International competition law is displaying “business as usual”

Keeping the core competition law principles in mind, I have gathered topics for you this month ranging from relevant suggestions made by lawmakers, to hefty fines as well as approvals by pertinent authorities.?

In an economy that is somewhat handicapped by current international affairs, it is all the more important that we look to these core principles to regulate vulnerable markets and ensure competition is still possible without influential enterprises taking advantage of their beneficial position. On the other hand, it is also necessary to further deals that will benefit the market and the consumers and that relevant institutions apply the necessary scrutiny to seizable deals that have the potential to impact competition in their respective areas.

This article contains news elements to all these factors and I invite you to read, comment and share your thoughts on what has been going on during the last month.

Philipp Morris Receives Green Light from EC for Swedish Match

The EU Commission has approved the takeover of the Swedish "snus" –? a Scandinavian moist oral tobacco product – manufacturer Swedish Match by the US tobacco company Philip Morris for around 16 billion euros. However, the takeover is "subject to conditions."?

According to the Commission on Tuesday, the condition is that the US group sells SMD Logistics, a subsidiary of Swedish Match. This would give Swedish Match a “de facto monopoly in the distribution of tobacco and nicotine products in Sweden". Philip Morris agreed to the conditions.

“To address the Commission’s preliminary competition concerns, Philip Morris International offered to divest Swedish Match’s logistics arm, SMD Logistics,” the EU competition enforcer stated.

With the merger Philip Morris is seeking to expand its presence in the fast-growing market for cigarette alternatives, with sales from smoke-free products expected to make up more than its revenue by 2025.

Google Hit with $165 Million Fine by Indian Watchdog

India's Competition Commission accuses Alphabet of abusing Android's dominant role to boost its main online search business.

The Indian competition authorities have imposed a fine of 13.37 billion rupees (165 million euros) on Google's parent company Alphabet. The country's competition commission accuses Google of abusing the dominant role of its Android operating system to strengthen its main online search business.

It said in a notice on Thursday that pre-installed Google apps were used to entice Android users to use Google Search. The Competition Commission ordered Google to make changes - including allowing users to uninstall Google apps.

India, soon to be officially the most populous country in the world, is an interesting growth market for Google and other Silicon Valley companies. Android phones are very popular in the country.

Amazon Faces ￡900 Million Class Action in UK

Online giant Amazon is yet again facing a lawsuit in the UK for anti-competitive behaviour. A London law firm announced on Thursday that it would file the ￡900 million (1035 million euro) class action lawsuit with the competent court in London by the end of October. The class action lawsuit will be brought on the grounds of Amazon having allegedly exploited its dominant market position and thereby harming consumers.

Let’s take a more detailed look: Amazon is allegedly giving preferential treatment to products sold on its trading platform by Amazon itself and those of sellers who use Amazon's logistics services. This would put other sellers at a disadvantage, which would also harm consumers because it would deprive them of alternative shopping options. Another main goal behind the lawsuit is to deter Amazon from “setting the rules in their favour and thereby treating consumers unfairly", as was stated by consumer advocate Julie Hunter.

Amazon vehemently denied the allegations, stating that the “[...] complaint is without merit and we are confident that this will be resolved in the court process."

Amazon plays a double-role in the marketplace, offering external retailers a place to sell their products while at the same time acting as a seller itself. In connection with this dual function, the EU Commission has also been taking action against the US company for some time on allegations of abuse of its dominant position.

In the EU, many of the mail-order company's practices, which are considered as problematic, are addressed in the EU's Digital Markets Act (DMA), which has been passed in the meantime. The law is expected to come into force in the course of next year and prohibits, for example, the discrimination against external providers on trading platforms.

Eutelsat and OneWeb Merger Should Receive “Highest Possible Scrutiny”

The planned merger between the French and UK Satellite Firm Eutelsat and Oneweb has turned many heads since the tie-up announcement in July. UK lawmakers have now also called for “the strictest possible scrutiny” under the country’s foreign investment review regime, which also speaks for the size of the deal.?

Eutelsat/Oneweb would be the European answer to SpaceX's Starlink or Amazon's Kuiper project: The French satellite operator Eutelsat is said to be on the verge of a complete takeover of their British satellite competitor OneWeb. Eutelsat already has a 23 % stake in the British company. The shareholders of Eutelsat and OneWeb would each hold 50 % of the shares in the new group, according to official sources. While these merger discussions have all been confirmed, the deal is still far from through.

OneWeb was saved from bankruptcy during the Corona crisis by money from the British government and Bharti Global from India. Since then, the British state has held about 20 % of OneWeb - if the company is now affiliated with Eutelsat, the UK would get a small minority share.

According to insiders, the UK is therefore also to be given veto rights over OneWeb, for example over customers who are considered dangerous for security reasons, and over the relocation of OneWeb's headquarters, which are to remain in London.

Customers are to be sought in the B2B environment - for example in aviation, the military or shipping. Apart from Starlink, OneWeb would be the only LEO satellite internet service worldwide.

