Failing firm defence

Anticompetitive practices

A US District Court allows a plea of nolo contendere, while retaining full discretion at sentencing to impose any penalty and fine against a price-fixing conspiracy engaged by an air cargo carrier (Florida West)
King & Wood Mallesons (Sydney)
This article was originally published on In Competition by King & Wood Mallesons (click here). US District Court blows full time on cartel proceedings against Florida West* The District Court has made the rare decision to accept a plea of no contest from airline Florida West, ending the (...)

Mergers

The Australian Competition and Consumer Commission opposes the proposed acquisition in the radiology industry (Delta Imaging / Sonic Health)
Australian Competition and Consumer Commission
ACCC to oppose Sonic’s acquisition of the assets of Delta Imaging Group* The Australian Competition and Consumer Commission has announced it will oppose the proposed acquisition by Sonic Healthcare Limited (Sonic) of assets of Delta Imaging Pty Limited (in liquidation), Delta Imaging Maitland (...)

The Competition Tribunal of South Africa approves a merger in the petrochemical and mining sector within four hours of receiving the Competition Commission’s recommendation (Stefanutti Stocks / Energotec)
Nortons Incorporated
South African Competition Tribunal approves merger in record time of 4 hours* The South African Competition Tribunal received notice of, heard and approved the acquisition by construction firm, Stefanutti Stocks (Pty) Ltd, of Energotec, which is a division of First Strut (Pty) Ltd, and (...)

The German Competition Authority clears the acquisition of a fireworks business by one of the major domestic suppliers (FKW Keller / Comet Feuerwerk)
German Competition Authority (Bonn)
Bundeskartellamt clears acquisition of fireworks importer FKW Keller, Bochum, by Comet Feuerwerk GmbH, Bremerhaven, in the first phase of merger control* The Bundeskartellamt has cleared the acquisition of the fireworks business of FKW Keller, Bochum, by Comet Feuerwerk GmbH in preliminary (...)

The UK OFT clears acquisition in the broadcasting sector (BT / ESPN)
DLA Piper
The Office of Fair Trading (OFT) has cleared British Telecoms plc’s (BT) proposed acquisition of ESPN Global Ltd (ESPN), despite finding that the failing firm defence was not fulfilled. Factual Background ESPN was a wholly owned subsidiary of the US based television sports broadcaster ESPN (...)

The German Competition Authority clears acquisition of a publishing business of the daily newspaper from an insolvent publishing house (Frankfurter Allgemeine Zeitung / Frankfurter Rundschau)
German Competition Authority (Bonn)
Bundeskartellamt clears acquisition of Frankfurter Rundschau by FAZ* Today the Bundeskartellamt has cleared plans by Frankfurter Allgemeine Zeitung GmbH or rather Frankfurter Societät GmbH, to acquire the publishing business of the daily newspaper Frankfurter Rundschau from the insolvent Druck- (...)

The German Competition Authority prohibits hospital merger, rejecting failing firm defence (Klinikum Worms / Hochstift hospitals)
Van Bael & Bellis (Brussels)
On 5 October 2012, details were published concerning a 5 September 2012 decision by the German Federal Cartel Office (“FCO”) prohibiting a proposed merger between two hospitals in Worms, a city on the west bank of the Rhine River in southwest Germany. According to the FCO, the proposed (...)

The UK OFT accepts commitments offered by a party to a completed acquisition in lieu of referring the case to the Competition Commission (Vue Entertainment International / Apollo Cinemas)
Herbert Smith Freehills (Brussels)
In May 2012 Vue Entertainment International Limited ("Vue") acquired sole control of Apollo Cinemas Limited ("Apollo"). In its decision of 24 August 2012 published in October 2012, the Office of Fair Trading ("OFT") stated that the acquisition had resulted or may be expected to result in a (...)

The EU Commission blocks a merger as its clearance would have resulted in a quasi-monopoly on the Greek air transport market (Olympic Air / Aegean Airlines)
University of East Anglia - CCP (Norwich)
Article published on Centre for Competition Policy blog. EU Commission Steers Clear of another Antitrust Disaster in Greek Air Transport, but for how long?* This month, the European Commission blocked the proposed merger between Greece’s two main airlines, Olympic Air and Aegean Airlines. What (...)

