EU/Competiton: Industry and Consumer goods

Newsletter 12/2020

In a 25.11.20 decision the Norwegian Competition Authority concluded that Verisure and Sector Alarm, by far the two largest players in the market, have engaged in illegal market sharing practices in the period from 2011 until 2017. According to the NCA Verisure and Sector Alarm agreed not to sell alarm services to each other’s customers through door-to-door selling. During the period in question, there was a substantial number of direct contacts between the two companies, according to the NCA, including: (i) Physical meetings, telephone conversations and e-mail correspondence. (ii) The two companies provided each other with detailed information about market strategies. (iii) They encouraged each other to comply with the agreed practices, and threatened each other with retaliatory measures when detecting deviations. The NCA carried out unannounced inspections 20.06.17 at the premises of Verisure and Sector Alarm. During the inspections, the NCA seized documents and electronically stored material. After the inspections, a substantial amount of evidence was systemised and examined, based on which the NCA conducted interviews with employees from both companies in the period February 2018 until September 2020. The decision followed a 17.06.19 Statement of Objections. The 25.11.20 decision imposes a NOK 766 million fine on Verisure. Sector Alarm accepted the SO and was fined NOK 467.3 million in a separate decision of 04.07.19. This is the highest fines in a cartel case in Norway to date.

The Commission published 19.11.20 its EU Strategy on Offshore Renewable Energy. The Strategy proposes to increase Europe’s offshore wind capacity from its current level of 12 GW to at least 60 GW by 2030 and to 300 GW by 2050. The Commission aims to complement this with 40 GW of ocean energy and other emerging technologies such as floating wind and solar by 2050. The Commission estimates that investment of nearly EUR 800 billion will be needed between now and 2050 to meet its proposed objectives. To help generate and unleash this investment, the Commission will: (i) Provide supportive legal framework: To this end, the Commission clarified the electricity market rules in an accompanying Staff Working Document and will assess whether more specific and targeted rules are needed. The Commission will seek to ensure that the revisions of the State aid guidelines on energy and environmental protection and of the Renewable Energy Directive will facilitate cost-effective deployment of renewable offshore energy. (ii) Help mobilise relevant funds to support the sector’s development: Horizon Europe funds will be mobilised to support research and development, particularly in less mature technologies. (iii) Ensure a strengthened supply chain: The Strategy underlines the need to improve manufacturing capacity and port infrastructure and to increase the appropriately skilled workforce to sustain higher installation rates. The Commission plans to establish a dedicated platform on offshore renewables within the Clean Energy Industrial Forum to bring together all actors and address supply chain development. Large parts of the Norwegian industry is particularly well-positioned to take part in the investments in offshore renewables in the EU through the coming years. Visit the strategy web page here.

(i) Statement of Objections (SO) on Amazon’s use of marketplace seller data: Amazon has a dual role as a platform; it provides a marketplace where independent sellers can sell products directly to consumers; and it sells products as a retailer on the same marketplace, in competition with those sellers. As a marketplace service provider, Amazon has access to non-public business data of third party sellers such as the number of ordered and shipped units of products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, data relating to shipping, to sellers’ past performance, and other consumer claims on products, including the activated guarantees. The Commission’s preliminary findings in a 10.11.20 SO allegedly show that very large quantities of non-public seller data are available to employees of Amazon’s retail business and flow directly into the automated systems of that business, which aggregate these data and use them to calibrate Amazon’s retail offers and strategic business decisions to the detriment of the other marketplace sellers. For example, it allows Amazon to focus its offers in the best-selling products across product categories and to adjust its offers in view of non-public data of competing sellers. The Commission’s preliminary view, outlined in its 10.11.20 SO, is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany – the biggest markets for Amazon in the EEA. If confirmed, this would infringe Article 102 TFEU that prohibits the abuse of a dominant market position. (ii) Investigation into Amazon practices regarding its “Buy Box” and Prime label: In addition, the Commission opened the same day (10.11.20) a second antitrust investigation into Amazon’s business practices that might artificially favour its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services (the so-called “fulfilment by Amazon or FBA sellers”). In particular, the Commission will investigate whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users, under Amazon’s Prime loyalty programme, lead to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services. The “Buy Box” is displayed prominently on Amazon’s websites and allows customers to add items from a specific retailer directly into their shopping carts. Winning the “Buy Box” (i.e. being chosen as the offer that features in this box) is crucial to marketplace sellers as the Buy Box prominently shows the offer of one single seller for a chosen product on Amazon’s marketplaces, and generates the vast majority of all sales. The other aspect of the investigation focusses on the possibility for marketplace sellers to effectively reach Prime users. Reaching these consumers is important to sellers because the number of Prime users is continuously growing and because they tend to generate more sales on Amazon’s marketplaces than non-Prime users. Visit the case dossiers here (Marketplace) and here (Buy Box).

The Commission adopted 25.11.20 a Pharmaceutical Strategy for Europe. The flagship actions of the strategy include: (i) A revision of the basic pharmaceutical legislation (target date for a proposal: 2022) with a view to making this framework future-proof and innovation friendly; (ii) A proposal for a EU (EEA) Health Emergency Response Authority (proposal: 2nd semester 2021); (iii) A revision of the regulations on medicines for children and rare diseases, (iv) Initiating a structured dialogue with and between all actors in the pharmaceutical manufacturing and public authorities to identify vulnerabilities in the global supply chain of critical medicines and shape policy options to strengthen the continuity and security of supply in the EEA; (v) Cooperation between national authorities on pricing, payment and procurement policies, to improve the affordability, cost-effectiveness of medicines and health system’s sustainability; (vi) The creation of a robust digital infrastructure, including a proposal for a European Health Data Space (target date for a proposal: 2021); (vii) Support to research and innovation, notably via Horizon 2020 and EU4Health; (viii) Actions to promote innovative approaches to EU R&D and public procurement for antimicrobials and their alternatives and measures to restrict and optimise their use. Visit the strategy here.

