It isn’t hard to see why the ABA Section of Antitrust Law has made Scottsdale, Arizona the regular venue for its annual February event. But not even golf courses under a cloudless sky could keep delegates away from this year’s debate on high-tech industries. By Maija Pesola

Leading academics, practitioners and regulators give their views

‘Competing Competition Laws: Do we need a Global Standard?’ was the title of the conference organised in Boston by the New England School of Law. A familiar enough topic to GCR readers, but this time given a more academic treatment. Sebastian O’Meara reports

With over 100 merger control regimes around the world now up and running, the need for cross-border and regional cooperation has become acute. Maija Pesola joined delegates at the IBC conference on International Merger Control in London in February

Sebastian O’Meara spoke to the Director General of the UK’s Office of Fair Trading about the benefits of the new Competition Act set to come into force in a year’s time and how he is preparing for the new role it assigns him

Gesner Oliveira of CADE, the Brazilian antitrust authority, looks at the latest jurisprudence and revised regulations affecting antitrust in South America’s largest market

Meeting for only the second time, Miami’s annual Latin American Competition and Trade Policy Round Table headed out to the University of Miami campus in Coral Gables. Sebastian O’Meara was there

Alfonso Miranda Londoño, Director of the Centre for the Study of Competition Law (CEDEC) at the Universidad Javeriana in Bogota, believes that regulation cannot work without political will to apply it

Sebastian O’Meara in Bogota asked Colombia’s top competition regulator, the Superintendent for Industry and Commerce, why the country’s laws were not being applied with more vigour

Sitesh Bhojani, Commissioner of the Australian Competition and Consumer Commission, looks at how Commonwealth and State legislation has dealt with the issue of restrictive practices within the opaque world of dentists, doctors and lawyers

Andy Baziliauskas of the Canadian Competition Bureau revisits a 1995 decision highlighting the problems of establishing anticompetitive dominance on the basis of buyer-seller contracts

Title: General Counsel and Head of Government & Industry Affairs, Safety, Security and Environment

Company: British Airways

Age: 50

Previous employment:

1988-1998 Queen’s Counsel and Head of Chambers at 5 Bell Yard, London

British Airways plc (BA)

Headquarters: London, UK

Founded: The firm traces its origins back to 1919

Turnover: £86 billion

Number of employees: over 60,000

British Airways is a member of the Oneworld Alliance formed in February 1999. Oneworld includes American Airlines, British Airways, Canadian Airlines, Cathay Pacific Airways, Qantas Airways, Finnair, Iberia and Japan Airlines. The alliance flies to 648 destinations in 139 countries

Title Vice President and General Counsel

Company Scandinavian Airlines System (SAS)

Age 43

Previous employment:

1984-88 Mannheimer & Zetterlöf

Scandinavian Airline Systems (SAS)

Headquarters: Stockholm, Sweden

Founded: 1946

Turnover: SEK 38 billion

Number of employees: 25,000

SAS is a member of the Star Alliance, which was formed in 1997 and includes Lufthansa, Thai Airways International, United Airlines, Air Canada and Varig.

All Nippon Airways, Ansett Australia and Air New Zealand are planning to join the alliance in 1999. The alliance flies to 600 destinations in 108 countries Recent competition case history: In July 1996 the European Commission began an investigation under Article 89 of the Treaty of Rome into airline alliances between British Airways and American Airlines; Lufthansa, SAS and United Airlines; KLM and Northwest; and Sabena, Austrian Airlines, Swissair and Delta.

In July 1998 The EU Commission ruled that the BA-AA alliance would be subject to conditions including reducing the frequency of flights on three routes and relinquishing up to 267 airport slots in London without compensation. The Commission also required the Lufthansa-SAS-United Airlines alliance to reduce the frequency of flights on two routes and to release up to 108 slots in Copenhagen and Frankfurt without compensation.

In a surprise eleventh-hour move, Intel Corp, the world’s largest maker of computer chips, agreed to settle US Federal Trade Commission charges that it had used monopoly power against customers with which it had patent disputes.

Microsoft chairman Bill Gates has indicated that the software giant also wants to settle a case that has kept it occupied for more than a year and threatened to tarnish its reputation with unwelcome publicity.

