After 27 years, Fordham’s annual conference on International Antitrust Law & Policy continues to draw more delegates year on year and offers an ideal opportunity to find out what regulators either of the Atlantic are doing and thinking. Sebastian O’Meara and Zelda Fazaeli listened in.

The IBA’s Annual Competition Conference in Fiesole follows hard on Fordham’s heels in the calendar, and while a more intimate event, it has established itself in just four editions as Europe’s answer to Fordham for the quality of the discussions it generates. Sebastian O’Meara was there to hear discussion of all the hottest issues.

The growth of business-to-business and business-to-consumer commercial traffic on the internet has spawned a host of competitonrelated issues. Zelda Fazaeli reports from Brussels on this and other topics covered at a recent conference on European antitrust law organised by IBC

Cento Veljanovski, managing partner of Case Associates, London offers a purely personal view of the controversy surrounding the competitive impact of European mobile telephony auctions

Joseph Gilchrist, Honorary Director of the European Commission and of counsel and European Affairs Adviser, Clifford Chance Pünder, Brussels, considers how current procedures in EU merger control cases could be revised to ensure merging parties’ rights are fully safeguarded

Read law at Emmanuel College, Cambridge, and went on to the Bar (Middle Temple) in 1973 after attending the Inns of Court School of Law. Also attended the Europa Instituut, Amsterdam University, where he completed a post-graduate course in EC Law.

Has been head of the GKN Group Legal Department since 1996. Chairman of the CBI Competition Panel, and in that role has been closely involved in recent developments in EU and UK competition law, including the Competition Act 1998 and the current modernisation proposals of the European Commission.

On October 11 Ignacio de León resigned as head of the Superintendency for the Promotion of Free Competition (ProCompetencia), the Venezuelan antitrust agency. He had not completed his four-year term.

Mark Warner of the OECD’s Trade Directorate has joined Hughes Hubbard & Reed’s New York and Washington, DC offices as international antitrust and trade counsel.

Law & Economics Consulting Group (LECG) has announced that Shyam Khemani is to join the firm as director of competitive strategy, antitrust and regulation.

Alberto Pera has joined the Gianni & Origoni team in Rome, where he will head its EU and competition department. Pera will, at the same time, work part-time at the Institute of Economic Research, also in Rome.

Christopher Norall left White & Case to join the Brussels office of Morrison & Foerster as partner, on 4th December. He is joined by Rony Gerrits, formerly an associate with White & Case.

Scott Crosby, a partner with Kemmler Rapp Boehlke for 20 years, has left to become a partner at Stanbrook & Hooper. He joined Stanbrook on November 1.

Norton Rose has made three lateral hires from Coudert Frères in Paris to form the basis of its new French competition practice.

Meanwhile, Dominique Brault and Philippe Corruble have joined Coudert Frères’ competition department. Corruble will replace de la Laurencie as head of the Paris competition department.

Wilmer Cutler & Pickering has hired the former assistant director of the FTC’s Bureau of Competition, Anticompetitive Practices Division, Veronica Kayne. She is joining the Washington DC office as partner.

Wilmer, Cutler & Pickering has also announced that counsel Eric Mahr has moved from the firm’s Washington DC office to its Brussels office.

A majority of Belgium law firm Loeff Claeys Verbeke have announced that they will be joining Allen & Overy Earlier this year the firm split into three parts. The international arm (including the entire Luxembourg office) merged with Allen & Overy, a number of Dutch lawyers joined Loyens & Volkmars, while the Belgian arm of the firm continued to trade under the Loeff Claeys Verbeke name.

The UK subsidiary of London Economics, London Economics Ltd, appears to be facing a brighter future following an 18-month saga of defections and unrest.

French energy and transport conglomerate Alstom SA is to acquire Fiat’s rail transport business, Fiat Ferroviaria, following EC antitrust clearance.

On October 16 Chevron and Texaco announced plans for a US$100-billion merger. The merged company, to be called ChevronTexaco Corporation, will be the third-largest producer of oil and gas in the United States and will have operations across the globe. Dave O’Reilly, who will become CEO of Chevron-Texaco, said: 'This is good news for the country because the United States will have an additional toptier energy company better able to compete effectively with the international majors.'

