The European Antitrust Agenda: EC Raids Fashion Companies; CMA Publishes Full Norton/Avast Decision; Google Reports Privacy Sandbox Progress; LSE Faces Quantile Merger Jeopardy 

Published on May 23, 2022

EC conducts fashion sector antitrust raids. The European Commission on Tuesday disclosed it has begun conducting unannounced inspections of fashion-industry companies in several EU member countries. The raids are a preliminary investigative step into suspected anticompetitive practices and don’t indicate that the companies targeted are guilty of violations, the commission said.  

The commission didn’t publish the names of corporations that have already received a visit. H&M Group, ASOS, C&A, and Zalando said that there were no unannounced inspections at their offices. Spokespeople at other top clothing retailers—Inditex, Primark, LVMH, Next, and URBN—didn’t respond to requests for comment.  

Full Norton/Avast decision published by CMA. The Competition and Markets Authority (CMA) last Monday published its full 50-page phase 1 decision referring NortonLifeLock’s (NLOK) proposed takeover of rival Avast (AVST) for an in-depth probe. Prior to releasing its full reasoning, the CMA had made available only a three-page summary.   

In the newly released document, the CMA says that internal documents as well as surveys and analysis provided by the parties support the view they’re close competitors in the supply of consumer cybersecurity software in the UK. The watchdog believes that following the merger, rival McAfee would be the sole independent provider of “endpoint security solutions” of similar size to the combined Norton-Avast. This software protects the endpoint—the customer’s device—from a number of security threats.   

Of note is the CMA’s view that Microsoft’s pre-installed Defender, the largest provider of endpoint security solutions in the UK by volume, exerts some competitive constraint, but is more limited than the constraint the parties—and McAfee—provide on each other.   

Several third parties have expressed concerns about the merger, the decision says. Those concerns range from bringing together two major competitors with high market shares to a potential harm to innovation with respect to R&D investment. 

The CMA began its in-depth review of the Norton/Avast deal in March. The authority has until September 8 to conclude the investigation.  

Google files ‘Privacy Sandbox’ progress report with CMA. Google (GOOG) last Monday sent the CMA a report detailing its progress over three months complying with binding commitments to the regulator for its “Privacy Sandbox” proposal. The Privacy Sandbox tool is aimed at protecting users’ privacy while not limiting the capabilities of businesses’ services. 

The report discloses updated timelines on the internal testing of the Privacy Sandbox and feedback Google received from third parties. The company states in the report that the feedback included concerns over the relevancy of content and advertisements; ways to measure advertising’s impact; limits to covert tracking; privacy boundaries across different sites; and prevention of fraudulent activity and spam. 

The report also highlighted previous recommendations CMA previously expressed to the company, such as Google outlining its internal product testing process, responding to industry concerns that the process would unfairly favor Google’s advertising business.  

This comes after Google’s early May launch of a new licensing tool for publishers in the EU. The search engine also last year released a program called “Google News Showcase,” a news aggregation platform that raised competition issues in Germany and France. The French regulator ended up fining Google 500 million euros ($527 million) for not following its demands for negotiating with the country’s news publishers regarding disagreements over copyright.  

LSE’s Quantile merger faces in-depth CMA probe. The CMA last week opened a phase 2 probe into the London Stock Exchange Group’s (LON: LSE) anticipated takeover of Quantile Group, which provides financial risk-management services. The parties offered undertakings on May 10, the details of which have not been made public. But the CMA decided the remedies were insufficient to resolve the authority’s competition concerns because they didn’t provide a clear-cut solution.   

A spokesperson for the buyer said in a statement, “Through our open model, we are committed to working in partnership with our customers to deliver choice.” The spokesperson added that the exchange will “continue to engage constructively with the CMA and other regulatory authorities and expect to close the transaction in H2 2022, subject to the relevant approvals.”  

A Quantile spokesperson said, “we continue to engage constructively with the CMA and other regulatory authorities and expect the transaction to close in H2 2022, subject to the relevant approvals.”   

EU and US reaffirm commitment to cooperate on tech and trade. At the 2nd Trade and Technology Council (TCC) Ministerial Meeting in Paris last week, EU and U.S. representatives highlighted hot-button issues ranging from artificial intelligence to supply chain security, especially for semiconductors.  

In addition, the meeting’s discussions focused on aligned and interoperable standards for digital technologies, data integrity and the coordination of export controls.  

The TTC has 10 working groups, including ones that focus on global technology standards, climate and clean technology, secure supply chains, data governance and export controls.  