The Brazilian Council for Economic Defense clears merger between two ammunition companies resulting in monopolization of the relevant market (CBC/Rossi)
Tauil & Chequer (in cooperation with Mayer Brown)
The author gives thanks to Ms. Natali de Vicente Santos, who gave support in research that was very useful to build this article. I. Summary of the case For the first time, CADE applied the “declining markets” argument to justify that the transaction between two ammunition companies was not (...)

The US FTC sues to undo completed acquisition in the healthcare industry approved by bankruptcy court (LabCorp, Westcliff)
Jones Day (Washington)
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Jones Day (Washington)
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Jones Day (Washington)
The Federal Trade Commission has filed an administrative lawsuit seeking to undo Laboratory Corporation of America’s (« LabCorp ») acquisition of Westcliff Medical Laboratories, Inc. (« Westcliff »). According to the agency’s December 1 complaint, the merger will substantially lessen competition (...)

The US DoJ requires rescission of a merger-to-monopoly and puts conduct remedies in place to ensure competition in the market for local newspapers in a city in West Virginia (Daily Gazette / MediaNews)
Akin Gump Strauss Hauer & Feld (Dallas)
The DOJ entered into a consent decree with two local West Virginia newspaper owners, requiring them to rescind a merger three years after its consummation. The Daily Gazette Company and MediaNews Group, Inc. had entered into a two-to-one merger, creating a monopoly from the only two local (...)

The Hungarian Competition Office clears concentration between two major salami producers (Bonafarm (Pick)/Herz)
lakatos, koves and partners
In December 2009, Bonafarm Zrt. (Bonafarm), and Herz Szalámigyár Zrt.(Herz) concluded asset transfer agreements for the transfer of all the assets of Herz, including trademarks, used for the production of salami. Herz, originally founded in 1888, was the second largest salami manufacturer in (...)

The US FTC employs a creative remedy, requiring the offer of divestiture to determine the existence of a viable alternative purchaser, before approving the merger of acute care hospitals (King’s Daughters Hospital / Scott & White)
Cleary Gottlieb Steen & Hamilton (Cologne)
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Cleary Gottlieb Steen & Hamilton (Washington)
After a decade of what was perceived by many as relatively restrained merger enforcement, the Obama administration has repeatedly and vocally vowed to “reinvigorate antitrust enforcement” and to “take effective action to stop or restructure mergers that are likely to harm consumer[s]”. Many (...)

The US FTC requires an unusual method of testing for a less anticompetitive purchaser by offering the sale before completing the requisite due diligence, then clearing the merger in the acute care facilities industry (King’s Daughters Hospital / Scott & White)
Milbank, Tweed, Hadley & McCloy (New York)
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Jones Day
Healthcare reform and concerns about consolidation in the health care industry juxtaposed with continuing economic distress provided a fascinating backdrop for the Federal Trade Commission’s (FTC’s) recent investigation of Scott & White Healthcare’s consummated acquisition of King’s (...)

The UK Competition Commission authorizes the purchase of two distressed local bus operators (Stagecoach Group of Eastbourne Buses - Cavendish Motor Services)
Desogus Law Office (Cagliari)
By a decision taken on 22 October 2009 the Competition Commission (CC) has changed its provisional findings of August and unconditionally cleared the Stagecoach acquisition of two local bus operators in Eastbourne, Eastbourne Buses Limited (EBL) and Cavendish. The CC was referred the (...)

The UK OFT accepts the application of the "Failing Firm Defence" in retail stores acquisition (HMV, Zavvi)
Linklaters (Hong Kong)
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Cadwalader Wickersham & Taft (Brussels)
On 14 May 2009, the Office of Fair Trading (OFT), the UK’s competition agency, allowed an application of the « failing firm defence » under UK competition law, thereby clearing the HMV/Zavvi retail store acquisitions to proceed. The UK is one of the few jurisdictions to have explicitly recognised (...)

The UK OFT refers two mergers in the market for local bus services to the Competition Commission (Stagecoach Group of Eastbourne Buses - Cavendish Motor Services)
Desogus Law Office (Cagliari)
The Office of Fair Trading (OFT) has recently referred to the Competition Commission (CC) two mergers between local bus operators . In October and December 2008, Stagecoach acquired the entire share capital of two Eastbourne local bus operators, first Eastbourne Buses and Cavendish Motor (...)

