London was the venue for this year’s annual meeting of the American Bar Association, and for the antitrust section that was reason enough to look beyond the borders of the United States in the sessions it organised. Sebastian O’Meara reports.

The product of a joint initiative by the European Commission and the government of Portugal, the first European Competition Day was held in Lisbon in June. Sebastian O’Meara was there

James Kanter spoke to the President of the Bundeskartellamt, Germany’s Federal Cartel Office, about his agency’s move to Bonn, the role of economic analysis in recent electricity mergers, the EC White Paper reforms, and suggestions of predatory pricing in the German retail sector

Is the international merger the right formula for Germany’s strongest competition practices? James Kanter visited Frankfurt and Düsseldorf to see how partners are dealing with rapid change in the market for legal services

Douglas E Rosenthal* discusses the treatment of trade in the DoJsponsored report on competition in the global economy and argues in favour of a multilateral approach to convergence through the WTO

Alex Nourry and Maddi Lawrence of Clifford Chance LLP, London look at the EU competition rules governing business-to-business and business-to-consumer exchanges online

Tim Ogier and Daniel Hanson of PricewaterhouseCoopers suggest that the evidence supporting the competition authority’s conclusion that British car buyers are getting a raw deal is not as convincing as first appears

Michaelyn Corbett and James Langenfeld of LECG, Inc question whether proposed legislation exempting areas of medical services in the US from antitrust laws is in the interests of consumers

Title:
Senior Vice President, US and Deputy General Counsel, MasterCard International Incorporated

Previous employment:
Attorney, Ladas & Parry; Senior Vice President and Assistant General Counsel, AT&T Universal Card Services

Ending months of speculation, it was announced in mid-July that the Bank of England’s chief economist, John Vickers, has been selected as Britain’s next Director-General of Fair Trading. Vickers takes over the post from John Bridgeman, the current DGFT, when his fiveyear term expires in September.

San Francisco-based Pillsbury Madison & Sutro, with its 596 lawyers, has agreed to 'a merger of equals' with Winthrop, Stimson, Putnam & Roberts of New York and its 265 attorneys. The combined firm boasts more than 860 lawyers and 16 offices - 12 in the US and four abroad. Although confident the merger will proceed by the end of 2000, the firms noted that the deal is subject to approval by partners of both firms and 'the execution of a definitive agreement.'

James Venit, widely considered among the five top antitrust partners in Europe, joined Skadden Arps Meagher Slate & Flom’s team of 54 competition lawyers in late June. His move has left rival US firm Wilmer Cutler & Pickering and its team of 36 competition lawyers bereft of their senior partner in Brussels.

Linklaters & Alliance’s EU & Competition Law Group, which comprises lawyers from six European firms, has appointed three new partners. They are Johan Ysewyn in Brussels, and Martin Snoep and Jolling de Pree in The Hague.

New appointments at:

• Watson, Farley & Williams
• PricewaterhouseCoopers
• Baker & McKenzie
• Jones Day Reavis & Pogue

Austria’s Hügel & Partners, with its 25 lawyers, has made a leap to pan- European status by joining with one of Germany’s leading firms, Haarmann Hemmelrath. The merger, formalised on July 1 2000, creates a firm with 220 lawyers in 14 jurisdictions.

Talks leading to the merger between Freshfields Deringer and Bruckhaus Westrick Heller Löber on August 1 began with meetings between top competition partners from the two firms, according to Frank Montag of Freshfields. The merger (see table, right) creates the world’s third largest global competition practice after Clifford Chance Rogers & Wells and Howrey & Simon measured by the number of fully competition-qualified lawyers.

Brazil’s antitrust authority, the Council for the Administration of Economic Defence (CADE), reconvened on July 5 with a new president, three new counsellors and a new address.

Philip Morris is set to buy Nabisco Holdings, and RJ Reynolds Tobacco is to buy Nabisco Group Holdings.

France Télécom is set to acquire Orange from Vodafone AirTouch.

The EC has cleared Sun Chemical Group’s acquisition of Coates Brothers inks business from Total Fina. Sun Chemical is wholly owned by one of Japan’s most diversified chemicals companies, Dainippon Ink and Chemicals.

