With British Airways and American Airlines unveiling their plans to spearhead a new global alliance, airline consolidation is again in the headlines as discussions over ownership of landing slots heat up.

At the IBA conference in Vancouver, the focus for competition lawyers was very much on telecoms, with the Antitrust and Trade Law Committee, the Communications Law Committee and the Latin American and Caribbean Steering Group all hosting interesting discussions. Sebastian O’Meara reports on what was said.

Almost a year since his appointment, the Federal Competiton Commission’s chairman, William E Kennard, is in the firing line as the telecoms merger wave heats up. Sebastian O’Meara spoke to him about the mergers, the Telecommunications Act and the future of competition in the industry.

After hearing William Kennard’s views on the telecoms industry in the US, Sebastian O’Meara spoke to some leading telecoms lawyers in Washington and New York to hear their ideas on how successfully competition was being promoted in US telecoms.

George Addy and Willie Grieve consider recent developments in the interface between competition law and sector-specific regulation in the Canadian telecommunications industry.

Martin Bechtold of Pünder, Volhard, Weber & Axster, Frankfurt am Main, looks at the provisions of the latest legislation amending Germany’s competition law, and detects some muddled thinking

Sebastian O’Meara went to Germany to sound out leading competition lawyers on their reactions to the forthcoming changes to the Federal Competition Law and found a mood of dissatisfaction

William J Kolasky and Leon B Greenfield of Wilmer, Cutler & Pickering, Washington DC, show how substantive convergence in merger review in the EU and US stands in stark contrast to procedural differences

Dimitris Tzouganatos of the University of Athens Law School assesses how well Greece’s Competition Committee has been enforcing the provisions of the 1977 Antitrust Law

President Menem of Argentina recently signed a decree implementing a highly controversial, potentially anti-competitive patents law. Shane Sorenson looks at the arguments and the implications for local and foreign pharmaceutical companies.

Bruce F Metge of Mintz Levin, Washington DC questions the purpose and benefit of enforcing the United States’ criminal antitrust provisions in the global marketplace.

Professor Robert Baxt and Darren Murphy of Arthur Robinson & Hedderwicks, Melbourne, Australia, on the Australian Competition Consumer Commission’s authorisation on public benefits grounds of the coordinated marketing activities of the North West Shelf Project participants.

The French government has blocked the Coca-Cola Company’s planned US$840m acquisition of the French orange drink brand Orangina, a division of Pernod-Ricard SA.

The European Commission has rejected the Italian government’s plans to transfer the majority of air traffic in Milan to the new Malpensa airport as discriminatory and incompatible with European legislation.

Britain’s new trade secretary, Peter Mandelson, has upheld a decision by the Monopolies and Mergers Commission to block the US$610m acquisition by Ladbroke of the Coral betting chain.

Three former executives of Archer Daniels Midland have been found guilty of engaging in an international conspiracy to fix the prices of lysine, an animal feed additive.

Judge Thomas Penfield Jackson of the Federal District Court has set a trial date of October 15 for the Department of Justice (DoJ)’s antitrust suit against Microsoft, following a request by Microsoft for a delay to the original September 23 trial date.

Showa Denko Carbon Inc, the South Carolina-based subsidiary of Showa Denko of Japan, has been fined for colluding to fix the price of graphite electrodes used in steel-making.

The European Commission has imposed record fines totalling nearly US$300 million on 15 north Atlantic shipping lines.

The Federal Communications Commission has approved Worldcom’s takeover of MCI, removing the last major regulatory hurdle in the way of the deal, originally valued at US$37 billion when announced in November 1997.

The DoJ has approved the proposed US$20 billion merger of Banc One Corp and First Chicago NBD Corp following a commitment from the companies to sell 39 branch offices in Indiana with total deposits of US$1.47 billion.

The European Commission has confirmed that it has cleared Seagram’s purchase of a 75 per cent stake in Polygram, the world’s largest music company, saying that although the two companies had overlapping activities in music and film, they saw no problems with the acquisition, as the market was highly competitive.

The European Commission has authorised the creation of a fullfunction joint venture by Overseas Holding Ltd (OOH) of the UK and VIAG Interkom Verwaltungs Gmbh (VIAG) of Germany, under the name Orange Communications SA, to provide mobile telephony in Switzerland.

Using similar reasoning, the Commission also authorised Telia AB and Sonera Cy to acquire, through their joint venture Amber Mobile Teleholding AB, joint control over UAB Omnitel, a Lithuanian mobile telephone operator, together with Motorola Lithuania Telecom Inc.

Royal Ahold moves closer to Giant clearance

The European Commission’s DGIV has decided to continue its investigation of prices for international phone calls, concentrating its investigations on seven dominant operators: OTE of Greece, Post & Telekom Austria, Postes et Télécommunications Luxembourg, SONERA (formerly Telecom Finland), Telecom Eireann, Telecom Italia and Telecom Portugal.

Van Miert investigates

Britain’s Office of Fair Trading says it will 'carefully scrutinise' the US$1 billion bid by BSkyB, controlled by Rupert Murdoch, for Manchester United - the largest sum ever paid for a sports team.

