The European Antitrust Agenda: Lufthansa/ITA Appears Headed for the Runway; Google’s Hotel Search Market Share Slides in EU; Luxembourg Raids Pharma Firms; EC Accuses Czech Republic of Antitrust Infringement, Alchem of Price Fixing; NGOs Go After Vodafone/Three

Published on Jun 17, 2024

Skies appear to clear for Lufthansa/ITA as IAG offers remedies. The German airline giant (ETR: LHA) is likely to receive the European Commission’s (EC) blessing to take a 41% stake in state-owned ITA Airways, Reuters and Politico reported last week, citing anonymous sources. Such a decision would please the plethora of Italian officials who’ve been lobbying hard for the enforcer’s green light.

The EC’s decision on the deal hasn’t gone out for interservice consultation, a roughly two-week process in which other commission departments sign off on it, a person familiar with the matter told The Capitol Forum. That means the approval isn’t yet set in stone, though officials are leaning toward clearing Lufthansa’s proposed investment, the person said.

The other airline deal under an in-depth EC investigation, International Airlines Group’s (LSE: IAG) proposed 400-million-euro ($428 million) acquisition of the 80% of Air Europa it doesn’t already own, bolstered its effort to win the commission’s approval. IAG submitted proposed remedies last Monday, and the EC’s decision deadline moved to August 20, according to an update to the commission’s website.

Google losing hotel search market share to Trivago, Tripadvisor in EU. The Alphabet (GOOG) unit’s hotel search vertical’s share of the hotel “metasearch” market, in which aggregators link to hotels’ own websites, dropped from 86% to just over 80% following its changes to comply with the Digital Markets Act (DMA), according to the industry marketing tech firm Mirai. Rival metasearch services Tripadvisor (TRIP) and Expedia-owned (EXPE) Trivago, meanwhile, saw their shares rise from 4.1% to 4.9% and from less than 10% to 15%, respectively, the firm said in a report posted Tuesday. (Mirai excluded other hotel “metasearch” players, as those firms only account for 1% of the market.)

Outside the European Union, where the DMA does not apply, Google Hotels’ share grew slightly, as did Trivago’s, while Tripadvisor saw a small decrease, according to the report.

The sweeping set of rules includes a requirement that Big Tech “gatekeeper” firms not favor their own services over those of competitors, which in Google’s case means the company can no longer give its category-specific search functions a leg up over competing services that depend on visibility on its search page.

A Trivago spokesperson declined to comment. Spokespeople for Google and Tripadvisor did not respond to requests for comment.

Luxembourg raids pharma companies over suspected “anti-competitive practices.” The country’s Autorité de la Concurrence said Thursday it carried out unannounced inspections of “various companies suspected of having implemented anti-competitive practices in the pharmaceutical and parapharmaceutical sectors” on Tuesday and Wednesday.

The authority didn’t name the companies involved, and cautioned that the raids marked a preliminary phase of its investigation and that the action doesn’t mean the targeted firms are guilty.

EC accuses Czechia of antitrust violation. The EC’s Directorate General for Competition (DG Comp) said Tuesday it sent Czechia a rare Letter of Formal Notice warning the country that it may be violating EU competition rules by designating one company, EKO-KOM, as the only packaging waste collector for over the past 20 years. If the agency’s investigation confirms its preliminary findings, it could order Czechia to remedy the competition concerns. Six companies have already tried and failed to enter the sector, the EC noted.

EC Commissioner for Competition Margrethe Vestager said: “The Czech market for packaging waste collection and recovery has been dominated by the incumbent operator for more than two decades. We are concerned that Czech measures have prevented entry of rival companies, with a consequent negative impact on prices, quality, innovation and choice.”

Letters of Formal Notice warn EU countries that they may be violating EU laws. DG Comp last sent one in 2015, accusing France of unfair procurement practices in the renewable energy sector. France passed a law one year later that set out a new competitive bidding process.

UK class action targets video game distribution platform. A digital rights campaigner filed an opt-out collective action at the UK’s Competition Appeal Tribunal on June 5 accusing Valve, which runs the popular gaming platform Steam, of abusing its dominance by overcharging customers for its PC games. Claimant Vicki Shotbolt is seeking about 656 million pounds ($835 million) in damages on behalf of 14 million UK gamers that Valve allegedly overcharged.

The claim raises three separate alleged abuses: price parity clauses that prevent game developers from offering better prices for PC-games on rival platforms; tying that forces gamers to buy any add-on content for games also from Steam; and an excessive commission rate for publishers of up to 30%, which was purportedly passed to consumers.

Valve didn’t respond to a comment request.