According to reports, British Airways and Royal Dutch Airlines (KLM) are planning to file for a full merger with European competition authorities by the first week in August. However, KLM officials have been reported as warning that an important prerequisite for the deal is some form of agreement between the UK and US governments on future ‘open skies’ agreements.

United Airlines’ parent company UAL is pursuing its US$11.6 billion merger with US Airways in the face of industrywide antitrust concerns. The combined group would have 6,500 flights a day and be the world’s largest carrier.

Unilever, the Anglo-Dutch consumer products group, is set to acquire the US food group Bestfoods in a US$20.3 billion deal.

Vivendi, the French media, utilities and telecom group and its pay-TV unit Canal Plus have secured a C$33.7 billion takeover of Seagram, the Canadian drinks and entertainment company.

Belgium’s Interbrew is set to purchase the brewing operations of the UK’s Bass.

Terra Networks, the Madrid-based internet service provider that is majority- owned by Spain’s Telefónica, is to acquire Lycos, a Massachusetts-based internet portal, in a transaction valued at US$12.5 billion.

The EC has authorised the acquisition of American Cyanamid Company, the crop protection business of American Home Products Corporation, by BASF in a deal worth approximately 3.8 billion euro.

Goldfields and Franco Nevada are set to merge in a US$1.8 billion deal that will produce one of the world’s largest gold companies. Franco Nevada’s chairman has been reported as saying that the merger would give his company greater leverage over the price of gold. He was also cited by the Wall Street Journal as speculating that the deal would represent a first step in future industry consolidation.

Goldfields and Franco Nevada are set to merge in a US$1.8 billion deal that will produce one of the world’s largest gold companies. Franco Nevada’s chairman has been reported as saying that the merger would give his company greater leverage over the price of gold. He was also cited by the Wall Street Journal as speculating that the deal would represent a first step in future industry consolidation.

This case has two interesting aspects. Firstly, it illustrates the difficulties encountered when implementing liberalisation laws, which in theory aim at opening markets to competition but nevertheless may force an undertaking to adopt an anticompetitive behaviour.

Secondly, this case is in line with all the most recent developments in Belgian Competition law, that is to say that most jurisprudence is mainly based on EC law principles.

Florence Melchior and Sophie Ayrault
Freshfields Deringer
Brussels

The Competition Act amendments process moves into the consultative stage, with an independent research organisation reviewing submissions from stakeholders and organising cross-country roundtable discussions.

The Bureau releases its Merger Notification Procedures Guide and Draft Abuse of Dominance Guidelines.

John F Clifford and Omar K Wakil
McMillan Binch
Toronto

The debate in the Danish Parliament swung round dramatically after the draft amendment to the Danish Competition Act was tabled. The amendments to the Danish Competition Act have now been approved with the support of the right-wing parties in Parliament, who insisted on higher thresholds.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

The simplified merger vetting procedure introduced by the new Notice should be considered as a further attempt by the Commission to concentrate scarce resources on the more complex and problematic cases. The original idea of clearing a merger case by abstaining from adopting a formal decision, in accordance with Article 10(1) and (6) ECMR, has been abandoned. At the same time, the Commission is reviewing the ECMR with a view to proposing amendments to the current jurisdictional rules.

Tania Schröter
Freshfields Deringer
Brussels

The Finnish Competition Authority has cleared a concentration strengthening the dominant position of the largest Finnish dairy company, Valio Oy, in several market segments. The clearance is subject to significant conditions by which in particular the availability of raw milk to the competitors of Valio Oy is safeguarded. According to the Finnish Competition Authority, the conditions are sufficient to maintain competition in the milk product markets even though Valio Oy’s market share will rise to 60 to 70 per cent in certain product segments.

Christian Wik & Niko Hukkinen
Roschier-Holmberg & Waselius
Helsinki

Notwithstanding the reversal on appeal, the decision of the Paris Court of Appeal has established an important precedent that competition law may apply to a trade union if it is pursuing an economic activity,which can be distinguished from its traditional function of safeguarding the interests of its members.

