Canadian COMPETITION LAW

July 9, 2010

We are pleased to provide this Global Competition Review from our friends at the leading Singapore firm Rajah & Tann.

Asia

Overview

The competition law arena has been sizzling in Singapore and the rest of Asia. In Singapore, the Competition Commission of Singapore (‘CCS’) issued its first infringement decision for abuse of dominance on 4 June 2010. On the same day, the CCS issued its first infringement decision following a leniency application made. In Singapore also, the first appeals against a decision by the CCS were heard by the Competition Appeal Board. The Competition and Antitrust team handled some of these. In the region, enforcement of competition laws is picking up as well with a number of decisions made by the competition regulators in Indonesia, Korea, Japan and even India. On the regulatory front, Malaysia has become the latest Asian country to introduce competition laws.

Cases

Singapore’s First Abuse Of Dominance Decision

On 4 June 2010, the CCS issued its first infringement decision on abuse of dominance. SISTIC.com Pte Ltd (‘SISTIC’) was fined S$989,000 (the largest fine imposed on a single company to date) by the CCS for imposing exclusivity clauses on key venues and event promoters. The CCS found that with a share of around 90% of the market for the provision of ticketing services to both event promoters and ticket buyers and a lack of existing countervailing bargaining power in the market, there was no doubt that SISTIC was dominant in Singapore. By imposing exclusivity arrangements on 17 event promoters as well as on two of Singapore’s biggest venues, the Esplanade and the Singapore Indoor Stadium, SISTIC prevented its competitors such as Tickets.com, Gatecrash and Global Ticket Network, from entering into or expanding in the market. In addition to the financial penalty, SISTIC has until 4 August 2010 to modify its existing agreements to remove all clauses that require SISTIC’s contractual partners to use SISTIC exclusively. SISTIC has the option to appeal the CCS decision. Any such appeal must be lodged by 4 August 2010.

Infringement Decisions Issued In First Cartel Whistle-Blowing Case in Singapore

In the third cartel decision in Singapore, the CCS issued S$187,592.94 in fines on 13 electrical services companies for price fixing through bid-rigging. The investigation was triggered by a leniency application by one of the cartel parties, Arisco Engineering & Maintenance Services Pte Ltd. By blowing the whistle before an investigation had started, Arisco was granted 100% immunity from imposition of a fine. On substance, the case is a classic bid-rigging case, with the electrical companies colluding to bid on various electrical or building works projects. Typically, when a project was up for tender, the company that was interested in winning the project would request for a cover bid from at least one other company. The company making the request would inform the others of its bid price so that they could submit a higher quote. According to the CCS, there were even instances where the company making the request prepared the quotation for the companies supporting it.

First Appeals Heard By The Competition Appeal Board In Singapore

On 1, 2 and 3 June, the first appeals lodged against a decision issued by the CCS were heard by the Competition Appeal Board. Our Competition and Antitrust Team acted for four of the Appellants. The appeals were filed by a number of express bus companies which were found to have fixed the minimum selling prices of bus tickets to a few destinations in Malaysia as well as the amount of a Fuel Insurance Charge paid by their customers. The overall penalties imposed by the CCS in this case amounted to nearly S$1.7 million. The decision by the Competition Appeal Board has been reserved.

The Indonesian Competition Regulator (‘KPPU’) Fined 20 Cooking Oil Producers For Fixing Prices

The KPPU fined 20 Indonesian cooking oil producers for colluding to set prices of cooking oil. The KPPU decided to investigate the case after noting that even though the price of crude palm oil which is the main input for cooking oil fell significantly in 2008, the price of cooking oil did not. In the course of its investigation, the KPPU found minutes of meetings during which the oil producers discussed prices, production capacity and the structure of production costs. The KPPU decided that the 20 palm oil producers violated Articles 4 (oligopoly) and 5 (price fixing) of Law No 5 year 1999 on the Prohibition of Monopoly Practices and Anti Competitive Behaviour and imposed a fine totalling Rp290 billion (S$44 million).

