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September 16, 2019 |
DOJ’s Antitrust Division Elects Binding Arbitration to Resolve Merger Challenge

Click for PDF On September 4, 2019, the U.S. Department of Justice’s Antitrust Division filed a complaint in the Northern District of Ohio challenging Novelis Inc.’s proposed $2.6 billion acquisition of Aleris Corporation. In a first, the Antitrust Division has agreed to resolve the matter through binding arbitration under the Administrative Dispute Resolution Act of 1996, 5 U.S.C. § 571 et seq. Assistant Attorney General Makan Delrahim remarked that “[t]his new process could prove to be a model for future enforcement actions, where appropriate, to bring greater certainty for merging parties and to preserve taxpayer resources while staying true to the [Antitrust Division’s] enforcement mission.” It remains to be seen whether this case portends a larger shift in the Antitrust Division’s approach to resolving merger investigations and negotiating remedies, or whether arbitration will be limited to the specific circumstances surrounding Novelis’ acquisition of Aleris. To the extent arbitration becomes a meaningful option for merging parties in future cases, however, the ramifications are significant. Background The Antitrust Division and the Federal Trade Commission share responsibility for investigating proposed mergers and acquisitions to determine whether, if consummated, they would violate Section 7 of the Clayton Act, which prohibits transactions whose effect “may be substantially to lessen competition.”[1] Parties to transactions that are subject to the Hart-Scott-Rodino Act (or “HSR”) must observe a waiting period before closing, and typically do not close until the Antitrust Division completes its investigation. If, after investigating a proposed transaction, the Antitrust Division concludes it would violate Section 7, it will typically demand a remedy (such as a divestiture of one party’s assets) or, if the parties do not propose a sufficient remedy, challenge the transaction in federal district court. Novelis announced its proposed acquisition of Aleris on July 26, 2018, and the proposed transaction was subject to HSR. Under the terms of the agreement, Novelis would acquire Aleris’ 13 production facilities across North America, Europe, and Asia.[2] Following an antitrust investigation lasting roughly 14 months, the Antitrust Division filed suit challenging the proposed acquisition.[3] The complaint alleged that the transaction would combine two of only four North American producers of aluminum auto body sheet metal, and that the combined company would represent 60 percent of production capacity in this market. The Antitrust Division supported its claims by quoting internal documents where Novelis indicated concern that, absent the transaction, Aleris would be acquired by a new entrant that would “likely … bid aggressively and negatively impact pricing” in the market. In an unusual move, the Antitrust Division simultaneously issued a press release stating that the parties had agreed to arbitrate the central question of product market definition, the outcome of which would determine whether the parties would divest certain assets to cure the alleged competition concern.[4] In a related court filing, the Division laid out its rationale for pursuing arbitration rather than its usual practice of challenging the merger in federal court or agreeing to a negotiated divestiture. It noted that merger challenges require “weeks-long trials involving the submission of thousands of pages of exhibits, and testimony from a substantial number of fact witnesses, as well as extensive expert testimony.”[5] Citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344–46 (2011), the Antitrust Division explained that arbitration is favored by federal policy and would offer “a speedier and less costly alternative to litigation.” The filing attached a redacted term sheet explaining that the arbitrator would decide one question: whether aluminum auto body sheet constitutes a relevant product market under the Horizontal Merger Guidelines. The arbitrator would not reach the ultimate question of whether the transaction would substantially lessen competition under section 7 of the Clayton Act. Significantly, according to the Division, whether or not the parties will need to divest assets hinges on the arbitrator’s determination. If the arbitrator ruled that the relevant product market is broader than aluminum auto body sheet, the Division agreed to withdraw its complaint and the parties could close without any divestiture remedy. If the arbitrator concluded that aluminum auto body sheet is the relevant market, then the parties would be obligated to divest the overlapping business to a buyer acceptable to the Division through a Tunney Act proceeding in which a court would approve the settlement so long as it is in the “public interest.” This unique process provides the parties with certainty as to when they can close their merger. If the arbitration proceedings are still pending on December 20, 2019, or if the Antitrust Division prevails, then the parties and the Antitrust Division agreed to negotiate a hold separate order. The hold separate order would allow the parties to close their deal pending final court approval of their agreed-upon remedy, so long as they agree to hold the divested assets separate. If the parties prevail, however, then they can close their deal without conditions (i.e., they can close without a hold separate or a remedy). Either way, closing would be allowed no later than December 20. Key Takeaways An Emerging Third Option? Up until now, parties to a transaction that the Antitrust Division claimed raised antitrust concerns had two options to resolve the dispute: (1) negotiate a remedy to address competitive concerns raised by the transaction, or (2) litigate against the Antitrust Division in federal court. Novelis may signal the Antitrust Division’s willingness to offer a third option that allows the Division and the parties to avoid a trial in federal court by allowing an arbitrator to decide dispositive issues. However, a broader policy has not yet been announced, and it may turn out that this new arbitration option may be limited to certain cases. AAG Delrahim noted “[t]he division would have to evaluate several factors before agreeing to arbitrate,” including the potential “efficiency gains,” whether the issues to be resolved in arbitration are “clear and easily can be agreed upon,” and the cost of any “lost opportunity to create valuable legal precedent.” Novelis offers clues as to how these factors might apply in future cases. The Division and the merging parties agreed on the parameters of a divestiture remedy and that the need for the remedy turns on the resolution of a discrete question—in this case, the definition of the relevant product market. Matters that present multiple or more complex antitrust issues or where no structural remedy is practically available may not be candidates for arbitration. Of course, mergers being investigated by the Federal Trade Commission would not be subject to this new policy. Timing Certainty May Be the Primary Benefit.  The Division’s filing suggests that arbitration would be “speedier” than litigation, though the Novelis arbitration timelines are comparable to the deadlines in case management orders for recent merger trials. Per the filing, the Division and the parties are obligated to work toward commencing the arbitral hearing within 120 days from the filing of an answer, with the hearing to be completed within 21 days, and a final decision within 14 days after the hearing. Assuming no extension to the 21-day deadline to file an answer under Rule 12, the parties would receive an arbitration decision within 176 days, or almost six months. This is roughly equivalent to the length of time typically needed to reach a decision on the merits in a federal merger trial, which averaged roughly 150 days for litigated in recent years. This suggests that the primary benefit of arbitration in this setting may be timing certainty, though limits on appeals of arbitration decisions may present time savings over trial and appellate litigation. Limited appeal rights may further narrow the scenarios in which arbitration will be a suitable option for either the Division or the parties. Fewer Confidentiality Concerns for Third Parties. The Novelis arbitration hearing will be confidential and (presumably) governed by a protective order. In contrast, during a federal court trial, third party customers and competitors of the merging parties often must testify publicly in open court (or at least, must reveal their views to the parties or their counsel under a protective order). In this regard, confidential arbitration appears to eliminate the need to grapple with complex and sensitive confidentiality issues that arise during trial. By the same token, federal court opinions generated by these cases provide valuable insights and precedents for future antitrust cases. To the extent that confidential arbitration becomes more prevalent, there may be fewer such opinions. ____________________    [1]   15 U.S.C. § 18.    [2]   Novelis to Acquire Downstream Aluminum Producer Aleris, July 26, 2018, available at: http://investors.novelis.com/2018-07-26-Novelis-to-Acquire-Downstream-Aluminum-Producer-Aleris.    [3]   Complaint, United States v. Novelis, Inc., 1:19-CV-02033, Dkt. 1, (N.D. Ohio Sept. 4, 2019), available at: https://www.justice.gov/opa/press-release/file/1199441/download.    [4]   Justice Department Sues to Block Novelis’s Acquisition of Aleris, Press Release, U.S. Department of Justice, Sept. 4, 2019, available at: https://www.justice.gov/opa/pr/justice-department-sues-block-noveliss-acquisition-aleris-1.    [5]   Plaintiff United States’ Explanation of Plan to Refer This Matter to Arbitration, United States v. Novelis, Inc., 1:19-CV-02033, Dkt. 11, (N.D. Ohio Sept. 9, 2019). The following Gibson Dunn lawyers assisted in preparing this client update: Adam Di Vincenzo, Richard Parker and Chris Wilson. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any of the leaders and members of the firm’s Antitrust and Competition practice group: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Brian K. Ryoo (+1 202-887-3746, bryoo@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Trey Nicoud (+1 415-393-8308, tnicoud@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Olivia Adendorff (+1 214-698-3159, oadendorff@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) Ryan T. Bergsieker (+1 303-298-5774, rbergsieker@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 3, 2019 |
Gibson Dunn Adds Competition Partner Christian Riis-Madsen to Brussels Office

Gibson, Dunn & Crutcher LLP is pleased to announce that Christian Riis-Madsen will join the firm’s Brussels office as a partner in the firm’s Antitrust and Competition Practice Group.  Riis-Madsen joins the firm from O’Melveny & Myers. “We are delighted that Christian is joining us,” said Ken Doran, Chairman and Managing Partner of Gibson Dunn.  “He is highly regarded in the Brussels legal and business communities and is well-known to many of our partners and several of our clients.  He has a well-rounded competition practice with deep experience with top multinational technology companies. Moreover, he has demonstrated strong leadership qualities and will complement the strengths of our global Antitrust and Competition Practice Group.” “Christian is a super fit to our existing Brussels practice, both in terms of his great legal skills and his personality,” said Peter Alexiadis, Partner in Charge of the Brussels office.  “Christian has been on our radar for some time.  His reputation in the high tech sector fits very well with our existing client base, while significant synergies also present themselves in the growth of our existing Scandinavian/Nordic practice.” “I am looking forward to working with my new colleagues at Gibson Dunn,” said Riis-Madsen.  “The firm’s premier competition practice and technology clientele are a perfect platform to continue to grow my practice.” About Christian Riis-Madsen Riis-Madsen has a broad competition law practice, advising on antitrust and regulatory matters before the European Commission.  He has advised companies in a variety of industries and has significant experience in the technology sector, including issues related to two-sided markets, online platforms and intellectual property rights. Before joining Gibson Dunn, Riis-Madsen practiced with O’Melveny & Myers from 2004 to 2019 and most recently served as head of the Brussels office.  Prior, he practiced with Norton Rose in Brussels and Kromann Reumert in Copenhagen.  He is admitted to practice in Denmark and Belgium.  He is fluent in Danish, English, French, German, Norwegian and Swedish. He received his B.A. in law in 1998 and his LL.M. in law in 2000 from the University of Copenhagen.

August 15, 2019 |
Gibson Dunn Lawyers Recognized in the Best Lawyers in America® 2020

The Best Lawyers in America® 2020 has recognized 158 Gibson Dunn attorneys in 54 practice areas. Additionally, 48 lawyers were recognized in Best Lawyers International in Belgium, Brazil, France, Germany, Singapore, United Arab Emirates and United Kingdom.

July 26, 2019 |
New UK Prime Minister – what has happened?

Click for PDF Boris Johnson has won the Conservative leadership race and is the new Prime Minister of the UK. Having been supported by a majority of Conservative MPs, this week the former mayor of London won a 66% share (92,153 votes) in the ballot of Conservative party members. Although there is some criticism of the fact that the new Prime Minister has been elected by such a narrow constituency, it is the case that most political parties in the UK now select their leaders by way of a members ballot. As things stand, the UK is due to leave the European Union (EU) at 23:00 GMT on 31 October 2019. Boris Johnson’s new Cabinet, and the 17 related departures, has set a new tone of determination to leave the EU by that date with or without a deal – “no ifs or buts”. Although only 12 of the 31 members of the new Cabinet originally voted to leave the EU, these “Brexiteer” MPs now dominate the senior Cabinet positions. The newly elected President of the European Commission, Ursula von der Leyen, has however indicated she is willing to support another extension to Brexit talks. In Parliament the Conservatives govern in alliance with the Northern Irish DUP and can only stay in power with the support of the House of Commons. Following defections earlier in the year and the recent suspension of a Conservative MP facing criminal charges, the Government now has an overall working majority of only two MPs (and if, as expected, the Conservatives lose a by-election on 1 August, the Government’s working majority will fall to one). A number of the members of Prime Minister May’s Government who resigned before Boris Johnson took office have made it clear that they will do everything they can to prevent the UK leaving without a deal including voting against the Government. There is therefore a heightened prospect of a general election. This theory is supported by the appointment as Special Adviser to the Prime Minister of political strategist Dominic Cummings who was the chief architect of the campaign to leave the EU in 2016. There has been some debate about whether the new Prime Minister would prorogue Parliament (effectively suspending it) to prevent it stopping a no deal Brexit. That would undoubtedly trigger a constitutional crisis but, despite the rhetoric, it feels like an unlikely outcome. Indeed Parliament recently passed a vote to block that happening. It is difficult to tell where the mood of the House of Commons is today compared to earlier in the year when Prime Minister May’s deal was voted down three times. Since then both the Conservative and Labour parties suffered significant losses in the EU election in May. The new Brexit Party which campaigned to leave made significant gains, as did the Liberal Democrats who have a clear policy to remain in the EU. The opinion polls suggest that, if an election was called today, no party would gain overall control of the House of Commons. It is just possible, however, that some MPs on both sides of the House who previously voted against the May deal would now support something similar, particularly to avoid a no-deal exit from the EU. It may be the case that Boris Johnson, who led the campaign to leave the EU, is the last chance those supporting Brexit have to get Brexit through Parliament. If he fails then either a second referendum or a general election will probably follow. It is not clear what the result of a second referendum would be but it is likely that Labour, the Liberal Democrats and the SNP would all campaign to remain. The EU has consistently said that it will not reopen Prime Minister May’s Withdrawal Agreement although the non-binding political declaration is open to negotiation. The so-called “Irish backstop” remains the most contentious issue. The backstop is intended to guarantee no hard border between Ireland and Northern Ireland but Boris Johnson is concerned it could “trap” the UK in a customs union with the EU. Boris Johnson claims that technology and “trusted trader schemes” means that checks can be made without the need for a hard border. Others, including the EU, remain to be convinced. Parliament has now gone into recess until 3 September 2019 and then, mid-September, there will be another Parliamentary break for the two week party conference season. The Conservative Party Conference on 29 September – a month before the UK’s scheduled exit from the EU – will be a key political moment for the new Prime Minister to report back to the party supporters who elected him. Finally, it is not clear what “no deal” really means. Even if the UK leaves without adopting the current Withdrawal Agreement, it is likely that a series of “mini deals” would be put in place to cover security, air traffic control, etc. A new trading agreement would then still need to be negotiated to establish the ongoing EU-UK relationship. And the issue of the Northern Irish border will still need to be resolved. This client alert was prepared by Charlie Geffen, Ali Nikpay and Anne MacPherson in London. We have a working group in London (led by Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) addressing Brexit related issues.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – Antitrust ANikpay@gibsondunn.com Tel: 020 7071 4273 Charlie Geffen – Corporate CGeffen@gibsondunn.com Tel: 020 7071 4225 Sandy Bhogal – Tax SBhogal@gibsondunn.com Tel: 020 7071 4266 Philip Rocher – Litigation PRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – Tax JTrinklein@gibsondunn.com Tel: 020 7071 4224 Patrick Doris – Litigation; Data Protection PDoris@gibsondunn.com Tel:  020 7071 4276 Alan Samson – Real Estate ASamson@gibsondunn.com Tel:  020 7071 4222 Penny Madden QC – Arbitration PMadden@gibsondunn.com Tel:  020 7071 4226 Selina Sagayam – Corporate SSagayam@gibsondunn.com Tel:  020 7071 4263 Thomas M. Budd – Finance TBudd@gibsondunn.com Tel:  020 7071 4234 James A. Cox – Employment; Data Protection JCox@gibsondunn.com Tel: 020 7071 4250 Gregory A. Campbell – Restructuring GCampbell@gibsondunn.com Tel:  020 7071 4236 © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