Mexico’s antitrust agency, the Federal Competition Commission, says it is investigating charges that Corporación Internacional de Aviación SA (Grupo Cintra), the three-year-old holding company for the country’s two largest carriers, Aeromexico SA and Mexicana de Aviación, is engaged in 'predatory' marketing practices that have hurt smaller carriers.

Delta Air Lines has agreed to take full control of regional carrier Atlantic Southeast Airlines by offering U$700 million for the 72 per cent of parent company ASA Holdings Inc it doesn’t already own.

Discussions between British and American officials about an ‘open skies’ pact between the two countries are reported to be making progress following the breakdown of an earlier round of talks in October.

Banque Nationale de Paris (BNP) has made a surprise US$37 billion bid for Société Générale and Paribas in an attempt to thwart the agreed US$17 billion merger between the two banks.

The face of the Italian banking sector looks set to change radically following two proposed deals.

EU antitrust investigators have raided eight banks across the continent to investigate whether there is cooperation on the fees charged for converting currencies in the euro zone.

Phone giant AT&T and cable company Tele-Communications Inc have completed their US$48 billion merger eight months after it was first announced.

German telecoms operator Deutsche Telekom AG has dismissed allegations that it uses discriminatory behaviour and predatory pricing to favour its T-Online Internet unit as 'nonsense' following an announcement that the European Commission has opened an initial inquiry into the company’s Internet practices after a complaint by rival firm AOL Europe.

The US Department of Defense is weighing General Dynamics Corp’s US$1.4 billion bid for Newport News Shipbuilding Inc amid concerns that the deal could result in a concentration of naval shipbuilding in one region of the United States and lead to a near-monopoly of maintenance shipyards in key regions.

Allied Waste Industries Inc has agreed to acquire Browning-Ferris Industries Inc in a US$7.3 billion deal that brings together the second and third waste-haulage companies in the US in the latest phase of consolidation in the industry.

Consolidation in some industries, notably the automotive industry, is 'triggering real competition concerns,' says EU Competition Commissioner Karel van Miert.

The EU Commission says it is likely to launch a full-scale antitrust investigation into any proposed merger between broadcasters British Sky Broadcasting and Canal Plus.

The European Commission has conditionally cleared the US$35 billion merger of pharmaceuticals companies Zeneca Group plc of the UK and Astra AB of Sweden, which will create the third-largest such company in the world.

Italy’s Antitrust Authority has launched an investigation into Italy’s state railway company, Ferrovie dello Stato (FS), to determine whether it has abused its dominant position in the market for longdistance goods transport.

The EU Commission has conditionally approved the merger of two Danish slaughterhouses after a five-month investigation.

March 16 was prematurely springlike in the Cercle Royal Gardens in Brussels as Allen & Overy celebrated 20 years of doing business in the Belgian capital with a birthday seminar which attracted well over 100 lawyers, regulators and firm clients from around the world.

German law firm Pünder Volhard Weber & Axster is consolidating and strengthening its competition activities in Brussels.

One of Linklaters’ leading competition lawyers, Christopher Bright, has left the firm to become managing partner of Clifford Chance’s European competition practice.

Italian law firms Erede e Associati, Bonelli e Associati and Pappalardo e Associati are merging to create the largest law firm in Italy, with approximately 100 lawyers.

German firm Feddersen Laule Scherzberg & Ohle Hansen Ewerwahn is to build a new antitrust focus in Düsseldorf headed by partner Horst Henschen.

Former German Federal Minister of Transport Matthias Wissmann, joined the Berlin office of Wilmer, Cutler and Pickeing at the beginning of March.

UK firm Olswang is increasing its strength in the competition field with a new office in Brussels and new recruitment in London.

The former Assistant Director of the FTC’s Premerger Notification office, Joseph Krauss, has joined Washington DC firm Hogan & Hartson as counsel.

Belgian firm Liedekerke Wolter Waelbroek & Kirkpatrick has merged with primarily Flemish boutique practice Schiltz Linden Grolig to improve its national coverage.

Anthony DiResta

Competition specialist Elisabeth Welson has been appointed partner in the Wellington office of Simpson Grierson.