Nine Indonesian Airlines Fined By The KPPU

In May 2010, the KPPU fined nine Indonesian airlines Rp585 billion (S$88.3 million) for fixing the amount of fuel surcharge imposed on passengers for national flights. The KPPU found that on 4 May 2006 the Indonesia Aviation Company Association (‘INACA’) and nine aviation companies, including Indonesian flagship carrier Garuda Indonesia, signed an agreement to charge their customers a fixed fuel surcharge from 10 May 2006 on all national flights. Although the agreement was said to have been officially cancelled by the parties on 30 May 2006, the KPPU found that it continued to be implemented by the various airlines at least until late 2009. In issuing its decision, the KPPU stated that the estimated additional cost to the airlines’ customers during this period amounted to between Rp5.08 trillion (S$800 million) to Rp13.8 trillion (S$2.1 billion).

China’s First Public Anti-Cartel Action Under The Anti-Monopoly Law

On 30 March 2010, China’s National Development and Reform Commission (‘NDRC’) published its first public infringement decision under the Chinese Anti-Monopoly Law (‘AML’), in which it imposed financial penalties on 21 members of a Rice Noodle Cartel for price fixing. The Cartel started in 2009, when 18 rice noodle producers from Nanning met to discuss a joint increase in rice noodle prices, which was implemented on 1 January 2010. On 21 January 2010, 15 rice noodle producers from neighbouring Liuzhou joined their counterparts in Nanning in the price increase, entering into profit-sharing agreements with the Nanning producers. According to the NDRC infringement report, three ‘organisers’ of the Rice Noodle Cartel were fined RMB100,000 (S$20,320) each while fines of between RMB30,000 (S$6,100) to RMB80,000 (S$16,260) were imposed on 18 members of the Cartel pursuant to the AML. Several executives who participated in the Rice Noodle Cartel were also arrested following allegations that they ‘coerced’ several of the Liuzhou rice noodle producers into participating in the Cartel.

Competition Commission Of India (‘CCI’) Issues Order To Stay Ban On Movie Screening

In June 2010, the CCI issued an order staying the ban imposed by the Kamataka Film Chamber of Commerce (‘KFCC’) on the Hindi and the Tamil versions of the movie ‘Raavan’ (or ‘Raavanan’).  Reliance Big Pictures (‘RBP’), the distributor of the movie, had complained to the CCI that the KFCC which originally had agreed to the screening of the movie in 25 cinemas of the State decided to restrict the number of cinemas releasing the movie to four multiplexes. The CCI’s interim order prohibits the KFCC from restricting the screening of “Raavan” being distributed by the RBP. The KFCC has appealed the order issued.

19 Airlines Were Fined A Record Of 120 Billion Won in Korea

On 28 May 2010, the South Korean Fair Trade Commission (‘KFTC’) fined 19 airlines a combined 120 billion won (S$137.87 million) for unfair trading and issued warnings to two more airlines. The KFTC’s investigation began with unannounced inspections in February 2006, prompted by a leniency application from Korean Air. In its investigation, the KFTC found that the 21 airlines had conspired to introduce fuel surcharges and continued to raise surcharge rates for air cargo services between Hong Kong and Korea, Europe and Korea and Japan and Korea between 1999 and 2007. Amongst those penalised were Japan Airlines, Lufthansa, Cathay Pacific, Singapore Airlines, Malaysian Airlines and Air France, while Scandinavian Airlines and Air India were issued warnings.

Japan Airlines And American Airlines Apply For Anti-Trust Immunity In Japan

In June 2010, Japan Airlines and American Airlines applied to the Ministry of Land, Infrastructure, Transport and Tourism of Japan, seeking authorisation to enter a Joint Business Agreement which provides for an enhanced cooperation between them on routes between Asia and North America. The two airlines had previously applied to the US Department of Transportation to secure clearance for their Agreement. The Joint Business Agreement provides for a close cooperation between Japan Airlines and American Airlines, with the two airlines agreeing on capacity, routes, schedules etc. Such agreements between competing airlines are typically prohibited under competition rules unless authorised by the relevant regulator.

