Summary of Key Developments — November/December 2023

The “European Antitrust Bimonthly Bulletin” breaks down the major antitrust developments in Europe during the past two months into concise and actionable takeaways. For any questions or suggestions please contact Jindrich Kloub, Deirdre Carroll, or any other attorney in the European Antitrust Team listed at the end of the Bulletin.

European Commission Issues Statement of Objections to Amazon/iRobot Merger; Adobe/Figma Abandoned
On November 27, 2023, the EC sent a Statement of Objections to Amazon over its proposed acquisition of iRobot, the maker of the popular Roomba brand of robot vacuum cleaners. The charge sheet is based on the EC’s preliminary findings from an in-depth investigation into the acquisition’s impacts. The concerns are based on Amazon’s potential ability and financial incentives to hinder iRobot's rivals from distributing their products on Amazon’s online marketplace. The EC now has until February 14, 2024, to reach a final decision. The UK’s Competition and Markets Authority (CMA) cleared the deal unconditionally, while the U.S. is still reviewing it.

Adobe/Figma also felt the pressure of increased scrutiny from the EC, but also the UK’s CMA: On December 18, 2023, the parties announced that they had mutually agreed to abandon their planned merger. As part of this, Adobe will pay Figma the prearranged break-fee of $1 billion. This followed a Statement of Objections from the EC in November and similar concerns from the CMA.

The EC is focusing also on competition issues arising from vertical mergers. Companies should anticipate and prepare for nonhorizontal (and nontraditional) theories of harm, including through the early involvement of economists and the early consideration of appropriate remedy packages.

Illumina to Divest GRAIL
On December 17, 2023, Illumina announced it would divest GRAIL. Two days earlier, the U.S. Fifth Circuit Court of Appeals had ruled against Illumina in the Federal Trade Commission’s (FTC’s) lawsuit to block the merger. Illumina announced it would divest GRAIL through a third-party sale or a capital markets transaction.

The EC had previously ordered Illumina to divest GRAIL on October 12, 2023. Despite the announced divestment, Illumina is expected to maintain several lawsuits challenging EC decisions. This includes the lawsuit challenging whether the EC had jurisdiction over the merger under a novel application of Article 22 of the EU Merger Regulation. This lawsuit saw a hearing before the European Court of Justice on December 12, 2023, and a final judgment is expected next summer. A success in this challenge would invalidate the basis for the monumental €432 million ($473 million) gun-jumping fine, which Illumina is challenging separately. Finally, on December 22, 2023, Illumina appealed the EC’s divestment order, which requires Illumina to provide substantial support to GRAIL until it is divested.

Companies contemplating M&A impacting the EU and UK should consider front-loading substantive assessments in any filing analysis and factor in the impact of EU and UK reviews on deal terms, timetables, and risk allocation—even if they generate little or no revenue in Europe—given the increasing risk of being "called in" for review. While the Illumina/GRAIL deal did not meet the standard merger thresholds in the EU, it resulted in the first review under the EU's Article 22 below-threshold review powers, the first use of interim measures in a merger review, a record gun-jumping fine, the first gun-jumping fine on a target company, and multiple appeals. Despite these pending appeals, the EC accepted two further Article 22 referrals in August.

EC Fines Rabobank for Bond Cartel
On November 22, 2023, the EC fined Rabobank €26.6 million ($29 million) for allegedly participating in a bond cartel with Deutsche Bank, which escaped a fine because it revealed the cartel under the EC’s leniency policy. According to the EC, traders of Euro-denominated SSA bonds (Supra-Sovereign, Foreign Sovereign, Sub-Sovereign/Agency bonds) and government-guaranteed bonds exchanged commercially sensitive information and colluded on pricing, volume, and trading strategies between 2006 and 2016 via email, instant messages, and online chat rooms. Deutsche Bank avoided a fine of €156 million ($169 million) by reporting the cartel in 2017 and securing leniency.

