Cartel Digest


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Parental Liability for EU Antitrust Infringements: New and Broad Frontiers

The European Union (EU) antitrust law concepts of ‘undertaking’ and ‘single economic entity’ allow fines to be imposed on parent entities of subsidiaries involved in cartel conduct, even where the parent was not itself involved or aware of the cartel. Recent case law developments in the cartels sphere have materially extended the circumstances in which such fines can be imposed on parents.

Conglomerate Effects: An EU Resurgence?

The European Commission (EC) is increasingly invoking conglomerate theories of harm in its merger reviews. The complexity of these theories is resulting in more in-depth Phase 2 reviews and behavioral access commitments are relatively common for conglomerate mergers in the high-tech space.

In re vitamin C Antitrust Litigation

In January 2018, the U.S. Supreme Court granted certiorari in In re vitamin C Antitrust Litigation, the first lawsuit in U.S. history where the Chinese government has intervened to take a position in a case. The request for Supreme Court review followed a September 2016 decision by the Second Circuit that set aside a US$147 million treble damages verdict for the U.S.-purchaser plaintiffs. In setting aside the verdict, the Second Circuit held that the district court had failed to follow the reasoning in a submission by the Chinese Ministry of Commerce about the meaning and effect of Chinese competition law.

Reduction in Leniency; Drop in Enforcement?

Leniency programs have been one of the most effective tools for cartel prosecution over the past two decades. While there has been a proliferation of leniency programs across jurisdictions, established agencies such as the United States Department of Justice (DOJ) and the European Commission (EC) are experiencing a decrease in the number of leniency applications. This note examines possible explanations for the decline in leniency applications, but concludes that the benefits of leniency still outweigh those costs in most cases.

Risks for Consummated Deals Even Where No Notification Requirements

In a number of jurisdictions, antitrust authorities may challenge consummated mergers even when the parties were not required to report those deals in the first instance or where the parties reported the deals, but the authorities did not initiate challenges after their pre-closing review. This article identifies some examples of merger challenges in these circumstances and other antitrust risks that arise with nonreportable mergers, and discusses lessons parties should draw from the antitrust authorities’ enforcement practices.

UK State Aid in a Post-Brexit World

The draft agreement on the U.K.’s withdrawal from the EU (the Draft Withdrawal Agreement), published on November 14, 2018, still sets out the only agreed terms of the divorce element of the U.K.’s withdrawal — despite the delays and extensions.

The European Courts Recognize Creditors’ Interests in State Aid Decisions

In this article we examine a recent landmark case where the European Court of Justice recognized that if a creditor challenges a national banking resolution process on the grounds that it has suffered damage, it should also have legal standing to bring a case against the relevant State aid decision as these processes are inextricably linked.

United States Supreme Court Accepts the Importance of Two-Sided Markets Analysis

On June 25, 2018, the U.S. Supreme Court, in a 5-4 decision by Justice Thomas, held that provisions in American Express Company’s contracts with merchants that restricted the ability of these merchants to steer customers to other credit or charge cards did not violate the Sherman Act. Ohio v. American Express Co., 138 S. Ct. 2274, 2280 (2018). In doing so, the Court recognized the importance of examining the effects on an alleged restraint on both sides of a two-sided platform market.

US Policy Shifts in Intellectual Property Antitrust Enforcement

Under the Trump administration’s leadership, the Antitrust Division of the Department of Justice (DOJ) appears to be changing its enforcement approach toward intellectual property (IP) issues arising in the context of standard-setting organizations (SSOs).

Developments in the Antitrust Enforcement of Online Platforms’ Use of Data

The economic value and utility of customer data has led to many technology companies devising successful business models on the basis of providing free access to their online platforms and services in return for access to their users’ personal data. Data has therefore become an important input for online services and thus a parameter for market competition in the digital economy.

Moving Past Actavis with Evolving Lifecycle Management Strategies

For nearly two decades, reverse payments have been the perennial focus in the pharmaceutical industry and among antitrust professionals. But while courts continue to grapple with the implications of the Supreme Court’s decision in FTC v. Actavis, Inc., 570 U.S. 136 (2013), more attention is being brought to pharmaceutical companies’ lifecycle management strategies.

How Should Competition Law React to Fintech?

Financial technology companies, known as ‘fintechs,’ are an increasingly prominent and disruptive presence in the financial services market. While these technologies are having a significant impact on the competitive landscape, the European Commission and national competition authorities have expressed concern as to whether the current competition legal framework is equipped to deal with the challenges created by these new technologies, some of which we discuss in the article.

Extraterritorial Application of Major Antitrust Regimes

The past several decades have seen a surge in trade deals, technology advancements and logistical developments that have culminated in the most liberalized markets in history. Today’s economies are inextricably interdependent.