Hitachi Cable Ltd And 9 Others Fined For Fibre-Optic Cable Cartel

The Japan Fair Trade Commission (‘JFTC’) recommended that a penalty of Y16 billion (S$92 million) be imposed on 10 fibre-optic cable parts makers for rigging bids for supply projects involving devices for two regional phone units of Nippon Telegraph and Telephone Corp. The 10 companies, which include Advanced Cable Systems Corp and Hitachi Cable Ltd, were held to have substantially restrained competition in the market of optical fibre cable products by colluding to determine which companies would win the tender for certain parts such as fibre-optic cable connectors, as well as the cost of the orders.

Competition Commission Of Pakistan (‘CCP’) Takes Issues With Pakistan-Saudi Air Agreement

The CCP is of the view that the Pakistan-Saudi Air Agreement which limits the provision of air transport services to two airlines – Pakistan International Airlines and Saudi Airlines – between the two countries will lead to an artificial increase in the price of air tickets charged to consumers. On that basis, the CCP recommended opening the route to other airlines from both countries and let fair competition play its role in lowering costs to consumers.

Australian Court Fines Four Marine Hose Makers For Bid Rigging

The Federal Court in Melbourne has fined four makers of marine hose a total of about A$8.24 million (S$ 9.92 million) for engaging in a cartel. The case started on 1 June 2009 when the ACCC instituted proceedings alleging that four manufacturers of marine hoses, Trelleborg Industries SAS, Dunlop Oil & Marine, Bridgestone Corp and Parker ITR, conspired to avoid competition in tender processes led by major oil companies such as ExxonMobil, Woodside Petroleum, and BHP Billiton. The firms were found to have rigged bids, controlled prices for marine hose and allocated market share in Australia and elsewhere in the world. The case was part of a worldwide marine hose cartel which was first investigated in 2008 in the EU and USA.

Legislation / Regulation

Malaysia To Introduce Competition Laws

On 22 April 2010, Malaysia’s House of Representatives passed the Competition Bill 2010 and the Competition Commission Bill 2010. The new Competition Act and Competition Commission Act will likely be implemented in the course of 2011. Whilst the Competition Commission Act provides for the establishment of a Competition Commission to administer and enforce the Competition Act, the Competition Act focuses on the prohibition of anti-competitive and abusive conduct and practices. There are no provisions in the Competition Act, however, that expressly deal with mergers, and consequentially no notification requirements for mergers in Malaysia. Under the Competition Act, potential fines for infringements of the Act can amount up to 10% of the worldwide turnover of the enterprise over the period during which the infringement occurred, which can potentially be very large as they are strictly not constrained by the relevant market nor by a time period. Businesses in Malaysia need to start preparations for compliance with the requirements of the Competition Act early as certain traditional ways of doing business will have to change.

China Proposed Rules To Implement Anti-Monopoly Law

On 25 May 2010, the China State Administration for Industry and Commerce (‘SAIC’) issued revised drafts of three implementation rules explaining features of the enforcement approach that will be applied to key Anti-Monopoly Law (‘AML’) ‘conduct rule’ prohibitions, namely, monopoly agreements, abuse of dominant market position and abuse of administrative powers to eliminate and restrict competition. The Draft Monopoly Agreement Rules and Draft Dominance Rules provide direction for situations in which business operators may be able to justify or raise defences for agreements or conduct that would otherwise infringe China’s AMLaw. In the Draft Administrative Monopoly Rules, the SAIC prohibits the abuse of administration powers of administrative or governmental authorities which eliminate or restrict competition.