EC accuses Alchem of pharma price fixing. The enforcer has sent a Statement of Objections to Alchem International Pvt. Ltd. and its subsidiary Alchem International, taking the preliminary view that the company violated EU antitrust rules by taking part in a cartel concerning a key product in abdominal antispasmodic drugs—the agency’s first-ever pharmaceutical cartel case.

Alchem may have agreed with other companies to fix the minimum sale price of the pharmaceutical ingredient N-Butylbromide Scopolamine/Hyoscine (‘SNBB’) to distributors and manufacturers, the EC said in a statement Thursday. Last year, the Brussels-based agency approved a settlement reached by other companies involved in the same cartel.

Alchem didn’t respond to a request for comment.

Civil society groups challenge Vodafone/Three merger rationale. The CMA on Thursday published responses received as part of its phase 2 review of Vodafone UK’s (LON: VOD) proposed merger with CK Hutchison’s (HKG: 0001) Three network. Unite, the UK’s largest private sector trade union, said the transaction will lead to “job losses, higher prices and further profiteering, without delivering the promised investment.” It added that “lower-income consumers more broadly will also disproportionately bear the costs of the merger and we are currently conducting polling to submit to the Phase 2 inquiry on this basis.”

The consumer advocacy organization Which? challenged the merging parties’ claim that they don’t act as competitive constraints on each other. It told the CMA that four years of data from UK communications regulator Ofcom showed “significant proportions of recent switchers to either Three or Vodafone came from the other firm,” and that the companies’ stores are “commonly located very close to one another.”

Meanwhile, the merging companies said the current conditions of competition “have delivered, and will continue to deliver, sub-optimal outcomes for UK consumers and businesses.” They argued the CMA’s phase 1 decision “mischaracterises the market” and raises “unrealistic” concerns about information-sharing. They reiterated claims that the efficiencies and 5G investment from their combination makes the deal procompetitive.

The CMA will issue its provisional findings in August, when it’ll also start considering remedies. The agency has until October 12 to complete its in-depth investigation.

Danish agency assists EC in investigating DMA compliance. The Danish Competition and Consumer Authority (DCCA) can help the EC with checking whether companies designated as “gatekeepers” under the bloc’s Digital Markets Act (DMA) are complying with the law, a senior official at the DCCA told The Capitol Forum.

“The European Commission is the sole enforcer of the DMA regulation. The DCCA can assist the Commission with DMA investigations in Denmark,” said Bettina Funch-Jarlbæk, deputy head of division at the DCCA.

“The Commission can, for example, ask the DCCA for assistance in carrying out investigations, market studies or in obtaining specific information,” she said.

The EC has labeled as gatekeepers seven companies: Alphabet, Amazon (AMZN), Apple (AAPL), Booking (BKNG), ByteDance, Meta (META) and Microsoft (MSFT). Funch-Jarlbæk and the DCCA didn’t directly address whether it’s investigating a recent complaint under the DMA from the Danish Press Publications’ Collective Management Organisation and the Danish Media Association, which The Capitol Forum reported last week.

EC starts first in-depth FSR deal review. The EC last Monday opened its first in-depth investigation of an acquisition under the Foreign Subsidies Regulation (FSR). The agency said United Arab Emirates-controlled Emirates Telecommunications Group’s (ADX: EAND) acquisition of sole control of PPF Telecom Group, excluding its Czech business, may distort the EU single market for telecom services because the acquirer received an unlimited guarantee from the UAE and a loan from UAE-controlled banks directly facilitating the transaction.

The agency now has until October 15 to decide whether those subsidies allowed Emirates Telecoms, known as e&, to deter or outbid other parties interested in PPF, or will negatively affect the EU’s internal market post-merger. It can impose remedies or even block the transaction. PPF provides telecom services in Bulgaria, Czechia, Hungary, Serbia and Slovakia.

EC Commissioner for Competition Vestager said in a statement: “The FSR allows us to tackle distortive support from third countries for the acquisition of businesses in the EU. Our investigation will also assess whether e& may have received foreign subsidies that could distort fair competition in the telecom sector.”

German enforcer clears Thermo Fisher/Olink. The Bundeskartellamt today unconditionally approved Thermo Fisher Scientific’s (TMO) proposed acquisition of proteomics company Olink (OLK). Authority President Andreas Mundt said in a statement: “The merger will result in only insignificant market share additions on the markets affected. Potential product bundling or the risk of market foreclosure, which have been thoroughly examined, are ultimately not expected to occur.”

The clearance was largely expected given the companies hadn’t offered remedies before the end of the in-depth investigation. The deal is now just awaiting a decision from the CMA, which has until July 3 to issue its phase 1 findings.

Vestager’s Weekly Calendar

To view EC Commissioner for Competition Margrethe Vestager’s schedule for the week, click here.