The UK OFT accepts failing firm defence to clear entertainment retail merger (HMV / ZAVVI)
Herbert Smith Freehills (Brussels)
On 28 April 2009, the Office of Fair Trading (“OFT”) announced that it had decided to clear the acquisition of 15 stores belonging to the Zavvi entertainment retail chain by HMV plc (“HMV”) on the basis that the Zavvi stores were a “failing firm”. The so-called failing firm defence can override prima (...)

The Dutch Competition Authority conditionally clears in phase II an hospital merger based on efficiency arguments (Ziekenhuis Walcheren / Oosterscheldeziekenhuizen)
European Commission - DG COMP (Brussels)
Background to the case More than 3.5 years after the first notification of the merger, the Dutch competition authority (NMa) cleared the merger between Ziekenhuis Walcheren and Oosterscheldeziekenhuizen, two hospitals in Zeeland (the Netherlands). The merger process started in September 2005 (...)

The Turkish Council of State orders stay of execution of Competition Board’s remedies inherent to its conditional clearance decision in daily political newspapers market (Vatan Newspaper/ Dogan Group)
Hewlett Packard (Istanbul)
Background On 10 March 2008, the Turkish Competition Board has conditionally cleared the acquisition of Vatan Newspaper (Vatan) by Doðan Gazetecilik A.Þ. (Doðan Group) - the biggest media holding both in terms of audience and advertisement revenues- , by accepting the “failing company defense”. (...)

The UK OFT publishes a restatement of its position concerning "Failing Firm" Defence in merger reviews
Cadwalader Wickersham & Taft (Brussels)
The UK antitrust authority, the Office of Fair Trading (OFT), published on 18 December 2008 a restatement of its position on the « failing firm » defence in merger reviews. In current economic conditions, this is timely confirmation of the relevant principles and practice. It is also a reminder (...)

The Italian Antitrust Authority approves subject to remedies the airlines merger to monopoly take off: the Alitalia privatization saga nears its conclusion (CAI - Alitalia - Airone)
Freshfields Bruckhaus Deringer
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Eversheds Bianchini (Roma)
On 3 December 2008, the Italian Antitrust Authority (IAA) approved the transaction through which Compagnia Aerea Italiana S.p.a. (CAI) will acquire the operating assets of Alitalia Linee Aeree Italiane S.p.a. (Alitalia) as well as sole control over AirOne S.p.A. (AirOne). Alitalia is the (...)

The British Government is reported to have assured a bank that its aim to create the UK’s largest retail bank would not be subject to competition scrutiny (Lloyds/HBOS)
Compass Lexecon
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Compass Lexecon (London)
Summary On 18 September 2008 Lloyds TSB announced that it was to purchase HBOS, in a move that would create the UK’s largest retail bank . Although such a merger would normally cause serious competition concerns, the Government is reported to have assured Lloyds that the deal would not be (...)

The Turkish competition board, while accepting the failing company defense, clears a merger conditional to remedies in the daily political newspapers market (Vatan Newspaper / Dogan Group)
Erdem & Erdem
The Turkish Competition Board (hereinafter referred to as the “CB”) in its decision numbered 08-23/237-75, dated March 19, 2008 granted conditional authorization for the acquisition of the sole control of Bagımsız Gazeteciler Yayıncılık A.S. and Kemer Yayıncılık ve Gazetecilik A.S. (hereinafter (...)

The German competition authority rejects the failing firm defence and prohibits a merger between two hospital (Mariahilf / Asklepios)
Berlin Freie Universität
I. Background LBK Hamburg GmbH (LBK) is a leading supplier of hospital services in the city of Hamburg. Seven hospitals that stood originally in the sole sponsorship of the city of Hamburg are combined within the LBK. Since a partial privatisation in 2004 LBK is jointly controlled by the (...)

A German court confirms application of merger rules to public hospital operators holding them as economic undertakings (German public hospitals)
Angermann
Summary of the case The judgement of the appellate court Düsseldorf, which was delivered on the 11th of April 2007, decides the challenge of a decision of the Federal Cartel Office regarding a merger between two private companies that operate several public hospitals that are part of the legal (...)