Following an announcement by the French government that it was planning to 'financially restructure' the state-owned Crédit Foncier de France prior to renewing its attempts to sell the bank, Competition commissioner Karel van Miert asked for details of the planned cash injection.

The European Commission has decided to open a detailed investigation into the merger between the Finnish-based wood products group Enso Oyj and Sweden’s Stora Kopparbergs och Bergslags.

The European Commission has extended by two weeks its deadline for its initial review of the proposed US$35 billion merger between American Home Products and Monsanto.

The long-awaited MacKay panel on the banking sector in Canada has issued a qualified endorsement of proposed big bank mergers, saying such mergers should be allowed if, after a full public review, they are found to be in the public interest.

Three international operators dominated the auction for segments of the broken-up Brazilian telecoms operator Telebras.

Italian residential telephone users have a new choice after Infostrada became the first company to challenge the former monopolist Telecom Italia in this market.

British Airways and American Airlines have unveiled plans for a global alliance with Canadian Airlines, Cathay Pacific of Hong Kong and Qantas of Australia.

Intel Corp Chairman and CEO Craig Barrett has spoken of a 'fundamental disagreement' with the FTC over its interpretation of antitrust law.

The former state-owned Mexican telephone operator Telmex has filed for an injunction against a ruling by the national competition regulator, the Federal Competition Commission (CFC) declaring Telmex a dominant carrier.

The Court of First Instance in Luxembourg is currently hearing an appeal from 42 plaintiffs in the European cement industry (one regional association, eight national associations and 33 producers) against a European Commission decision of 1994 which accused them of infringements of Article 85 of the EC treaty involving, among other things, their participation from 1983 in an agreement designed to ensure non-transshipment to home markets and to regulate cement transfers from one country to another, the exchange of price information and the participation in bilateral or multilateral market-sharing agreements.

The proposed merger of entertainment firms Atlantis Communications Inc and Alliance Communications Corp, which would result in the creation of one of the top dozen entertainment firms in North America, is currently attracting the interest of regulators in Canada.

Preston Gates Ellis has been representing PP&L Inc in its federal complaint challenging the constitutionality of Pennsylvania’s Electricity Generation Customer Choice and Competition Act of 1996, which aims to permit customers to choose their electricity supplier starting in 1999.

The Commission has opened a phase two investigation into the proposed merger between Enso and Stora (see News) which would create the biggest pulp, paper and board manufacturer in the world.

The European Commission is investigating the proposed £2.1 billion acquisition by Marsh & McLennan of the US, the world’s biggest insurance broker, of Sedgwick plc, the last publicly quoted UK insurance broker.

Imperial Tobacco Group's acquisition of Douwe Egberts van Nelle

The Commission has approved the merger of two formerly state-owned Finnish energy companies, IVO, mainly involved in electricity generation, and Neste, an oil and natural gas company.

After eight years at Coudert Brothers, highly-regarded telecoms expert Colin Long will join London’s Olswang solicitors.

Jeremy Lever QC is re-emerging from retirement on October 6 to rejoin Monckton Chambers on a full-time basis.

Robin Aaronson is joining Law and Economics Consulting Group in London.

Following the establishment of the Linklaters Alliance, Alec Burnside will move from the current Brussels office into the Alliance of European Lawyers office at rue Brederode 13.

The ACCC did not intervene in the recent acquisition of Smiths Snackfoods by PepsiCo. Informal clearance was provided to PepsiCo after Frito-Lay Australia divested a portfolio of brands, assets and intellectual property called 'Snack Brands Australia' to Dollar Sweets Holdings. The divestment addressed the ACCC’s concerns that the acquisition, without a simultaneous divestiture, would result in a substantial lessening of competition in a market.

Gaire Blunt/Jenny Zaverdinos
Allen Allen & Hemsley
Sydney

Taken with Amylum, Bodycote means that Article 12§4 permits the transfer of shares, but not the exercise of the attached voting rights.

However, in Bodycote, the Council imposed a fine of only Bfr1 million (approximately US$28,000) on the acquirer, a long way short of the maximum fine provided in the law for breach of the duty to suspend (up to 10 per cent of the parties’ turnover).

In addition, the precise meaning of Article 12§4 in relation to concentrations effected through a transfer of assets remains unclear.

Vincent Dirckx
Freshfields Deringer
Brussels

The Competition Bureau has revisited two business areas well known to it from transactions challenged previously, this time allowing a newspaper deal to proceed but finding significant problems in a proposed petroleum marketing and refining joint venture.

John F Clifford and Jeffrey P Roode
McMillan Binch
Toronto

The Danish Competition Council is establishing a solid track record devoid of surprises and consistent with previous practice and the practice of the EC Commission.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

It is interesting to compare this judgment with the Court’s April judgement in Javico where contractual export bans outside the Community having the effect of appreciably preventing, restricting or distorting competition and trade within the Community were found to fall under Article 85 (1) and therefore to be unenforceable. The difference apparently results from the trademark rights in the Silhouette case which - until they are exhausted - allow their owner additional protection.

