With the end of his tenure as Competition Commisioner, Karel van Miert has closed a long chapter in European policy-making, first in charge of the public transport portfolio, and then, for the lasr seven years, in charge of competition. A few days after handing over to his successor and erstwhile colleague Mario Monti, Mr van Miert spoke to Sebastian O’Meara in a Brussels café, reflecting on the past and looking into the future.

Over 400 lawyers attended the American Bar Association Antitrust Section’s meeting at the ABA Annual conference in Atlanta in August. One of the highlights of a packed agenda was a session hosted jointly by the International Antitrust & Foreign Competition Law and Transportation Industry committees on the divisive topic of airline alliances. Callum Campbell reports

Introducing the first-ever ranking of law firm competition groups by number of lawyers, Maija Pesola wonders how important the size of a department can be in a field where specialist expertise is allWhere size matters - up to a point

Christopher Bright of Clifford Chance, London, looks at how the growth of cross-border and international antitrust has led inexorably to the quest for a global antitrust regime

Donald I Baker of Baker & Miller PLLC, Washington DC, rehearses the pitfalls and opportunities that await countries creating competition laws and enforcement agencies for the first time, and offers some practical advice of his own

Tom Hoehn, James Langenfeld, Meloria Meschi and Len Waverman of LECG/NAVIGANT Consulting Inc summarise for GCR the findings of their study, commissioned by the UK’s Office of Fair Trading, on the role of empirical evidence in antitrust investigations

Horst Henschen of Feddersen Laule Ewerwahn Scherzberg Finkenburg Clemm, Düsseldorf, explains why notifications to the German authority may be taking a little longer to process than usual and how the inconvenience to filing parties can be minimised

Title: Vice President Legal Affairs, Group Legal Counsel

Age: 46

Previous employment:

1980-87 Roschier-Holmberg & Waselius
1988-89 Corporate Counsel, Nokia Corporation

Title: Vice President and Associate General Counsel

Age: 45

Previous employment:

1979-84 Cadwalader Wickersham and Taft

Closing arguments were being made in the Microsoft trial as we went to press, with observers everywhere trying to guess the outcome and its consequences - free rein for Microsoft, a break-up resulting in the creation of a series of ‘Baby Bills’ or some other outcome. The government didn’t mince its words in its closing arguments.

In one of the biggest media mergers in history, Viacom has agreed to acquire CBS for some US$36 billion in shares to form a new entity that is expected to have revenues of more than US$20 billion a year and would rival Time Warner’s position as the industry leader.

Mexico’s antitrust agency, the Federal Competition Commission (CFC), has begun an investigation into passenger air travel in the country.

In one of its first moves under the leadership of the new Competition Commissioner, Mario Monti, the EU Commission is investigating the sales practices of the French carmaker Peugeot, with Commission officials conducting dawn raids at Peugeot premises in Germany and the Netherlands, as well as its headquarters in Paris.

Competition Commissioner Mario Monti has reiterated the position of his predecessor, Karel van Miert, on the takeover of the Portuguese financial holding Champalimaud by Spain’s Banco Santander Central Hispano, saying there had always been 'a perfect match of views' between Van Miert and himself over the matter.

The proposed merger between the Swedish telecoms operator Telia and its Norwegian counterpart Telenor is facing a new challenge with an accusation that Telia has abused its dominant position to take a grip on the broadband market.

As GCR went to press, the EU Commission was reportedly set to block the US$1.5 billion takeover by the British tour operator Airtours of its rival First Choice, believing the deal would stifle competition in the package holiday market in the UK by reducing the number of companies in the market from four to three.

The privately-owned British airline British Midland, which wants to expand its services to routes over the North Atlantic, has stepped up its campaign to pressure the authorities in London and Washington over an open-skies agreement with a publicity campaign highlighting high business class prices on key transatlantic routes from London to the United States and urging passengers to write to their MPs to demand an end to the situation.

Coca-Cola Co’s antitrust troubles continue. Italian regulators - in a preliminary ruling - have found that Coke violated antitrust laws by abusing a dominant market position, a decision that leaves Coke liable to fines of some US$80 million, or 10 per cent of its annual turnover in Italy, if it is confirmed in a final ruling in December.

The Australian Competition and Consumer Commission (ACCC) has instituted legal proceedings against Universal Music, Sony Music, Warner Music, the Australian Record Industry Association and Music Industry Piracy Investigation Pty Ltd, alleging that they have taken unlawful action in order to discourage or prevent Australian businesses from selling 'parallel imports' of compact discs.