Jacques-Philippe Gunther and David Tayar
Freshfields
Paris

The investigation into this merger illustrates clearly the FCO’s attempt to accelerate the liberalisation process in the gas and energy sectors, as well as in waste disposal, with the help of merger control provisions. These previously closed markets are progressively being opened up to competition on an entirely new scale, as a result in part of the imposition of divestiture requirements in cases such as this.

August-Carel Maske
Freshfields Deringer
Cologne

No significant amendments to Hungary’s competition law are currently foreseen. However, in certain sectors where natural monopolies or limited competition exist and special regulations therefore apply, new legislation will be introduced later this year. The aim of the proposed Telecoms Act and the Electricity Act is to meet the requirements established by the EU for states seeking membership. In order to achieve harmonisation with EU legislation, Hungary will liberalise its telecoms, media and energy sectors. The bills have attracted intense scrutiny from Hungarian legal experts.

Ádám Máttyus and Ágnes Bogdán
Bruckhaus Westrick Heller Löber
Budapest

Exchange of information between competitors often constitutes a ‘grey area’ as it is not always easy to determine when it becomes a competition law-sensitive issue. The European Court of Justice and the Court of First Instance have ruled that exchanges of aggregate data normally do not infringe Article 81 of the EC Treaty provided that the information is not used for anti-competitive purposes. In the present case, Banca d’Italia’s decision appears to be consistent with the case law, which states that information exchange must be viewed in the light of its factual context. Accordingly, information exchange carried out in a systematic manner on disaggregated price-related data could amount to a concerted practice, irrespective of the need to determine exactly how, in practice, this influenced the market behaviour of the parties.

Salvatore Lamarca
Freshfields
Milan

In two concentration cases in the daily newspaper sector, the Dutch Competition Authority has recently investigated substitutability of regional newspapers on the readers’ market and on the market for advertising.

After this market analysis, the Authority established that both concentrations would lead to high market shares, and it subsequently imposed several conditions to the transactions. These conditions not only included divestments but also undertakings to safeguard the independence of newspapers within the same group.

Pepijn van Ginneken
Allen & Overy
Amsterdam

The decision of the Supreme Court overruling, for the first time, a government decision on a merger case was based on the principle of the plurality of the media as opposed to strict competition grounds. This decision therefore establishes an important precedent, namely the principle that in mergers affecting the media sector, criteria unrelated to competition may play a significant role in determining the outcome of the merger review.

Natalia Trujillo
Freshfields
Madrid

Parties to Competition Act proceedings before UK regulators will be entitled to the following fair trial guarantees:

• equality of arms, namely the right to put one’s case to the tribunal in a manner not placing one in a position of substantial disadvantage vis-à-vis one’s opponent;
• a right of confrontation against adverse witnesses;
• the presumption of innocence (perhaps requiring proof to a criminal or other high standard);
• a right of access to the investigation file maintained by the authorities;
• the privilege against selfincrimination;
• trial before an independent and impartial tribunal (ie independent from the investigators, the parties and the State and impartial in both objective and subjective terms);
• a reasoned judgment; and
• trial within a reasonable period.

Patrick Doris
Freshfields
London

Shortly after the Justice Department filed suit to block the combination of WorldCom and Sprint, the parties announced that they had abandoned their plans for the merger. Assistant Attorney General Klein issued a statement welcoming the parties’ decision and stressing again that the deal 'would have led to higher prices, lower service quality, and less innovation for millions of American consumers and businesses'.

Ronan P Harty
Davis Polk & Wardwell
New York

In general, the new Guidelines provide much added insight as to the appropriate analysis for determining whether a franchise agreement or master franchise agreement for Europe will be lawful or suspect and, if suspect, what needs to be changed to bring it within the scope of the VRBE. For most franchisors, the VRBE will contain both advantages and disadvantages compared to the old FBE. Regardless, franchisors now have all the information that will be made available in order to analyse whether their new European agreements need to be modified and existing European agreements need to be renegotiated. Especially with the VRBE’s many details, and exceptions on exceptions, this is a necessary - but not an easy - analysis.

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