In a 26.11.20 decision the Commission fined the pharmaceutical companies Teva and Cephalon EUR 60.5 million for agreeing to delay for several years the market entry of a cheaper generic version of Cephalon’s drug for sleep disorders, modafinil, after Cephalon’s main patents had expired. The agreement was concluded well before Cephalon became a subsidiary of Teva. Modafinil is a medicine used for the treatment of excessive daytime sleepiness associated in particular with narcolepsy. It was Cephalon’s best-selling product under the brand name “Provigil” and for years accounted for more than 40% of Cephalon’s worldwide turnover. While the main patents protecting modafinil had expired in Europe by 2005, Cephalon still held some secondary patents related to the pharmaceutical composition of modafinil, which aimed at securing additional patent protection. The decision concerns a patent settlement agreement whereby Cephalon induced Teva not to enter the market with a cheaper version of modafinil, in exchange for a package of commercial side-deals that were beneficial to Teva and some cash payments. Teva held its own patents relating to modafinil’s production process, was ready to enter the modafinil market with its own generic version, and it had even started selling its generic in the UK. Then, it agreed with Cephalon to stop its market entry and not to challenge Cephalon’s patents. While generally patent settlements can be legitimate, the Commission found that the settlement agreement between Teva and Cephalon was not. Teva committed to stay out of the modafinil markets, not because it was convinced of the strength of Cephalon’s patents, but because of the substantial value transferred to it by Cephalon. The value transfer was mainly embedded in a number of commercial side-deals, which Teva would not have achieved without committing to staying out of the market. Visit the case dossier here.

Following the statement of objections of 30.09.20, the Norwegian Competition Authority adopted a decision 11.11.20 against the (horizontal) Schibsted (Finn.no) / Nettbil merger in the sector for internet ads for used cars. The Schibsted-owned Finn.no is the by far largest service in the market and Nettbil is a new participant in the market. This is the first “digital case” at the NCA and the NCA Also noted when adopting the decision that “internationally, there is an increased focus on the importance of facilitating competition in digital markets, to avoid that individual players become too powerful.”

The EFTA Surveillance Authority (ESA) approved 12.11.20 amendments to a guarantee scheme in Norway that ensures access to liquidity for companies, including a prolongation of the scheme. ESA approved 26.03.20 a guarantee scheme ensuring access to liquidity for small and medium-sized enterprises (SMEs) facing dwindling revenues due to the on-going COVID-19 pandemic. The approved scheme was aligned with the State Aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission. The Framework has now been amended to allow for guarantee schemes to remain in force until 30 June 2021. On 02.04.20 the scheme was amended to also include large enterprises; on 25.05.20 the scheme was prolonged until 31.12.20; and, on 31.07.20, the scheme was amended to include aid to micro enterprises in difficulty. COVID-19 measures continue to affect business operations, ESA has approved Norway’s proposal to extend the scheme so as to allow for guaranteed loans to be granted until 30.06.21. ESA has also approved that the loans can have maximum six years guarantee, rather than three. This will make repayment plans more manageable for businesses and can lower default risk. The scheme has a total budget of NOK 50 billion (EUR 4.66 billion). Visit the decision here.

The Commission published 25.11.20 its new Action Plan on Intellectual Property, which sets out five key areas for development over the coming years. The Action Plan proposes to upgrade a series of existing IP tools and make them fit for the digital age, including improving the supplementary protection certificates (SPC) for patented medicinal and plant protection products and modernising EU design protection. It aims at strengthening the protection of agricultural geographical indications (GIs) while considering the feasibility of a GI protection system for non-agricultural products at EU level. The Commission also launches an industry dialogue to address the impact of new technologies (such as AI and block chain) on the IP system. To ensure that companies have access to fast, effective and affordable protection tools and reduce the persisting fragmentation and complexity in the current system, the Action Plan calls for a rapid rollout of the unitary patent system to create a one-stop-shop for patent protection and enforcement across the EU. Visit the action plan here.

The EDPB adopted 10.11.20 recommendations on measures that supplement transfer tools to ensure compliance with the EEA level of protection of personal data, as well as recommendations on the European Essential Guarantees for surveillance measures. Both documents were adopted as a follow-up to the CJEU’s ‘Schrems II’ ruling. As a result of Schrems II, controllers relying on Standard Contractual Clauses (SCCs) are required to verify, on a case-by-case basis and, where appropriate, in collaboration with the recipient of the data in the third country, if the law of the third country ensures a level of protection of the personal data transferred that is essentially equivalent to that guaranteed in the EEA. The CJEU allowed exporters to add measures that are supplementary to the SCCs to ensure effective compliance with that level of protection where the safeguards contained in SCCs are not sufficient. The recommendations on the supplementary measures will be submitted to public consultation until 21.12.20. They will be applicable immediately following their publication. The consultation on Recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data can be visited here. The (final) Recommendations 02/2020 on the European Essential Guarantees for surveillance measures can be visited here.