EU competition chief Margrethe Vestager said at the meeting that the Russian invasion of Ukraine “has further underlined the key importance of our cooperation with the U.S. on economic and technology issues.” She stressed that the partnership “‘goes beyond our reaction to the war.”  

The next ministerial meeting is scheduled to occur in six months in the U.S.  

Volkswagen to get EC go-ahead for Europcar buy. German automaker Volkswagen (ETR: VOW3) is set to receive the EC’s unconditional approval this week for its plan to acquire joint control of French rental car company Europcar Mobility (EPA: EUCAR), Reuters reported last week. The commission’s phase I decision deadline is Wednesday. 

Vestager’s Weekly Calendar 

Monday. Meets with Magnus Brunner, Austrian minister of finance.  

Tuesday. Virtually attends the European Tech Alliance CEO Forum.  

Tuesday. Meets with Vincenzo Amendola, the Italian undersecretary of state in charge of European affairs.  

Tuesday. Meets with Robert Habeck, German vice chancellor, federal minister for economic affairs & climate action.  

Tuesday. Meets with Helen Dixon, Irish commissioner for data protection.  

Upcoming Events 

May 24-25. Informa’s Advanced International Competition Law, London. In-person event will feature speakers Marc Zedler, deputy head of unit at the EC’s Directorate-General for Competition; Stanislas Martin, general rapporteur at France’s Autorité de la Concurrence; Konrad Ost, vice president of the Bundeskartellamt; Michael Grenfell, executive director of the CMA; Oliver Bethell, Google’s director of EMEA competition; and Miguel Perez Guerra, PayPal’s director and head of antitrust EMEA. 

May 25. GCR Live Dusseldorf. Steigenberger Parkhotel Düsseldorf, Germany. The event will feature Anne Bliek, Head of Commercial Legal at TomTom; Silke Hossenfelder, Head of Genera; Policy Division at the Bundeskartellamt; Cornelia Hörnig, Senior Director/Corporate Legal Counsel at Infineon; Aurélien Maehl, Senior Public Policy Manager, Europe at DuckDuckGo; Christine von Merveldt, Judge at the Regional Court, Munich; and Tilman Makatsch, Head of Competition Litigation and Antitrust Economics at Deutsche Bahn.  

Recent Developments 

Veolia/Suez merger would lead to loss of competition and higher council tax bills, CMA finds. In a provisional decision, the CMA said the acquisition of Suez (EPA: SEV) by Veolia Environnement (EPA: VIE) raises serious competition concerns. The UK regulator in December opened a phase 2 probe into the merger of the two French waste and water management service companies. Earlier that month, the EC cleared the deal in phase I with remedies. 

The investigation focuses on eight markets in the UK where both firms operate, and the provisional findings show competition concerns in seven of the eight markets. In the UK, Veolia and Suez are the only two waste management companies that operate across the sector’s entire supply chain. The CMA thinks the merger would result in either higher costs or lower quality services or both for local councils and, in turn, higher bills for taxpayers already under a tight squeeze. 

“The CMA’s initial view is that a full divestiture of the entire UK Waste Business of either Veolia or Suez represents the only effective remedy,” the watchdog said. The authority has until July 17 to conclude its review. 

Wieland-Werke loses appeal of Aurubis merger block. The EU’s lower-tier General Court last week rejected an appeal by German copper manufacturer Wieland-Werke seeking to overturn the EC’s 2019 prohibition of the company’s plan to buy the Rolled Products business of rival Aurubis and Aurubis’ stake in the Schwermetall manufacturing joint venture.  

CMA identifies concerns with property search firm merger. The CMA last week provisionally found that Canadian cloud software provider Dye & Durham’s (DND:CN) completed acquisition of UK rival TM group is anticompetitive. Both firms provide property search reports that detail crucial property information buyers and sellers might rely upon before closing a deal.   

The CMA began an in-depth probe into the deal in December and has provisionally concluded that the merger of two of the industry’s biggest actors in an already highly concentrated market would result in undue burdens for UK homebuyers.  

In a press release, the watchdog said: “In light of this loss of competition, the CMA has also set out its initial view that the only effective way to address the issues it has identified would be for Dye & Durham to sell TM Group to a suitable buyer.”  

The competition authority also published its full provisional findings. The involved parties didn’t originally report the acquisition to the CMA, but the regulator ordered an investigation nonetheless after finding sufficient competition concerns within the deal. The watchdog has until August 16 to reach a final decision on the review.   