A Norton Rose team has succeeded in getting a European Commission decision concerning the use of authorised guarantees from Greece to Olympic Airways amended.

The Financial Times reported on November 1 that the European Commission’s antitrust services will be monitoring third-generation (3G) mobile phone auctions now being held across Europe after problems were identified in Italy, the Netherlands and Austria.

Having received EU approval of its merger with Time Warner, America Online Inc has turned its attention to Spain, where the US-based online services company has announced a joint venture with Banco Santander Central Hispano (BSCH), the leading financial group in Spain and Latin America.

C3D, a subsidiary of the French transport group Caisse des Dépôts et Consignations, has failed in its attempted takeover bid for the Go-Ahead Group, a UK transport group active in rail, bus and airport services.

Deutsche Telekom CEO Ron Sommer is facing a volatile few months as he attempts to steer through the biggest deal of his career: a US$50 billion stock and cash acquisition of VoiceStream Wireless, the US mobile phone outfit.

Subject to regulatory approval, General Electric (GE) is set to acquire Honeywell in a US$45-billion deal. GE, often tagged the world’s most valuable company, is a diversified technology, services and manufacturing company.

ASX and the New Zealand Stock Exchange have announced plans to merge. The news signals a change of attitude by the New Zealand Stock Exchange, which has traditionally been reluctant to create a single market for equities trading and capital raisings, reports say.

Cement group Holderbank (Switzerland) has - with the Portuguese company Secil - launched a public bid for the leading Portuguese cement producer, Cimpor. The Portuguese state has a ‘golden share’ in Cimpor, and the government has issued a decision prohibiting Holderbank/Secil from buying more than 10 per cent of Cimpor’s capital with voting rights.

Four major European steel manufacturers - Arbed, Corus, ThyssenKrupp and Usinor - have announced that they are to establish two ecommerce B2B platforms, ‘Steel 24/7’ for the sale of various steel products and ‘Buy for Metals’ for the procurement needs of the metals industry.

As promised by Margaret Bloom, OFT director of competition policy, at various conferences recently, the UK is tightening up on competition. Or so it seems. The first dawn raid ever was carried out by the OFT in late October on Arriva and FirstGroup, two bus companies. The OFT has the power to raid under a March 2000 amendment to the 1998 Competition Act. It also has the power to grant immunity from prosecution to anyone within the cartel who turns ‘whistle-blower’. According to press reports, so far immunity has been granted twice. There are at present 15 further cases of serious suspected anti-competitive behaviour under investigation in the UK.

The Cartel Office’s guidelines facilitate application of the new prohibition on sales below cost price in that they reflect the interpretation of the competent authorities. Primarily they serve to clarify issues relating to the interpretation of the prohibition, thereby enhancing transparency as regards its scope. However, the precise calculation of cost prices, as well as the specific circumstances of each case, will doubtlessly complicate proceedings under Section 20 paragraph 4 ARC.

August-Carel Maske
Freshfields Bruckhaus Deringer
Brussels

With its decision No. Vj-70/2000, the Hungarian Competition Office approved the acquisition of joint control by MOL over Slovenaft AS with Slovintegra AS and Slovbena AS. The significance of the decision is that it supports the Hungarian Competition Office’s Ruling No. 24 according to which the substantial element of the joint control is that the managing parties should agree on essential decisions concerning the business activity of the company under control. The joint control can be the result of de facto situations or an agreement as well.

Ágnes Bogdán
Oppenheim and Partners
Freshfields Bruckhaus Deringer
Budapest

The impetus for the new competition law came, not surprisingly, with the country’s financial crisis, which began in mid-1997. When the Business Competition Authority now being set up is in place, Indonesia will have, in theory at least, a fully operational antitrust regime. How the provisions of the law, which some are suggesting are too vague, work in practice remains to be seen.