July 23, 2019 |
DOJ Antitrust Division Will Now Consider DPAs for Companies Demonstrating “Good Corporate Citizenship”

Click for PDF The DOJ Antitrust Division recently announced that it will allow prosecutors to resolve criminal antitrust investigations with deferred prosecution agreements (“DPAs”) for qualified corporate defendants. Under the Division’s prior policies, the first company or individual to self-report an antitrust violation could qualify for leniency, but the Division required others involved in the conspiracy to plead guilty or face indictment. The Division’s new policy allows for DPAs to be offered when a company has demonstrated the four hallmarks of “good corporate citizenship”: (i) having an effective compliance program, (ii) self-reporting wrongdoing, (iii) cooperating with government investigations, and (iv) remedying past misconduct. In announcing the new policy, Assistant Attorney General Makan Delrahim focused extensively on one aspect of corporate citizenship—corporate compliance programs and their importance in determining whether a company would qualify for a DPA. In conjunction with the new policy, the Antitrust Division also published guidance describing how it will evaluate corporate antitrust compliance programs and how that evaluation will affect charging decisions (including the possibility of a DPA) and sentencing recommendations (such as whether to seek probation or a corporate monitor). This new policy further adds incentives for companies to implement a well-designed, effective antitrust compliance program to detect—and ideally prevent—criminal antirust conduct within an organization. The New Policy As part of every corporate charging decision, the Division will now be required to evaluate ten factors outlined in the Principles of Federal Prosecution of Business Organizations (the so-called Filip Factors listed in the Justice Manual at § 9-28.300) in determining whether to charge a corporate defendant, including whether the company has a robust and effective compliance program. Based on an evaluation of those factors, prosecutors will be allowed to offer DPAs, under which the Division brings charges but agrees not to proceed with prosecution in exchange for the company’s payment of a monetary penalty and commitment to abide by certain requirements or conditions. In evaluating a company’s compliance program, the Division will initially consider whether it prohibited criminal antitrust violations, whether it detected and facilitated prompt reporting of the violation, and to what extent the company’s senior management was involved in the violation. Prosecutors will then evaluate the effectiveness of the compliance program by examining nine factors: (1) design and comprehensiveness; (2) culture of compliance; (3) responsibility for the compliance program; (4) risk assessment; (5) training and communication; (6) periodic review, monitoring, and auditing; (7) reporting; (8) incentives and discipline; and (9) remediation and role of the compliance program in the discovery of the violation. If the Division decides to prosecute a company, its compliance program can still be credited at the sentencing stage. An effective compliance program may, for example, result in a three-point reduction of the culpability score in calculating the recommended sentence under the Guidelines (potentially reducing the company’s fine by millions of dollars), persuade the Division to recommend a corporate fine below the Guidelines range (provided that the defendant provided substantial assistance), or allow the company to avoid probation and a costly corporate monitorship. Significance Availability of DPAs in Criminal Antitrust Investigations. This announcement represents a shift from the Division’s longstanding policy of not offering credit for a compliance program at the charging stage and disfavoring DPAs except in extraordinary cases where criminal prosecution would have jeopardized the defendant’s eligibility to conduct business (see, e.g., financial institutions in the LIBOR case or pharmaceutical manufacturers in the generic drugs investigations). The new policy appears to bring the Antitrust Division’s practice regarding DPAs closer to the Criminal Division’s and may create new options for companies that are not first-in-line leniency applicants. Elements of Effective Compliance Program. The Division’s new guidance recognizes that “no compliance program can ever prevent all criminal activity” and lists nine factors that prosecutors will consider when evaluating the effectiveness of an antitrust compliance program, suggesting that the Division will not view an antitrust violation as an inherent failure of a compliance program. Because this is a significant change from past policy and practice, it remains to be seen whether and how much the Division will credit a compliance program that satisfies many of the nine factors but ultimately fails to prevent or detect a violation. What is clear is that the Division is now placing a premium on the design and implementation of compliance programs such that companies should review their existing antitrust compliance programs and ensure they are consistent with the Division’s new guidance. A copy of the Assistant Attorney General’s remarks can be found at: https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-new-york-university-school-l-0 A copy of the Division’s guidance about corporate compliance programs can be found at: https://www.justice.gov/atr/page/file/1182001/download Gibson Dunn’s 2018 Year-End Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements can be found at: https://www.gibsondunn.com/2018-year-end-npa-dpa-update/ The following Gibson Dunn lawyers assisted in preparing this client update: Scott Hammond, Dan Swanson, Jeremy Robison, Cindy Richman, Rachel Brass, Jarrett Arp, and Brian Ryoo. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any of the leaders and members of the firm’s Antitrust and Competition or White Collar Defense and Investigations practice groups: Antitrust and Competition Group: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Brian K. Ryoo (+1 202-887-3746, bryoo@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Trey Nicoud (+1 415-393-8308, tnicoud@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Olivia Adendorff (+1 214-698-3159, oadendorff@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) Ryan T. Bergsieker (+1 303-298-5774, rbergsieker@gibsondunn.com) White Collar Defense and Investigations Group: Washington, D.C. F. Joseph Warin (+1 202-887-3609, fwarin@gibsondunn.com) Richard W. Grime (202-955-8219, rgrime@gibsondunn.com) Scott D. 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Fagel (+1 415-393-8332, mfagel@gibsondunn.com) Charles J. Stevens (+1 415-393-8391, cstevens@gibsondunn.com) Michael Li-Ming Wong (+1 415-393-8234, mwong@gibsondunn.com) Winston Y. Chan (+1 415-393-8362, wchan@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 20, 2019 |
Webcast: Dealing with Online Markets and Digital Services from a Competition Law Perspective

Joined by Jorge Padilla (Compass Lexecon), our Gibson Dunn panel considers current and emerging trends in the EU and Asia in online markets and digital services. Topics to be Discussed The starting point – the role of data (an EU perspective) Digital Platforms and market power issues in the EU An emerging competition issue – High Tech enters the banking sector Recent German initiatives The emerging Asian experience We encourage you to forward this invitation to colleagues and friends who would also benefit from this discussion. View Slides (PDF) PANELISTS: Peter Alexiadis is an Irish qualified solicitor who has practised Community law in Brussels since 1989. He is a Visiting Professor at Kings College, London, where he teaches the LLM course “Competition Law & Regulated Network Sectors”. His competition practice focuses on merger control, abuse of dominance actions, complaints under the State aids rules, and vertical distribution and IP licensing practices. Peter has been listed as “2014-2015 Brussels Media Lawyer of the Year” and the “2018 Brussels Telecommunications Lawyer of the Year” in Best Lawyers International. David Wood is an English and Belgian qualified partner in the Brussels office of Gibson Dunn and co-chairs the Firm’s Antitrust and Competition Practice Group. Mr. Wood’s practice encompasses the full range of antitrust issues, including cartels, merger control, abuse of dominance (monopolization), restrictive agreements, sector inquiries and private enforcement. He has strong knowledge in the financial services, media/high-tech, and transport sectors and previously held a number of senior positions in DG Competition of the European Commission. Jens-Olrik Murach is a German qualified partner and a member of the Brussels Bar with almost 20 years of experience practicing antitrust law in both Brussels and Germany. Mr. Murach’s practice covers the complete range of EU and German antitrust issues, including merger control, restrictive practices, market dominance, cartel investigations, sectoral investigations, compliance and antitrust litigation. Sébastien Evrard is a partner in the Hong Kong office of Gibson Dunn. He is a member of the Firm’s Antitrust and Competition Practice Group. Mr. Evrard handles complex antitrust matters in Asia. He is a co-author of Anti-Monopoly Law and Practice in China, the leading English treatise on China’s competition law. Dr. Jorge Padilla is Senior Managing Director and Head of Compass Lexecon Europe. Dr. Padilla has given expert testimony before the competition authorities and courts of several EU member states, as well as in cases before the European Commission. Dr. Padilla has also given expert testimony in various civil litigation (damages), international arbitration cases, and competition cases in non-EU jurisdictions (Argentina, Chile, China, Colombia, India, Israel, Jamaica, South Africa and Turkey). He is also a Research Fellow at the Centro de Estudios Monetarios y Financieros (CEMFI, Madrid) and teaches competition economics at the Barcelona Graduate School of Economics (BGSE). MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit. © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 7, 2019 |
Nineteen Gibson Dunn attorneys recognized by Who’s Who Legal Competition 2019

Nineteen Gibson Dunn attorneys were recognized by Who’s Who Legal Competition 2019. Brussels partners Peter Alexiadis, Jens-Olrik Murach and David Wood and associates Attila Borsos and Elsa Sependa; Dallas partners M. Sean Royall and Robert Walters; Hong Kong partner Sébastien Evrard; London partner Ali Nikpay; Los Angeles partner Daniel Swanson; San Francisco partners Rachel Brass, Trey Nicoud and Gary Spratling; and Washington, D.C. partners D. Jarrett Arp, Adam Di Vincenzo, Scott Hammond, Joseph Kattan, Richard Parker and Cynthia Richman were recognized. The list was published in June 2019.

May 23, 2019 |
Webcast: Is It Bad To Be Big? An Antitrust Update On Monopoly Law And Enforcement

The topic of monopoly is in the news almost every day. Join us for a look behind the headlines to understand what you need to know about the current state of Sherman Act Section 2 monopolization law and enforcement. Our panel includes seasoned Gibson Dunn antitrust litigators and appellate advocates, former FTC and DOJ officials, and a leading antitrust economist. View Slides (PDF) PANELISTS: Thomas G. Hungar is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and a member of the firm’s Appellate and Constitutional Law and Antitrust and Competition Practice Groups. His practice focuses on appellate litigation, and he assists clients with congressional investigations and complex trial court litigation matters as well. He has presented oral arguments before the Supreme Court of the United States in 26 cases, including some of the Court’s most important patent, antitrust, securities, and environmental law decisions, and he has also appeared before numerous lower federal and state courts. Mr. Hungar served as General Counsel to the U.S. House of Representatives from July 2016 until January 2019, when he rejoined the firm. Previously, he served as a Deputy Solicitor General of the United States. Janusz A. Ordover is an Emeritus Professor of Economics and a former Director of the Masters in Economics Program at New York University where he taught since 1973. He served as the Deputy Assistant Attorney General for Economics in the Antitrust Division of the U.S. Department of Justice under President George H. W. Bush. While at the Antitrust Division, Professor Ordover served on the White House de-regulation task force, guided economic analyses of antitrust enforcement and acted as a liaison between the Justice Department and various regulatory agencies. At the Division, he was one of the main drafters of the 1992 Horizontal Merger Guidelines. Professor Ordover served as an advisor to the Organization for Economic Cooperation and Development (OECD) in Paris, the World Bank, and the Inter-American Bank for Development on matters of privatization, regulation, international trade policy, and competition policy. He has advised the governments of Poland, Czech Republic, Russia, Hungary, Argentina, and others on regulation and competition matters, as well as on privatization strategies. Richard Parker is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and a member of the firm’s Antitrust and Competition Practice Group. Mr. Parker is a leading antitrust lawyer who has successfully represented clients before both enforcement agencies and the courts. As a trial lawyer and an antitrust regulatory lawyer, Mr. Parker has been involved in many major antitrust representations, including merger clearance cases, cartel matters, class actions, and government civil investigations. He has extensive experience representing clients in matters before the Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division. From 1998 to 2001, he served as the Senior Deputy Director and then as Director of the Bureau of Competition at the FTC. Cindy Richman is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and Co-Partner-in-Charge of the office. Ms. Richman has experience handling a wide variety of antitrust matters in a broad range of industries, including in high-technology products. Who’s Who Legal has repeatedly named Ms. Richman a “Future Leader” in Competition, noting that she is known for her “impressive advocacy skills” and “strong track record in important cases.” Her practice includes defending companies before state and federal courts, including appellate courts, in matters alleging a range of antitrust-based claims. Ms. Richman has particular expertise defending against monopolization and attempted monopolization claims, including those based on allegations of exclusive dealing, refusal to deal, and predatory pricing. Daniel G. Swanson is a partner in the Los Angeles and Brussels offices of Gibson, Dunn & Crutcher and Co-Chairs the firm’s Antitrust and Competition Practice Group. Mr. Swanson is a member of the California and Brussels Bars and holds a Ph.D. in economics from Harvard University. As a trial and appellate litigator, he has been involved in numerous antitrust matters involving claims of monopolization and dominance, including some of the most significant Section 2 cases of the last several decades. He frequently represents clients in matters involving technology and intellectual property. Chambers USA has reported that “Daniel Swanson has a vast amount of antitrust expertise covering everything from merger investigations to civil and criminal litigation” and has described him as “a highly regarded trial lawyer with a wealth of experience” and as “a ‘tough opponent’ in civil and criminal litigation, alleged cartel matters and IP-related issues.” MCLE INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. This program has been approved for credit in accordance with the requirements of the Texas State Bar for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the area of accredited general requirement. Attorneys seeking Texas credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

May 14, 2019 |
Supreme Court Holds That iPhone Users Have Standing To Seek Federal Antitrust Damages From Apple For App Store Purchases