Europe

Europe saw a slew of cartel decisions on the back of leniency applications to the authorities in various industries, including the airline industry, the tobacco sector, the memory chip sector, the coffee industry and the bathroom equipment sector to name a few. Interestingly, Europe also saw its first settlement decision following the introduction of the new simplified procedure in June 2008 in the memory chip case. In relation to merger notifications, the European Commission cleared the acquisition of joint control of Air China Cargo by Cathay Pacific Airways and Air China. Additionally, two Sara Lee divestments before the European Commission have met with different fates – Procter & Gamble’s acquisition of the air care business cleared the Phase I review whereas Unilever’s acquisition of the household and body care business has been steered into the Phase II Review.

Cases

Resale Price Maintenance In The UK Tobacco Sector

On 16 April 2010, the UK Office Of Fair Trading (‘OFT’) imposed a total fine of GBP225 million on tobacco manufacturers and their retailers for artificially controlling the prices of tobacco products in the market. According to the OFT, the unlawful arrangement involved tobacco manufacturers Imperial Tobacco and Gallaher entering into individual agreements with various retailers such as Asda, Sainsbury’s, Safeway, Somerfield etc. Under these agreements, the retail price of one brand was linked to a competing manufacturer’s brand. The OFT found that these arrangements were in place at various times between 2001 and 2003 and covered cigarettes, hand rolling tobacco, pipe tobacco, cigars and cigarellos. Sainsbury’s approached the OFT for leniency for the arrangements and received full immunity from the fines. Some retailers benefited from a reduced fine for voluntarily providing information to the OFT after the investigation had started.

First Settlement Decision In The EU

On 19 May 2010, the European Commission (‘EC’) announced its first ever settlement decision that brought to an end the EC’s investigation in a cartel in the DRAM sector. The cartel involved ten manufacturers of memory chips (DRAM) including Samsung, Infineon, NEC, Hitachi, Mitsubishi and Toshiba. The settlement decision was brought about under a new simplified procedure introduced in 2008. It allows the parties, at an early stage of the procedure, to acknowledge their participation in an anti-competitive agreement and accept their liability for it, in order to shorten the procedure and benefit from a 10% reduction in the fine. The total fines imposed on the infringing parties crossed EUR 331 million. Micron received full immunity from the fines as it provided information to the Commission before it had started its investigation. An investigation was also initiated in the US, by the Department of Justice, and led to the imposition of US $731 million in fines on companies including Samsung. Samsung executives were also convicted of criminal charges in the US investigation.

17 Companies Fined A Total Of €622 250 783 By The EC For A Long Running Price Fixing Cartel Of Bathroom Equipment

The investigation by the EC was triggered by a leniency application filed by one of the cartel’s participants. The cartel lasted for 12 years, during which the 17 bathroom equipment manufacturers fixed prices for baths, sinks, taps and other bathroom fittings in six countries, including Germany, Austria, Italy, Belgium, France and the Netherlands. During meetings of 13 national trade associations in Germany (over 100 meetings), Austria (over 80), Italy (65), and also Belgium, France and The Netherlands and through other bilateral contacts, the parties fixed price increases, minimum price, and rebates, and exchanged sensitive business information. The highest fine of more than €325 million was imposed on Ideal Standard (US), whilst the whistle-blower was granted full immunity from the fines. Remarkably, the EC decided to reduce the fines of five undertakings by 25% or 50% based on their difficult financial situation.

EC Smashes Prestressing Steel Producers Cartel

17 prestressing steel producers groups were hit with a total fine of €518 million, ArcelorMittal’s fine alone amounting to more than €276 million. The cartel which started in the early eighties was exposed by one of the participants, DWK/Saarstahl who blew the whistle in 2002. The cartel terminated at that time, after the EC carried out raids at the premises of a number of the participants. Further raids were conducted in 2006. The investigation revealed that, for nearly 20 years, the 17 groups which encompassed 36 individual companies, agreed on quotas, prices and allocated clients across Europe. In this case, as in the bathroom equipment case above, the EC granted reductions of 25%, 50% and 75% of the fines imposed on 3 companies which had filed ‘inability-to-pay’ applications. Note, however, that the EC had received 13 of such applications. Elements taken into account by the EC when reviewing ‘inability-to-pay’ applications included, inter alia, a review of the company’s financial statements and ratios evaluating the financial strength, profitability and solvency of the company. In addition, the EC looks at the social and economic context of the company.