Tom Blass

A recently-published review of the Irish banking sector makes interesting reading. It provides a snapshot of the sector and makes a number of recommendations designed to promote competitiveness. It expresses concern regarding the potential impact on competition of a merger involving the major Irish banks, but acknowledges the possibility of takeovers by foreign banks seeking exposure to the Irish economy or access to the EU.

Gerald FitzGerald
McCann FitzGerald
Dublin

Two recent decisions of the Autorità Garante demonstrate how its policy is rapidly evolving to ensure the enforcement of antitrust rules as widely as possible. Article 2 of the Italian Antitrust Law has now been applied to a number of economic situations, sectors and alleged anticompetitive practices, not just the typical cartels or anti-competitive agreements.

Matteo Falcione and Luca Crocco
Freshfields Bruckhaus Deringer
Rome and Milan

Belgium is taking steps to ensure the prompt implementation of its liberalisation legislation. New provisions have been adopted to increase the independence of the management of the electricity grid operator. The appointment of an operator appears to be the next crucial step enabling the government to liberalise the market effectively.

Florence Melchior
Freshfields Bruckhaus Deringer
Brussels

Air Canada is ordered by the Competition Bureau to cease offering discount airfares in eastern Canada in response to new entry. Elsewhere, the Competition Bureau announced that it will not challenge the acquisition by CanWest Global of a number of media assets from Hollinger.

John F Clifford and Jeffrey P Roode
McMillan Binch
Toronto

The changes to Colombia’s competition law regime enacted this year appear to be very mixed in terms of their effect on competition.

Alfonso Miranda Londoño
Centro de Estudios de Derecho de la Competencia
Bogota

The Danish Competition Council has cleared the first merger notified under the new merger control regime in Denmark, making the clearance conditional upon a number of commitments including divestiture of holdings in the Copenhagen Stock Exchange, the Danish Security Centre and the Danish Payment Systems.

Jan-Erik Svensson*
Gorrissen Federspiel Kierkegaard
Copenhagen

 * The author represented Danske Bank in the deal and was responsible for making the joint notification

As previously reported in GCR, in April 1999 the Commission adopted a White Paper and invited comments. According to the Commission, the majority of comments received expressed a favourable view of the Commission’s approach, and the current proposal takes account of the contributions from the European Parliament and the Economic and Social Committee and of the numerous observations received from the NCAs and industry, which in particular stressed the need to maintain an adequate level of legal certainty and consistency in the application of competition rules throughout the Community. With the current proposal, the Commission aims to reduce its own workload by removing from it responsibility for dealing with notifications for exemption under Article 81(3) which, in its eyes, do not bring to its attention serious violations of competition rules. The authority thereby hopes to gain more room to pursue high-profile ‘serious infringements’ (ie hard-core cartels). While the current proposal may succeed in this respect (and, in passing, also widens the Commission’s investigative powers), it still leaves altogether unanswered a number of open questions (eg as to the possible development of ‘forum shopping’ between agencies).

Marc Reysen
Freshfields Bruckhaus Deringer
Brussels

The first merger case ever referred to the Competition Council has been approved conditionally. The case concerned the formation of a joint venture between the Finnish telecom company Sonera Oyj and the publiclyowned Finnish Broadcasting Company. Even though a clearance was obtained, Sonera decided to withdraw from the deal shortly after the Competition Council’s decision.

Christian Wik, Ilkka Aalto-Setälä and Jenni Lukander
Roschier-Holmberg & Waselius
Helsinki

In another development, Finland has introduced new legislation regulating the transmission, distribution, supply, and storage of natural gas. The aim of the regulation is to provide a framework for workable competition in the retail sale of natural gas and thereby facilitate a gradual integration of the Finnish natural gas market with the European markets.

Christian Wik, Ilkka Aalto-Setälä and Jenni Lukander
Roschier-Holmberg & Waselius
Helsinki

This decision is the first of its kind in the banking sector. The amount of the fine imposed on the banks is particularly significant, especially considering that the French Competition Council was recently criticised, after the publication of its 1999 annual report, for the low level of cartel fines previously imposed. The imposition of a 1.145 billion franc fine demonstrates the willingness of the French competition authority to vigorously curb cartels in line with the European Commission’s policy. The banks have appealed against the decision. Judgment is expected within six to nine months.