Click for PDF Decided May 13, 2019 Apple, Inc. v. Pepper, No. 17-204 Yesterday, the Supreme Court held 5-4 that iPhone users are “direct purchasers” from Apple when they purchase apps on Apple’s App Store, and thus have standing to sue Apple for alleged monopolistic overcharges under Section 2 of the Sherman Act, even though third-party app developers pay for the allegedly monopolized app-distribution services and set the prices for apps charged to iPhone users. Background: A group of iPhone users sued Apple for damages under Section 2 of the Sherman Act, alleging that Apple monopolized the retail market for the sale of apps and unlawfully used its monopoly power to charge consumers higher-than-competitive prices. According to plaintiffs, Apple requires them to purchase iPhone apps from developers exclusively through Apple’s App Store. Although app developers independently set the retail price of each app, Apple charges developers a yearly fee to place their apps in the App Store, along with a commission on each sale. The iPhone users alleged that this arrangement caused them to pay inflated prices for apps and sought antitrust damages from Apple. Under Illinois Brick Co. v. Illinois, 431 U.S. 720, 729 (1977), only direct purchasers, “and not others in the chain of manufacture or distribution,” can sue for damages under federal antitrust law. The district court dismissed the action under Illinois Brick, reasoning that the app developers were the direct purchasers of Apple’s app-distribution services because they paid the annual fees and commissions charged by Apple. The Ninth Circuit reversed, holding that the iPhone users could sue Apple for allegedly monopolizing and attempting to monopolize the sale of iPhone apps. Issue: “Whether consumers may sue anyone who delivers goods to them for antitrust damages, even when they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense.” Court’s Holding: Yes. Illinois Brick does not bar plaintiffs’ claim for alleged monopoly overcharge damages because iPhone users are properly regarded as direct purchasers. “The [plaintiffs] pay the alleged overcharge directly to [defendant]. The absence of an intermediary is dispositive. Under Illinois Brick, the [plaintiffs] are direct purchasers … and are proper plaintiffs to maintain this antitrust suit.” Justice Kavanaugh, writing for the majority What It Means: The Court’s decision embraces a formal approach to antitrust standing in a claim arising under Section 2 of the Sherman Act that focuses on whether the plaintiff directly contracts with the alleged monopolist, irrespective of whether it directly bears the cost of the alleged monopolistic conduct. In doing so, the decision creates the risk that companies operating “electronic marketplaces” will be subject to suit by both the third-party sellers who pay to use the companies’ services and to end-consumers who purchase the third party’s products or services on the platform. The decision threatens to increase the cost and complexity of antitrust litigation, as courts may be required to engage in the complex task of apportioning antitrust damages among different levels of purchasers of a good or service. Justice Gorsuch, writing for a four-Justice dissent, highlighted some of the difficult questions lower courts must now address, including whether and to what extent third parties pass on alleged monopolistic charges, a question that will need to be addressed as to “all of the tens of thousands of developers who sold apps through the App Store at different prices and times over the course of years.” These increased litigation costs may have a negative financial impact on the e-commerce space as a whole. The Court was careful to note that it was not “assess[ing] the merits of the plaintiffs’ antitrust claims” or any “defenses Apple may have.” Having established standing, plaintiffs must now face the challenge of showing how a claim of charging “too much” overcomes Supreme Court precedent disapproving such claims. The Court’s decision raises the question whether it might overrule Illinois Brick in the future.  Although certain amici argued that the Court should do so here, the Court reasoned that “[i]n light of our ruling in favor of the plaintiffs in this case, we have no occasion to consider that argument.” Time will tell whether the Supreme Court’s formal approach to standing under Section 2 will carry over into substantive Section 1 analysis, e.g., requiring a reevaluation of principal-agent relationships that are not subject to Section 1 strictures under longstanding precedent. Gibson Dunn will be hosting a webcast on the current state of monopoly law and enforcement, including the impact of this decision, on May 23, 2019.  For more details, please click here.  As always, Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Related Practice: Antitrust and Competition Scott D. Hammond +1 202.887.3684 shammond@gibsondunn.com M. Sean Royall +1 214.698.3256 sroyall@gibsondunn.com Daniel G. Swanson +1 213.229.7430 dswanson@gibsondunn.com

April 25, 2019 |
Gibson Dunn Earns 79 Top-Tier Rankings in Chambers USA 2019

In its 2019 edition, Chambers USA: America’s Leading Lawyers for Business awarded Gibson Dunn 79 first-tier rankings, of which 27 were firm practice group rankings and 52 were individual lawyer rankings. Overall, the firm earned 276 rankings – 80 firm practice group rankings and 196 individual lawyer rankings. Gibson Dunn earned top-tier rankings in the following practice group categories: National – Antitrust National – Antitrust: Cartel National – Appellate Law National – Corporate Crime & Investigations National – FCPA National – Outsourcing National – Real Estate National – Retail National – Securities: Regulation CA – Antitrust CA – Environment CA – IT & Outsourcing CA – Litigation: Appellate CA – Litigation: General Commercial CA – Litigation: Securities CA – Litigation: White-Collar Crime & Government Investigations CA – Real Estate: Southern California CO – Litigation: White-Collar Crime & Government Investigations CO – Natural Resources & Energy DC – Corporate/M&A & Private Equity DC – Labor & Employment DC – Litigation: General Commercial DC – Litigation: White-Collar Crime & Government Investigations NY – Litigation: General Commercial: The Elite NY – Media & Entertainment: Litigation NY – Technology & Outsourcing TX – Antitrust This year, 155 Gibson Dunn attorneys were identified as leading lawyers in their respective practice areas, with some ranked in more than one category. The following lawyers achieved top-tier rankings:  D. Jarrett Arp, Theodore Boutrous, Jessica Brown, Jeffrey Chapman, Linda Curtis, Michael Darden, William Dawson, Patrick Dennis, Mark Director, Scott Edelman, Miguel Estrada, Stephen Fackler, Sean Feller, Eric Feuerstein, Amy Forbes, Stephen Glover, Richard Grime, Daniel Kolkey, Brian Lane, Jonathan Layne, Karen Manos, Randy Mastro, Cromwell Montgomery, Daniel Mummery, Stephen Nordahl, Theodore Olson, Richard Parker, William Peters, Tomer Pinkusiewicz, Sean Royall, Eugene Scalia, Jesse Sharf, Orin Snyder, George Stamas, Beau Stark, Charles Stevens, Daniel Swanson, Steven Talley, Helgi Walker, Robert Walters, F. Joseph Warin and Debra Wong Yang.

April 19, 2019 |
Gibson Dunn Ranked in Legal 500 EMEA 2019

The Legal 500 EMEA 2019 has recommended Gibson Dunn in 14 categories in Belgium, France, Germany and UAE.  The firm was recognized in Competition – EU and Global in Belgium; Administrative and Public Law, Dispute Resolution – Commercial Litigation Industry Focus – IT, Telecoms and the Internet, Insolvency, Insurance, Mergers and Acquisitions, and Tax in France; Antitrust, Compliance, Internal Investigations and Private Equity in Germany; and Corporate and M&A and Investment Funds in UAE. Chézard Ameer, Ahmed Baladi,  Jean-Pierre Farges and Dirk Oberbracht were all recognized as Leading Individuals. Jérôme Delaurière was listed as a “Next Generation Lawyer.”  

March 26, 2019 |
Global Competition Review Recognizes Gibson Dunn for Merger Control Matter of the Year

Global Competition Review has named the AT&T/Time Warner matter as the “Merger Control Matter of the Year – Americas” at its annual GCR Awards. Gibson Dunn was counsel to AT&T. The awards were presented on March 26, 2019.

March 8, 2019 |
Gibson Dunn Ranked in Chambers Europe 2019

Gibson Dunn received 30 rankings in Chambers Europe 2019: 22 individual rankings and eight firm rankings. The firm was recommended in the following categories: Competition/European Law – Belgium; Corporate Investigations – Europe-wide; Corporate/M&A: High-End Capability – France; Restructuring/Insolvency – France; TMT: Information Technology – France; Compliance – Germany; Corporate/M&A: High-End Capability – Germany; Dispute Resolution: White-Collar Crime: Corporate Advisory – Germany. The following Gibson Dunn partners were recognized as leaders in their fields: Peter Alexiadis, Ahmed Baladi, Sandy Bhogal, Jérôme Delaurière, Jean-Pierre Farges, Benoît Fleury, Charlie Geffen, Ariel Harroch, Chris Haynes, Ali Nikpay, Dirk Oberbracht, Wilhelm Reinhardt, Sebastian Schoon, Benno Schwarz, Steve Thierbach, David Wood, and Finn Zeidler.

February 19, 2019 |
FTC Publishes Revised Hart-Scott-Rodino Notification Thresholds for 2019

Click for PDF On February 15, 2019, the Federal Trade Commission announced its annual update of the thresholds for pre-merger notifications of M&A transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”).  Pursuant to the HSR Act, these thresholds are updated annually to account for changes in gross national product. The size of transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will increase by $5.6 million, from $84.4 million in 2018 to $90 million in 2019.  The new thresholds, the issuance of which were delayed due to the government shutdown, are expected to take effect in March, 30 days after notice is published in the Federal Register. Original Threshold Current Threshold Revised Threshold $10 million $16.9 million $18 million $50 million $84.4 million $90 million $100 million $168.8 million $180 million $110 million $185.7 million $198 million $200 million $337.6 million $359.9 million $500 million $843.9 million $899.8 million $1 billion $1.6878 billion $1.7995 billion The maximum fine for violations of the HSR Act has increased from $41,484 per day to $42,530. The amounts of the filing fees have not changed, but the thresholds that trigger each fee have been increased: Fee Size of Transaction $45,000 Valued at more than $90 million but less than $180 million $125,000 Valued at $180 million or more but less than $899.8 million $280,000 Valued at $899.8 million or more The 2019 thresholds triggering prohibitions on certain interlocking directorates on corporate boards of directors are $36,564,000 for Section 8(a)(l) and $3,656,400 for Section 8(a)(2)(A).  The Section 8 thresholds take effect upon publication in the Federal Register. If you have any questions about the new HSR size of transaction thresholds, or HSR and antitrust/competition regulations and rulemaking more generally, please contact any of the partners or counsel listed below. The following Gibson Dunn lawyers assisted in preparing this client update: Adam Di Vincenzo, Andrew Cline and Chris Wilson. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the HSR Act or antitrust issues raised by business transactions. To learn more about these issues, please feel free to contact any of the following practice group leaders and members: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Andrew Cline (+1 202-887-3698, acline@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Trey Nicoud (+1 415-393-8308, tnicoud@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Olivia Adendorff (+1 214-698-3159, oadendorff@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 11, 2019 |
Antitrust in China – 2018 Year in Review