Coffee Roasters  Fixed Prices In Germany

On 9 June 2010, the German Cartel Office imposed fines totalling approximately €30 million on 8 coffee roasters including Kraft Foods, Luigi Lavazza Deutschland and Melitta SystemService GmbH, the German Coffee Association as well as 10 employees of the companies. According to the Bundeskartellamt, the companies participated in price fixing arrangements for sales to out-of-house markets ie hotels, vending machines, and other bulk purchasers. It was found that there was a ‘working group’ of directors and sales managers of the coffee roasters that existed from at least 1997 up until mid 2008. The Bundeskartellamt held that on at least two occasions, price increases by these companies was a result of their price fixing arrangement. In addition to the companies, the German Coffee Association was also fined for publicly supporting the cartel’s price increase in 2005. The investigation was triggered by a leniency application from Alois Dallmayr Kaffee oHG in January 2010 which received full immunity from the fines.

Airlines Investigated By The OFT For Sharing Commercially Sensitive Information

On 22 April 2010, the OFT issued a statement of objections against two international airlines: Virgin Atlantic and Cathay Pacific airlines. According to the OFT, the two airlines allegedly shared commercially sensitive information allowing them to coordinate their pricing strategies for passenger fares on the London–Hong Kong route. The alleged infringement took place through several contacts between employees of the two airlines over a number of years. The OFT initiated its investigation after Cathay Pacific approached the OFT on its information exchanges with Virgin Atlantic. Under the OFT’s leniency policy, the first company to come forward with information about a cartel may be granted an immunity or a reduction in monetary penalties. Since Cathay Pacific provided information to the OFT before the OFT had started its investigation, it will not have to pay any monetary penalty in the event that an infringement is found, provided that it continues to cooperate with the OFT. What is important to recognise is that the sharing of information alone is not prohibited. However, when the exchange is of commercially sensitive information resulting in price fixing between competitors, this amounts to an anti-competitive agreement.

European Commission (‘EC’) Clears The Acquisition Of Joint Control By Cathay Pacific Airways And Air China Of Air China Cargo

In Europe, mergers, including acquisition of joint-control by two or more companies over a third undertaking, have to be notified to the EC if certain turnover thresholds are crossed. This was the case here, which explains the review of this merger by the European competition authority although Air China is essentially active in Chinese domestic market. The EC cleared the merger in view of the fairly limited combined market share of Air China and Cathay Pacific in air cargo transport between China and Europe and the presence on the various routes of many large international airlines which will prevent the parties from taking advantage of their enhanced position in these markets post merger.

The EC Clears Sara Lee And Procter&Gamble Merger But Opens In-Depth Investigation In Sara Lee And Unilever Merger

The proposed acquisition by Procter&Gamble of Sara Lee’s air care business was cleared in Phase I by the EC which found that notwithstanding the relatively high market share of the merged entity in the home air freshener market, the merged entity will still face sufficient competition to alleviate competition concerns in the relevant market. Unilever’s proposed take-over of Sara Lee’s household and body care business met more hurdles. The EC, stating that the merger creates ‘significant overlaps in a number of products used by consumers on an every day basis’, decided to proceed to a Phase II review of the merger to ensure that the merger will not result in higher prices for deodorants, bath and shower products, to name a few. The decision is due in October this year.