Angélique De Brousse
Freshfields Bruckhaus Deringer
Paris

The Cartel Office’s guidelines facilitate application of the new prohibition on sales below cost price in that they reflect the interpretation of the competent authorities. Primarily they serve to clarify issues relating to the interpretation of the prohibition, thereby enhancing transparency as regards its scope. However, the precise calculation of cost prices, as well as the specific circumstances of each case, will doubtlessly complicate proceedings under Section 20 paragraph 4 ARC.

August-Carel Maske
Freshfields Bruckhaus Deringer
Brussels

Some of Japan’s telecommunications companies continue to be sheltered from real competition. However, this situation is unlikely to continue indefinitely, and the official recommendation by the Information Technology Special Committee that the NTT Group be broken up is an indication of the changing climate.

Hideto Ishida,
Anderson Mori,
Tokyo

The Endesa/Iberdrola merger, if it comes to fruition, would result in a major restructuring of the Spanish electricity market. If the proposal to exchange assets with other European utilities were accepted, it would open the Spanish market to European competitors while allowing Endesa/Iberdrola to gain access to other European markets. Repsol- YPF/Gas Natural’s possible takeover bid could raise different competition concerns (ie vertical as opposed to horizontal) as Gas Natural is the leading supplier of gas to electricity companies.

The challenge for the government now is to analyse the divestment proposals and accept those that contribute to a healthier competitive structure in the Spanish electricity market. The restructured market would somewhat look different depending on who the prospective buyers of the disposed assets were (ie the other Spanish utilities, Repsol- YPF/Gas Natural or other European utilities). This transaction exemplifies the pivotal role reserved to the government in mergers affecting key economic sectors or formerly privatised companies, and the consequent political interference.

Natalia Trujillo
Freshfields Bruckhaus Deringer
Madrid

The merger between Unilever NV/plc and Bestfoods USA allowed the Swiss Competition Commission to apply the ‘portfolio power’ theory in Switzerland. It relied on the European precedent Guinness/Grand Metropolitan and held that companies holding key brands in markets where brands play an important role may, under certain circumstances, exercise strong market power. This market power could be exercised by gaining significant additional economic discretion in (i) fixing prices and launching promotions and granting discounts, (ii) tying different brands or (iii) threatening to cease supplying customers.

Marcel Meinhardt
Lenz & Staehelin
Zurich

In the course of its inquiry, the Commission used isochronic analysis to assess the extent of consumer choice in local catchments areas. It expressed some concern about the relative lack of choice in some areas and went as far as to recommend a system of approvals from the Office of Fair Trading for new supermarket developments in areas where supermarket chains already have large stores. However, as this recommendation did not relate to specific conduct by retailers or follow from any adverse public interest finding, the Competition Commission recognised that the Secretary of State could not implement such a remedy without separate legislation. Finally, the Secretary of State has asked the Director General of Fair Trading to monitor the situation to see whether legislative changes in this area should be considered at a later stage.

Janet Gillen
Freshfields Bruckhaus Deringer
London

What lessons can we learn from this battle? First, franchisees are bound by the written language of their franchise agreements. If the franchise agreement prohibits oral modifications, any changes must be in writing (except in very limited circumstances). Second, if a franchisee has to sign the franchisor’s then-current franchise agreement at the time of renewal, it can expect that there may be terms that are significantly different from the current agreement. A franchisee might be faced with the choice of staying with the franchisor under new, more restrictive terms or going it alone; and even if it has the right thereafter to engage in a similar business, it will, at a minimum, lose the value of the many years of association with the franchisor’s brand. Third, and perhaps of greatest interest to international franchisors, the case raised the question of whether the competitive conditions in a foreign market may be sufficiently different from those in the home market as to justify different provisions (eg in terms of the covenant not to compete). The settlement of the case left this last question unresolved, but it will surely be raised in other cases in the future.

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