iA. Authority for Consumers and Markets (ACM) decisions.
1. Trade and Industry Appeals Tribunal rules ACM has not sufficiently demonstrated that railway company has an economically dominant position.
On June 1, 2021, the Trade and Industry Appeals Tribunal (College van beroep voor het Bedrijfsleven (the “Tribunal”)) upheld (link in Dutch) the District Court's ruling annulling the ACM’s decision imposing a €40,950,000 fine on National Railways (NS). According to ACM, NS abused an economically dominant position on the Dutch main rail network (MRN) when participating in a tender issued by Limburg for the concession for public transport in the province of Limburg.
ACM stated that, as holder of the main rail network concession, NS had (and would have) at least a 100% market share on the MRN until 2025. The ACM referred to EU case law that says, in the event of a very large market share or the granting of a statutory monopoly, an undertaking can be considered to have a dominant position. Furthermore, the ACM considered possible contraindications and examined the extent to which there is (potential) competition for the main rail network.
The Tribunal noted that the ACM is not ultimately concerned with competition in executing the MRN-concession, but with competition to acquire the MRN-concession. It follows that what is at issue is whether the State has an alternative railway other than NS who could be granted the MRN-concession. According to the Tribunal, it appears that it was not obvious that the MRN-concession would be awarded to NS or would be awarded again to NS in the future.
2. ACM clears acquisition of VHE Holding by Torqx Capital Partners.
On June 21, 2021, the ACM decided (link in Dutch) that Torqx Capital Partners B.V. (Torqx) may acquire VHE Holding B.V. (VHE). Torqx is an investment company specializing in medium-sized companies located in the Benelux. Torqx is active in the field of production, distribution, and assembly of specialty cables and cable connectivity solutions (through subsidiary Cable Connectivity Group or Capable B.V.) and distribution of fixing materials and related products (through subsidiary Fabory). Other portfolio companies of Torqx are Fri-Jado, Folat, Sonic Equipment, Descroes and Verhoef. VHE Holding is a company that specializes in the design, development, production and execution of control panels, modules and cable assemblies.
3. KOG Investments and Agroamerica Tropical Oil Holding allowed to set up joint venture.
On June 16, 2021, the ACM decided (link in Dutch) that investment company KOG Investments Pte Ltd. may set up a joint venture with Agroamerica Tropical Oil Holding Corp. KOG is a subsidiary of Wilmar International Limited, which is active in the agricultural sector. Agroamerica is part of the AgroAmerica Group, which is a farm that is active in the production of tropical fruits and sustainable palm oil products. Agroamerica itself is active in the production and commercialization (export) of palm oil-based products. The joint venture, Agroamerica Wilmar Corp., intends to build, own, and operate an edible oil refinery in Guatemala.
4. ACM approves acquisition of Hemink by NIBC Co-Investments Holding.
On June 3, 2021, the ACM decided that NIBC Co-lnvestments Holding B.V. may acquire Hemink Management Team B.V., Hemink Vastgoedzorg B.V. Schildersbedrijf H.J.F. Hemink B.V., Hemink Servicecenter B.V., Energieteam B.V., SmartPrefab B.V. and Hemink Groep B.V. (all acquired entities hereinafter jointly: Hemink). NIBC is part of the NIBC Group, a bank that focuses on medium-sized enterprises in a number of different sectors, namely Fintech, Infrastructure, Technology, Shipping and Commercial Real Estate. NIBC Group is part of the group of Blackstone Group Inc., a U.S. investment firm that holds interests in various (financial) companies. Hemink offers energy-efficient renovations and services in the field of real estate in the Netherlands. This includes planned maintenance, painting, small construction projects, service and maintenance and prefab solutions.
B. Rotterdam District Court holds Bencis liable competition violations of its subsidiary.
On May 26, 2021, Bencis was held liable (link in Dutch) as the parent company for a fine imposed on its subsidiary portfolio company. Due to a coincidence, Bencis’s private equity role in the portfolio company was not acknowledged as creating parental liability, resulting in two separate penalty decisions—one against Bencis and one against its subsidiary. A subsidiary’s violation of the competition does not itself constitute a tort by the parent, because the relativity requirement under tort law has not been met. It is, however, conceivable that incorrectly answering questions about competition law infringements within the scope of due diligence by the portfolio company at the time of the acquisition constitutes an unlawful act. The case was referred back to the cause list for further litigation on this issue. This may also bring into play discussions as to seeking recovery from the management responsible for both the infringement as well as the lack of disclosure in the due diligence.
