The IG is comprised of 13 worldwide “protection and indemnity” clubs of ship owners, which together provide insurance to approximately 93 percent of ocean ships.

The Commission is concerned that certain provisions in the IG’s marine-insurance agreements may restrict competition by blocking commercial insurers or other mutual P&I insurers from the relevant market by restricting access to ship owners.  The Commission stated that it “fears that the provisions at stake in the agreements … may harm ship owners and the insurers that are not members of the IG.”

The provisions at issue involve claim-sharing and joint-reinsurance agreements as well as rules which govern the contractual relationships between the clubs and their members. 

The probe follows the recent expiration of a 10-year antitrust exemption enjoyed by the P&I agreements under European Union regulations.  Although the EU in April again created certain antitrust exceptions for the insurance industry, the P&I agreements were not included among them because their market share rises far above the 20-25 percent maximum provided for by EU competition regulations.

In response to the investigation, the IG stated that “there have been no relevant or material changes to the arrangements or in the market for P&I cover” since regulators last reviewed the agreements in 1999. 

The Commission launched the investigation on its own initiative, even though there have been no complaints regarding these agreements.  There is currently no deadline for completing the investigation.

On July 26, 2010, the European Commission opened two formal investigations of International Business Machines Corp. (IBM) to probe allegations of IBM’s anticompetitive behavior in the mainframe computer market.  These investigations come on the heels of the investigation launched in October 2009 by the U.S. Department of Justice regarding IBM’s mainframe business.

The EC opened one of the investigations to determine whether IBM has engaged in practices designed to shut out competition for supplying maintenance services for mainframes.  In particular, the EC suspects that IBM may have been “restricting or delaying access to spare parts for which IBM is the only source” in order to stamp out competitors.

The second investigation is looking into whether IBM is improperly tying its mainframe operating system to its mainframe hardware.  Before the investigation had commenced, software emulator providers T3 and TurboHercules had filed complaints alleging that IBM’s tying practices are unfairly preventing customers from using IBM’s mainframe operating system on non-IBM hardware.

According to the EC, approximately 8.5 billion euros ($11 billion) worldwide and roughly 3 billion euros ($4 billion) in Europe were spent in 2009 on new mainframe hardware and operating systems.

The immunity allows the members of the so-called Oneworld Alliance – including British Airlines, American Airlines, and Iberia of Spain – to coordinate on prices, capacity, and service.  The U.S. approval follows on the heels of a similar grant from the European Commission the week before.

Both the U.S. and the E.U. have conditioned immunity on the Oneworld Alliance members’ giving up coveted takeoff and landing positions at Heathrow airport for flights departing to the United States.  But the airlines seem to believe that this sacrifice will be worth the advantage they will gain from partnering with one another.  The Oneworld Alliance will compete against two other global competitors that already have antitrust immunity – Star Alliance (made up of Lufthansa and United/Continental, who have announced a merger) and SkyTeam (made up of Delta Air Lines and Air France-KLM.)

These global partnerships are changing the face of airline competition.  Rather than one airline competing against the others serving the same region, these global alliances will compete against one another.  This will particularly impact corporate travel buyers, who tend to negotiate with the alliances.  Proponents of these ventures argue that forging an alliance, and gaining global reach, keeps the airlines competitive with what business travelers need.

Of course, this means that airlines left without global partners may be at a distinct disadvantage, as critics of the U.S. and E.U.’s actions would be quick to point out.  Virgin Atlantic’s Richard Branson, for example, has been an outspoken critic of the Oneworld Alliance.  Virgin Atlantic has no global partners.

Because of significant differences between the assets involved in the American and European aspects of the deal, however, it seems likely that U.S. regulators will continue to scrutinize the venture more rigorously.

Comcast is America’s largest cable company and second largest internet service provider.  NBC owns major stakes in television, film, and cable programming as well as a major share in online streaming television service Hulu.  Under the deal, announced December 3, 2009, Comcast would buy a majority stake in NBC from its parent, General Electric.  As a result, Comcast and NBC would form a joint venture owned 51% by Comcast and 49% by NBC; Comcast would also manage the venture.  The deal is valued at $37 billion.

The European Commission has announced that the deal “would not significantly impede effective competition in the European Economic Area or any substantial part of it.”  But they pointedly noted that in Europe, unlike in the U.S., Comcast owns no cable assets.  Thus in Europe the deal creates no vertical relationship between a Comcast cable distribution platform and NBC’s programming assets.  Such a relationship would, however, result from the U.S. portion of the deal.