Recent Developments in Hybrid Settlement Cases

Since the introduction of the European Commission’s (EC) settlement procedure in 2008, just over one in five of all its settlement cases have involved at least one party dropping out of the settlement procedure. This has usually led to settlement and standard infringement proceedings being pursued in tandem against the various participants of the same cartel. Such hybrid cases have turned out to be a more frequent occurrence than “the exception” that the EC had initially envisaged.

No-Poach Agreements Raise Issues for Companies with Employees in the United States

No-poach or non-solicitation agreements have been a focus of government examination for several years. In October 2016, the U.S. Department of Justice (DOJ) and the U.S. Federal Trade Commission (FTC) (collectively Antitrust Agencies) heightened their awareness of the issue with a detailed joint guidance document to human resource professionals and hiring managers (HR Guidance).

The Protection of Nascent Competitors: A US and EU Perspective

Both the United States and EC have signaled intent to increasingly focus antitrust policy on the protection of nascent competitors and the development of nascent markets. In the U.S., both agency statements and certain cases have cast some light on a shift in antitrust policy to more aggressively protect nascent competitors from domination or elimination by larger and more established rivals.

CFIUS Reform: A New Concern for Foreign Investors

The Committee on Foreign Investment in the United States (CFIUS) is a committee of representatives of nine federal agencies tasked with reviewing investments in, or acquisitions of, U.S. companies by foreign investors for national security concerns and recommending to the President whether to block such transactions. 

Tougher Implementation of Procedural Rules in Merger Control

Very significant fines have been levied for procedural breaches of the merger rules in the last year or so. Facebook was fined €110 million in 2017 for providing misleading information and Altice was fined €125 million in 2018 for gun-jumping. The European Commission (EC) has gotten much tougher on procedural violations of the merger control rules. But it’s not just the EC. The U.S. agencies have also continued to penalize gun-jumping heavily, and several other antitrust authorities across the world are following suit.

US Antitrust Enforcement in the Trump Administration

While the Trump administration officially took office on January 20, 2017, the appointment and confirmation of the officials leading the two antitrust agencies has been gradual and staggered: Assistant Attorney General (AAG) for the Antitrust Division of the Department of Justice (DOJ) Makan Delrahim was confirmed in September 2017, while the full slate of new commissioners at the Federal Trade Commission (FTC), including Chairman Joseph Simons, was confirmed in April 2018.

Aliende and Goeteyn Author Chapter in GCR EMEA Antitrust Review

Partners Elvira Aliende Rodriguez and Geert Goeteyn, and associates Caroline Préel and Patricia Sanchez-Calero (all Brussels-Antitrust) have authored the chapter “European Union: Cartels and Lenience” in the GCR EMEA Antitrust Review 2020 published by Global Competition Review on July 19, 2019.

Companies With Effective Antitrust Compliance Programs Could Get Relief From Criminal Prosecution Under New DOJ Policy

The Antitrust Division of the U.S. Department of Justice (Division) finally will consider the existence of effective antitrust compliance programs at the charging stage of criminal antitrust investigations, opening up the possibility that cartel participants could avoid prosecution even if they are not a first-in leniency applicant.  The Division’s previous, and longstanding, approach had been not to consider compliance programs at the charging stage, on the theory that a compliance program is by definition ineffective if it failed to prevent a criminal violation of the antitrust laws. The most important practical effect of this new policy is likely to be that the Antitrust Division will be more willing to consider the use of a deferred prosecution agreement (DPA) to resolve criminal cartel matters – an option it has strongly resisted before now.

Shearman & Sterling Leads and Founds the Inaugural Edition of AI, Machine Learning & Big Data Edition

Shearman & Sterling attorneys acted as the founding lead editors and contributors to key chapters in the latest Global Legal Insights edition entitled, AI, Machine Learning & Big Data, a book published by Global Legal Group Ltd, London. The publication covers the important considerations, legal issues and market practices in 31 global jurisdictions around artificial intelligence with respect to how it intersects with the laws of each country.

European Commission Imposes Fine on Canon for Gun-Jumping

On 27 June 2019 the European Commission imposed a fine of €28 million on the Japanese imaging and optical products manufacturer Canon for “gun-jumping” by using a warehousing structure in its 2016 acquisition of Toshiba Medical Systems (TMS), and this comes two years after the Commission announced that it had opened an investigation. Canon has announced that it will appeal the fine.

This decision has important implications for companies wishing to structure the sale of a business so that signing and closing take place simultaneously, despite the buyer needing to obtain regulatory approvals or achieve other gating items before taking full control of the target.

Shearman & Sterling Launches New Barrier Blasters Podcast Series

Shearman & Sterling has launched a new podcast called Barrier Blasters, a series dedicated to enhancing diversity and inclusion in the communities in which we live and work. The podcast will feature conversations with individuals and industry leaders who have challenged the status quo, broken through barriers, and in doing so, have created opportunities for others.