Seattle firm Bogle & Gates PLLC ceased to practise law on March 31.

British Aerospace plc took a lead role in European defence consolidation with plans to buy General Electric Co’s Marconi defence unit for £7.7 billion.

Ford Motor Company is set to become the world’s second largest car manufacturer if its planned £4 billion acquisition of AB Volvo of Sweden goes through.

French banking group Société Générale has announced plans to merge with Compagnie Financière de Paribas. The US$17 billion deal would create the largest bank in France, and Europe’s third largest bank in terms of total assets. Following these announcements, on March 9 Banque Nationale de Paris launched a US$37 billion hostile takeover bid for the combined group.

The European Commission has cleared the US$11 billion joint venture between BT and AT&T to create the world’s largest carrier of transit services.

Italian telecommunications group Olivetti has launched a £37 billion hostile takeover bid for Telecom Italia, formerly the state monopoly provider.

The UK Monopolies and Mergers Commission recently ruled that the merger between pharmaceutical business information firms IMS Health INC and Pharmaceutical Marketing Services INC (PMSI) could reduce competition in pharmaceutical data services, and required IMS to divest the Source Dispenser business and to give undertakings in relation to supplying these services.

The European Commission has cleared a merger between two Finnish paper and pulp machinery manufacturers, Valmet and Rauma.

US engineering group Eaton is to acquire Aeroquip-Vickers in a US$1.7 billion deal which is expected to create unparalleled strength in the mobile hydraulics sector.

Automotive and space technology provider TWR Inc has beaten Federal- Mogul in its bidding war for British autoparts and aerospace group Lucas- Varity plc.

Intel Corporation has settled with the FTC on the eve of its landmark antitrust case.

The US District Court of Delaware recently ruled that Barr Laboratories could proceed with its antitrust suit against DuPont.

US paper and forestry products producer International Paper is to acquire paper manufacturer Union Camp in a tax-free, stock-for-stock exchange valued at US$6.6 billion.

Houston-based energy firm Reliant is to enter the European Energy market with the US$2.4 billion acquisition of NV Energieproduktiebedrijf UNA, one of the biggest power companies in the Netherlands. The acquisition will take place over seven years because the Dutch energy market is not due to be fully liberalised until 2007.

The Polish Antimonopoly Court overturned the decision of the Polish Office for the Protection of Competition and Consumers prohibiting an acquisition by Cementownia Ozarow SA, a large cement factory controlled indirectly by Irish CRH Plc, of a controlling stock in Faelbud SA in Lublin.

The New Zealand Commerce Commission has judged the 1997 merger between the Air New Zealand and Ansett Australia domestic airfreight operations to be anti-competitive for the same-day airfreight market, and will require the parties to renegotiate the deal.

UK Travel group Thomas Cook is to merge its worldwide leisure travel and financial services business with the US travel company Carlson Group. Simultaneously, Preussag AG, owner of Hapag-Lloyd, the largest German integrated leisure travel operator, has invested in the merged entity with rights to take a majority share of the equity. The joint venture will create one of the UK’s largest vertically integrated travel groups, operating under the name of Thomas Cook.

Delta Air Lines has taken control of ASA Holdings Inc, the parent company of Atlantic Southeast Airlines. Atlantic Southeast and ASA Holdings will remain wholly owned but separate units.

Section 46 of the Trade Practices Act 1974 does not compel a manufacturer or wholesaler to supply goods of services to all who wish to acquire them. The section prohibits a refusal of supply which constitutes a use by a corporation of its substantial degree of market power for a proscribed anticompetitive purpose. In this recent case, a former wholesale distributor of street directories was successful in establishing each of the elements requires under Section 46. The publisher and wholesaler of the directory, in refusing to continue to supply the distributor, was held to have taken advantage of its substantial degree of market power for the purpose of preventing the distributor from engaging in competitive conduct with existing distributors.

Gaire Blunt and Jenny Zaverdinos
Allen Allen & Hemsley
Sydney

Because of delays in the passage of the Bill caused by the introduction of amendments, the law is not expected to be adopted before mid- April 1999 at the earliest. However, the level of market opening that will be reached in Belgium is already substantial and is higher than the 26.48 per cent minimum set by the Commission.