Ultimately, however, e-commerce and Internet shopping may significantly reduce the impact of the Court’s ruling as presumably trademark owners will find it more difficult to enforce their rights.

Maya Barr
Freshfields Deringer
Brussels

The Court of Appeal confirmed the very high fines, taking into account, in particular, the seriousness of the offences and France Télécom’s monopoly. The case thus confirms the French courts’ movement towards stricter control of public monopolies as recently seen in the Court’s judgment ordering EDF - the French state-owned electricity producer - to pay a fine of Ffr30 million.

Nicolas Charbit
Freshfields
Paris

The threat of increased concentration in the retail sector has been a talking point for some time and the FCO seems to be taking a very careful look at any transaction in this sector. However, this case shows that in the FCO’s view the critical level has not yet been reached.

Philipp Cotta
Deringer Tessin Herrmann & Sedemund
Berlin

Under the former Competition Act, the fact that a company had a 30 per cent market share was sufficient to establish a dominant market position within the meaning of the Act. Under the new Act (effective as of January 1 1997), the existence of a dominant market position can only be established after various aspects of the market have been considered. The new Act’s definition of a ‘dominant market position’, according to the Competition Office, includes factors such as the availability of other products or services to consumers and the fact that a dominant company can make business decisions at its discretion regardless of competitors. In short, the once black-and-white rule on dominance has given way to a more sophisticated market assessment.

Ádám Máttyus
Bruckhaus Westrick Heller Löber
Budapest

A review of existing Irish merger control legislation is overdue, particularly since the Competition Authority decided that mergers should be subject to review not only under the Mergers Act (the legislation designed specifically for the review of mergers) but also under the Competition Act (which is modelled on Articles 85 and 86 of the EC Treaty). An expert group appointed by the Minister for Enterprise Trade and Employment has recently published a report recommending the streamlining of the merger control regime, as well as procedural improvements under the Mergers Act.

Gerald FitzGerald*
McCann FitzGerald
Dublin

*The author is a member of the Competition and Mergers Review Group

The Supreme Court has recently adopted a de minimis rule. A company’s executives may be subject to imprisonment for criminal violations by the company. Failure to obtain approval for an agreement in restraint of trade is actionable immediately upon signing the agreement itself

Michael V Shine and William B Korman
Shine, Hunter, Martin & Co
Tel Aviv

The Mexican FCC regulations recently issued establish the responsibilities and roles of the various directors and the line of reporting to the FCC chairman. What is less transparent is the demarcation of responsibilities between the individual directors.

Gabriel Castañeda
Castañeda y Asociados
Mexico City

While overall impressions of the Authority’s performance remain good, the Authority is aware that problems could arise as the deadline for decisions on the more than 1,000 notified agreements draws nearer.

Maurice Essers
Loeff Claeys Verbeke
Amsterdam

The Ministry of Commerce has shown an open attitude to the conclusions in the MOC paper and it will therefore come as no surprise if sanctions such as corporate probation are put forward as part of its final recommendation

David G Moorman
Simpson Grierson
Auckland

Although apparently the TDC does not oppose the merger, it does subject it to very onerous conditions. When considering its final decision, the Government will no doubt have in mind two considerations: on the one hand, to create a strong Spanish sugar manufacturer able to compete with other international players and, on the other hand, to maintain effective competition in the Spanish market. It will be interesting to see which consideration prevails.

Francisco Cantos
Freshfields
Madrid

The Market Court (the ‘Supreme Court’ for competition matters in Sweden) has recently given its first judgment in a merger matter. The court rejected the Competition Authority’s request for a prohibition of the merger in question. In its judgment the Court would seem to have placed great emphasis on the need of the merging parties to rationalise and restructure in order to maintain their competitive strength.

Johan Coyet
Mannheimer Swartling
Stockholm

Mr Mandelson must make his decision shortly. While there are good economic arguments in favour of establishing a market for slots, it will be interesting to see whether Mr Mandelson is prepared to back the OFT in the face of opposition from Brussels. The alternative involves proceeding against the advice of the OFT - a course of action occasionally taken by his predecessor, Margaret Beckett, who notably referred two mergers to the Monopolies and Mergers Commission against the advice of the OFT.

Simon Neill
Freshfields
London

The drug wholesaler cases represent another notable court victory for the FTC. Indeed, the judge in the case went out of his way to praise the 'high level of performance by the FTC'.

Remarking on the changes that have taken place within the agency over the past decade or so, the court noted that 'it was not too long ago when this agency was so fraught with dissension that it was unable to perform its mission ... If this is an example of the revitalised agency in action, the public interest will be well served in the days to come.'

Ronan P Harty
Davis Polk & Wardwell
New York City

Not much is left of the franchisees’ case on remand. Although the appeals court declined to dismiss the case outright and said it was 'not inconceivable' that a class action might be used 'in a carefully controlled manner', it appears that the franchisees will be limited to arguing that Meineke’s conduct constituted a breach of their particular versions of the franchise agreement. Any damages that may be awarded in the future would be limited to the lost profits that each franchisee could prove based on his or her individual circumstances.

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