Legislation / Regulation

Revised Competition Rules For Vertical Agreements

On 1 June 2010, the revised competition rules for vertical agreements came into force in the EU. The new Block Exemption Regulation (‘BER’) issued by the EC replaces the previous BER on vertical restraints which applied since 1999. The new rules do not drastically depart from the previous ones, as only vertical agreements which do not contain hard core restrictions, such as the fixing of resale prices for instance, benefit from this safe harbour. It takes into account, however, developments in the distribution of goods and services over the last ten years, including internet sales. For instance a supplier may impose a requirement, as for off-line sales, that in a selective distribution system, a distributor must not sell online through a website that does not meet the agreed quality standards or to unauthorised distributors. The new BER also takes into account the size of the distributor or retailer in the relevant market. The BER does not apply to agreements involving distributors or retailers who cross a 30% market share threshold.

EC Launches Public Consultations On A New Regime for Assessment Of Horizontal Agreements

As part of the public consultation on the new regime for the assessment of horizontal agreements, the EC issued a new draft of its so-called Horizontal Guidelines which deals with agreements between competitors. Interestingly, the draft includes a new chapter focussed on information exchanges that provides useful guidance on the type of information that can or cannot be exchanged between competitors without running afoul of the law.

UK OFT Issues Revised Guidance On Director Disqualification Orders In Competition Cases

Under the Company Directors Disqualification Act 1986 (as amended from time to time, ‘CDDA’), the OFT has the power to apply to the High Court for a Competition Disqualification Order (‘CDO’) against a director of a company. A CDO prevents an individual from acting as a director of a company for up to 15 years. Specifically, the Court must make a CDO against an individual if the undertaking of which he is a director infringes the prohibition of anti-competitive agreements or of abuse of a dominant position and if the Court considers this individual unfit to be in the management of a company. On 29 June 2010, the OFT issued a revised Guidance which replaces the one previously issued in 2003 on the same topic, stating the factors it will take into consideration in deciding whether it should apply for a CDO. The OFT will follow a five-step approach and consider the following:

(i)  whether there has been a breach of competition law: the OFT will now consider applying for a CDO even in cases where there is no prior decision or judgment. In the previous Guidance, application for a CDO was only in cases where the infringement of competition law had been established in a judgment or a decision;

(ii)  the nature of the breach and whether financial penalty has been imposed: the OFT is more likely to envisage applying for a CDO in cases where a financial penalty has been imposed, although it may do so even in cases where no financial penalty has been imposed. This is to send a strong deterrence message to all directors, including those of companies where a financial penalty was not imposed due to the small size of their company;

(iii)  whether the company benefitted from leniency: as in the previous Guidance, the OFT will not apply for a CDO against a current director of a company that benefitted from leniency. However, the revised Guidance provides that the OFT may nevertheless consider applying for a CDO against a director who ceases to act as a director of the company due to its role in the competition law infringement, or who fails to co-operate with the leniency process;

(iv)  the extent of the director’s responsibility for the breach of competition law: the previous Guidance established a hierarchy depending on the degree of involvement of the director (distinguishing between the director who directly contributed to the breach, the director who only had reasonable grounds to suspect that there was a breach but did not prevent it and the director who ought to have known that the undertaking’s conduct amounted to a breach). The revised Guidance states that the OFT is likely to apply for a CDO in each and all of these cases. The objective is to encourage all directors to take positive and reasonable steps to uncover potential breaches of the competition law and to monitor the company’s compliance with competition law;

(v)  any aggravating or mitigating factor: the OFT, for instance, will look at the direct involvement of the director in the conduct as an aggravating factor, whilst the director taking disciplinary action against the employee(s) responsible for the breach will act as  a mitigating factor.

Americas

With respect to litigation in antitrust law, the single most awaited decision in North America was issued in May 2010, when the US Supreme Court declared the 32 football teams of the National Football League as not constituting a single economic entity. The matter has been sent back to the lower courts to determine if any damages should be payable. In merger applications, the US FTC unanimously cleared Google’s acquisition of Admob, but has decided to keep a close watch on the industry in case there are any further changes. The Americas has also seen legislative reform with Mexico tightening the grip of its Competition Act and the US beginning a review process for its Horizontal Merger Guidelines.

