The European Commission recently raided SKF AB, Schaeffler Group, and the offices of other European rolling bearings makers to investigate whether they violated European antitrust rules.

The companies manufacture bearings for the automotive and aerospace industries. 

The Commission is investigating whether the companies violated European Union (“EU”) laws prohibiting cartels and restrictive business practices by allegedly entering into agreements which fixed the prices for ball-bearings.  The Commission noted that the inspections are part of a preliminary investigation and do not mean that the companies have committed any anticompetitive behavior. 

SKF, the world’s largest rolling bearings manufacturer, said its offices in Gothenburg, Sweden and Schweinfurt, Germany were visited by EU Officials. 

SKF and Schaeffler are both cooperating with the investigation.

October was a busy month for European and U.S. antitrust enforcers, who revised “best practices” aimed at enhancing the efficiency of antitrust investigations on both sides of the Atlantic.

First, on October 14, 2011, the U.S. Department of Justice, the Federal Trade Commission and the European Commission (the “EC”) issued an updated set of “best practices” that they use to coordinate merger reviews under their concurrent jurisdictions.  Three days later, the EC announced another set of revised best practices regarding its unilateral review of alleged anticompetitive conduct.

The revised practices regarding merger reviews are the latest development in a joint effort by the U.S. and the EC, started in 1991, “to promote cooperation and coordination and lessen the possibility or impact of differences … in the application of their [respective] competition laws.”  In 2002, they jointly issued their first set of best practices on concurrent merger reviews.

The trans-Atlantic antitrust enforcers have now revised those practices, “confirming” the 2002 version and building on the “experience gained” since they were issued. 

The most significant enhancement is the emphasis on the role of merging parties in facilitating cooperation.  For example, the revised practices encourage parties to authorize the agencies to share information, and to execute confidentiality waivers to enable such sharing.

The practices also advise parties to coordinate the timing of their filings with the various agencies, warning that if a final decision in one jurisdiction is reached before filing has taken place in the other, any possibility of meaningful cooperation between the agencies will have been excluded.

In addition, the practices implore the agencies to do their part to improve coordination.  For instance, they advise the agencies to:   

• contact one another promptly upon learning of a merger that may require simultaneous review;  

• align the timing of their investigations;

• engage in inter-agency consultations, particularly at “key stages” such as before issuing a second request, negotiating remedies, or deciding to prohibit a merger;

• sharing information such as draft discovery requests and their analyses of market definition, competitive effects and other relevant issues; and

• permitting parties to give joint presentations, interviews and document submissions to the agencies.

The revision notes the particular value of cooperating with respect to remedies, and includes an expanded discussion of how coordination can be improved in that regard.  For instance, it advises the agencies to “keep one another informed” of remedy discussions, “share draft remedy proposals,” and generally ensure that their remedies “do not impose inconsistent or conflicting obligations.”  The revised practices also encourage improvement of coordination with authorities in other nations.  For example, they advise parties to inform the U.S. and EU of any actual or anticipated outside review, and they advise the agencies to “seek to cooperate with [such] other authorities….” 

Like the revised best practices on merger review, the EC’s recently-revised best practices for unilateral antitrust proceedings also aim to promote efficiency.  They follow a 2010 draft and were developed through “public consultation and practical experience.”  Significant improvements over the 2010 draft include advising the EC to:     

• inform parties of the parameters for potential fines;

• extend “state of play meetings” to cartel cases and complainants in certain circumstances;

• provide enhanced access  to “key submissions” such as economic studies; and

• publish rejection of complaints.

The EC has also expanded the role of the independent Hearing Officer, who is responsible for guarding the procedural rights of the parties being reviewed.  Among other changes, the Hearing Officer can now resolve issues regarding attorney-client privilege and questions that might force parties to admit to violations.

Canada’s Competition Bureau has released final revisions to its Merger Enforcement Guidelines.

The Guidelines describe how the Competition Bureau will analyze merger transactions. 

The new Guidelines were issued on October 6, 2011, after the Bureau held consultations during the last two years with foreign competition agencies and throughout Canada.  The changes are the first revisions to the Guidelines since 2004. 