Click for PDF 2018 marked the tenth anniversary of the Anti-Monopoly Law (“AML”). The main highlight of the year is the major re-organisation of China’s antitrust enforcement agencies. China merged its three antitrust regulators into a single entity, which now oversees all mergers, pricing and non-pricing issues. This move brought to an end China’s unique tripartite system, which had been criticized for its fragmented enforcement and arbitrary assignment of duties. The integration of China’s antitrust enforcement agencies is expected to result in a better allocation of resources and more consistent decision-making in the long term, which in turn, should increase the level of enforcement and transparency. This client alert highlights the most significant developments from 2018 and what to expect for 2019. 1.    Legislative/Regulatory Developments Establishment of the State Administration for Market Regulation. On March 21, 2018, China merged its existing three antitrust regulators into a single entity called the State Administration for Market Regulation (“SAMR”). The SAMR is directly supervised by the State Council of China and officially began its operations in April 2018. In addition to overseeing food and drug administration, intellectual property and product quality, the SAMR undertakes all the antitrust responsibilities previously held by the National Development and Reform Commission (“NDRC”), the Ministry of Commerce (“MOFCOM”) and the State Administration for Industry and Commerce (“SAIC”). The re-organisation of China’s antitrust regulators forms part of the Chinese State Council’s Institutional Reform Plan as well as President Xi Jinping’s wider policy goals, which include strengthening the government’s market supervision capability. The SAMR consists of 27 “bureaus”, two of which now oversee antitrust enforcement. The Anti-monopoly Bureau is responsible for (1) carrying out antitrust investigations and taking enforcement actions against violations of the AML, including monopoly agreements, abuse of dominance and abuse of administrative power; (2) conducting merger review; (3) drafting and implementing anti-monopoly rules and guidelines; (4) ensuring fair competition review mechanisms; and (5) providing guidance to Chinese enterprises on responding to and coping with antitrust investigations and competition litigation in foreign jurisdictions. The Price Supervision and Anti-Unfair Competition Bureau is in charge of enforcing the Anti-unfair Competition Law and Price Law, which previously fell under the ambit of the NDRC and the SAIC. In particular, the Price Supervision and Anti-Unfair Competition Bureau is responsible for (1) formulating guidelines and regulations on price supervision and anti-unfair competition; (2) supervising the prices of goods and services; (3) carrying out investigations and enforcement actions against unfair pricing and unfair competition; and (4) regulating direct selling enterprises and agents and cracking down on pyramid schemes. Throughout 2018, the SAMR has been reforming and consolidating local Administration for Market Regulation (“AMR”) offices at a provincial level and is expected to release further details regarding the integration of local enforcement teams in 2019. New Merger Control Guidelines. On September 29, 2018, the SAMR issued a new set of merger control guidelines, which replaced the guidelines previously issued by MOFCOM. These guidelines include: (1) Guiding Opinions on the Notification of the Concentration of Undertakings; (2) Guiding Opinions on Documents and Materials Required for the Notification of Undertakings; (3) Working Guidance for Anti-monopoly Review on Concentration of Undertakings; (4) Explanation on the Implementation of the Notification Form for Anti-Monopoly Review of Concentration of Undertakings; (5) Guiding Opinions on the Notification of Concentration of Undertakings Subject to Simplified Procedure; and (6) Guiding Opinions on Regulating the Titles of Cases on the Notification of Concentrations of Undertakings. The updated guidelines contain minor changes to the guidelines previously issued by MOFCOM. Antitrust Guidelines on the Abuse of Intellectual Property Rights. On November 19, 2018, the SAMR adopted the “Anti-Monopoly Guidelines on the Abuse of Intellectual Property Rights”. The guidelines were jointly produced by China’s three antitrust enforcement agencies and the State Intellectual Property Office, before they were merged into the SAMR. As explained in our Antitrust in China – 2017 Year in Review[1], the guidelines (1) introduce a case-specific analytical framework to determine whether an undertaking’s exercise of its IP rights is anti-competitive;  (2) address the definition of the relevant market and provide that, in some cases, it may be appropriate to consider the relevant technology market (as opposed to the relevant product market); and (3) introduce a safe harbour provision in respect of certain agreements that would otherwise fall foul of the AML. The guidelines will be formally issued and promulgated in 2019. Other Antitrust Guidelines. In addition to the Antitrust Guidelines on the Abuse of Intellectual Property Rights, the SAMR approved three other Antitrust Guidelines, namely: (1) Antitrust Guidelines for the Automotive Sector; (2) Guidelines regarding Exemption of Monopoly Agreements; and (3) Guidelines regarding Leniency Application for Horizontal Monopoly Agreements. Along with the Antitrust Guidelines on the Abuse of Intellectual Property Rights, these three guidelines will come into force during the course of 2019. According to Director General (“DG”) Wu Zhenguo, these guidelines have been drafted “in an effort to share [the SAMR’s] law enforcement ideas and experience with business operators, stabilize their expectations, and improve the transparency of law enforcement.”[2] Potential Amendments to the AML. In 2017, China’s antitrust enforcement agencies and legislators commenced their work to revise the AML. A draft revision of the AML was prepared in 2018, but it is unclear when the first draft will be released for consultation and come into force. If implemented, these revisions would constitute the first amendments to the AML in its ten-year life. According to DG Wu Zhenguo, the SAMR will focus on improving the existing legal provisions in the AML “so they may be adapted to the development and changes of both the national and global economic environments.”[3] Expected revisions include an increase in the financial penalty for failure to notify (currently capped at RMB 500,000) and an elucidation of Article 14 in relation to retail price maintenance. Integration of the NDRC and SAIC’s Provisions. The SAMR plans to streamline its substantive rules and procedural requirements in the areas of monopoly agreements, abuse of market dominance and administrative monopolies by integrating the regulations issued by the SAIC and NDRC in these areas. The SAMR plans to integrate the “Provisions Against Price Fixing” of the NDRC with the “Provisions for the Industry and Commerce Administrations on the Prohibition of Monopoly Agreements” and the “Provisions for the Industry and Commerce Administrations on the Prohibition of Abuse of Dominant Market Position” of the SAIC. It will also integrate the “Provisions on the Administrative Procedures for Law Enforcement Against Price Fixing” of the NDRC with the “Provisions for the Administrative Departments for Industry and Commerce to Investigate and Handle Monopoly Agreements and Abuse of Dominant Market Position” of the SAIC. 2.    Merger Control In 2018, the SAMR (and its predecessor MOFCOM) reviewed a total of 441 concentrations, which represents a 36% increase from 2017.[4] As of October 2018, the SAMR (and its predecessor MOFCOM) received a total of 2,420 notifications since the promulgation of the AML, amongst which 2,380 were approved unconditionally, 2 were prohibited and 38 were approved subject to remedies.[5] As part of its reorganisation mandate, the SAMR sought to make the merger review process more efficient. The SAMR now has three dedicated Merger Control Divisions, which are divided according to industries. As of Q4 2018, the SAMR took an average of 15.6 days to review and approve a filing after it is formally submitted under the simplified procedure.[6] In addition, the SAMR now aims to reduce the length of merger reviews by issuing requests for information within 5 days of receiving the parties’ filing.[7] Published Decisions. Only those SAMR decisions prohibiting a transaction, or imposing or removing remedies are published. In 2018, the SAMR (and its predecessor MOFCOM) imposed remedies in a number of high-profile cases. It required structural remedies in all conditionally approved cases in 2018, save for Essilor/Luxotica, in which it required only behavioural remedies. On March 13, 2018, Bayer secured MOFCOM’s conditional approval for its proposed acquisition of Monsanto, a US agrochemical and agricultural biotechnology corporation. MOFCOM required Bayer to (1) divest a number of its businesses and assets globally, including its vegetable and seeds business; and (2) grant “fair, reasonable and non-discriminatory access” to the merged entity’s digital agricultural platforms in China for five years after the merged entity’s entry to the Chinese market. The ongoing Sino-US trade war had consequences for US companies seeking merger clearance in China. On July 25, 2018, US chip maker Qualcomm announced that it would cease its proposed 44 billion US dollar takeover of NXP Semiconductor (“NXP”) after it failed to secure the SAMR’s approval by the deadline set out in the transaction documents. Chinese stakeholders voiced their concerns regarding Qualcomm’s expansion into strategic sectors, such as mobile payments, and commentators noted that the decision was likely influenced by the Chinese government’s mandate to ensure that domestic companies have access to key inputs, including intellectual property rights. Since the deal was announced in October 2016, the deadline for closing had been extended numerous times and Qualcomm had obtained approval from all jurisdictions save for China. As a result, Qualcomm paid NXP a termination fee of 2 billion US dollars. Qualcomm’s Chief Executive Officer Steve Mollenkopf stated, “there were probably bigger forces at play here than just us.”[8] On July 26, 2018, the SAMR conditionally approved the merger between Essilor, a French lens manufacturer and Luxottica, an Italian eyewear manufacturer. Pursuant to the conditions imposed by the SAMR, the merged entity must not sell eyewear products at below cost prices without a justified reason; refrain from engaging in tie-in sales or imposing exclusivity requirements on retailers; and ensure the availability of all products and services to customers in China on a fair basis. On September 30, 2018, the SAMR conditionally approved the merger between Linde, a German chemicals company and Praxair, an American industrial gases company. The SAMR imposed six conditions, which included the following: (1) the parties must divest helium assets with an annual production volume of 90 million cubic feet; (2) Linde must divest its stakes in four joint ventures in Guangdong province; and (3) the parties must provide a timely and stable supply of certain gas products to Chinese customers at reasonable prices and volumes. On November 23, 2018, the SAMR conditionally approved industrial equipment manufacturer United Technologies Corporation’s takeover of Rockwell Collins, a manufacturer of aircraft parts. The SAMR required United Technologies Corporation to divest its research projects on oxygen systems, which could be in direct competition with an existing product of Rockwell Collins. This is not the first time that the Chinese regulator required parties to divest a business line or an R&D project to address its concerns that the merged entity would have a reduced incentive to innovate. As reported in our Antitrust in China – 2017 Year in Review[9], in Becton Dickinson/C.R. Bard, MOFCOM required Becton Dickinson to divest its soft core needle biopsy device business, as this could be in direct competition with an existing product of C.R. Bard. Enforcement of Conditions. On January 31, 2018, MOFCOM fined Thermo Fisher Scientific for its failure to comply with a condition imposed on its 2014 acquisition of Life Technologies. By decreasing the discounts given to Chinese distributors, the merged entity breached MOFCOM’s conditions that it must reduce the catalogue prices of certain products sold in China by 1% each year and maintain the discounts given to Chinese dealers. MOFCOM issued a relatively low fine of RMB 150,000, in light of the compensation that the merged entity provided to the affected dealers in China and the lack of consumer harm. In other cases, the SAMR and its predecessor MOFCOM lifted the conditions that MOFCOM had imposed in previous transactions. On February 1, 2018, MOFCOM decided to waive the conditions that it imposed on the establishment of a joint venture between Henkel and Tiande Chemical; these conditions included the supply of ethyl cyanoacetate products on fair and reasonable terms and a prohibition on excessive pricing and information exchange between the JV and Henkel.  On February 9, 2018, MOFCOM announced that it would lift the conditions that it imposed in 2013 on the merger between Taiwanese semiconductor companies MediaTek and MStar Semiconductor. The conditions included the maintenance of MStar Taiwan as an independent entity and a prohibition on cooperation between MStar Taiwan and MediaTek without MOFCOM’s prior consent. On August 22, 2018, the SAMR announced that it would lift the conditions imposed on a joint venture involving the Shenhua Group in 2011. The condition required the JV not to limit the supply or raise the prices of its coal-water slurry gasification technology. Enforcement Against Non-Notified Transactions. In 2018, MOFCOM published penalty decisions for failure to notify reportable transactions in a record number of 15 cases.[10] In one case, MOFCOM fined Shandong Sun Holding RMB 300,000 on February 6, 2018, for its failure to notify its acquisition of control in three different target companies. Shandong Sun Holding had initially submitted a filing to MOFCOM in 2015, which was rejected on the basis of incomplete documentation, and submitted another filing in 2016, only after it had completed the acquisitions. On April 26, 2018, the SAMR fined Yunnan Metropolitan Real Estate Development RMB 150,000 for failing to notify its acquisition of stakes in 8 companies, whose aggregate turnover exceeded the thresholds for mandatory notification. In another case, the SAMR fined Dutch paper pulp producer Paper Excellence BV RMB 300,000 on July 30, 2018 for its failure to notify the acquisition of Eldorado Brasil Celulose. The transaction was structured in three steps; the SAMR began its investigation into the transaction in March 2018,  after the parties had carried out the first two steps of the transaction. 3.    Non-Merger Enforcement The SAMR (and its predecessors) initiated 32 investigations involving monopoly agreements and abuse of dominance in 2018.[11] Despite the announcement of the consolidation of the three agencies in March 2018, local Development and Reform Commission (“DRC”) and Administration for Industry and Commerce offices continued to be in operation and conduct enforcement actions. This may change in 2019 as the SAMR issued a notice on December 28, 2018 to authorize provincial AMRs to carry out antitrust enforcement work at the local level.[12] Pharmaceuticals, utilities and transportation were the main industries subject to heightened scrutiny in 2018. Some of the most notable decisions include the NDRC’s decision in January 2018 to impose a total fine of RMB 84.06 million on two Petro China entities for engaging in minimum price-setting in the resale of natural gas;[13] the SAMR’s decision in June 2018 to impose a total fine of RMB 12.86 million on four Shenzhen tugboat companies for price-fixing;[14] and the SAMR’s decision on an investigation initiated in July 2018 to impose a total fine of RMB 12.43 million on two domestic pharmaceutical firms for selling active pharmaceutical ingredients at excessively high prices and for refusal to deal.[15] The fine imposed in each case amounted to 3% to 8% of the undertaking’s relevant annual sales revenue. More significantly, 2018 saw the first published decision since the enactment of the AML where individuals were fined for obstructing an antitrust investigation.[16] On August 22, 2018, the Guangdong DRC fined the legal representative and general manager of a local automobile sales and services company a total of RMB 20,000 for refusing to cooperate with an investigation conducted by the Guangdong DRC. The two executives violated Article 42 of the AML, which provides that individuals under investigation should cooperate with antitrust agencies, by unplugging the USB flash disk from which the officials were retrieving evidence, instructing employees to shut down their computers while the officials were carrying out the investigation, refusing to comply with an order to provide documents (claiming that such documents contained trade secrets) and challenging the authority of the officials. Even though the two executives later apologized and provided the requested documents to the Guangdong DRC, the legal representative was fined RMB 12,000 and the general manager was fined RMB 8,000. While antitrust enforcement agencies focused on the domestic market in 2018 and that there were fewer high-profile investigations involving multinational corporations compared to previous years, the SAMR launched an investigation into three major suppliers of dynamic random access memory and conducted several dawn raids at the offices of these memory chip makers in May 2018.[17] The investigation will likely continue through 2019. 4.    Civil Litigation In 2018, Chinese courts handed down milestone judgments in cases concerning abuse of dominance and resale price maintenance in vertical agreements, which provided more clarity on the interpretation and application of the AML. Abuse of Dominance. Two of the cases involved Tencent, the Chinese tech giant, as the defendant. Tencent’s victory in both cases highlights the difficulty in establishing dominant position in the digital market in China. In the first instance case brought by Shenzhen Micro Source Code Software Development Co., Ltd. (“Micro Source”), a Chinese software company, Micro Source argued that Tencent’s blocking of Micro Source’s WeChat Official Account constituted a refusal to deal and that Tencent engaged in discriminatory practice because other similar official accounts had not been blocked.[18] The WeChat Official Account platform is one of the features offered by WeChat, a Chinese multi-purpose messaging, social media and mobile payment application developed by Tencent. It allows businesses to conduct marketing and promotional activities on WeChat. The Shenzhen Intermediate People’s Court rejected Micro Source’s definition of the relevant market as the mobile instant messaging and social media platform in Mainland China. The court held that the starting point in defining the relevant market in anti-monopoly cases is to identify the goods or services to which the disputed conduct relates, and then carry out a substitutability analysis on those goods or services. While the dispute arose on the WeChat platform, the disputed conduct pointed specifically to the WeChat Official Account services, which the court considered to be a value-added feature separate from WeChat’s basic mobile instant messaging and social media services. As such, the court defined the relevant market as the market for providing marketing and promotional services through the internet in Mainland China. The court further held that the data submitted by Micro Source on WeChat’s average monthly and daily active users did not establish Tencent’s market dominance because first, the data did not relate to the relevant market defined by the court and second, the average number of active users on the platform could not reliably reflect the platform’s market share or power because internet users frequently signed up for multiple competing platforms. Finally, the court found that Micro Source did not adduce any evidence to support its allegation that Tencent engaged in discriminatory practice. In regard to Micro Source’s allegation on refusal to deal, the court noted that a plaintiff must show that the refusal to deal had either the purpose or effect of excluding or restricting competition, an evidential burden that Micro Source failed to discharge. In a separate action, Tencent was sued by Xu Shuqing, an individual, who alleged that WeChat’s refusal to accept a set of emoji created by Xu amounted to abuse of dominance.[19] In dismissing Xu’s appeal, the Supreme People’s Court rejected his definition of the relevant market as the WeChat emoji open platform and his argument that there was no substitution for such platform. Instead, the court defined the relevant market as the internet emoji service market and found that there were other channels for Xu to distribute his set of emoji. While Xu adduced evidence of WeChat’s market share on the WeChat emoji open platform to support his allegation that Tencent held a dominant position, the evidence did not relate to the relevant market defined by the court. The court further cautioned against placing too much emphasis on market share when determining an undertaking’s market position in the highly volatile and dynamic market for internet companies. Finally, the court held that Tencent’s refusal to deal did not have the purpose or effect of excluding or restricting competition because the refusal was justified by Xu’s violation of WeChat’s review policy, which the court determined as reasonable, and that Xu could have revised his design and resubmitted a set of compliant emoji to compete with other applicants. Resale Price Maintenance in Vertical Agreements. While the NDRC (now integrated into the SAMR) utilized an “illegal per se” approach in handling cases involving resale price maintenance, Chinese courts have adopted a more moderate “rule of reason” approach in civil cases, as demonstrated by the Guangdong High People’s Court’s judgment on the Dongguan Gree air conditioner case. Dongguan Yushi Xinqing Geli Trading Co. Ltd. (“Yushi”) and Dongguan Heshi Electronics Co. Ltd. (“Heshi”) are the distributor and supplier of the Gree air conditioners in Dongguan, a city in Guangdong province. The two companies entered into an agreement with Dongguan Hengli Guochang Electronics Store (“Guochang”), a retailer, to sell Gree air conditioners. The agreement contained a clause setting out the minimum resale price of Gree products. In violation of the clause, Guochang sold one of the Gree models below the price agreed between the parties, and Yushi and Heshi demanded Guochang to pay a penalty for the breach. Guochang sued Yushi and Heshi, arguing that the minimum resale price clause amounted to resale price maintenance and constituted a vertical monopoly agreement, which is prohibited by Article 14 of the AML. The Guangdong High People’s Court identified three factors for consideration when analysing resale price maintenance in a vertical agreement: (1) whether competition in the relevant market was sufficient at the material time; (2) the market position of the product in question at the material time; and (3) the purpose and effect of the resale price maintenance policy, including a weighing of pro-competitive and anti-competitive effects. The court confirmed that, unlike cases involving horizontal agreements, plaintiffs in vertical agreement cases bear the burden of establishing the illegality of the resale price maintenance arrangement. Nevertheless, the court also acknowledged that as public interests are at stake in vertical monopoly cases, courts may actively seek and obtain evidence on a case-by-case basis. While finding that the three companies entered into and implemented a resale price maintenance arrangement, the court held that the arrangement did not constitute a monopoly agreement. Even though Gree’s market share amounted to 30% to 40% of the domestic air conditioner market in Mainland China, the court found that Gree did not hold a dominant position and that there was no evidence to show that the purpose or effect of the arrangement was to exclude or restrict competition. In particular, the court acknowledged the potential pro-competitive effects of a resale price maintenance arrangement (for example, maintaining the price of a product at a reasonable level may facilitate market entry for new companies and brands), and held that the relevant market was sufficiently competitive because there was generally low brand loyalty in the relevant market and that undertakings competed on many parameters that were equally, if not more, important than pricing, such as the quality of the product and after-sale service.    [1]   Gibson, Dunn & Crutcher, “Antitrust in China – 2017 Year in Review” (released on March 28, 2018), available at: https://www.gibsondunn.com/antitrust-in-china-2017-year-in-review/.    [2]   Antitrust Source, “Interview with Wu Zhenguo, Director General of China’s State Administration for Market Regulation (SAMR)” (released in December 2018), available at: https://www.americanbar.org/content/dam/aba/publishing/antitrust_source/2018-2019/atsource-december2018/dec18_wu_intrvw_12_17f.pdf.    [3]   Ibid.    [4]   Yicai, “SAMR’s Annual Report Card: It Takes Only 8.5 Days to Form a Company; Approval Rate for New Drugs Accelerated with 48 New Drugs Approved in a Year” (市场监管总局一年成绩单:企业开办需仅8.5天,新药上市加快一年批48个) (released on December 27, 2018), available at: https://www.yicai.com/news/100087903.html.    [5]   See Footnote 2.    [6]   PaRR, “PaRR Analytics: SARM Simple Case Review Averages 15.6 Days in 4Q18” (released on January 18, 2019), available at: https://app.parr-global.com/intelligence/view/prime-2770624.    [7]   SAMR, “SAMR: Increased Efficiency for Review of Business Operator Concentration Cases” (国家市场监管总局:提高经营者集中案件的审查效率) (released on November 16, 2018), available at: http://samr.saic.gov.cn/xw/yw/xwfb/201811/t20181116_277087.html.    [8]   Bloomberg, “Qualcomm Scraps NXP Deal Amid U.S.-China Trade Tensions” (released on July 26, 2018), available at: https://www.bloomberg.com/news/articles/2018-07-26/qualcomm-to-scrap-nxp-deal-as-deadline-passes-for-china-approval.    [9]   See Footnote 1. [10]   SAMR, “Zhang Mao: Protect Fair Competition and Facilitate the Healthy Growth of Socialist Market Economy” (张茅:保护公平竞争 促进社会主义市场经济健康发展) (released on August 1, 2018), available at: http://samr.saic.gov.cn/xw/yw/zj/201808/t20180801_275354.html. [11]   China Market Regulation News, “The Strengthening of Anti-Monopoly Enforcement” (反垄断执法不断增强) (released on January 9, 2019), available at: http://www.cicn.com.cn/2019-01/09/cms114231article.shtml. [12]   SAMR, “Notice from the SAMR on the Delegation of Authority on Anti-Monopoly Enforcement” (市场监管总局关于反垄断执法授权的通知) (released on January 3, 2019), available at: http://samr.saic.gov.cn/xw/yw/wjfb/201901/t20190103_279720.html. The notice sets out the types of cases involving monopoly agreements and abuse of dominance that the SAMR will either handle directly or authorize provincial AMRs to handle: (1) cases involving autonomous regions, municipalities or more than one provinces; (2) cases involving the abuse of administrative power by a provincial government; (3) more complex cases or cases that will have a significant impact on the national level; and (4) other cases that the SAMR deemed necessary to handle directly. Provincial AMRs are authorized to directly handle other cases involving monopoly agreements and abuse of dominance that take place within the relevant administrative area. [13]   SAMR, “SAMR Published Administrative Penalty Decisions Against Two Natural Gas Companies” (市场监管总局发布对两家天然气公司的行政处罚决定书) (released on July 27, 2018), available at: http://samr.saic.gov.cn/gg/201807/t20180727_275281.html. [14]   SAMR, “SAMR Published Administrative Penalty Decisions Against Four Shenzhen Tugboat Companies” (市场监管总局发布对深圳4家拖轮公司的行政处罚决定书) (released on June 25, 2018), available at: http://samr.saic.gov.cn/gg/201806/t20180625_274741.html. [15]   SAMR, “SAMR Imposed a Fine of RMB 12.43 million Against Drug Companies Specializing in Chlorpheniramine Maleate for Monopoly Behavior” (市场监管总局对扑尔敏原料药企业实施垄断行为依法处罚1243万元) (released on January 2, 2019), available at: http://samr.saic.gov.cn/xw/yw/xwfb/201901/t20190102_279577.html. [16]   Guangdong Provincial DRC, “Guangdong Provincial DRC Administrative Penalty Decision No. 7 of 2018” (广东省发展和改革委员会行政处罚决定书 粤发改价监处〔2018〕7号) (released on August 31, 2018), available at: http://www.gddrc.gov.cn/zwgk/zdlyxxgkzl/jgzf/pgpt/201809/t20180903_478125.shtml; “Guangdong Provincial DRC Administrative Penalty Decision No. 8 of 2018” (广东省发展和改革委员会行政处罚决定书 粤发改价监处〔2018〕8号) (released on August 31, 2018), available at: http://www.gddrc.gov.cn/zwgk/zdlyxxgkzl/jgzf/pgpt/201809/t20180903_478124.shtml. [17]   SCMP, “US Memory Chip Maker Micron Says Chinese Officials Visited its Offices ‘Seeking Information’ in Possible New Trade War Front” (released on June 2, 2018), available at: https://www.scmp.com/business/companies/article/2148937/memory-chip-maker-micron-says-chinese-regulatory-authorities. [18]   Legal Weekly, “Court Held that Tencent’s Blocking of Account Did Not Amount to Monopoly” (法院判决腾讯封号不构成垄断) (released on September 19, 2018), available at:  http://www.legalweekly.cn/article_show.jsp?f_article_id=17080. [19]   China Intellectual Property Lawyers Net, “Civil Case Judgment on the Appeal of Tencent Being Sued for Abuse of Market Dominance” (腾讯被诉滥用市场支配地位再审民事裁定书) (released on December 17, 2018), available at: http://www.ciplawyer.cn/html/cpwxfbz/20181217/140845.html?prid=170. The following Gibson Dunn lawyers assisted in the preparation of this client update: Sébastien Evrard, Emily Seo and Bonnie Tong. Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these issues.  Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition practice group, or the following lawyers in the firm’s Hong Kong office: Sébastien Evrard (+852 2214 3798, sevrard@gibsondunn.com) Kelly Austin (+852 2214 3788, kaustin@gibsondunn.com) Emily Seo (+852 2214 3725, eseo@gibsondunn.com) Bonnie Tong (+852 2214 3762, btong@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 7, 2019 |
Nine Gibson Dunn partners recognized by Who’s Who Legal Thought Leaders Competition