Cases

The US Supreme Court  Decides The National Football League Is Not A Single Economic Entity

On 24 May 2010, the US Supreme Court released its much awaited decision in the American Needles case. The US Supreme Court held that the 32 football teams that make up the National Football League (‘NFL’) had engaged in activities that may constitute concerted action under Section 1 of the Sherman Antitrust Act. In particular, the Supreme Court reversed the decision of the two lower courts and rejected NFL’s argument that the association along with the 32 teams formed a ‘Single Economic Entity’ that could be exempt from the Sherman Act for jointly marketing their intellectual property. The Court took particular note that although the teams share common interests in promoting the sport and must necessarily cooperate to produce games, there was no such commonality and necessity in the marketing of each team’s individual IP. The teams should instead pursue individual interests in licensing their IP. In concluding that the teams’ collective licensing activities had deprived the market of ‘independent centres of decision making’, the Court remanded the case back to the District Court to determine whether any damages were payable to the plaintiff, ie American Needle.

U-Haul Enters Into A 20-Year Settlement Agreement With US Federal Trade Commission (‘FTC’)

On 9 June 2010, U-Haul and its parent company entered into a settlement agreement with the FTC, which brought an end to the FTC’s investigation into the market for ‘do-it-yourself’ truck rentals. The FTC’s case was not brought under the Sherman Act, but Section 5 of FTC Act which is aimed at preventing deceptive practices by businesses. According to the FTC, U-Haul invited its closest competitor, Avis Budget Group (‘Budget’), to enter into an arrangement to increase the rates of one-way truck rental charges. The invitations to increase the rates were made publicly and privately to Budget and would have allowed the two companies to coordinate price increases to the detriment of consumers. The proposed settlement order between U-Haul and the FTC prohibits U-Haul from colluding or inviting collusion with its competitors on market sharing, allocating customers and fixing prices and will expire in 20 years.

US FTC Closes Its Investigation Into Google–Admob Deal

On 21 May 2010, the FTC announced that it was closing its investigation into Google’s proposed acquisition of Admob, the mobile advertising network company. A mobile advertising network company sells advertising space to companies, which then creates applications and other content for those websites that are made for handphone devices, such as the iPhone. In reaching its decision, the FTC stated that although the proposed acquisition raised competition issues, the recent move by Apple to introduce its own mobile advertising network helped clear the deal. In particular, Apple’s recent acquisition of Quattro Wireless allowed it to launch its own ‘iAd’ service. The vote to close the investigation was a unanimous 5-0. The FTC stated that although the acquisition was cleared, it will continue to monitor the market.

More Than 18 Months In Jail For A Former Sales Manager Of A Ready-Mix Concrete Company

On 26 April 2010, a former executive of GCC Alliance Concrete Inc pleaded guilty to charges of anticompetitive price fixing in the ready-mix concrete sector in Iowa and neighboring states. According to the Department of Justice (‘DOJ’), Mr Steve VandeBrake, a former sales manager, contravened the Sherman Act by taking part in a cartel arrangement with three different companies on price fixing and bid rigging for the sale of ready-mix concrete. The DOJ also alleged that Mr VandeBrake took part in discussions and reached an agreement on the annual price list to be given to customers of the cartel members in the ready-mix concrete sector in Iowa. Under the plea agreement with the DOJ, Mr VandeBrake has agreed to pay US$100,000 in fines and has also agreed to serve a jail term of one year and seven months.