Dutch regulator to clarify platform rules. The Netherlands’ Autoriteit Consument en Markt (ACM) notified businesses last week it will publish a set of guidelines giving platform companies and online businesses that rely on their services clarity on how to interpret and abide by the EU’s Platform-to-Business (P2B) Regulation.   

The P2B regulation came into force in June 2020 with the stated purpose of protecting consumers by ensuring fairness, transparency and accountability in online marketplaces, search engines and other Internet platforms.  

The ACM, charged by the Dutch Council of State to enforce the regulation, concluded after a market study that the regulation’s language allows for loose interpretations. ACM board member Manon Leijten said the watchdog’s intention in releasing the guidelines is “to provide clarity about how ACM, as the regulator enforcing these rules, will interpret these standards, thereby clarifying to platforms what they need to do, and ensuring that their business customers know what their rights are.”  

Dutch businesses can expect to see the guidelines published for public consultation in the autumn.  

Pharma companies appeal CMA infringement findings. The Competition Appeal Tribunal (CAT) last week published appeals made in April by four pharmaceutical companies—Lexon, Alliance Pharmaceuticals (LON: APH), Cinven and Advanz Pharma—against the UK watchdog’s finding of anticompetitive agreements among them.  

The CMA in February concluded that four companies—Lexon, Alliance, Focus (previously owned by Cinven and currently owned by Advanz) and Medreich—had established a pharmaceutical cartel. The regulator found that the firms colluded to restrict the supply of anti-nausea prochlorperazine tablets to the Nation Health Service through a “Market Exclusion Agreement,” artificially raising prices for the medication. 

Lexon, Alliance, Cinven, Advanz, and Medreich were respectively fined 7.3 million pounds ($9 million), 6.7 million pounds ($8 million), 6.7 million pounds, 7.9 million pounds ($10 million) and 4.6 million pounds ($5.73 million).  

All but Medreich appealed the decision, alleging that the watchdog hadn’t established with sufficient proof that the actors participated in market exclusion and that the fines imposed were excessive. Medreich admitted cartel involvement and cooperated with the CMA investigation, resulting in a 40% fine reduction. The appeals were made public last week. 

MOL files OMV deal with EC after Slovenian watchdog refuses review. MOL Hungarian Oil and Gas (MOGG:GR) has notified its plan to acquire the Slovene business of OMV Group (OMV:AV). The two oil and gas companies operate fuel stations and supply motor fuels, heating oil and bitumen, which is used on road services and roofs, in Slovenia. 

The merger was filed for EC review after the Slovenian Competition Protection Agency (CPA) refused to review the case following a request by the buyer. The national regulator told The Capitol Forum that the agency “has jurisdiction to assess concentrations that have an impact only on the national market.” The regulator added that “in the case of MOL /OMV Slovenia, the CPA considers that the concentration has a dimension beyond the borders of Slovenia (mainly on the wholesale market), which exceeds the competence of the CPA, and therefore rejected the proposal to assess the merger, submitted by the notifying party to the European Commission.” 

The commission has until June 22 to conclude its phase I review. 

Norwegian and Portuguese competition watchdogs hold bilateral meeting. The Norwegian Competition Authority (NCA) and the Portuguese Competition Authority (AdC) met May 19 and 20 to discuss issues of interest to both parties, including anticompetitive behavior in labor markets, the retail sector and digital businesses. 

The two authorities said they worked on trying to ensure more efficient and open markets. Margarida Matos Rosa, president of the AdC, said following the meeting that this conversation “[was] especially relevant given the context of economic recovery and increased digitization.”  

Canon loses appeal against General Court fine. Japanese imaging and optical products maker Canon on Wednesday lost its appeal before the General Court of an EC fine for not notifying the commission of its Toshiba Medical Systems’ acquisition.  

The acquisition occurred over a two-step process in 2016, whereby an interim buyer—MS Holding—first acquired the company before it was then purchased by Canon.

But the EC in 2019 found that Canon had violated the commission’s notification obligations. The company was fined 28 million euros ($30 million) for failing to secure approval from the EC before going ahead with the deal.  

The General Court concluded that Canon failed to prove that the interim transaction wasn’t a partial implementation of its ultimate acquisition of Toshiba Medical Systems. 

The commission has fined Meta, General Electric and Illumina for similar procedural missteps in recent years. 

Maersk/Noble decision published. The CMA last week published its full-text decision on the anticipated merger between Maersk Drilling (CPH: DRLCO) and Noble Corporation.  

The two offshore drilling contractors had been exploring selling some North Sea jack-up rigs to alleviate the authority’s competition concerns. The CMA has previously stated it believed there were reasonable grounds to accept these remedies, if offered.