Herbert Smiths reputation for competition and trade law has been much enhanced by recent announcements that both the former European Commissioner for Trade, Sir Leon Brittan, and Jeantet & Associes competition partner Claude Lazarus were to join the firm in the new year. Brittan joins as a consultant to the firm, while Lazarus will take a partnership role in the Paris office. He will be accompanies by a team of 3 associates.

The Allen & Overy competition practice is to gain at least 10 lawyers, as the firm merges with the international practice of Loeff Claeys Verbeke. Head of the Loeff Claeys Brussels team, Tom Ottervanger and two of his associates will join the firm in Brussels, while in Amsterdam a team of lawyers led by Paul Glazener will add considerable weight to Allen & Overy’s Netherlands practice.

Washington DC-based Covington & Burling merged with New York firm Howard Smith & Levin on 1 October.

Chicago firm Rudnick & Wolfe and Baltimore-based Piper & Marbury merged in 30 October in the largest merger between equal-sized law firms in US history. The new law firm, to be called Piper Marbury Rudnick & Wolfe LLP has over 750 lawyers and offices in eight cities around the United States. In terms of the antitrust practice, the combined firm will have 26 attorneys working mainly from the Washington, DC and Baltimore offices.

Coudert Brothers are widening the scope of the competition practice through a merger with German law firm Shuermann & Partners and Belgian law firm Coppens Van Ommenslaghe & Faures. The firm is also building competition capability in London under the leadership of partner Alistair Gorrie.

The former head of the Legal and Economic Secretariat of the Swedish Competition Authority, Kenny Carlsson, has joined Stockholm- based law firm Gernandt & Daneilsson.

Four European law firms, Dibb Lupton Alsop of the UK, Ginestie Paley-Vincent & Associes in France, Brugueras Garcia- Bragado, Molinero and Associados in Spain and Price & Partners in Belgium are launching an international partnership, DLA & Partners.

UK Law firms Denton Hall and Wilde Sapte are to merge with effect from 1 February 2000.

UK firm Lovell White Durrant has joined the scramble for Anglo-German law firm mergers, and announced plans to merge with Frankfurt-based Boesebeck Droste.

The energy group of Boston-based economic consultancy Charles River Associates has been considerably strengthened by two high level appointments.

Norwegian law firm Bugge Arentz- Hansen & Rasmussen (BAHR) has added new strength to its competition practice, in the form of Helge Stemshaug.

The Stibbe Simont Monahan Duhot competition team has been strengthened with the addition of associates Lars Bakers and Hein Hobbelen.

The Central and East European Law Initiative, (CEELI), a public service project of the ABA is setting up an initiative to train Bulgarian judges and prosecutors on competition law issues.

Atlanta-based law firm King & Spalding has elected Jeffrey Cashdan to the partnership.

Following the announcement of the Alcan/Pechiney/Alusuisse merger, the world’s largest aluminium company Alcoa announced a surprise US$5.6 billion bid for the world’s third largest, Reynolds Metals.

Europe’s largest telecoms provider, Deutsche Telekom, is to expand its coverage further with the acquisition of One2One, the UK’s fastest-growing mobile phone operator.

The US-based communications company NTL looks set to become the largest cable-TV provider in Britain following a complex restructuring of Cable & Wireless Communications (CWC).

The proposed merger between French supermarket chains Carrefour and Promodes, valued at 15.6 billion euros, will create the world’s second largest shopping chain.

Dow Chemical Co is to buy long-time rival Union Carbide in a stock deal valued at US$8.89 billion.

Suez Lyonnaise des Eaux is set to be the world leader in water services following a US$5.5 billion US shopping spree which has seen the French firm acquire Pittsburgh-based Calgon Corp for US$415 million, Illinios company Nalco for US$4.1 billion and most recently United Water Resources for US$1 billion. These acquisitions are part of a recent trend for US municipalities to privatise their water services.

The UK Restrictive Practices Court has upheld the right of the FA Premier League to collectively sell TV rights. Concluding a case brought against the FAPL by the Office of Fair Trading, the court ruled that the exclusive TV rights granted to BSkyB and the BBC by the FAPL are not against the public interest.

In an unprecedented move, the European Commission has issued an apology to the Fédération Internationale de l’Automobile for leaking statements to the press in relation to an ongoing investigation into FIA agreements.

The Court of Arbitration for Sport in Lausanne has upheld the rules of UEFA, the governing body of European football, which prohibit clubs owned by the same company from taking part in the same competition.