Companies, in particular those in the financial sector, are advised to review their compliance policies to ensure they are up to date and effective and appropriately focus on risks arising out of improper information sharing. This cartel investigation is one of many in the financial sector targeting collusive interest rate setting or bond trading.

EC Investigates Automotive Starter Battery Cartel
On November 30, 2023, the EC issued a Statement of Objections to five manufacturers of automotive starter batteries (including Banner, Clarios, Exide, FET, and Rombat), as well as the trade association Eurobat and its consultancy Kellen, alleging that they had colluded to raise prices for automotive batteries. According to the EC, between 2004 and 2017 the manufacturers created and agreed to use new indices in their negotiations with car manufacturers (so-called “Eurobat Premium System”). The trade association and its consultancy allegedly knew about this conduct and actively contributed to creating and running the system.

Companies and trade associations should review their compliance policies to ensure they are up to date and effective and appropriately focus on risks arising out of improper information sharing.

EC Fines Ethanol Benchmark Cartel
On December 7, 2023, the EC fined Swedish agricultural cooperative Lantmännen €47.7 million ($52 million) for allegedly participating in a cartel to influence the ethanol benchmark price. This decision follows a €20 million ($22 million) settlement reached with Abengoa in 2021 and the closing of an investigation against Alcogroup earlier in 2023 in the same matter. Lantmännen had participated in settlement discussions with the EC but dropped out of the settlement process. Lantmännen noted its intent to appeal the EC’s decision.

According to the EC’s decision, between November 2012 and March 2014, Lantmännen conspired to raise the wholesale ethanol benchmark for the Rotterdam area published by market intelligence firm Platts, as most of its sales were tied to this benchmark. Lantmännen and other cartel participants tried to limit the physical supply of ethanol to the Rotterdam area, coordinated their trading during the period when the benchmark price was determined, and exchanged commercially sensitive information to achieve their goals.

Companies are advised to review their compliance policies to ensure they are up to date and effective. Companies that are active in markets which rely on benchmarks should ensure that their compliance policies appropriately focus on potential risks associated with the setting and use of relevant benchmarks.

EC Raids Delivery Hero and Glovo over Employee No-Poach Allegations
On November 21, 2023, the EC together with national antitrust authorities conducted dawn raids at the offices of unnamed online food delivery companies. Delivery Hero confirmed that its German offices and the Spanish offices of its subsidiary Glovo had been inspected. The EC stated that it was investigating anticompetitive conduct in the form of employee no-poach agreements and exchanges of commercially sensitive information. This investigation builds on raids which took place in 2022, targeting alleged allocation of online food delivery markets.

Companies should be aware that antitrust regulators in Europe are increasingly targeting employee no-poach agreements and ensure that their compliance policies and training appropriately focus on HR professionals.

French Authority Fines Rolex for Prohibiting Online Distribution
On December 19, 2023, the French Competition Authority fined Rolex €91.6 million ($100 million) for having prohibited its retail distributors from selling Rolex watches on the internet for a period of more than 10 years.

Rolex sells its luxury watches exclusively via a network of authorized retailers and prohibits them from selling via mail order or the internet. Rolex argued that this was necessary to preserve its luxury image and to guard against counterfeits and off-network sales. The Authority rejected these measures as disproportionate, as Rolex’s main competitors have developed technological solutions against counterfeiting on the internet and off-network sales. Rolex itself, together with a retailer, maintains an online sales program for pre-owned watches with a guarantee of authenticity, demonstrating that less restrictive measures are possible, according to the Authority.

Companies with selective distribution models should carefully assess whether the restrictions they impose on their authorized retailers are proportionate. While it is possible to restrict sales via online platforms to protect the luxury image of a brand, all restrictions have to be proportionate. As this case shows, competition authorities remain suspicious of an outright prohibition of online sales.