If the deal goes through and is approved by the competition authorities, France and the UK would move closer together in the satellite business. But the question that competition authorities will have to ask themselves is who this deal might drive out of the satellite business.

Speira to Acquire and Integrate Real Alloy Europe

Germany-based aluminium rolling and recycling company Speira has signed an agreement to acquire the European recycling business of Real Alloy ("Real Alloy Europe"), announcing the acquisition and integration of Real Alloy on the 21st October. The closing of the transaction was subject to customary closing conditions and approvals. The EU Commission approved the tie-up in a Phase I decision??

Real Alloy Europa is a leading European recycler of aluminium and magnesium scrap and related by-products with seven sites and approximately 600 employees in Germany, Norway, France and the UK. The acquisition expands Speira's ability to use recycled metal in production and provide its customers with high quality, low carbon aluminium rolled products.

Speira CEO Einar Glomnes stated that "The integration of Real Alloy Europe into Speira will accelerate our strategy to create closed loops from scrap to end product and back. Going forward, we look forward to investing in the combined capabilities of Speira and Real Alloy Europe to meet market demand for sustainable and closed-loop solutions.”

"Following the acquisition, Speira will continue to focus on recycling services for existing and new Real Alloy Europe customers. We will serve the entire European aluminium industry and work closely with customers along the entire value chain," Glomnes said.

Speira customers will benefit from more high-quality products with a low carbon footprint.

Speira CEO Einar Glomnes said, “The integration of Real Alloy Europe into Speira will accelerate our strategy of creating closed loops from scrap to final product and back. We look forward to investing further in Speira’s and Real Alloy Europe’s combined capabilities to meet the market’s demand for sustainable and circular solutions.”

Polish Competition Authority Sides with Basketball Players

The Polish Competition Authority UOKiK has fined the national Basketball league and its 16 teams for illegally colluding to terminate players’ contracts and withholding their wages in response to the coronavirus pandemic. The fine, based on the decision of the President of the UOKiK, was passed on the grounds of the early termination of league competitions as a result of the coronavirus pandemic and the ensuing agreement of the clubs to not to pay the players all the salaries due for the season. Not only were contracts with basketball players to be terminated, but also salaries for the rest of the seasons not to be paid.

President of UOKiK, Tomasz Chróstny, commented on the matter, stating that “sports clubs are entrepreneurs within the meaning of the Polish and European competition law. This means that they should make their own business decisions. Acting in agreement, they were able to illegally exchange sensitive information and eliminate an important factor affecting competition between them, i.e. rivalry for the best players.”

The case of the coordinated actions enabled the clubs to reduce the players’ monetary benefits without having to fear that they would move to a different club in the following season. The quality of the players does not only affect the success rate of a club, but also has a financial impact in regard to ticket and merchandise sales.

DMA to Regulate the Metaverse

At the beginning of this year, the President of the EU Commission Ursula von der Leyen presented the priorities for 2023. The statement of intent also announced an "initiative on virtual worlds, such as the Metaverse".

Moreover, Thierry Breton, Commissioner of the EU Single Market, stated that the EU Commission is not yet done regulating digital markets and, after passing the Digital Markets Act (DMA) and Digital Services Act (DSA), wants to target the Metaverse next.

In a blogpost, Thierry Breton writes that the Commission has no plans to witness a “new Wild West or new private monopolies."

The Metaverse is creating new public spaces that need to be designed according to European values and where people should feel as safe as they do in reality.

"We want to shape the development of safe and thriving metaverses from the very beginning," Breton adds. For them to flourish, he says, they must adhere to interoperability standards and be competitive. "No single private actor should hold the key to the public space."

While the goals and intentions sound good, the pertinent question will be how to implement them concretely. If companies are forced into an overly tight legal corset, this could inhibit innovation rather than promote it. Especially if this legal body will take a long period of time to achieve the security it is targeting.?

Mexican Bus Cartel Reaches Final Destination

Mexican regulators have fined the largest passenger bus lines of the country for around $60 million on the grounds of them having colluded among themselves for 20 years to keep fares artificially high.

This led to a high detriment for consumers, the regulators communicated that the price-fixing may have cost bus passengers about $170 million in excess ticket costs.

The Federal Commission on Economic Competition said the fines were levied against 18 bus companies and 31 individuals associated with them.

Between 2000 and 2020, the companies allegedly reached six different agreements to charge equally high fares or split routes among themselves, rather than compete among themselves to charge less.

So all in all, as we can see in the proposed merger of Eutelsat and Oneweb, European lawmakers are urging the competition authorities to take a very close look at tie-ups that could endanger competition on the European and British markets. And whereas regulation of omnipresent companies such as Meta, Google and co. is more necessary than ever now, one has to take into account how the regulations are being implemented and whether the targeted goals in question are being attained effectively through these regulations.

When taking into consideration other fields such as the venture capital space, international competition law is displaying “business as usual” which is a good sign, showing us that business is thriving despite the difficult environment.