Nine Gibson Dunn partners were recognized by Who’s Who Legal Thought Leaders – Competition 2019. Brussels partners Peter Alexiadis and David Wood; London partner Ali Nikpay; Los Angeles partner Daniel Swanson; San Francisco partners Trey Nicoud and Gary Spratling; and Washington, D.C. partners D. Jarrett Arp, Scott Hammond and Richard Parker were recognized. The list was published in February 2019.

January 29, 2019 |
Europe’s Highest Court Finds in Favor of UPS in Merger Review Appeal

Click for PDF On 16 January 2019, the European Union’s highest court, the Court of Justice, upheld the claim of United Parcel Service, Inc. (“UPS”) that the European Commission (“Commission”) had breached its rights of defense. It had breached those rights when it had declared that UPS’s proposed merger in 2012 with TNT Express NV (“TNT”) was incompatible with the internal market because it would lead to significant impediment of competition in up to 15 Member States of the European Economic Area.[1]  The Court of Justice thus upheld a Judgment of the General Court taken in 2017.[2] Both UPS and TNT are leading providers of international express delivery of small parcels. The violation of the UPS’s rights of defense occurred when the Commission failed to provide UPS with the opportunity to comment upon a revised econometric model which served as the Commission’s basis for prohibiting the proposed merger because of the supposed risk that prices would rise post-merger.  In the circumstances of the case, that failure on the part of the Commission was sufficiently important to justify the conclusion that the Commission Decision adopted on 13 January 2013[3] should be annulled.  The Court of Justice’s Judgment is of high importance to merger practitioners both because of the confirmation of the procedural standard which the Commission needs to satisfy in its merger reviews, but also because of the possible ramifications which the Judgment might have on the procedures to be followed in future merger proceedings. 1.   Background In upholding UPS’s action for annulment of the Commission’s Decision nearly four (4) years after the filing of the appeal against the Commission’s veto Decision in the proposed UPS/TNT merger, the General Court in Luxembourg ruled that the Commission had breached UPS’s rights of defense by relying on a modified version of its initial econometric analysis without having shared that version with the merging parties before the Decision to block the merger was adopted. The Commission appealed against the General Court’s Judgment on three separate grounds, the first two of which related to an infringement of the rights of defense (and the consequences arising therefrom) and the third ground consisting of an alleged infringement of the obligation on the Commission to state reasons for its adopted Decisions. 2.   Infringement of the rights of defense The cornerstone of the Commission’s challenge to the General Court Ruling lay in its denial that it was under an obligation to communicate the final econometric analysis to the merging parties before adopting its final decision. In support of its position, the Commission expressed its view that, after a Statement of Objections (“SO”) has been issued to the notifying parties, it is not obliged to disclose any interim or preliminary conclusions until the time of the adoption of its Decision, as its conclusions in the intervening period between a SO and the Decision might be subject to modification or change.[4]  To this end, argued the Commission, the only findings that are challengeable are those that are contained in the final adopted Decision, even if one assumes that the Commission cannot rely on grounds of which the notifying parties are unaware.[5]  Moreover, the Commission argued that the General Court had erred in implying that the Commission was under an obligation to disclose all of its internal views prior to the adoption of a Decision, as the right of access to the file does not extend to internal documents.[6]  Finally, the Commission contended that, even if UPS’s rights of defense had been infringed, this could not lead to an annulment of the Commission’s Decision because – at least with respect to some of the markets – an impediment to competition had already been found based on factors other than the economic analysis.[7] The Court of Justice commenced its Ruling with an affirmation that the right of defense is a general principle of EU law that must be observed.  With respect to merger control review, the application of that general principle requires, among other things, that the Commission provide written notice to the notifying parties of the Commission’s objections, and that this notice be accompanied by an appropriate period in which the notifying parties can address those objections in writing.[8]  What this means in practice is that the notifying parties must be put in a position in which they can make known their views on the accuracy and relevance of all the factors upon which the Commission intends to base its Decision.  To the extent that the Commission seeks to justify its position by reference to an econometric model, it follows that the parties must be able to submit their observations on that particular econometric model. In the view of the Court, the fact that an SO only sets forth the Commission’s provisional conclusions, which may legitimately be modified in light of observations received and evidence collected, does not entitle the Commission to amend its econometric model upon which its objections are based without having first communicated those amendments to the notifying parties.[9] In light of the importance attributed by the Commission to econometric models in assessing the effects of a merger, the Commission’s failure to disclose such information ran counter to the policy priority accorded to transparency in the merger review process.  Such a practice would have the effect of undermining any effective judicial review of Commission Decisions by the Courts.[10]  As such, the Court of Justice concluded that the General Court had not erred in law in holding that the Commission Decision should be annulled as a consequence of the infringement of UPS’s rights of defense.[11] 3.   The obligation on the General Court to state reasons Finally, the Commission sought that the General Court’s Ruling be overturned because the General Court had failed, in its view, to acknowledge formally a number of arguments raised by the Commission when responding to certain questions raised by the General Court at the hearing in Luxembourg.  In the circumstances, argued the Commission, the General Court should be held to have failed to examine and address the arguments raised by the Commission.[12] The Court of Justice rejected the Commission’s arguments on this point, holding that the General Court had addressed the points put forward by the Commission, even if it had only done so implicitly.[13] In particular, the Commission criticized the General Court for having failed to take formal note of an argument according to which the use in the econometric model of a continuous variable for the prediction stage was warranted and followed from UPS’s methodology on estimation rate.  The Court recalled that the General Court had noted that the Commission relied on a discrete variable at the estimation stage and on a continuous variable at the prediction stage, holding that although the use of a discrete variable had been discussed repeatedly during the administrative procedure, it did not appear from the file that it had also been the case with regard to the use of different variables at the different stages of the econometric analysis.[14]  For those reasons, the Court considered that the General Court had justified in law its Ruling and had implicitly rejected the Commission’s arguments that UPS had “intuitively” been able to identify the amendments to the econometric model.[15] Lastly, the Commission also claimed that UPS’s plea that its rights of defense had been infringed should have been dismissed by the General Court, because the finding of a significant impediment to effective competition on the respective Danish and Dutch markets had not been based exclusively on the results of the econometric model.  In these circumstances, the Commission claimed that it was contradictory for the General Court to annul its Decision on the basis of an infringement of the rights of defense while at the same time concluding that the revised econometric model was capable of overriding the qualitative information taken into account by the Commission (given that it could not have reduced  the number of Member States in which the merger would have given rise to a significant impediment to effective competition).[16] This argument was dismissed by the Court of Justice, which considered that the premise on which the argument was based was incorrect. The Court concluded that the Commission had wrongly assumed that the infringement of the rights of defense would only lead to the annulment of the Decision if, in the absence of the procedural irregularity, the Decision would have been different in content. Indeed, the Court considered that an infringement of the rights of defense should be able to lead to the annulment of a Commission Decision provided that – in the absence of such infringement – there was “even a slight chance” that the merging parties would have been better able to defend themselves.[17] 4.   Potential impact of the Judgment The Court of Justice’s Ruling in the UPS Case has a number of important implications on EU merger practice. (i) This Ruling constitutes an emphatic application of the doctrine of “equality of arms” as an integral part of the rights of defense, insofar as it emphasizes the notifying parties must have access to the documentation that makes up the case against them.  Moreover, the Court of Justice also found fault with such an act of non-disclosure by the Commission because it would risk the effectiveness of review by the Courts.  To the extent that the Commission bases its objections to a merger on certain facts, these must be disclosed to the notifying parties to afford them the opportunity of defending themselves during the review period, rather than consigning their objections to an appeal process after their merger has been shelved.  In the circumstances of the case, the evidence contained in the final version of the econometric model relied upon by the Commission was clearly material to its substantive review, and therefore should have been made available by the Commission. Hairs may no doubt be split in the future about which acts of Commission non-disclosure might be actionable, but the Court was clear that there was little doubt that the notifying parties’ defense during the merger review was seriously hampered by the Commission’s act of non-disclosure. (ii) The Court elevates the rights of the defense to a higher standard than has been acknowledged in previous case-law, insofar as the Court did not consider it necessary to engage in an enquiry into whether the Commission’s act of non-disclosure amounted to an error whose magnitude was likely to change the nature of its final conclusions (i.e., a “manifest error”).[18]   The Court reference to “even a slight chance” appears to constitute an important erosion of the Commission’s otherwise wide discretion in interpreting economic evidence, as it will now be aware that its discretion will need to exercised alongside a full disclosure of the underlying supporting evidence.  It will only be in unusual circumstances that the Commission will be able to assert with confidence that an act of non-disclosure would not have been capable of affecting its substantive conclusions. The particular fact pattern in the UPS Case has probably played a very material role in the Court of Justice’s Ruling, suggesting that no hair-splitting was necessary. For example, the econometric model was revised after exchanges that had been made in the course of the Oral Hearing held in the latter stages of the Commission’s review. Moreover, UPS had contended that those changes, rather than being an appropriate response to what had been argued at the Oral Hearing, were changed unilaterally by the Commission in ways which were arguably inappropriate and which were unsubstantiated in the text of the Commission’s Decision, being only revealed in the course of the proceedings before the General Court. This fact pattern therefore suggests that this was a case which amounted to much more than a situation of a notifying party submitting evidence late in the review process and thereby compromising the Commission’s tight review deadlines. As a result, it was clear that the Court was concerned with the potential misuse or biased use of economic models by the Commission, having stressed that the methodological basis behind the models used “must be as objective as possible in order not to prejudge the outcome of the analysis on way or another”.[19] What remains unclear from the Ruling is whether an enquiry into whether a final Decision was affected by a Commission infringement will still be required by the Court in relation to failings of a less fundamental nature, so that the Court’s tough stance regarding the infringement of the rights of defense applies only where the nature of the infringement is sufficiently egregious, as it was in relation to the handling of key economic evidence.  What falls short of a failure to provide access to a revised econometric model is therefore likely to require clarification through subsequent case-law. (iii) In agreeing to UPS’s procedural challenge, the European Courts have opened up the possibility that the actions for damages lodged by UPS and others[20] may bear fruit.  To date, actions for damages for blocked mergers have resulted in relatively meagre damages awards by the European Courts, other than in the Schneider/Legrand Case,[21] where the Commission’s procedural infringements were wilful and serious. Given the underlying circumstances in the UPS Case, it cannot be discounted that the Court may be willing to adopt the approach to damages taken in Schneider/Legrand.  Will the Court of Justice’s uncompromising stance on the gravity of the procedural failings in the UPS Case have a similar effect in ramping up the quantum of damages to which the Commission may be subject? Practitioners will await with interest the approach of the European Courts  to the damages claims that will follow in the wake of the UPS Ruling. (iv) It seems inevitable that the Commission will react to the Court’s strong rebuke by modifying its procedures of review.  One can envisage one of two possibilities, neither of which is ideal from a practitioner’s perspective and neither of which addresses the procedural problem really at issue in the UPS Case. First, the Commission might move away from its current flexible procedure of allowing notifying parties the ability to file submissions virtually throughout the course of the review period.  Instead, notifying parties might find themselves in a position of being obliged to file certain types of economic data within specified time limits in order for them to be taken into account.  In this way, multiple modifications to economic evidence might become procedurally untenable.  The major drawback of this approach would be that the notifying parties might not be able to respond sufficiently quickly with appropriate economic evidence, especially if the Commission is exploring a novel theory of harm. Second, the Commission might open up the possibility of multiple exchanges on economic evidence, but only if the procedural quid pro quo is a relatively elastic extension of the period of review.  Sacrificing the commercial benefits of a relatively certain fixed period of review for an open-ended review period would not be seen in many quarters of the business community as desirable. One thing is clear: given the increasing importance attached by the Commission to economic evidence, the procedural aftermath of the UPS Case will be felt for some time in the ways in which such economic evidence is processed. Whether or not the approach of the European Courts signals an increased willingness of the Courts to subject the Commission’s broad discretion in examining economic evidence remains to be seen.    [1]   See ECJ’s Judgment in Case C‑265/17 P – European Commission v United Parcel Service, Inc., 16.01.2019, ECLI:EU:C:2019:23. Available at: http://curia.europa.eu/juris/document/document.jsf;jsessionid=6EDA43936703CA52E17A4149562E80E2?text=&docid=209848&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=7507536    [2]   See ECJ’s Judgment in Case T‑194/13 – United Parcel Service, Inc. v European Commission, 07.03.2017, ECLI:EU:T:2017:144. Available at: http://curia.europa.eu/juris/document/document.jsf?text=&docid=188600&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=7508760    [3]   See the European Commission’s Decision on Case COMP/M.6570 — UPS/TNT Express, 30.01.2013. Available at: http://ec.europa.eu/competition/mergers/cases/decisions/m6570_20130130_20610_4241141_EN.pdf    [4]   An SO is a document which summarizes the Commission’s prima facie antitrust concerns regarding the merger.  While the arguments in the SO serve as the basis for the Commission’s final conclusions in support of its Decision to block the merger, the Commission is not bound to follow its views in the SO as a matter of law.  See para. 36 of the ECJ’s Ruling and para. 63 of ECJ’s Judgment in Case C‑413/06 P – Bertelsmann and Sony Corporation of America v Impala, 10.07.2008, EU:C:2008:392. Available at: http://curia.europa.eu/juris/document/document.jsf?text=&docid=67584&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=9868410    [5]   See para. 24 of the ECJ’s Ruling.    [6]   See para. 26 of the ECJ’s Ruling.    [7]   See para. 50 of the ECJ’s Ruling.    [8]   See para. 29 of the ECJ’s Ruling.    [9]   See paras. 36 and 37 of the ECJ’s Ruling. [10]   See para. 50 of the ECJ’s Ruling. [11]   See para. 56 of the ECJ’s Ruling. [12]   See paras. 59 to 62 of the ECJ’s Ruling. [13]   See paras. 64 to 68 of the ECJ’s Ruling. [14]   See para. 66 of the ECJ’s Ruling. [15]   See paras. 65 to 67 of the ECJ’s Ruling. [16]   See para. 62 of the ECJ’s Ruling. [17]   See paras. 68 and 69 of the ECJ’s Ruling. [18]   See para. 68 of the ECJ’s Ruling. [19]   See para. 53 of the ECJ’s Ruling. [20]   According to the official notice published in the EU’s official journal, UPS brought an action against the European Commission on 29.12.2017.  The Irish airline ASL also brought an action against the European Commission on 11.09.2018.  Both notices are available at: http://res.cloudinary.com/gcr-usa/image/upload/v1519658653/EU_Journal_ks934v.pdf. and https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62018TN0540&from=EN [21]   See ECJ’s Judgment in Case C-440/07 P – Commission v. Schneider Electric SA, 16.07.2009, ECLI:EU:C:2009:459. Available at: http://curia.europa.eu/juris/document/document.jsf?docid=72486&doclang=en The following Gibson Dunn lawyers assisted in preparing this client update: Peter Alexiadis, David Wood, and Maria Francisca Couto. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition practice group, or the following lawyers in Brussels: Peter Alexiadis (+32 2 554 7200, palexiadis@gibsondunn.com) David Wood (+32 2 554 7210, dwood@gibsondunn.com) Please also feel free to contact any of the following practice group leaders and members: Brussels Peter Alexiadis (+32 2 554 7200, palexiadis@gibsondunn.com) Jens-Olrik Murach (+32 2 554 7240, jmurach@gibsondunn.com) Lena Sandberg (+32 2 554 72 60, lsandberg@gibsondunn.com) David Wood (+32 2 554 7210, dwood@gibsondunn.com) London Patrick Doris (+44 20 7071 4276, pdoris@gibsondunn.com) Charles Falconer (+44 20 7071 4270, cfalconer@gibsondunn.com) Ali Nikpay (+44 20 7071 4273, anikpay@gibsondunn.com) Philip Rocher (+44 20 7071 4202, procher@gibsondunn.com) Deirdre Taylor (+44 20 7071 4274, dtaylor2@gibsondunn.com) Munich Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) Hong Kong Kelly Austin (+852 2214 3788, kaustin@gibsondunn.com) Sébastien Evrard (+852 2214 3798, sevrard@gibsondunn.com) Washington, D.C. 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Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

