A View from Constantine Cannon’s London Office

By Richard Pike and Yulia Tosheva

On Thursday, the EU Commission launched three separate investigations into suspected anticompetitive practices in the online sales of consumer electronics, video games and hotel accommodation.

The launch of these investigations does not come as a surprise.  On September 15, 2016, the Commission published a Preliminary Report following its sector inquiry into e-commerce which identified retail price restrictions, discrimination on the basis of location and geo-blocking practices as areas of concern.

During the sector inquiry, the Commission gathered evidence from nearly 1,800 companies operating in e-commerce sales of consumer goods and digital content and analysed around 8,000 distribution contracts.  The inquiry is part of the EC’s wider Digital Single Market Strategy, which was adopted on May 6, 2015.  As this blog discussed, the goal of the Digital Single Market is to ensure better access for consumers and businesses to digital goods and services across Europe, and create a level playing field for digital networks and innovative services.

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Amazon Offers to Scrap E-book Clauses to Settle EU Antitrust Probe.  Amazon has offered to alter its e-book contracts with publishers in a bid to end an EU antitrust probe and stave off a possible fine, the European Commission said on Tuesday.  Amazon, the biggest e-book distributor in Europe, proposed to drop some clauses in its contracts so publishers will not be forced to give it terms as good as those for rivals, the Commission said.  Such clauses relate to business models, release dates, catalogs of e-books, features of e-books, promotions, agency prices, agency commissions and wholesale prices.

Judge Blocks Aetna’s $37 Billion Deal for Humana.  A federal judge ruled that a $37 billion merger between the health insurance giants Aetna and Humana should not be allowed to go through on antitrust grounds, siding with the U.S. Justice Department, which had been seeking to block the deal.  The deal is one of two mega-mergers proposed by the nation’s largest health insurers; both were challenged by the Obama administration. Another federal judge is expected to rule soon on the case involving Anthem and Cigna, the larger of the two deals, at $48 billion.

FTC Settles Pay-for-Delay Lawsuit, Files Two Related Complaints.  The U.S. Federal Trade Commission announced that it has settled allegations that Endo Pharmaceuticals violated antitrust law when it agreed to pay rivals Watson Laboratories and Impax to delay introducing generic versions of two painkillers.  The FTC filed charges against Watson, and Allergan Plc , accusing it of breaking the law by reaching an agreement with Endo to block a generic competitor for the local anesthetic Lidoderm.

As Regulators Waver, Apple Takes on Qualcomm in Courts.  Apple’s new legal assault on Qualcomm in the United States and China reflects its conclusion that regulators are unlikely to put an end to what it considers the chip maker’s unfair business practices, according to analysts.  Apple has long objected to Qualcomm’s practice of charging for the “modem” chips that help phones use wireless networks data plans and its demands for a license fee based on the total price of the phones.  Qualcomm was the original inventor of a number of key wireless technologies.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

U.S. Bucked Rest of World on Antitrust Enforcement in 2016.  It was a record year for antitrust cartel enforcement in 2016, with $6.7 billion in total fines levied — but not in the U.S., which had its slowest year in a decade, according to a new report.  Even as the European Union levied a record $4.1 billion in antitrust fines, the U.S. Department of Justice’s Antitrust Division’s total fines nosedived to $387 million in 2016 — down from a record $2.85 billion in 2015.

U.S. Loses Bid to Overturn AmEx Antitrust Decision.  A federal appeals court on Thursday rejected the U.S. government’s request that it reconsider its decision allowing American Express to stop merchants from encouraging customers to use rival cards that charge lower fees.  Without comment, the U.S. Court of Appeals for the Second Circuit let stand its Sept. 26 reversal of a lower court ruling that had struck down AmEx’s “anti-steering” rules.  That reversal by a three-judge panel allowed New York-based AmEx to block merchants that accept its cards from steering customers to rivals Visa and MasterCard, even if such steering would have saved them money.

Former Barclays Trader Pleads Guilty in Currency Manipulation Conspiracy.  A former Barclays trader pleaded guilty on Wednesday to federal charges arising from a global investigation into the manipulation of foreign-exchange prices at major banks, according to the U.S. Justice Department.  Jason Katz, a former Barclays trader who later worked at BNP Paribas, pleaded guilty in Federal District Court in Manhattan to participating in a price-fixing conspiracy, becoming the first person to admit criminal wrongdoing in the inquiry.  Mr. Katz’s plea came after Barclays and three other banks pleaded guilty last year to conspiring to manipulate currency prices.