The Guidelines were changed after the United States revised its Horizontal Merger Guidelines in 2010.  As we reported in an earlier post, the U.S. revisions offered a more tolerant approach for analyzing mergers by downplaying the role of market definition and by emphasizing the need to avoid interference with competitively beneficial mergers. 

Some of the Canadian revisions follow the U.S. approach by having less of an emphasis on market definition and by looking more at the competitive effects of a merger.  Other features of the new Guidelines include discussing how a merger is defined under the Competition Act, providing for greater scrutiny of vertical mergers, and giving an update to the merger “efficiencies defence.”

The European Commission is expected to unveil proposed legislation in the coming weeks designed to curb speculation in commodities trading, which has been blamed for sharp increases in energy and food prices.

A draft of the Commission’s proposed revisions to the EU’s 2004 Markets in Financial Instruments Directive (“MiFID”) obtained by some news outlets would require “that all trading venues on which commodity derivative contracts are traded adopt appropriate [position] limits or alternative arrangements to ensure the orderly functioning of the market and settlement conditions for physically delivered commodities and provide systematic, granular and standardised information on positions by different types of financial and commercial traders to regulators … and market participants ….”

The Commission is reported to be simultaneously drawing up plans for an overhaul of the Market Abuse Directive (“MAD”) enacted in 2003.  If adopted by the Council of the European Union and the European Parliament, that reform would give European regulators enhanced authority to investigate trading systems on spot commodity markets, which had thus far escaped effective oversight.

Reuters has quoted a leaked draft of the Commission’s proposal as saying that “By gaining access to spot commodity market traders’ systems, competent authorities are also able to monitor real-time data flows.”

The Commission’s proposed amendments to MiFID and MAD are expected to be made public – officially, this time – this month.

The European Commission has received a split decision in two appeals of multi-million euro fines it imposed for anticompetitive conduct in beer and acrylic glass markets.

The European General Court has annulled the European Commission’s 31.66 million euro antitrust fine assessed against beer brewer Koninklijke Grolsch NV.  In case T-234/07, Koninklijke Grolsch v. Commission, the European General Court focused on the imputed liability to Koninklijke Grolsch for actions of its subsidiary, Grolsche Bierbrouwerij Nederland BV.

This appeal stems from a 2004 case in which the Commission found a cartel among the Netherlands’ four largest beer brewers.  The Commission determined that Koninklijke Grolsch NV, Heineken NV (jointly and severally liable with its subsidiary Heineken Nederland BV), Bavaria NV and InBev NV divided the Dutch market and coordinated on prices, price increases, and various commercial conditions.

The conduct resulted in fines totaling 273.78 million euros (including 219.28 million to Heineken and 22.85 million euros to Bavaria).  InBev was not fined as it was granted full leniency for participating in the investigation.  The three penalized companies appealed.

In June 2011, the European General Court reduced the fines assessed to Heineken and Bavaria by a total of  23.42 million euros  after finding there was a lack of evidence on the coordination of commercial terms.

On the remaining appeal, the European General Court ruled in favor of Koninklijke Grolsch stating that the Commission failed to demonstrate why Koninklijke Grolsch, which had not directly participated in the alleged cartel, should be liable.  There is a rebuttable presumption in EU law that a parent company exercises decisive influence over the conduct of a wholly owned subsidiary.  However, in the case at hand, the Commission did not discuss the economic, legal, and organizational links between Grolsche Bierbrouwerij Nederland and Koninklijke Grolsch.  Thus there was insufficient evidence to attribute liability to Koninklijke Grolsch NV.

The European Commission fared better in T-216/06, Lucite International and Lucite International UK v. Commission. In this case, Lucite International, a division of Mitsubishi Rayon Co. appealed a 25 million-euro fine from the Commission for colluding on acrylic glass prices.

Lucite claimed its fine should be reduced due to attenuating circumstances.  Lucite alleged its participation was limited to lower-level employees acquired after its 1999 purchase of Imperial Chemicals Industries plc (ICI).  Further, a commercial policy put in place by Lucite after the acquisition of ICI worked to undermine the cartel.  The European General Court disagreed, and ruled that Lucite failed to show “the Commission erred in its assessment of attenuating circumstances.”