January 24, 2019 |
“New Year Special”: European Commission’s DG Comp Sets Out Its Stall at the OECD’s Global Competition Forum

Click for PDF Reviving an old tradition of the European Commission disrupting competition lawyers’ New Year breaks with the portents of increased intervention or narrower interpretation of certain antitrust doctrines than would otherwise be expected, the Commission’s “New Year Special” came in the form of eight (8) papers which it delivered at the OECD Competition Forum held in December 2018. The contributions made by the European Commission’s DG Competition to the OECD Competition Forum provide an insight into the key positions covering its implementation policy in the immediate future in relation to a range of both substantive and procedural issues.[1] I.   Procedural Issues The Commission set forth its position in four (4) key areas of EU Competition law procedure, namely: the treatment of legally privileged information in competition proceedings; the effects of regional competition agreements; investigative powers in practice (i.e., unannounced inspections in the digital age and respect for “due process” in relation to the gathering of evidence); and investigative powers, embodied in Requests for Information. 1.   The treatment of legally privileged information in competition proceedings The Commission summarised the EU Courts’ views on Legal Professional Privilege (“LPP”) , providing insight into how it interprets the Court’s rulings in practice. As it has only been under European case-law that the concept of LPP has been recognised in the EU, it is case-law that has shaped its contours. The guiding light in the case-law is still provided by the Court of Justice’s ruling AM & S v Commission in 1982, with the Court describing the concept as an “essential corollary to the full exercise of the rights of defence“.[2] The Court identified two conditions in order for LPP to apply at the EU level, namely: (1) the communication must be made for the purpose and in the interest of the client’s defence in competition proceedings; and (2) the principle only applies to communications with independent lawyers (i.e., not in-house lawyers) that are registered with a Bar in one of the EU Member States. The protection extends to internal notes that report the content of privileged communications and documents that are exclusively drawn up for the purpose of seeking legal advice. However, the Commission notes that it will not consider communications between a company and third parties’ lawyers or (normally) other professional advisers (such as patent attorneys) to be privileged. Nor does LPP, in the Commission’s view, attach to communications between a lawyer and a firm if they are found at the premises of another firm.[3] Even more controversially, the Commission also expresses the view that LPP should also not attach to communications between lawyers, nor to attachments to privileged documents. In the Commission’s view, it is for the firm concerned to justify any claims of LPP. If such a claim is made during an on-site inspection, the Commission has the right to take a cursory look to verify the reasons being invoked to justify such a claim. In turn, the firm may refuse to grant a cursory look if this would reveal privileged content. However, if the reasons provided are insufficient, the Commission considers that it is able to take a cursory look (and even impose fines if the claim is found to be unjustified). The Commission can also resort to the “sealed envelope procedure”, which allows it to seize documents and to address claims for privilege at a later stage. The parties concerned in any dispute as to the scope of the Privilege can also involve the Hearing Officer, who acts as an independent adjudicating third party in potential disputes.[4] During inspections, the Commission can make electronic copies of documents, which allows it to exclude or hold separate privileged documents. The Commission also has the right to seize so-called “family documents” (i.e., documents belonging to the same line of communication). In the United States, LPP extends to in-house counsel. However when the Commission requests documents physically situated in the United States, it is European Union law that applies. There will be occasions where this may conflict with a US firm’s obligation not to disclose documents. It is in these cases that the Commission on occasion opts to send formal requests (instead of non-binding simple requests) to the party in question, so that US firms can comply with the obligation without waiving their protection in US legal proceedings. As the Commission is increasingly demanding the production of documents in complex merger proceedings, it is currently working on “best practice guidelines” on information requests under the EU Merger Regulation (“EUMR”). Comment: While the Commission’s contribution is couched in terms that it is merely reflecting existing case-law, practitioners will be concerned that the Commission is stretching that jurisprudence to unforeseen limits. The two Commission propositions which will cause most disquiet are that: (1) (potentially privileged) communications found at the premises of another undertaking; and that (2) communications between lawyers, fall outside LPP. With respect, the citation of the Pendropil Case in support of this proposition does not justify the Commission’s claims that LPP is lost in these two above-listed circumstances.[5] That case concerned communications between external counsel relating to the settlement of a commercial dispute, which were later obtained by the Commission pursuant to a dawn raid at the premises of one of the parties to that dispute. Because the documents in question were not generated with EU proceedings in mind, the relevance of the Pendropil Case is arguably not germane to the situations considered by the Commission. Following the instructions of their respective clients, external lawyers may exchange communications in relation to EC investigations in a number of circumstances. For example, in merger cases, data and arguments may be exchanged on a counsel-to-counsel basis for the purposes of responding to RFIs or for the preparation of notifications. Another example can be found in relation to communications for the purpose of preparing a common defence. There are legitimate public policy reasons why LPP should extend to communications between external lawyers, as well as to communications between firms and lawyers found at another firm’s premises. The public policy reasons why such communications between external lawyers should benefit from LPP include: the exercise of legitimate rights of defence; the balancing of the Commission’s ability to review evidence from more than one party, consistent with “equality of arms” doctrine; and the effective management of resources by enabling submissions to be made in an efficient manner. It is, therefore, important that the Commission’s submission not be read as calling into question the applicability of LPP to joint defence communications. The public policy mischief created by such an erosion of the traditional notion of LPP, which one can identify in the legal traditions of most EU Member States, supports the view that the Commission would be well advised to clarify its position further. 2.   Regional competition agreements The Commission sums up its experience of 14 years of cooperation with National Competition Authorities (“NCAs”) within the European Competition Network (“ECN”), the network of cooperation under the de-centralised system of enforcement of European competition law that was introduced alongside Procedural Regulation 1/2003. Moreover, the Commission explains how the soon-to-be-adopted ECN+ Directive will deepen existing cooperation and will further harmonise the institutional framework of the national competition enforcement systems and the rules on leniency programmes.[6] The new Directive will, inter alia, make it easier for applicants to obtain a leniency marker across multiple jurisdictions. The key points assessed in the paper include: Regulation 1/2003 provides that the Commission and the NCAs of the Member States should allocate cases to the NCA which is best placed to deal with the case. In cases where three or more Member States are involved, the Commission is often deemed to be best placed to hear a case. According to Regulation 1/2003, NCAs can also carry out inspections on behalf of one another, without the need for each of them to open proceedings, and subsequently to exchange information and rely upon it as evidence. Since the introduction of the ECN in May 2004, the affected Member State NCAs have informed the Commission and their fellow NCAs of decisions to open proceedings in 1031 cases. This indicates that more than 85% of all decisions adopted within the framework of public enforcement of European competition law are now being adopted by Member State NCAs. In its 2014 paper on “Ten years of cooperation within the ECN”, the Commission had singled out three issues where improvements in the current system of cooperation were necessary: (1) to guarantee the independence of NCAs, which presupposed the existence of sufficient resources; (2) to ensure that they have a set of effective investigative and decision-making powers at their disposal; and (3) that the NCAs in all Member States have powers to impose effective fines and that they have functioning leniency programmes in place. These goals will be reached by the ECN+ Directive passed in 2018, further to which the Member States will have a two-year timeframe for implementation. Upon implementation, all Member States will have a fining system according to which the NCA or a civil court can impose a fine, and also a leniency programme modelled after the “soft-law” ECN Model Leniency Programme, whereby firms can obtain reductions in fines up to full immunity in exchange for “blowing the whistle” on a cartel. The harmonisation of leniency programmes includes immunity for employees of the leniency applicant. The ECN+ Directive will also facilitate the securing of companies’ leniency markers when they consider whether to apply for leniency in multiple jurisdictions, as cases may be re-allocated to other jurisdictions after the leniency application has been made. Comment: The Commission’s contribution on regional competition agreements contains few novelties and surprises. The Commission has previously published its findings and experiences with the ECN in various papers. It has also widely promoted and thoroughly clarified its Proposal for the ECN+ Directive. It can be expected that some time will pass for the additional support directed at less active National Competition Systems, as provided in the Proposal, to bear fruit, even beyond the two-year implementation period established under the Directive. Ever since the decentralisation of competition policy enforcement brought about by Regulation 1/2003, questions have been raised about whether all Member State NCAs had sufficient resources and independence to ensure that they could exercise effective decision-making. Whilst it is hoped that the measures foreseen will effectively assist NCAs in this regard, the Commission’s goal of supporting the independence of NCAs – while no doubt well-intentioned – might flounder in light of: (1) the susceptibility of certain NCAs to political interference in certain Member States, especially smaller ones, when  prosecutions are lodged against large local vested interests; (2) the rise in consumer protection-style offences and “public interest” reviews introduced at Member State level, which are more vulnerable to political enforcement priorities; and (3) the limited financial resources available to certain NCAs to hire the right calibre of in-house attorneys and economists required in complex investigations against large incumbent operators or multinationals. In contrast, the move towards a more harmonised system of leniency programmes across different Member States will likely have a more short-term effect, and its benefits to companies will become evident more quickly. It constitutes a welcome simplification in the coordination of leniency applications where numerous EU jurisdictions are affected by the same commercial activity. 3.   Investigative powers in practice – unannounced inspections in the digital age and respect for “due process” in relation to evidence The Commission has explained its practice in relation to on-site inspections, commonly known as “dawn raids”, at a time when the bulk of a firm’s data is stored digitally. The Commission has addressed several topics, including the challenges it faces with digitally-stored data (e.g., access to data stored off-site) and its challenges in the gathering of physical documents. For example: With respect to digitally-stored data, the Commission sometimes faces problems in accessing documents that are archived or saved in back-ups; this is because the necessary hardware is no longer available. By contrast, identifying the location of servers or accessing third-party servers are issues that have not yet emerged as problematic. Accordingly, no legal challenges have been brought to date in relation to the so-called “access principle”. According to this principle, the Commission inspectors have the right to access all information that is accessible to the entity which is subject to the inspection.[7] In general, the Commission takes copies of all pieces of information that are material to the investigation. The scope of the investigation is set out in the Decision authorising the inspection, which is presented to the investigated party upon arrival at its premises. Documents to which LPP is attached cannot be taken from the premises when it is not possible to assess on-site whether these documents enjoy such privileged status. The Commission will apply its “sealed envelope procedure” in these cases.[8] The documents will then be examined at the Commission’s premises in the presence of a company representative and, possibly, be added to the file (i.e., under the process of “continued inspection”). In carrying out inspections, the Commission relies on its own internal forensic IT team. It also uses forensic software, which is used to restore deleted data. The Commission reviews digital data on a central review interaction platform, which facilitates search queries made with respect to the data set. For the conduct of the search, the Commission relies primarily on keywords. Those keywords are not shared with the firms being investigated. The Commission also examines data irrespective of the storage medium in which it is stored. This includes personal electronic devices such as phones (but only insofar as they contain data “related to the business”). As regards firms’ procedural rights, they may bring an action for annulment against the Decision which authorises the inspection. However, this action does not have a suspensory effect. Alleged infringements of procedural rights that allegedly occur during the inspection, on the other hand, can only be challenged alongside the final Decision which authorises the inspection. Where the investigation is closed without a Decision having been adopted, the investigated company can bring an extra-contractual liability claim against the Commission. Another essential procedural right relates to access to the file. After the Commission sends out a Statement of Objections, the addressee is entitled to obtain full access to the Commission’s file against it. The right to access to the file does not extend to internal documents of the Commission (this constitutes an absolute exception to the rule), nor does it necessarily relate to business secrets of other undertakings (where a balancing exercise has to be conducted against the business secret owner’s interests). Comment: With this paper, the Commission provides some useful background on the procedures it follows during on-site inspections (commonly referred to as “dawn raids”). Although this investigative tool has been in place for a while, the seizure of digital documents – which make up the largest part of business communications today – presents new challenges. This phenomenon makes it increasingly necessary to have a number of IT experts on-site. The Commission may often risk being accused of conducting so-called “fishing expeditions” in those cases where the search terms it uses are not sufficiently precise. On the other hand, as regards legal advisers who are present during the inspection, the Commission’s access to a myriad of digital documents stored in the Cloud also presents its challenges, as finding the balance between protecting a client’s rights and not obstructing the Commission’s information-gathering exercise is often difficult. 4.   Investigative powers embodied in Requests for Information There is a general trend in European competition law enforcement that requires companies to provide increasing volumes of data for the purposes of the Commission’s analysis. In its paper on its investigative powers, the Commission summarises its own best practices regarding Requests for Information (‘RFI’) as well as the relevant case-law of the European courts having an impact on this issue. These investigative powers relate both to the EU Merger Regulation and the general Procedural Regulation 1/2003, which covers behavioural issues such as cartel investigations and allegations of abusive behaviour. When investigating an alleged infringement of Article 101 and 102 TFEU, the Commission can carry out inspections, conduct interviews, and issue RFIs. In the context of merger control, the Commission can also request information through RFIs. This is an essential fact-finding tool, providing the Commission with the possibility to gather information quickly. RFIs can be addressed to the parties, as well as to third parties such as customers, competitors or trade associations. RFIs cannot be sent to persons to answer in their individual capacities. RFIs can be issued in the form of a simple request, which means that there is no legal obligation to respond.[9] However, if a company chooses to reply, it must provide correct and complete information (providing wrong or incomplete information may result in fines). Alternatively, the Commission can adopt a Decision which embodies the RFI, thereby rendering the RFI legally binding upon the addressee. In this situation, the addressee must reply. In each case, however, protection is offered to individuals against self-incrimination (but this right against self-incrimination does not extend to documents in the possession of the addressee).[10] The Commission can also impose periodic penalty payments in order to secure compliance with the request.[11] Both kinds of requests must set forth the legal basis for, and the purpose of, the request. In general, all information gathered can only be used for the purpose for which it was sought. In the case of non-compliance with an RFI (where implemented by a Decision) within the prescribed timeframe or, in the case of the provision of false or misleading information (by simple RFI as well as by Decision), the Commission may impose a fine not exceeding 1% of the total turnover of the addressee’s corporate group generated in the preceding business year.[12] Where false or misleading information has been provided as part of a Phase I clearance, the Commission can revoke that Decision. Where there has been a failure to provide requested information, it can result in a “stop the clock” situation for the proceedings until the company complies fully with the request. Comment: This paper is arguably the least contentious of the Commission’s positions, given that most of the subject-matter is well understood by firms and their legal advisors. However, the Commission’s submission, while presenting a welcome refresher on aspects of its RFI practice, does very title to explain how the Commission intends to use RFIs in the future. Over time, RFIs have developed from relatively simple requests to answer specific questions to instruments that are used to extract vast amounts of data, including entire sets of internal business communications in both cartel and merger proceedings. II.   Substantive issues When addressing key emerging issues in the substantive review, the Commission addressed four (4) key issues, namely: excessive pricing in pharmaceutical markets; personalised pricing in the digital era; the suspensory effects of merger notifications and “gun-jumping” practices; and quality considerations in the zero-price economy. 1.   Excessive pricing in pharmaceutical markets The actionability of excessive pricing allegations continues to be a controversial topic in European competition law. In its paper on the topic to the OECD, the Commission explains its powers of intervention in cases where dominant firms charge excessive prices to their customers, and considers the EU case-law on the subject and precedents developed by NCAs. In doing so, the Commission presents its views on the economic challenges presented by pharmaceutical markets. It justifies its recent investigative activity in the sector, setting out the types of economic indicators which will generally prompt the Commission to act. The key themes which emerge are as follows: Article 102(a) TFEU prohibits dominant firms from abusing their market power by “imposing unfair purchase or selling prices or other unfair trading conditions”. The Commission reiterates that because excessive prices directly harm consumers, they are a phenomenon that should be addressed by Competition Authorities. The Commission notes, however, that the charging of high prices is something that generally can be left to market forces to address, as they are often a signal for other companies to enter the market. Under EU case-law, prices are excessive when they have “no reasonable relation to the economic value of the product”. This test is fulfilled if the profit margin (difference between cost and price) is excessive. If the latter is the case, the price must also be “unfair in itself or when compared to competing products”. More recently, the Court of Justice accepted that a comparison could be made with prices of similar products or services in other Member States, insofar as the criteria for the selection are objective in character, appropriate and verifiable. If the comparison between the price of the dominant firm and the price of the compared product reflect an appreciable difference, this normally indicates an abuse of a dominant position. The dominant firm can defend itself by demonstrating that the price is not in fact unfair but actually reflects a level of innovation or supports the investment necessary to develop the product. Recent price spikes in off-patent pharmaceuticals have meant that the issue of excessive pricing has been put back on the enforcement agenda of Competition Authorities. Some of these markets’ features render them particularly susceptible to excessive pricing. One of these features is the low elasticity of demand following price rises, which means that price rises have very little effect on the amount of goods being purchased. Accordingly, firms can raise prices and do not have to fear that their products will no longer be bought. This is because neither patients taking the medication in question nor doctors prescribing it have to bear the cost of the medication. Another feature is the bargaining position of health care institutions, which is reduced because of the relatively limited choice of products and public pressure to have these products made available. The Commission also looks at the affected phases of the relevant pharmaceutical products’ lifecycle. There are, generally, three phases: the first phase requires significant R&D, which can take up to ten years and which involves considerable costs and risk; the second phase involves all regulatory approvals being obtained for the product to be sold (this is also the point at which the medication usually enjoys patent protection from generic drugs); and once the IP rights expire, the product enters into the third and final phase, the off-patent phase. It is in the off-patent phase where normally one would expect to witness generics producers entering the market. Indeed, price falls of up to 90% can be realized in this period. However, in some cases, there is no market entry from generics, and prices remain high or even rise above the previous level. It is in these latter instances where the Commission and other Competition Authorities should be prepared to investigate high prices. Between 2016 and 2018, NCAs in the UK[13], Italy[14] and Denmark[15] have held that pharmaceutical companies had charged excessive prices in particular circumstances. All of these Decisions are the subject of appeals. In 2017, the Commission opened its own investigation into the allegedly excessive pricing of live-saving cancer medicines by Aspen Pharma.