Florence Melchior
Freshfields Deringer
Brussels

Most of the Competition Bureau’s proposed amendments to the Competition Act became law in mid-March. The Bureau was also successful in obtaining a record fine for a foreign-directed conspiracy as well as prison sentences for some individuals engaged in deceptive telemarketing.

John F Clifford and Jeffrey P Roode
McMillan Binch
Toronto

The Competition Council refused to allow an electricity producer to exclusivity of supply on the basis of security and efficiency considerations.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

These two new regulations, in fact, do more than just simplify existing procedural rules. Under Regulation No 2842/98 the ‘sufficient interest’ requirement no longer applies to addressees, applicants, complainants or other third parties wishing to express their views orally. However, it is still at the Commission’s discretion whether they are allowed to do so. As a result of the second new Regulation, No 2843/98, procedures for the transport sector have been brought into line with procedures governing other sectors. It is therefore an important development in the application of competition rules and procedures to this sector.

Maya Barr
Freshfields Deringer
Brussels

The decision of the Competition Council provides guidance as to the scope of non-competition clauses that are accepted as restrictions ancillary to acquisition agreements. In its interpretation of such restrictions, the Competition Council applied the principles set forth in the notice of the European Commission on ancillary restrictions. According to the principles applied in this case, the non-competition restriction imposed on the seller must be limited to products and services which constitute the economic activity of the undertaking transferred. Similarly, the territorial scope of the non-competition clause must be limited to the geographical business activity area of the seller before the acquisition. Finally, the duration of the non-competition clause has to be reasonable. As a general rule, a period of five years is considered reasonable if both goodwill and know-how are transferred, and a period of two years when only goodwill is transferred.

Christian Wik and Nina Isokorpi
Roschier-Holmberg & Waselius
Helsinki

Canal+, pointing out its support of French film production (on which it spent 9 per cent of its turnover, ie FFr800 million, in 1998), appealed against this decision, which could have drastic consequences for the film industry. Film producers and industrialists also condemned the decision, believing it could result in Canal+ reducing or even scrapping altogether its financial backing for film production, a loss which would not be made good by TPS (which only spent FFr58 million in 1998 to support film production). The Conseil’s decision, which was confirmed by the Paris Court of Appeal on February 18, could constitute a turning point in the relationship between the French pay-TV market and the film industry. The decision by the Conseil to fine Canal+ and force it to surrender its exclusive right to pre-purchase French film broadcasting is likely to change significantly the current structure of financial support to the French film industry.

Jacques-Philippe Gunther and Frédéric Pradelles
Freshfields
Paris

The case is an important precedent and can be regarded as a significant step towards increased competition in the German energy sector. For the first time, the German regulator has applied the new competition rules in the energy sector and actively supported a market entrant pursuing its right to third party network access. It can be expected that Enron’s example will be followed by other energy suppliers seeking to enter the German market and result in the breaking up of existing regional network monopolies.

Georg Philipp Cotta
Deringer, Tessin, Herrmann & Sedemund
Berlin

The MRTP Commission restrained ANSAC, a US export cartel, from exporting soda ash to India either directly or indirectly. The Commission held that cartels and free markets are essentially antithetical to each other and cannot coexist. While a free market engenders competition, a cartel endangers competition.

Atul Chitale
A Y Chitale & Associates
Delhi

The new category certificate and category licence are to be welcomed. They recognise the positive contribution which vertical agreements normally make to economic life. While the use of market share thresholds introduces a degree of uncertainty in relation to the application of the documents (particularly for companies with market shares which may be close to the thresholds), this seems a small price to pay for a more realistic recognition of the effect on competition of such agreements. In practice, this approach will eliminate the need to consider the possible application of the Competition Act to the vast majority of vertical agreements. Of course, where such agreements may affect trade between EU Member States, the European Commission’s existing block exemption regulations will remain relevant until they too are replaced by a more flexible regime. It is to be hoped that any divergences which may arise between the new Irish regime and the Commission’s new block exemption regulation will not cause too much difficulty for businesses marketing their goods and services in Ireland.

