national law and non-discrimination.

Natalia Trujillo
Freshfields
Madrid

Based on a sound analysis, the Swiss Competition Commission held that the intended merger between Alcan, Pechiney and Algroup would not have created or strengthened a dominant position within the markets for primary aluminium and for flat-rolled products. The decision was based on definitions of the relevant geographic markets taking into consideration competition, namely from the CIS and Turkey.

Marcel Meinhardt
Lenz & Staehelin

How the UK government proceeds from here remains to be seen. It has published a draft Order under the FTA to deal with some of the practices which do not fall within the Block Exemption and has sent a copy of the Commission’s report to the European Commission for their consideration. However, tackling the problem of the Block Exemption will not be easy, and until that is achieved the UK government will be unable to really get to the root of the problem and open up the market to more competition.

Janet Gillen
Freshfields
London

It should be noted that, in its Analysis To Aid Public Comment, the FTC confirmed that traditional cooperative advertising programmes - where a manufacturer places restraints on the prices its dealers may advertise in ads funded in whole or in part by the manufacturer - will continue to be judged under the rule of reason. However, the FTC explained that, in the case of the music distributors, their conduct went 'well beyond typical . . . programmes.'

Ronan P Harty
Davis Polk & Wardwell
New York City

By challenging the practices in these cases, the FTC has demonstrated that it is willing to analyse creative forms of anti-competitive conduct and to challenge practices that unduly limit the independence of dealers to offer discount prices. The FTC has also given notice to antitrust lawyers that a ‘rule of reason’ standard does not always mean that the conduct under scrutiny is lawful.

Philip F Zeidman and Steven B Feirman
Piper Marbury Rudnick & Wolfe LLP
Washington, DC