[16] Comment: When the Commission comments on contentions topics such as excessive pricing, one must listen carefully – especially since the Commission opened its own case against Aspen Pharma in 2017. Yet, in its contribution to the OECD, the Commission is justifiably cautious in expressing its policy priorities. As regards the indicators which justify Competition Authorities becoming more active, the Commission sides with AG Wahl’s Opinion in the recent AKKA / LAA Case[17], where he states that only very specific market conditions justify an infringement action. In terms of the legal test to determine whether a certain pricing policy is excessive, the Commission largely reiterates its previous case-law on the matter and provides very little insight into how it envisages to interpret the legal tests proposed by the Court of Justice. It therefore remains to be seen whether, following its recent renaissance, the offence of excessive pricing will continue to stay on the enforcement agenda indefinitely. What will endure, however, is the considerable uncertainty as to whether a particular price is “excessive” within the meaning of Article 102 TFEU. Another issue which the Commission identifies is whether the current enforcement activity will continue to focus exclusively on the pharmaceutical sector, given that sector’s particular characteristics. In light of the Commission’s focus in its paper on the particular features of the markets for life-saving pharmaceuticals, it should come as no surprise that this may well be the case in practice.  It would also be unfortunate, for example, if certain over-zealous NCAs were to apply the rationale for intervention against excessive pricing in relation to luxury products, where the relationship between production cost and retail price is largely irrelevant (or even attractive) in the eyes of the consumer. 2.   Personalised pricing in the digital era The Commission has conducted a preliminary analysis of the growth in online personal pricing, which relates to the charging of individual prices based on particular customers’ willingness or ability to pay. Against the backdrop of large technology companies collecting large volumes of personal data, the paper explains the economics of personal pricing and concludes that the phenomenon is currently minimal. In its submission, the Commission also discusses which laws might apply to personal pricing, concluding as follows: In the offline world, personal pricing is a common phenomenon. In the online world, the availability of personal data now also allows the seller to draw conclusions as to a customer’s willingness to pay, and hence to price their goods and services accordingly. Personal pricing differs from dynamic pricing (which is based on the effects of supply and demand) and personalised ranking (which refers to personalised offers). Price discrimination already takes place with respect to large groups of customers (e.g., different pricing strategies in different Member States of the EU). The novelty with digital markets is that the use of personal data allows online sellers to sort customers into much smaller groups, thereby facilitating the more effective exploitation of each group’s willingness to pay. The Commission notes that three conditions must be fulfilled in order for this to be able to occur: (1) the ability to sort consumers into groups; (2) the market power of the seller (otherwise customers will turn to competitors who offer the goods at a cheaper price); and (3) customers must not be involved in the resale of products on a significant scale. While perfect personal pricing can be seen to be efficient (similar to a “perfect competition model”), it does not increase individual consumer welfare; as some customers will be paying more than they otherwise would need to pay. Consumers may then be able to spend less on other products. Also, where output is limited, sellers will typically seek to maximise their income, namely, by not selling at low prices. Finally, it is even possible that low-income customers will actually be charged more because they are higher-risk consumers. Personal pricing is, however, said to render any tendency toward (tacit) collusion (e.g., through reliance on algorithms) less likely because it generates many different prices and therefore dilutes market transparency. In its assessment of a number of studies, the Commission concluded that personal pricing is still very limited (according to one study, it was found to be prevalent in only 6% of situations). However, it is said to be more likely to prevail with regard to services such as airline and booking websites than with the sale of products such as TVs and shoes. From a competition law perspective, Article 102 TFEU could apply to provide the rationale for the abuse of market power in two ways: (1) personal pricing could constitute “discrimination”; or (2) could lead to “excessive prices”. However, it is open to question whether these theories of harm could easily be applied in the absence of particular supporting circumstances. Other areas of law possibly relevant to personal pricing include EU consumer protection law and EU data protection law. Comment: Given the prevalence of personal data, it may come as a surprise that personal pricing is a commercial practice that is not used more widely, especially given that one would expect online sellers to exploit customers’ interest in their products and services more noticeably. It is obvious, for instance, that data of the customer reviewing a product or service repeatedly online can lead to anticipated incremental price increases. However, arguably such strategy works only with products where prices fluctuate (e.g., airplane tickets, transportation apps such as Uber), as there is no fixed price that consumers can use as a benchmark for value. From a competition law point of view, personalised pricing may not constitute an area of great concern. For example, the charging of personalised prices renders collusive behaviour difficult to sustain – which is clearly pro-competitive. Similarly, establishing an abuse of market power may prove to be a difficult task. Price discrimination, namely, the sale of the same product to different buyers at different prices, only infringes competition law where that discrimination has an anti-competitive effect on competition and where the price difference is not objectively justified (e.g., by differences in costs or different patterns of demand). It needs to be considered, therefore, how far the justification of different demand patterns cannot also apply to personalised pricing. If in the medium term one reaches the conclusion that personal pricing is problematic, consideration could be given to drawing a distinction according to which the practice is permissible for non-dominant undertakings and (potentially) problematic for dominant firms. Perhaps the answer to the dilemma expressed in the relation to Article 102 TFEU lies in whether or not a dominant firm has introduced appropriate “transparency” measures in order to ensure that consumers are not misled or trapped into making irrational economic decisions because of circumstances beyond their control. Such price warnings are commonplace in sector-specific regulatory requirements. It would therefore not be stretching unduly a number  of provisions under national competition rules which already contain significant consumer protection mechanisms as the basis for intervention for personalized pricing where there is a lack of transparency of the essential terms of trade; this would seem to be a logical extension of the concept of ‘unfair’ in Article 102 TFEU. 3.   The suspensory effects of merger notifications and gun-jumping practices The recent fine of EUR 124.5 million which the Commission imposed on the merging parties in the Altice/PT Portugal merger for violating the EU merger “standstill” obligation is the latest chapter in the development of a competition law standard with which to review so-called “gun-jumping actions” (i.e., commercial actions which circumvent the suspensory effect of a pending merger clearance decision by proceeding to enact the modified merger transaction in practice).[18] In its gun-jumping paper, the Commission provides a concise overview of relevant case-law, emphasising that: To secure the effectiveness of the EU Merger Control regime and to facilitate the enforcement of a possible prohibition Decision, the EUMR  confers upon the Commission the power to impose on companies fines of up to 10% of their annual turnover when they fail to notify a transaction or to implement the transaction before the Commission has declared it to be compatible with the common market. Where an already implemented transaction is later prohibited, the Commission can order the parties to unwind the merger. In order to investigate whether there has been a violation of the requirement to notify the transaction and not to close before clearance, the Commission can issue Requests for Information and can carry out on-site inspections. The Commission sanctioned a breach of the “standstill” obligation and issued a fine of EUR 20 million in Electrabel’s acquisition of Compagnie Nationale du Rhone[19], finding that Electrabel had acquired decisive influence over the target before notification had occurred. The Commission’s Decision was upheld by both the General Court and the Court of Justice. In Marine Harvest/Morpol[20], the Commission held that, despite a minority shareholding of 48.5%, de facto control had been acquired before notification due to the acquirer’s past attendance rate at shareholders meetings. Only after Marine Harvest had made a public bid for the remaining shares did it notify the transaction, which ultimately received conditional approval. A fine of EUR 20 million was imposed, which was upheld by the General Court[21], while a further appeal to the Court of Justice is pending. In the acquisition of PT Portugal by Altice, gun-jumping resulted in a significantly higher fine of EUR 124.5 million being imposed. The contracts foresaw far-reaching veto rights for the acquirer that were in excess of those necessary to protect the value of the target business. Altice also exercised these rights, and the parties exchanged commercially sensitive information without appropriate safeguards in place (such as the establishment of a clean team). An appeal is pending before the EU Courts against the Commission’s Decision. Comment: The EC’s submission illustrates how recent practice has given weight to the “standstill” obligation in recent years. Record fines such as the one imposed on Altice have brought the obligation not to implement a merger before clearance is obtained on most firms’ radar. In addition, the case precedents bring greater legal certainty to an area that is still in its relative infancy. For example, this year’s ruling of the Court of Justice in the Ernst & Young Case made it clear that the suspension obligation is limited to actions that directly cause a change of control over the target company, whereas the Commission had consistently argued in its administrative practice in favour of a much wider understanding of the prohibition on gun-jumping.[22] The Ruling in Ernst & Young, while welcomed by practitioners, signals a sharp shift in emphasis when compared to existing Commission practice and recent national precedents. Seen in this light, it is to be hoped that the Ernst & Young Judgment is applied fully by the Commission in its administrative precedents which will follow. The Commission’s failure to accord due weight to that Judgment, while at the same time reverting to an emphasis on its prior practice, would leave some practitioners uncomfortable.[23] 4.   Quality considerations in the zero-price economy EU competition rules apply both to services for which a price is charged and to those services provided free of charge, especially those over the Internet. However, as most of the analytical frameworks traditionally used in competition analysis rely on price or output as primary competition parameters, the fact that today an increasing number of services are offered free of charge requires Competition Authorities to take due account of non-price parameters such as quality, choice, innovation and even privacy. Traditional tests therefore have to be adapted in order to reflect the realities of the “zero-price” economy. In its paper, the Commission presents its views on how the “zero-price” economy affects issues such as market definition, competitive assessment and the appraisal of defences based on efficiencies. The Commission’s key positions are as follows: A fundamental analytical element of any competitive analysis is the process of market definition, by which markets are primarily defined by the price elasticity of demand. Under this traditional analysis, one asks whether customers would switch from product A to product B in the case of a non-transitory price increase of 5-10% (small but significant non-transitory increase in price, “SSNIP”). However, given that price is not a suitable parameter for comparison in a “zero-price” economy, the Commission proposes to use a modified version of this test, which asks whether customers would switch from service A to service B in case there was a “small but significant non-transitory decrease in quality” (“SSNDQ”). This standard has already been applied in the Commission’s recent Google Android Case.[24] For the next stage of the analysis – the calculation of market shares – the Commission proposes to resort to the shares of transaction volumes or to shares measured by number of users (taking into account the existence of multi-homing and the number of dormant users). For its substantive assessment, the Commission suggests focusing on harm to quality. In the online advertising-supported sector, harm to quality does not only mean a loss of quality in the service itself but also relates to the additional costs that the consumer must bear in order to use the service; it could be the case, for example, that content becomes more difficult to access due to screen space being captured by advertising (which means that the consumer has to scroll more, to close the advertising, or to wait until reviewing the content). It may also become more difficult to distinguish between advertisements and actual “content”, as is the case with “native” advertising or the content affected by “influencers” (i.e., influential users of social media that are paid to advertise certain products to their follower base). Furthermore, some consumers may value the degree and means by which data is collected as a parameter of quality. It is therefore worth considering not only how much data firms collect but how this data is protected. Online advertising also creates costs for consumers due to increased data traffic and battery usage. It is worth remembering, however, that harm to quality can be offset or outweighed under a successful efficiency defence. The Commission has previously undertaken quality assessments in the context of “zero-price” services.[25] In all instances, it has been the reduction of consumer choice that has led the Commission to conclude that the conduct in question had an exclusionary effect, resulting in each case in less innovation and less competition in relation to quality. In the field of merger control, the Commission has already considered “zero-price” environments, most notably in Microsoft’s acquisitions of Yahoo Search Business, Skype, Nokia and LinkedIn, as well as in Facebook’s acquisition of WhatsApp.[26] In those cases, the Commission analysed possible negative effects on innovation, data protection and privacy which might stem from the notified transaction. In terms of efficiencies, the Commission found that the merging parties sometimes struggle to quantify non-price efficiencies, often relying on the achievement of economies of scale to justify their acquisitions.[27] Comment: After a number of “field tests”, such as the application of the “SSNDQ test” in cases involving tech companies, the Commission now provides a helpful if embryonic overview of its approach to the application of some of the necessary analytical steps. This is helpful for firms to better understand the Commission’s analysis and focal points of interest when investigating mergers or when conducting infringement proceedings. It remains to be seen, however, whether most of the suggestions which the Commission makes to its analytical framework will be considered appropriate by the European Courts. III.   Conclusion The Commission papers presented at the OECD’s Competition Forum are useful contributions to a number of legal topics, providing insights into the Commission’s current thinking and valuable guidance to the competition community. As regards the papers on procedural issues, three of them relate to the process of information-gathering. Due to the ever-growing amount of digital communications and collection of personal data, the need for this focus appears clear. The two papers on the Commission’s investigate powers show Competition Authorities’ growing need to have access to and be able to evaluate large amounts of data in order to fulfil their mandates. Both investigative tools, in the form of dawn raids and RFIs, have to be applied and adapted in light of the challenges posed by current technological developments. In turn, shaping the contours of LPP continues to be an extremely important issue. The answer to the question of which types of communication benefit from LPP needs to be kept under review, as the increasing amount of digitally stored communications means that there are more and more documents that may contain privileged content. The paper on EU-wide regional cooperation reminds us that infringements under EU competition rules are seldom limited to a single jurisdiction and that, therefore, a system needs to be in place that guarantees both that Competition Authorities can address anti-competitive conduct effectively and that firms are incentivized to self-report such behaviour. Two of the four substantive papers adopt a similar focus. Both the submission on personalized pricing and quality considerations in a “zero-price” economy consider topics that are driven by the collection of data on consumer behaviour, provided in return for free-of-charge online services. It is noteworthy in this regard that personalized pricing may be an issue that can be addressed more from a consumer policy and fairness perspective, rather than on the basis of competition law alone. While personalized pricing has not raised significant issues thus far, by contrast “zero-price” services already raise critical questions about fundamental competition issues such as market definition. Given the Commission’s first experience in cases concerning high-tech companies, the Commission has taken up this latter challenge to develop its thinking in a way that preserves its effectiveness in the Internet world. The contribution on price hikes in pharmaceutical markets reminds us that the issue of excessive prices will remain on the agenda, irrespective of the intrinsic difficulties in determining which prices are “unfair” or “excessive”. The paper on gun-jumping goes hand in hand with heightened interest in enforcement activities that can have huge financial repercussions on companies.    [1]   The OECD’s yearly Global Competition Forum is one of the largest conferences for and by competition officials. Over 100 Competition Authorities, international organisations and invited experts worldwide participate in the Forum each year. Participation is by invitation only and restricted to officials from Competition Authorities, government agencies and international/regional organisations.    [2]   Case 155/79 – AM & S v Commission.    [3]   The umbrella term used in EU legal parlance for any form of recognised entity with legal personality is “undertaking” (which can even be an individual).    [4]   DG Competition’s Hearing Officer, whose post was introduced to enhance impartiality and objectivity in competition proceedings, is responsible for organizing and conducting oral hearings and acting as an independent arbiter when a dispute about the effective exercise of procedural rights between parties and DG Competition arises. The Hearing Officer intervenes only when a dispute cannot be resolved by the parties and DG Competition. The Hearing Officer also decides on applications to be heard by third parties in the proceedings.    [5]   Case COMP/E-1/39.612 – Perindopril (Servier).    [6]   For the ECN+ Directive Proposal, refer to http://ec.europa.eu/competition/antitrust/nca.html.    [7]   The principle is enshrined in Article 6 of the new ECN+ Directive Proposal. The provision is intended to empower Member States’ Competition Authorities to be more effective enforcers. The Proposal aims to ensure that, when applying EU antitrust rules, all National Competition Authorities have the appropriate enforcement tools available. To that end, the Proposal provides for minimum guarantees and standards. Refer to http://ec.europa.eu/competition/antitrust/nca.html.    [8]   This consists of seizing relevant documents without inspecting them right away.    [9]   Article 11 of EUMR. [10]   Article 6 of the European Convention on Human Rights gives citizens the right to a fair trial. There is no explicit reference to self-incrimination. However, the European Court of Human Rights has interpreted this to include the right to remain silent and the privilege against self-incrimination. [11]   Article 14 of EUMR. [12]   Ibid. For example, the Commission recently fined an undertaking EUR 110 million for providing false or misleading information in a merger control procedure; see Case M.8228 – Facebook/WhatsApp. [13]   Competition and Markets Authority, Case CE/9742-13 Unfair pricing in respect of the supply of phenytoin sodium capsules in the UK (7 December 2016). [14]   Decision A480 of the Autorità Garante della Concorrenza e del Mercato of 29 September 2016 [15]   Decision of the Konkurrence- og Forbrugerstyrelsen of 31 January 2018. [16]   See press release at http://europa.eu/rapid/press-release_IP-17-1323_en.htm. [17]   Opinion in Case C-177/16. [18]   Case M.7993 – Altice/PT Portugal. [19]   Case M.4994 – Electrabel/Compagnie Nationale du Rhône. [20]   Case M.7184 – Marine Harvest/Morpol. [21]   Case C-10/18 P – Marine Harvest ASA vs the European Commission. [22]   Case C-633/16 – Ernst & Young. [23]   See Caspary, Tobias and Flandrin, Julie, Ernst & Young: First Guidance on Gun-jumping at EU Level, ECLR 9(8), 2018. [24]   Case AT.40099 – Google Android (not yet published). [25]   See abuse cases regarding Microsoft’s Media Player/Internet Explorer (Case COMP/C-3/37.792 – Microsoft) as well as Google Shopping (Case AT.39740 – Google Search [Shopping]) and Google Android. [26]   Cases M.5727 – Microsoft/Yahoo! Search Business; M.6281 – Microsoft/Skype; M.7047 – Microsoft/Nokia; M.8124 – Microsoft/LinkedIn. [27]   See Case M.5727 – Microsoft/Yahoo! Search Business. The following Gibson Dunn lawyers assisted in preparing this client update: Peter Alexiadis, David Wood, Balthasar Strunz and Christoph Raab. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition practice group, or the following lawyers in Brussels: Peter Alexiadis (+32 2 554 7200, palexiadis@gibsondunn.com) David Wood (+32 2 554 7210, dwood@gibsondunn.com) Please also feel free to contact any of the following practice group leaders and members: Brussels Peter Alexiadis (+32 2 554 7200, palexiadis@gibsondunn.com) Jens-Olrik Murach (+32 2 554 7240, jmurach@gibsondunn.com) Lena Sandberg (+32 2 554 72 60, lsandberg@gibsondunn.com) David Wood (+32 2 554 7210, dwood@gibsondunn.com) London Patrick Doris (+44 20 7071 4276, pdoris@gibsondunn.com) Charles Falconer (+44 20 7071 4270, cfalconer@gibsondunn.com) Ali Nikpay (+44 20 7071 4273, anikpay@gibsondunn.com) Philip Rocher (+44 20 7071 4202, procher@gibsondunn.com) Deirdre Taylor (+44 20 7071 4274, dtaylor2@gibsondunn.com) Munich Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) Hong Kong Kelly Austin (+852 2214 3788, kaustin@gibsondunn.com) Sébastien Evrard (+852 2214 3798, sevrard@gibsondunn.com) Washington, D.C. 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Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