Euronext Offers to Buy Unit of London Stock Exchange for $536 Million.  Euronext said on Tuesday that it had offered to buy the French arm of the London Stock Exchange Group’s majority-owned clearing business, as the British company looks to win regulatory approval for a merger with Deutsche Börse.  The London Stock Exchange and Deutsche Börse agreed in March to a merger, which would create Europe’s largest stock market operator by far, combining exchanges in Britain, Germany and Italy.  In July, shareholders from the two exchanges approved the deal, the companies’ third attempt to come together since 2000.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

Russia’s Gazprom Files Proposals to EU Aimed at Ending Antitrust Case.  Russia’s Gazprom said it had filed proposals with the European Commission aimed at resolving a five-year EU case over the Russian gas giant’s alleged monopoly practices.  The Russian state gas exporter, which supplies a third of the EU’s gas, has been on the European Commission’s radar since 2012, culminating in charges last year that it overcharged customers in eastern and central Europe and blocked rivals.  Since then, Gazprom has offered concessions aimed at staving off a potential fine of up to 10 percent of its global turnover.

South Korean Antitrust Regulator Fines Qualcomm $865 Million.   South Korea’s antitrust regulator slapped a 1.03 trillion won ($865 million) fine on Qualcomm Inc. Wednesday for allegedly violating competition laws.  The Fair Trade Commission said that the San Diego, California-based company had engaged in unfair business practices in patent licensing and chip sales, including refusing to let rival chipmakers license patents essential for chip making.  The FTC said Qualcomm allegedly used its dominant position in the modem chip market to force handset makers to pay license fees for a broad set of patents under terms it set unilaterally and to coerce handset makers into signing licensing contracts.

Abbott Gets U.S. Antitrust Approval to Buy St. Jude Medical.  Healthcare company Abbott Laboratories has won U.S. antitrust approval for its proposed $25 billion acquisition of medical device maker St. Jude Medical Inc., the U.S. Federal Trade Commission said.  Abbott agreed to divest two medical devices used in cardiovascular procedures to resolve FTC concerns the acquisition would stifle competition, the commission said in a statement.  “We continue to work to obtain final regulatory approvals and anticipate closing before the end of the year or shortly thereafter,” Abbott spokeswoman Elissa Maurer said in an email.

FTC Seeks More Iinfo on Bass Pro-Cabela’s Deal.  U.S. fishing and hunting equipment retailer Cabela’s Inc., which is being bought by privately held rival Bass Pro Shops, said the Federal Trade Commission had sought more information from the companies about the deal.  As part of the proposed $5.5 billion deal, announced in October, Capital One Financial Corp. had said it would buy Cabela’s credit card business and signed a 10-year partnership with Bass Pro to issue credit cards to Cabela’s customers.  On Friday, Cabela’s said Capital One had informed the company that it does not expect to get approval for acquiring the credit card business, called World’s Foremost Bank, before Oct. 3, 2017, hence not allowing the deal to close in the first half of 2017.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

AMC wins U.S. antitrust approval to buy Carmike Cinemas with conditions. AMC Entertainment Holdings won U.S. antitrust approval with conditions to buy smaller competitor Carmike Cinemas Inc in a $1.2 billion deal that would create the biggest U.S. movie theater chain.  The U.S. Justice Department said it approved the deal on condition that AMC and Carmike divest theaters in 15 markets and take steps to ensure that National Cinemedia and Screenvision, the two companies that make and sell pre-show advertising entertainment, remain viable.  Kansas-based AMC, which is majority-owned by Chinese billionaire Wang Jianlin’s Dalian Wanda Group, has about 380 theaters, while Georgia-based Carmike has 276 theaters, according to their websites.

American Airlines wins $15 million in antitrust case against Sabre. American Airlines Group Inc won about $15.3 million in an antitrust lawsuit that accused airline booking service Sabre Corp of harming competition and charging grossly inflated booking fees.  The Manhattan federal jury awarded nearly $5.1 million, a fraction of the up to $73 million American Airlines was seeking at trial.  But the sum automatically will be tripled under federal antitrust law.

G.M.’s Venture in China Fined $29 Million Under Antimonopoly Law. General Motors’s main joint venture in China was fined $29 million on Friday on charges that it suppressed competition by enforcing minimum sales prices for dealers.  It is the latest in a string of penalties against non-Chinese auto brands under the country’s antimonopoly law.  Chinese regulators have punished companies in several industries, like milk and medical devices, under the 2008 law in what appears to be an effort to force down consumer prices.

Rite Aid to sell 865 stores to Fred’s. Rite Aid Corp said it would sell 865 stores to Fred’s Inc for $950 million to satisfy antitrust concerns over its proposed takeover by Walgreens Boots Alliance Inc.  Rite Aid and Walgreens were widely expected to divest stores in states where the combined company would have a particularly strong position.  Walgreens has 13,200 stores, nearly 60 percent of which are in the United States, while Rite Aid has 4,570 stores in the United States.  Walgreens said in October 2015 it would buy smaller peer Rite Aid for $9.4 billion to widen its U.S. footprint.