The Czech Competition Office authorises as a rescue operation a merger in the insurance market subject to a capital increase (CPP/Kooperativa)
Gide Loyrette Nouel (Prague)
In this contribution we provide a summary of the Office’s first instance decision authorising an acquisition of an insurance company, Èeská podnikatelská pojiš ovna, a.s. (“CPP”), by another one, Kooperativa, pojiš ovna, a.s.(“Kooperativa”). The Office received a request by Kooperativa to approve its (...)

The French Supreme Aministrative Court rejects the Ministry of Economics’s application of the failing firm defence and annuls the authorisation of the intended merger between two home appliances manufacturers (Philips)
Herbert Smith Freehills (Paris)
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Tech Data
Background. When Moulinex was put into administration in 2001 competitor SEB submitted, amongst others, an offer to purchase Moulinex’ manufacturing sites and trading subsidiaries in France, Spain, Germany and several non-EU countries. SEB was conditionally retained by the judicial (...)

The European Commission gives the green light to the merger between the two existing satellite pay-TV platforms in Italy subject to a complex package of conditions (Newscorp/Telepiù)
European Commission - DG COMP (Brussels)
"The Commission closes probe into pay-TV industry in Italy approving Newscorp/Telepiù merger deal"* On 2 April 2003, after an in-depth investigation, the Commission gave the green light to the merger between the two existing satellite pay-TV platforms in Italy subject to a complex package of (...)

The French Ministry of economics unconditionally authorises the proposed acquisition of a French home appliances manufacturer’s assets by a competitor under the failing firm defence (SEB / Moulinex)
Herbert Smith Freehills (Paris)
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Tech Data
Background. When Moulinex was put into administration in 2001 competitor SEB submitted, amongst others, an offer to purchase Moulinex ’ manufacturing sites and trading subsidiaries in France, Spain, Germany and several non-EU countries. SEB was conditionally retained by the judicial (...)

The French Competition Council advises that the proposed acquisition of the French assets of an appliance manufacturer by one of its competitors should be authorised unconditionally since it does not lead to a strengthening of a dominant position and falls under the failing firm defence (SEB / Moulinex)
Herbert Smith Freehills (Paris)
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Tech Data
The French Competition Council advises that the proposed acquisition by SEB of Moulinex’ French assets should be authorised unconditionally since it does not lead to a strengthening of a dominant position and, in any event, falls under the failing firm defence (SEB / Moulinex) Background. When (...)

The German Competition Authority allows an exemption from the ban on putting the merger into effect (Deutsche Post)
German Competition Authority (Bonn)
Deutsche Post allowed to put merger with trans-o-flex into effect subject to strict obligations* The Bundeskartellamt has lifted the ban on putting into effect the planned increase by Deutsche Post AG (DP AG) of its share in trans-o-flex Schnell-Lieferdienst GmbH, Weinheim (trans-o-flex) from (...)

The European Commission approves the acquisition of Belgian chemical firms by German industrial company, applying the ’failing firm’ defence (BASF/Pantochim/Eurodiol)
European Commission - DG COMP (Brussels)
"BASF/Pantochim/Eurodiol: Change of direction in European merger control?"* In the context of competition policy, probably nothing can be discussed with greater relish than the concept of the rescue package merger, known as ‘failing firm defence’. The debate begins by considering whether a (...)

State Aids

The EU Commission issues a new regulation declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 TFEU
College of Europe (Bruges)
Article published on Lexxion State Aid Blog The New General Block Exemption Regulation: The Cornerstone of the State Aid Regime, 2014-2020* The new GBER at a glance Common Provisions Aid must be transparent Aid must have incentive effect Rules on cumulation Aid measures & awards must (...)

The EU Ministers meeting within the Competitiveness Council adopts a new coal regulation enabling Member States to grant State aid to facilitate the closure of uncompetitive mines until 2018
Bird & Bird (Dusseldorf)
EU Competitveness Council Extends State Aid for Loss-making Coal Mines Until 2018* EU Ministers meeting within the Competitiveness Council on 10 December 2010 adopted a new coal regulation enabling Member States to grant State aid to facilitate the closure of uncompetitive mines until 2018, (...)

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