Upcoming Events

June 17-18 at 3:50 a.m. ET (9:50 a.m. CET): “18th Annual IBA Competition Mid-Year Conference,” an in-person conference in London.

June 24, time to be confirmed: “ECN Digital Markets Act Conference,” an event hosted by the European Competition Network (ECN) at the Sheraton Hotel in Amsterdam. EC competition chief Vestager is giving the keynote speech.

June 26 at 3:30 a.m. ET (9:30 a.m. CET): The Law Society’s 4th Annual International Antitrust Summer Conference 2024. An in-person conference in London.

July 2 at 7 a.m. ET (1 p.m. CET): “International Competition Network Workshop Competition and Sustainable Development,” a webinar organized by France’s Autorité de la Concurrence. Speakers include Autorité President Benoît Cœuré and Bundeskartellamt President Andreas Mundt.

July 9-10 at 5 a.m. ET (11 a.m. CET): “GCR Live: Law Leaders Europe,” an in-person conference in Brussels. Speakers include Robert Benditz, a case handler at DG Comp; Yves Van Gerven, general counsel at the Belgian Competition Authority; and Amaryllis Müller, senior antitrust counsel at TikTok.

September 26 at 3 a.m. ET (9 a.m. CET): “CompLaw: Merger Control,” an in-person event in Brussels. Scheduled speakers include DG Comp Deputy Director General for Mergers Guillaume Loriot; Uber competition counsel David Dauchez; Siemens competition counsel Saar Dierckens and David Dubois, deputy head of the French Autorité de la Concurrence’s Merger Control Unit.

November 22 at 2:30 a.m. ET (8:30 a.m. CET): “New Frontiers of Antitrust,” an in-person event in Paris hosted by Concurrences. Speakers include Frédéric Jenny, chairman of the Organization for Economic Cooperation and Development’s competition committee; German Bundeskartellamt President Andreas Mundt; Avery Gardiner, Spotify’s competition policy director; CMA Chief Executive Sarah Cardell and Guillaume Loriot, deputy director general for mergers at DG Comp.

Recent Developments

Barratt/Redrow phase 1 begins. The CMA officially kicked off its phase 1 investigation into Barratt Developments’ (LON: BDEV) 2.5 billion pound ($3.2 billion) proposed takeover of rival homebuilder Redrow (LON: RDW) on Friday. The review follows a lengthy prenotification period. As The Capitol Forum has reported, Barratt may have to offer remedies to eliminate overlaps between its and Redrow’s assets in local areas, a sticking point that some experts suggest could be resolved without an in-depth investigation.

The agency is accepting comments on the transaction until June 28 and must issue its phase 1 decision by August 8.

Turkish enforcer fines Google $14.7 million for noncompliance. The Turkish Competition Authority has fined Google 482 million lira ($14.7 million) for ignoring its order to change how rival hotel comparison sites appear in search results. The agency was imposing daily penalties on Google until it complied with its 2021 decision and said in a press release June 10 that the company is now in compliance.

The original decision found Google unlawfully self-preferenced its own local accommodation services while pushing rivals down in search results. The company has now changed how its algorithm displays results for local hotel searches, the authority said.

Google didn’t respond to a request for comment.

Germany allows automakers to band together in patent licensing bids. BMW (ETR: BMW), Mercedes-Benz (ETR: MBG), Thyssenkrupp (ETR: TKA) and Volkswagen (ETR: VW) can jointly negotiate for the rights to “standard essential” patents for technology needed to meet technical standards—such as for the use of 4G or 5G in cars, the Bundeskartellamt said last Monday.

The authority’s president, Andreas Mundt, said in a statement that the Bundeskartellamt was “breaking new ground in the area of competition law, a development which is significant far beyond Germany.” Still, he added, the German enforcer can only tolerate the collaboration if it is limited to standards that aren’t specific to the auto sector and the companies comply with other competition rules.

CMA lays out timeline for veterinary market probe. The UK enforcer will hold hearings and take information from third parties on competition issues in the vet sector through January. It also plans to reach a provisional decision in the spring and will publish its final decision in the fall, according to a timetable published last Monday.

Sugar deal “is small in the context of the market,” buyer says. T&L Sugars’ proposed takeover of the UK assets of French conglomerate Tereos wouldn’t enable the combined company to raise the prices of the products it sells to grocers, T&L said in a rebuttal of the CMA’s objections to the buyout that was posted Friday. Tereos UK & Ireland relies heavily on its parent company and “is a weakened and declining player in the packing and distribution part of the value chain, which is dominated in the UK by British Sugar,” T&L said. The CMA faces a September 5 deadline to decide whether to block the transaction.