US DOJ Will Not Challenge The Proposed Hospital Cost Information Exchange Program In California

In April 2010, the DOJ issued a business review letter stating that it will not challenge the establishment by the Hospital Value Initiative (‘HVI’) of an information exchange program in relation to relative and resource efficiency of more than 300 hospitals in California. The HVI groups consists of three organisations that represent group purchasers of health services. The HVI plans to collect, analyse and distribute aggregated comparative data on the level of reimbursement received and the resources used by California hospitals in providing inpatient and outpatient services. The DOJ concluded that the information exchange program would unlikely lead to anticompetitive effects as the exchange involves data that is at least 10 months old and the program will not disclose disaggregated data or any hospital’s actual service fees. In addition, the program will provide greater information about the relative costs and utilisation rates of hospitals in California, helping payers and employers to make more informed decisions when purchasing hospital services.

Legislation / Regulation

Reform Of Competition Laws In Mexico

On 29 April 2010, the lower house of the Mexican Parliament passed a bill to reform the country’s competition laws. The bill, which is strongly supported by President Felipe Calderon, is expected to strengthen Mexican competition laws and bring them in line with international standards. For instance, the amendment will permit the competition commission to impose penalties of up to 10% of the annual turnover of the company in line with several other countries, including Europe. Under the current laws, the competition commission can only impose fines up to a maximum of 82 million Pesos (US$6.7 million). The amendments were approved by the lower house and the bill is currently pending with the Mexican Senate.

The US Fair Trade Commission (‘FTC’) Consults On Revamped Horizontal Merger Guidelines

In April 2010 the FTC and the DOJ released their proposed revisions on the Horizontal Merger Guidelines for public comment. The Guidelines were first issued in 1992 and have been only revised once since then in 1997. The revisions include amending the thresholds of the Herfindahl-Hirschman Index (‘HHI’) for determining whether the market is concentrated. The HHI is a tool used by the US antitrust regulators to determine the level of concentration in the industry. For example, the revised guidelines consider a market with an HHI of less than 1500 as ‘not concentrated’ as opposed to the prior threshold of 1000. The higher the resulting figure, the higher the market concentration in that market. The Merger Guidelines publishes various HHI thresholds that are used as benchmarks to determine whether certain mergers and acquisitions should be permitted. The lowering of this threshold means that certain mergers which would have raised concerns under the old Guidelines will no longer be considered as worthy of investigation. The revised Guidelines have also added a new section on ‘Evidence of Adverse Competitive Effects’, which demonstrates the type and nature of evidence that is generally considered by the FTC and the DOJ when evaluating the effect of mergers on competition in the market.

Africa

In South Africa, Computicket, a provider of ticketing services, has been referred to the Tribunal for allegedly abusing its dominance, in a case that mirrors SISTIC’s case in Singapore.

Cases

Airlines Raided For Suspicion Of Collusion To Raise Prices For The World Cup

On 31 March 2010, the South African Competition Commission (‘SACC’) raided the offices of South African Airways (‘SAA’), Mango Airlines and the Airlines Association of Southern Africa (‘AASA’) and seized documents and electronic data. The SACC had initiated an investigation against SAA, Mango, BA/Comair, 1Time, SA Airlink, and SA Express into alleged price fixing of their air fares for the World Cup. The Commission decided to raid the offices of these two airlines as it suspected that SAA and Mango had withheld information bearing on this investigation. Withholding of information can attract severe criminal penalties.

Computicket To Face Exclusionary Conduct Charges In Tribunal

The SACC has referred Computicket, a provider of ticketing services for entertainment events including theatres, festivals and live events to the Competition Tribunal after finding that Computicket abused its dominance in the market. Computicket, which enjoys a 95% market share, entered into long term (3-years) exclusive contracts with theatre owners, theatre producers, promoters and festival event organisers, thereby preventing competitors such as Strictly Tickets CC, Soundalite CC (trading as Artslink), and others from entering or expanding in the market. The SACC investigated the case further to complaints by these competitors. In referring the case to the Tribunal, the SACC stated that as a result of this exclusionary conduct, Computicket charged commissions and fees at a supra competitive level. The SACC has asked the Tribunal to impose a financial penalty equal to 10% of Computicket’s 2009 turnover and to declare void the exclusivity clauses in its various contracts with events promoters and organizers.

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