C. Bill to amend the 'House for Whistleblowers Act' and other laws to implement Directive (EU) 2019/1937.
On May 21, 2021, the Dutch legislature introduced a bill (link in Dutch) to amend the current ‘House for Whistleblowers Act’ (Wet Huis voor Klokkenluiders). The new law will be called ‘Whistleblower Protection Act’ (Wet bescherming klokkenluiders). This bill is to implement the EU Whistleblower Protection Directive. The bill expands the protection of whistleblowers who report suspected wrongdoing. In addition, reporters of a breach will receive protection in various areas of European Union law. For example, reporters who are wronged will no longer have to prove that they have been wronged because of their report. The burden of proof shifts to the employer. The employer will have to demonstrate that the disadvantage has nothing to do with the report.
Furthermore, the circle of protected persons is extended. Anyone who, in the context of his or her activities, comes across an abuse or violation of European Union law, reports it on reasonable grounds and is disadvantaged as a result will soon be protected. In addition, internal reporting procedures of employers must meet stricter requirements. Also, 'competent authorities', including the Whistleblower House, will be designated to receive reports and to investigate or take measures in response to a report of a violation of European Union law.
United Kingdom
A. UK supermarket chain seeks to divest certain petrol stations to obtain merger approval.
On June 28, the UK Competition and Markets Authority (CMA) accepted the proposed asset divestiture necessary before approving the merger of two supermarket chains. The acquirers of one of the UK’s largest supermarket chains, Bellis, has given undertakings to the CMA in order to avoid a phase 2 investigation. The CMA’s concerns are focused not on groceries but on retail supplies of road fuel and auto-LPG, as Bellis and its owners have 395 petrol stations in the UK and their activities overlap to a significant extent with Asda’s 323 petrol stations. Bellis and its owners have undertaken to divest road fuel outlets in 36 local areas and an auto-LPG in one local area, to a purchaser approved by the CMA. To obtain CMA approval, the purchaser must be independent of the acquirers and have the financial resources, expertise, incentive, and intention to maintain and operate the divested outlets as a viable business in competition with the acquirers and Asda; and Bellis and its owners must demonstrate that the sale to the purchaser is a complete remedy for the CMA’s concerns and does not itself raise competition concerns. The deadline for divestment is, as is usual, not stated in the undertakings, but is typically around six months from the date of the undertakings.
B. Market investigations: Funeral Services Market Investigation Order.
On June 16, 2021, the CMA issued an order remedying a number of adverse effects on competition found during the CMA’s intensive and detailed investigation of the funeral services market begun in March 2019. The Order requires all funeral-services firms (“directors”) to improve transparency by providing clear and prominent information about their pricing and the services they offer, so that these can be compared with those of their competitors. In addition, they are prohibited from soliciting for business by making payments to hospitals, hospices, care homes, and other similar institutions, or through contacts with coroners and police. Crematorium operators are also under an obligation of transparency as regards the pricing information they provide to funeral directors.
As well as issuing the Order, the CMA has made a recommendation to government to set up an inspection and registration regime to monitor the quality of funeral directors’ services, with a view to establishing a regulatory regime for funeral services more generally. In the meantime, the CMA intends to monitor this sector actively to identify and address harmful behavior and to publish annual reports. Sector operators are required by the Order to provide the CMA with specific price and volume information for this purpose. The CMA also intends to consider whether to consult on a further market investigation once the impact and consequences of COVID-19 on the sector are sufficiently understood and the sector has stabilized.
C. Consumer protection: Leasehold Housing Undertakings.
Many homeowners in England and Wales, particularly apartment owners, own their properties on a leasehold basis. This means that they take a long lease, generally between 99 and 999 years, from the freeholder, agreeing to pay the freeholder a “ground rent” for the duration of the lease. Traditionally, the ground rent payable has been a “peppercorn,” i.e., a small sum; however, substantial increases in ground rents, together with alleged mis-selling of leasehold properties, triggered recent enforcement action by the CMA.
On June 23, 2021, a firm with portfolios of freehold properties on which leasehold homes had been built gave an undertaking to the CMA to remove lease terms that regularly doubled the ground rent payable by leaseholders, to provide for indexed increases only and to repay the excess amount paid by their leaseholders. On the same date, a housebuilding firm gave an undertaking to the CMA to allow its leaseholders to buy the freehold of their properties at a discount that reflected the price they expected to pay at the time they originally purchased their property. The housebuilder also undertook to give refunds to leaseholders who had already purchased freeholds at higher prices. The CMA has contacted other firms asking them to remove doubling clauses from their leases.
Edoardo Gambaro, Pamela J. Marple, Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Hans Urlus, Dawn (Dan) Zhang, Mari Arakawa, Filip Drgas, Marta Kownacka, Pietro Missanelli, Massimiliano Pizzonia, Anna Celejewska-Rajchert, Jose Abel Rivera-Pedroza, Ippei Suzuki, Rebecca Tracy Rotem, and Alan W. Hersh contributed to this article.