Gerald FitzGerald
McCann FitzGerald
Dublin

The Italian competition authority’s investigation into the Lega Calcio naturally focuses on Article 2 of Italian competition law. However, even if the arrangements between the Lega Calcio and its members (the clubs) are cleared following the investigation, they could presumably still be found to be in breach of Decree 15/1999. It will be interesting to see how competition and media law will apply in parallel.

Luciano Vasques and Valeria Falce
Freshfields
Rome

The Dutch Competition Authority has refused to clear the contemplated merger of RAI and Jaarbeurs, thus making the first negative merger decision in its existence. In its competition analysis, the Authority emphasised the relationship between two relevant markets, in which RAI and Jaarbeurs have large market shares. RAI and Jaarbeurs proposed a number of mainly behavioural undertakings. However, the Authority insisted on structural undertakings from the parties and refused to allow the merger to proceed. The parties have several options for appeal.

Pepijn van Ginneken
Loeff Claeys Verbeke
Amsterdam

The New Zealand Ministry of Commerce has recommended changes to the Commerce Act 1986 designed to increase the Act’s deterrent effect against anticompetitive behaviour by large New Zealand firms. The changes are likely to be in force later this year, and should see tougher penalties and a wider range offences being caught.

Peter Hinton and Alexia Beer
Simpson Grierson
Auckland

The imposition of a record fine by the TDC demonstrates the increasing commitment of the Spanish competition authorities to the enforcement of competition law, particularly in those sectors being progressively liberalised by the government such as electricity and telecommunications. The competition authorities are clearly not prepared to allow large firms which previously held monopolies in sectors of the Spanish economy to undermine the government’s push towards liberalisation.

Koldo Loidi
Freshfields
Madrid

In a decision based on a rigorous economic analysis, the Swiss Competition Commission has introduced the concept of collective dominance into Swiss antitrust law. Drawing in its analysis on the EU Commission’s decisions and the checklist of the German Bundeskartellamt, the Commission ordered the merging companies to divest two affiliated companies. The decision centred on the duopoly which would have been created by the merger and the fact that both companies were vertically integrated.

Marcel Meinhardt
Lenz & Staehelin
Zurich

The draft Order can, if nothing else, be admired for being both short in length and wide in scope. Some definitions may need clarification, however. For example, the meaning of 'marketing of services' is not entirely clear.

The Order differs from the European approach in that it does not attempt to operate the exclusion by reference to any market share caps, it has fewer ‘black clauses’ and (without any single market issues to consider and with the combination of powers under the Fair Trading Act 1973 and the power of clawback), it is wider in scope.

The operation of the Act could have the odd result that an agreement might fall within the scope of the UK definition of a vertical agreement but not within the EU definition. Another discrepancy is that, whereas early guidance could be sought from the OFT on whether the agreement would be exempt under the EU block exemption, such guidance does not appear to be available where there is doubt as to whether an agreement would be excluded under the UK definition.

Gina Jennings
Freshfields
London

Chairman Pitofsky’s remarks about the application of the antitrust laws to high-tech industries come at a time when US antitrust regulators have been particularly visible in monitoring and challenging the practices of some high-tech businesses. It will be particularly interesting to se whether, if the Justice Department is successful in its current monopolisation suit against Microsoft, the remedy that is mandated will take account of Pitofsky’s call for caution and restraint.

Ronan Harty
Davis Polk & Wardwell
New York

The decisions are important precedents in unfair competition practices in Venezuela and have provided participants both in the market and in the legal community with clear standards by which to judge what type of activities can be considered unfair.

Gonzalo Rodriguez-Matos
Anzola Boveda Raffali y Rodriguez
Caracas

The Commission is proposing to use a market share approach for the exemption of some vertical restraints. However, there is little guidance or precedent in the EU on the way in which markets should be defined in the context of distribution arrangements in general, and franchising arrangements in particular. In the US, the courts and antitrust enforcement agencies have rejected the notion that any presumption of market power flows from a franchisor’s trademark or unique name. Therefore, the markets in which franchisors operate are generally identified as the upstream market for the sale of business opportunities or a broad downstream market for products sold by both franchised and nonfranchise businesses.

Philip F Zeidman
Rudnick, Wolfe, Epstien & Zeidman
Washington, DC