This vertical relationship was one of several concerns raised by opponents of the deal in a public comment period offered by the U.S. Federal Communications Commission, which has jurisdiction to review the deal.  The venture’s opponents believe it will lead to higher cable bills, fewer independent programmers and less public-service programming.  Comcast and NBC will formally respond to the public comments later this month.  But they have already argued that the deal would be a boon to consumers by improving broadcast operations, pressuring cable networks to lower prices and improve quality, and speeding the development of “anytime, anywhere” video service.  And they say the post-venture NBC would still only account for 12% of national cable network advertising and affiliate revenues, hardly enough to dominate cable advertising.

The FCC and the U.S. Justice Department, which shares jurisdiction over the deal, are expected to decide by year-end whether to approve or deny the deal or approve it with conditions, such as asset divestitures.

The cartel consisted of Knauf Gips KG, France’s Lafarge SA, Britain’s BPB Plc, and Belgium’s Gyproc Benelux.  The decision upholds part of the European Commission’s November 27, 2002, total fine of 478.32 million euros (approximately $605 million) imposed on the four companies. 

The fines stem from the cartel’s price-fixing of plasterboard for builders in Germany, Britain, France, Belgium, the Netherlands and Luxembourg between 1992 and 1998.  The Commission found that the companies implemented their cartel through a clandestine system that exchanged information and monitored the market to avoid competition.

A few weeks ago, on June 17, 2010, the ECJ upheld a fine of 249.6 million euros (approximately $300 million) against Lafarge for its role in the cartel.  As part of that decision, the ECJ found that the Commission had correctly doubled the fine against Lafarge based on Lafarge’s prior infringement of competition laws.

The Commission fined AstraZeneca 60 million euros ($74 million), which the Court reduced to the still significant amount of 52.5 million euros. 

The Court found that between 1993 and 2000, pharmaceutical giant AstraZeneca engaged in anticompetitive behavior in order to preserve its market dominance and prevent generics from entering the market.  AstraZeneca’s scheme was wildly successful.  By 2000, Losec was the world’s highest-selling drug with global sales exceeding $6 billion. 

AstraZeneca was found to have shielded its drug from competition by misleading European patent authorities into granting it additional periods of patent protection.  To gain these additional periods, AstraZeneca told the patent authorities in various European countries that it did not receive approval to market Losec until1998.  The trouble is, AstraZeneca actually received approval in 1997, yet concealed this information from the patent authorities. 

The Court also found that AstraZeneca attempted to block generics from entering the market by changing the form in which Losec was sold from capsule to tablet.  Competing pharmaceutical companies are able to introduce generic versions of brand-name drugs into the market only if the original product is still for sale.  To keep generics off the trail, AstraZeneca asked various European countries to actually withdraw their approval of the capsule form in favor of the new tablet form that AstraZeneca had developed.  The Court found that this was yet another of AstraZeneca’s anticompetitive tactics aimed at creating a roadblock to a rival company introducing a generic version of their blockbuster drug.

In 2008, the European Commission began a probe into the name-brand versus generic rivalry, finding that drug companies routinely engage in anticompetitive practices to shield their name-brand drugs from competition by generics.  The Court’s upholding of the Commission’s ruling against AstraZeneca will provide the Commission with strong precedent to help stop pharmaceutical companies from engaging in such anticompetitive behavior.

Canada’s Minister of Finance, Jim Flaherty, has announced the launch of a new Task Force for the Payments System Review.  As Flaherty commented, consumers today can make payments in “a bewildering number of ways, even by tapping a cell phone against a scanner.”

One of the Task Force’s main goals will be to figure out how to introduce these new payment technologies without compromising Canadian safety and efficiency or consumer protection.  The Task Force is gearing up to provide recommendations to the Minister by the end of 2011. 

The Task Force’s mandate includes: (1)”[i]dentify[ing] public policy objectives to be pursued in the operation and regulation of the payments system;” (2) “[i]dentify[ing] and assess[ing] the regulatory and institutional structures best suited to achieving those public policy objectives;” (3) “[a]ssess[ing] and report[ing] on the safety and soundness of the Canadian payments system;” (4) “[a]ssess[ing] the competitive landscape for current participants by identifying any potential barriers for new entrants and mechanisms to improve the competitive landscape of the domestic payments system;” (5) “[a]ssess[ing] the degree of innovation in the domestic payments system and report[ing] on the challenges and opportunities to bring new and innovative products to market in Canada;” and (6) “[a]ssess[ing] and report[ing] on whether consumers and merchants are well served by the domestic payments system.”

The Task Force is chaired by Patricia Meredith, a Professional Associate and Senior Adviser to financial services and technology companies with the consulting firm Monitor Group, an Adjunct Professor at York University’s Schulich School of Business, and former Executive Vice President of corporate strategy and member of the Senior Executive at Canadian Imperial Bank of Commerce.