Semiconductor manufacturer Texas Instruments is to acquire Unitrode Corporation, a major designer and supplier of power management components, in a stock-swap valued at US$1.2 billion.

The New Zealand Commerce Commission looks set to deny authorisation to a merger between the New Zealand Dairy Board and up to eight dairy companies.

The US government’s efforts to prosecute foreign companies under US antitrust laws recieved a further setback as a US District court in Boston found in favour of Nippon Paper Industries Inc in a price-fixing case brought by US Justice Department - one of the first in which the DoJ has tried a foreign company for a wholy overseas conspiracy.

The European Court of First Instance has delivered an ambiguous preliminary ruling in the first of seven cases in which RJB Mining is challenging the European Commission’s decisions regarding state aid to the German and Spanish coal industry. The court rejected both RJB’s and the Commission’s interpretation of the state aid code, and dismissed RJB’s case. RJB is to appeal.

Westdeutsche Landesbank is appealing the July decision by the European Commission that the increase in capital of WestLB in the amount of Dm5.9 billion through integration of the Wohnungsbauforderungsanstalt (agency for promoting housing development) involved state aid elements.

The European Commission has launched a second challenge to Portugal’s opposition to the merger between Spanish bank Banco Santander Central Hispano (BSCH) and Portugal’s Champalimaud group.

The strongest airline alliance on the African continent is to be created as SAir Group, the parent company of Swissair, acquires a 20 per cent stake in South African Airways (SAA).

British American Tobacco is to buy the remaining 58 per cent of Canadian consumer products group Imasco it does not already own and will sell off all the group’s subsidiaries apart from the tobacco arm, Imperial Tobacco.

British American Tobacco is to buy the remaining 58 per cent of Canadian consumer products group Imasco it does not already own and will sell off all the group’s subsidiaries apart from the tobacco arm, Imperial Tobacco.

One of the world’s largest shipping groups is to be created as AP Møller- Mærsk acquires the international liner business of Sea-Land Service Inc for an estimated US$800 million.

Ashlands Inc, a US energy, construction and chemical conglomerate, has launched a bid to acquire Danish construction company Superfos A/S.

The raising of the notification thresholds is a very welcome measure, even though there is a feeling that they are still too low to relieve business of unnecessary administrative burdens. On the other hand, the possible introduction of a simplified notification form for transactions where no 25 per cent market shares will be held will most certainly be much appreciated by business and practitioners.

In an unprecedented move, the Canadian Government has issued an Order suspending the application of the Competition Act to enable Canada’s two national carriers to discuss and make proposals regarding the future structure of the industry. Long-awaited changes to the pre-merger notification rules which will double no-close waiting periods are expected to be implemented in October.

John Clifford and Jeff Roode
McMillan Binch
Toronto

The duration of delivery contracts for natural gas must be shortened from 20 years to 10 years.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

These three draft notices have been long awaited and should be considered in the context of the Commission’s attempts at broad reform of EU competition law (in particular, the White Paper on competition enforcement reform and the pending vertical restraints block exemption commented on in previous issues). The outgoing Commission aims at leaving its mark on the future competition law framework. The new Competition Commissioner, Mario Monti, has already indicated his intention to follow in his predecessor’s footsteps. However, being an economist by profession, he is expected to bring a more economic assessment to competition policy.

Maya Barr
Freshfields Deringer
Brussels

The Finnish Competition Authority cleared the concentration of two IT service providers on condition, among other things, that the acquirer divests the Finnish subsidiary of the target and that the leading Finnish telecommunications operator halves its minority ownership in the acquirer and the number of seats that it has on the Board of Directors of the acquirer.

This case is one of three in which the Finnish Competition Authority has issued conditional merger clearances so far.

Christian Wik and Nina Isokorpi
Roschier-Holmberg & Waselius
Helsinki

The ART’s action can be compared with the Vodaphone/Cellnet case, in which Oftel, with the support of the MMC, managed to impose a reduction in fixed-to-mobile call prices. Nevertheless, the ART’s action has been contested by the French operators. Although the relevant EC Directive limits national regulators’ action to controlling the prices of powerful operators, the French implementing decree extends the ART’s competence to cover excessive interconnection prices charged by all operators, irrespective of their market power.

The ART, justifying its action on the basis of its general powers to protect consumers, has successfully managed to impose a substantial reduction of the prices charged by operators.

