Spar Plus

25 June, 2008

Plus Spar would be better, since in my own experience Spar is a high-end retail shop, while Plus is more on the low end.

Nevertheless: “The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Plus Élelmiszer Diszkont Kft., a Hungarian discount retailer, by the Austrian retailer Spar. The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.” See more…


Damages claim by the European Commission

24 June, 2008

The intro of the press release of the Commission sais: “The European Commission has filed cases with the Tribunal de Commerce in Brussels seeking compensation from four lifts companies for damages suffered from inflated prices for the installation and maintenance of lifts and escalators. In 2007 these companies were found by the Commission to have operated illegal cartels in several countries, in breach of EC Treaty rules on cartels and restrictive business practices (see IP/07/209). No final amount of the damage can yet be calculated, given the complexity and variety of contractual relations, but it is expected that expert assessments in the context of the court cases will help identify the total amount of overpayment suffered. The Commission’s action covers claims for its own buildings and those of other EU institutions, both in Brussels and Luxembourg”

Any recovery of taxpayers’ money is welcome.

I am pretty sure we will see some comments on the “judge and adjudicator” debate, namely that the Commission is going to sue based on a case that was investigated and decided by it. Since it is a “follow on” claim, this is going to be interesting…


Leniency movie in English

15 June, 2008

We reported in “Better than 24…” – a source from Brussels entry about the small movie of the Dutch NCA. Now it is availabe in English also.

 


Mills cartel – eating for more

12 June, 2008

This is the allegation. The Hungarian competition authority, the Gazdasági Versenyhivatal, conducted a dawn raid at 8 millers. Three other undertakings are also investigated. The authority suspects that the undertakings have dived market among themselves. The suspected infringement started according to the information available to the authority in 2004 and is still running. The allegation is that ehe undertakings held several meetings at hotels, motels and at their offices where they have divided up the market. The also colluded on minimum prices and future prices. Mover the collusion involved partly also public procurements. They even planed to set up a fund for compensating foreign undertakings if they do not enter the Hungarian market.

 

Maybe some comments: We should not make early judgements, but if the allegations are true, the investigation of the authority is more than welcome. There have been few hard-core cartel cases recently and the publicity of such cases and the possible large fines are very important for deterrence. If the authority concluded that the allegations were true, the undertakings can expect a large fine.


Publication at IMEDIPA – concurrent jurisdictions

9 June, 2008

Institute of Studies in Competition Law and Policy published a conference paper: Case Allocation in antitrust and collaboration between the National Competition Authorities and the European Commission”, by Dr. Alexandra Mikroulea, assistant professor at the University of Athens.


State aid: Commission requests Hungary to end long-term power purchase agreements and recover state aid from power generators

5 June, 2008

“State aid: Commission requests Hungary to end long-term power purchase agreements and recover state aid from power generators

The European Commission has requested Hungary, following an in-depth investigation under EC Treaty state aid rules, to end long term power purchase agreements (PPAs) for electricity because they constitute unlawful and incompatible state aid to the power generators. The PPAs should be terminated before the end of 2008. Hungary must at the same time recover the aid granted to the generators concerned since Hungary’s EU accession.

Competition Commissioner Neelie Kroes said: “The phasing out of long term purchase agreements is a crucial step in the liberalisation of the electricity market in Hungary. The termination of very similar agreements in Poland in April this year has already led to lower electricity prices. A well-functioning free market can now develop on the Hungarian wholesale electricity market too. I hope that the advantages of genuine competition both for competitors and for consumers will become apparent on the Hungarian market as rapidly as they have in Poland.”

Around two thirds of the electricity generated in Hungary is sold under long term power purchase agreements (PPAs) to the state owned Magyar Villamos Művek (MVM). Such agreements can restrict competition because they close off a significant part of the market from new entrants. New entrants therefore get only a limited chance to compete on the market, and competition cannot develop properly. Following an in-depth investigation (see IP/05/1407), the Commission found that the PPAs concluded between MVM and ten power generators between 1995 and 2001 have been conferring unlawful and incompatible state aid to these generators within the meaning of Article 87(1) of the EC Treaty as from the accession of Hungary to the EU on 1 May 2004. The Commission’s final decision orders the termination of the agreements within 6 months. Hungary must furthermore recover from the power generators the revenues which they could not have obtained from the market without PPAs.

The Commission recognises the major investment in power plants made by the power generators before accession. The Commission has already allowed other Member States to grant state aid in order to help power generators to recoup investment made prior to the liberalisation of the electricity market, provided that the negative effects of such aid on competition was minimised. In 2001, the Commission issued the ‘stranded costs methodology’, which lays down the principles for assessing this form of aid.

The Commission’s investigation revealed that the PPAs in Hungary do not constitute an appropriate tool to compensate the generators for their pre-accession investments. Instead of helping these incumbents to adapt to the conditions of free competition, PPAs rather shield them from competitive pressure. The Commission’s decision only concerns the Hungarian PPAs; should Hungary notify another compensation mechanism, this would need to be assessed on its own merits.

In the case of the PPAS in Poland, the Commission could in the same decision request the termination of the contracts and approve the compensation notified by Poland, which was found compliant with the principles of the ‘stranded costs methodology’.

Background

In the mid-90s, Hungary’s main objective in the energy sector was to ensure security of supply and the modernisation of power generation infrastructure. In order to reach these capital intensive aims, the state introduced a system of PPAs as an incentive for power generators to invest in Hungary. Under these agreements, which have been signed between 1995 and 2001 and expire between 2010 and 2024, MVM has the obligation to buy a fixed volume of generation capacities, a fixed quantity of produced electricity at a fixed price. The PPAs thereby guarantee the generators a return on investment without any commercial risk. PPAs strengthen the position of PPA-bound generators in comparison with others.” – states the press release of the European Commission.


Documents releated to the Budapest meeting of the European Competition Authorities

4 June, 2008

The Hungarian competition authority, the GVH published some publicly available documents related to the Budapest meeting of the European Competition Authorities. These are:

Publicly available ECA materials
Discussion paper on the operation of the ECA (January 2001)

Merger co-operation
Principles on the application, by National Competition Authorities within the ECA, of Articles 4 (5) and 22 of the EC Merger Regulation (January 2005)

Procedures guide on the exchange of information between members on multijurisdictional mergers

Leniency
Principles for leniency programmes (September 2001)

Air Traffic
Procedures guide on the exchange of information between members on notifications, proceedings and decisions in the field of air transport

Report on mergers and alliances in civil aviation (May 2004)

Loyalty programmes in civil aviation (Summer 2005)

Progress report on slot trading (June 2005)

Code-sharing agreements in scheduled passenger air transport (May 2006)

Financial Services
Comparative study of competition in retail banking and payments systems markets (April 2005)

Final report on competition issues in retail banking and payments systems markets in the EU (May 2006)

Fines
Principles of convergence on pecuniary sanctions imposed on undertakings (May 2008)