China’s National Development and Reform Commission (“NDRC”) of China has levied fines and administrative penalties against more than 20 producers of rice noodles.  This enforcement action represents the first application of Article 13 of China’s Anti-Monopoly Law against a price-fixing cartel.  According to media reports, the local Guangxi counterpart of the NRDC led the enforcement efforts.

The cartel involved competing rice noodle producers in the cities of Nanning and Liuzhou.  The first cartel began in November of 2009 in the city of Nanning and continued until January 2010.  During that time, competitors held a series of meetings that led 18 noodle producers to agree to increase prices of rice noodles. Soon thereafter, a second cartel formed in the nearby city of Liuzhou that lead 15 noodle producers to reach agreement to raise prices.  After consumer protests, the NRDC began its investigation, which eventually resulted in publication of China’s first public infringement decision under the Chinese Anti-Monopoly Law on March 30, 2010. 

The fines ranged from 100,000 RMB (approximately $14,700 U.S. dollars) to 800,000 RMB (approximately $117,800 U.S. dollars).  Reports have also indicated that some producers took advantage of China’s leniency program and only received warnings.  China’s Price Law also played a role as local enforcement agencies restored rice noodle prices to pre-cartel levels.

The B.C. Court of Appeal’s earlier decision certifying a class of direct and indirect purchasers of DRAMs (semiconductor memory chips also known as “dynamic random access memory”) remains therefore the definitive pronouncement on the law on class certifications in competition cases in Canada.  As previously discussed, the B.C. Court of Appeal’s decision lowered somewhat the threshold for class certification –allowing plaintiffs at the certification stage to show a “credible and plausible methodology” for addressing damages on a class-wide basis and finding that the certification judge had erred when he subjected plaintiff’s expert to “rigorous scrutiny.”

The B.C. Court of Appeal had found that it could be possible for plaintiffs to prove that the manufacturers benefitted from their wrongful conduct, and thus prove liability on a class-wide basis as a common issue.  The Court of Appeal had noted that guilty pleas to the conspiracy charges in the United States and manufacturers’ agreements to pay fines calculated as a function of the gross pecuniary gain they derived from the crime amounted to “admissions that they engaged in the wrongful conduct alleged by the appellant and that they obtained an unlawful benefit from that conduct.”

Time will tell whether the decision will result in more competition class action proceedings in Canada – a country where there have been very few contested competition class action certification hearings to date.

Bundeskartellamt President Andreas Mundt spoke strongly about the need for antitrust regulation, saying that “cartels … are highly damaging to society and therefore have to be rigorously prosecuted” and noting that “coordinated price increases for consumer goods such as coffee have a direct impact on consumers’ wallets,”

The Bundeskartellamt is  assessing a fine for the German Coffee Association (GCA) and 10 employees.  The eight coffee roasters (Tchibo GmbH, Kraft Foods Außer Haus Service GmbH, J.J. Darboven GmbH & Co. KG, Melitta SystemService GmbH & Co. Kommanditgesellschaft, Luigi Lavazza Deutschland GmbH, Seeberger KG, Segafredo Zanetti Deutschland GmbH and Gebr. Westhoff GmbH & Co. KG) include local units of two U.S. companies, Kraft Foods Inc. and Luigi Lavazza SpA. 

According to the Bundeskartellamt’s investigation, from at least 1997 through mid-2008, a group of directors and sales managers at the roasters within the GCA coordinated price hikes and cuts – but mostly hikes – for roasted coffee supplied to restaurants, caterers, hotels, vending machine companies and other bulk consumers.

The Bundeskartellamt has a Leniency Programme, which allows for fines to be waived or reduced for cartel members who report price-fixing or cooperate.  It was a leniency filing from cartel member Alois Dallmayr Kaffee OHG that triggered the Bundeskartellamt’s investigation in the first place, and it has escaped a fine as a result.  Two other coffee makers – Melitta and Darboven – cooperated with the investigation and have apparently received reduced penalties as a result, though the amount of the fines for each cartel member have not been released.  The GCA has admitted liability and said it regretted the infringement in a separate statement.

German law allows the Bundeskartellamt  to fine member companies up to 10 percent of their revenues from the previous fiscal year if they uncover a cartel in the course of an investigation.  With the potential for such a mammoth fine, it is not surprising that six of the companies and their employees have already agreed to settle the regulator’s claims instead of fighting. 

This week’s activity is part of increased scrutiny the Bundeskartellamt has placed on the coffee industry in Germany in recent years.  Though this investigation has only been underway since 2009, the Bundeskartellamt already fined three of the coffee roasters (Tchibo, Melitta and Alois Dallmayr) and six of their employees approximately 159.5 million euros in December based on a similar price-fixing cartel in the retail sector that allegedly ran from early 2000 until July 2008.  A separate investigation into cappuccino makers based on similar price-fixing suspicions remains underway, and is expected to be completed soon.