CMA Accepts Commitments from Amazon, Meta Regarding Treatment of Competitors
On November 3, 2023, the UK’s CMA accepted commitments from Amazon and Meta aimed at improving their treatment of competitors and closed its separate abuse of dominance investigations against the two companies. Following a market study into online platforms and digital advertising, the CMA became concerned that Meta could abuse data obtained from advertisers on Facebook Marketplace. Meta committed to provide data opt-outs to advertisers and to refrain from using such data to develop new products, functionalities, or designs competing with the advertisers.

The investigation into Amazon focused on how the company treated third-party sellers on Amazon Marketplace. The authority highlighted how Amazon’s retail arm could use third-party sellers’ commercially sensitive data to compete against them, might favor its own products over competitors’ when deciding which products to put in the “Buy Box,” and that third-party sellers participating in the Prime program who did not use Amazon’s fulfillment services could not negotiate rates with other carriers but had to use the rates Amazon had negotiated for them. To resolve the investigation, Amazon committed to refrain from using rival sellers’ nonpublic data to make decisions about its competing retail products. Amazon equally committed to using only verifiable and nondiscriminatory conditions for deciding which products qualify for the “Buy Box,” with inclusion of the product in the Prime program not an eligible criterion. Finally, Amazon will allow third-party sellers in the Prime program to individually negotiate rates with independent carriers. Amazon’s commitments to the CMA mirror those accepted by the EC on December 22, 2022.

Companies should consider whether they are facing any barriers because of conduct by dominant or incumbent firms in the UK. We can assist in identifying possible opportunities and formulating the appropriate strategy for obtaining relief. Equally, we can assist with defending against such claims.

EU Court Largely Confirms Altice Gun-Jumping Fine
On November 9, 2023, the European Court of Justice issued its judgment largely upholding a gun-jumping fine against Altice. The EC imposed a fine of €124.5 million ($135 million) in 2018 on Altice for: 1) prematurely implementing its merger with PT Portugal, a telecommunications operator, by exercising decisive influence before notifying the merger; and for 2) closing the deal before it was cleared by the EC. The European Court of Justice rejected Altice’s substantive arguments (including its arguments that distinct and cumulative fines for a breach of each of the notification and standstill rules were disproportionate and amounted to double punishment). However, it reduced the fine to €115.5 million ($125 million) because it found that the EC failed to adequately reason why both fines were identical, despite relating to infringements of differing duration.

When considering M&A, companies should be careful how they draft any pre-closing covenants and in terms of how they engage with the target business to avoid any appearance of early implementation. We have significant experience in designing effective pre-closing frameworks.

EU Court Upholds Euribor Cartel Fines Against JPMorgan Chase And Crédit Agricole
On December 20, 2023, the General Court of the EU substantially upheld the EC’s decision fining JPMorgan Chase and Crédit Agricole for participating in a Euribor-related cartel. In 2016, the EC fined JPMorgan Chase €337 million ($369 million) and Crédit Agricole €114.6 million ($125 million) together with HSBC for participating in the manipulation of the interest rate benchmark Euribor. Four other banks settled allegations of participating in the same cartel in 2013, accepting aggregate fines of €1.4 billion ($1.53 billion).

While the General Court accepted JPMorgan Chase’s argument that the EC had not properly explained how it calculated the fine, it rejected the bank’s claim that it had not participated in the cartel for a duration of five months and that the EC had misunderstood “sarcastic” and “ironic” exchanges among traders. Taking into account all evidence, the General Court annulled the decision against JPMorgan Chase and reimposed the exact same fine of €337 million ($369 million) based on the Court’s own calculations. Regarding Crédit Agricole’s challenge, the General Court found that the EC also had not properly explained the fine calculation and that it did not prove Crédit Agricole’s participation in certain aspects of the other banks’ anticompetitive conduct. The General Court reduced Crédit Agricole’s fine by €4.6 million ($5 million) to €110 million ($120 million).