January 22, 2019 |
Law360 Names Gibson Dunn Among Its Competition 2018 Practice Groups of the Year

Law360 named Gibson Dunn one of its six Competition Practice Groups of the Year [PDF] for 2018. The practice group was recognized for scoring important wins for clients in high-stakes antitrust litigation last year. The firm’s Competition practice was profiled on January 22, 2019. Gibson Dunn’s Antitrust and Competition Practice Group serves clients in a broad array of industries globally in every significant area of antitrust and competition law, including private antitrust litigation between large companies and class action treble damages litigation; government review of mergers and acquisitions; and cartel investigations, internationally across borders and jurisdictions.

January 18, 2019 |
Gibson Dunn Ranked in Legal 500 Asia Pacific 2019

Gibson Dunn has been recognized in 12 categories in the 2019 edition of The Legal 500 Asia Pacific. The Singapore office was ranked in the following Foreign Firms categories: Banking and Finance, Corporate and M&A, Energy and Restructuring.  The Hong Kong office was ranked in the Antitrust and Competition, Corporate (including M&A), Private Equity, Projects and Energy, and Regulatory: Anti-Corruption and Compliance categories.  Additionally, the firm was ranked for its work in India, Indonesia and the Philippines.  Brad Roach was named as a Leading Lawyer in the Singapore: Energy – Foreign Firms and Indonesia: Foreign Firms categories; Kelly Austin was named as a Leading Lawyer in the Hong Kong: Regulatory: Anti-Corruption and Compliance category; Michael Nicklin was named as a Leading Lawyer in the Hong Kong: Banking & Finance category; Scott Jalowayski and Brian Schwarzwalder were named as Leading Lawyers in the Hong Kong: Private Equity category; and Troy Doyle was named as a Leading Lawyer in the Singapore: Restructuring & Insolvency – Foreign Firms category; and John Fadely and Albert Cho were named as Leading Lawyers in the Hong Kong: Investment Funds category. Youjung Byon has also been named as a Next Generation Lawyer for Hong Kong: Investment Funds.