Jacques-Philippe Gunther and Nicolas Charbit
Freshfields
Paris

The approval of Parmalat/Cirio took almost six months instead of the normal maximum 75 days provided by the law. The proceedings entailed lengthy and difficult negotiations between the parties and resulted in dramatic changes from the original structure of the transaction. In the other case, Nutricia risks a fine of up to 1 per cent of the Italian turnover of the group in 1994 for having failed to comply with merger filing requirements at that time. These two recent cases show that antitrust issues are playing an increasingly important role in M&A deals in Italy and that it is now clearly necessary to consider formal and substantive competition issues while structuring an M&A transaction in Italy in order to avoid being faced with unexpected regulatory intervention.

Salvatore Lamarca
Freshfields
Milan

The Dutch Competition Authority has investigated a national scheme for the restructuring of the pork butchering sector. This sector is characterised by problems caused by structural overcapacity. An industry association was created to reduce overcapacity by buying out some slaughterhouses and restricting the production of the remaining slaughterhouses.

However, the Competition Authority judged that this method of restructuring was not in accordance with the applicable rules on competition in the Netherlands. An individual complaint with the Authority against the economic reconstruction in the pork business was therefore upheld.

Pepijn van Ginneken
Loeff Claeys Verbeke
Amsterdam

The conversion of some agricultural product boards to companies as of April 1 next year is part of the ongoing deregulation of the sector.

Giles Kennedy and Marc Cropper
Simpson Grierson
Wellington

As a result of the hearing process in Norway in connection with the Commission’s White Paper on the modernisation of the implementation of Articles 81 and 82 of the EC Treaty, it has become apparent that extensive harmonisation of the Norwegian substantive and procedural competition rules will be necessary. Some main points are discussed.

The Norwegian Competition Authority has, however, so far not expressed an official opinion on the subject, other than recognising that there is a need for a comprehensive review.

Jonas W Myhre
Hjort Law Office DA
Oslo/Brussels

The Antimonopoly Court indicated that of mergers completed without the consent of the President of the Office for the Protection of Competition and Consumers only those having negative consequences for competition should be penalised.

Malgorzata Posluszna
Wardynski & Partners
Warsaw

This law is an important step towards harmonisation for a potential Member State, especially considering both the volume and trend of state aids granted in the EU.

Thomas J Pomméra
Paris

Among other things, the new Act introduces the concepts of 'intermediate' and 'large' mergers, which are defined by thresholds.

Edward Southey
Webber Wentzel Bowels
Johannesburg

This landmark decision has been eagerly awaited, as it is the first decision adopted by the Government regarding the merger of financial institutions. The decision is a clear indicator of the Government’s policy on financial institutions’ stakes in competing companies in ‘strategic’ sectors of the economy. Other financial institutions planning a merger will have to take into account this important precedent. However, this decision is likely to have more widespread effects as the Government is considering adopting legislative measures to ensure that all financial institutions (ie not only those affected by the merger) meet the requirements set out by the Government in this decision.

Koldo Loidi
Freshfields
Madrid

Implementation of the proposals for merger reform will require primary legislation, so a new regime is some way down the line. According to the timetable outlined in its ‘Implementation Plan’, the Department of Trade and Industry is on schedule so far. The consultation document was published in August and the consultation period is set to run until December 1 1999. If all goes according to plan, responses will be analysed in October and the outcome of the review will be published in May 2000. Progress thereafter will depend very much on the legislative process

Renella Reumerman
Freshfields
London

One of the driving forces behind the aggressive enforcement policies of the FTC, Competition Bureau Director William J Baer, has announced that he will be leaving the agency in the near future. Mr Baer’s four-year tenure as Director is the longest in the Bureau’s history. Mr Baer will be succeeded by his Senior Deputy Director, Richard G Parker, described by The Wall Street Journal as 'a steely litigator who relishes courtroom conflict.' The Journal also referred to 'agency insiders' who said that 'where Mr Baer has sometimes been willing to compromise in a close case, Mr Parker may not.'

Ronan P Harty
Davis Polk & Wardwell
New York City

This decision will mean a significant change in the practice of the legal profession (as well as of engineers, architects and public accountants because of the other two decisions), requiring lawyers who formerly relied on the certainty that a minimum fee would be paid to compete with other lawyers to offer attractive fees for their services.This is surely the aim of a sound competition policy.

Gonzalo Rodriguez-Matos
Anzola Boveda Raffalli y Rodriguez
Caracas

It is ironic that countries experiencing economic difficulty are taking actions that may discourage foreign investment. Malaysia, Indonesia, and many other Asian countries remain attractive markets for expansion-minded franchisors. It is too early to determine whether these franchise-specific laws will present significant barriers to foreign franchisors, but there should be concern about whether they present a harbinger.

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