Companies, in particular those in the financial sector, are advised to review their compliance policies to ensure they are up to date and effective and appropriately focus on potentially improper information sharing.

Restrictions Against European Super League Football Project Constitute Abuse of Dominance
On December 21, 2023, the European Court of Justice held that sport association statutes, which require the association’s prior approval with member clubs participating in new competitions and give the association the exclusive right to commercially exploit the media rights to such competitions, constitute an abuse of dominance. The European Court of Justice ruled in response to a request for a preliminary ruling from the Madrid Commercial Court, which is presiding over a lawsuit between European Superleague Company, which is acting for 12 European football clubs wishing to start a new football competition format, and the football associations FIFA and UEFA, which maintain the above restrictions in their statutes.

The Court of Justice ruled that while restrictions on who can access a market can be justified based on transparent, objective, nondiscriminatory and proportionate criteria, FIFA and UEFA’s statutes failed to provide such criteria.

This ruling only applies to the statutes of FIFA and UEFA and does not prejudge European Superleague Company’s bid for a new football competition format, which is for the Madrid Commercial Court to rule on. Finally, UEFA changed its statutes in 2022 in an attempt to conform with the expected ruling by the European Court of Justice, which may impact the Madrid Commercial Court’s ruling.

Companies should consider whether they are facing any access barriers because of conduct by dominant or incumbent firms in Europe. We can assist in identifying possible opportunities and formulating the appropriate strategy for obtaining relief. Equally, we can assist with defending against access claims.

Vestager Returns to Office as Competition Commissioner
On December 8, 2023, Margrethe Vestager confirmed that she was returning to her post as Commissioner for Competition and Executive Vice-President of the European Commission. She had been on unpaid leave since September 5, 2023, to focus on her ultimately unsuccessful candidacy for president of the European Investment Bank. During her absence, Justice Commissioner Didier Reynders took charge of her antitrust portfolio and EC Vice-President Vera Jourová of her digital file. The Internal Market Commissioner, Thierry Breton, effectively took over the leadership role for the EU’s digital agenda, however.

It can be expected that Commissioner Vestager will feel free to act more forcefully than her interim replacement Commissioner Reynders. While it is unclear if she will seek a third term as Commissioner for Competition, Commissioner Vestager is expected to focus on wrapping up several abuse of dominance proceedings against large tech companies and the implementation of the Digital Markets Act.

Regulators Show Increasing Interest in Investments in AI Start-Ups
On November 14, 2023, it was reported that the proposed $4 billion commercial partnership between Amazon’s AWS and AI start-up Anthropic prompted questioning from several antitrust enforcement agencies, including the FTC, the UK’s CMA, and Germany’s Federal Cartel Office (FCO). Amazon announced it would have a minority stake in Anthropic, but no representation on the board, no voting rights, and no management rights. It is understood that the CMA decided not to open a formal inquiry into that deal. Minority stakes are generally not reportable in the EU, but some European jurisdictions have a wider scope of what constitutes a notifiable transaction. Under German antitrust law, gaining a material competitive influence suffices, while UK merger rules catch minority stakes that confer material influence.

The FCO formally concluded on November 15, 2023, that Microsoft’s partnership with OpenAI had not constituted a notifiable merger. According to the FCO, OpenAI’s activities were not substantial enough in Germany when Microsoft gained a material competitive influence over OpenAI, although the transaction thresholds were met. The FCO added that it was open to revisiting this decision at any time if Microsoft were to increase its influence. In contrast, prior to initiating a formal probe the CMA asked interested parties on December 8, 2023, to comment on whether the partnership between Microsoft and OpenAI constituted a merger. Microsoft has argued that under recent changes it merely gained a non-voting observer on OpenAI’s board of directors.

Companies should be aware that minority stakes may be reviewable in certain jurisdictions and any commercial partnerships need to be carefully structured to ensure merger control rules are not triggered where possible.