April 13 2017
Following an anonymous complaint, the Federal Cartel Office (FCO) recently investigated a joint venture between two competitors. The joint venture was active in the production and commercialisation of coal and grill lighters, as were the two parents. Only after the joint venture had given several commitments – one of which was to cease its commercialisation activity – was the FCO satisfied that any restrictions of competition were sufficiently remedied.
Two companies active in the production and commercialisation of coal and grill lighters had set up a 50/50 joint venture that also produced coal and grill lighters. The joint venture also sold lighters on the market, both self-produced lighters and lighters which it had purchased from its parents. The two general managers of the joint venture also held positions within the parents: one general manager was simultaneously shareholder and general manager of one of the parents, and the other was a former shareholder and current employee of the other parent.
The FCO did not have to decide finally on the case since the parties agreed on commitments, but it preliminarily concluded that the joint venture facilitated market coordination between the two parents. This assessment was based on the following considerations:
The FCO therefore applied a presumption according to which both parents would take into account information from the joint venture when deciding on their own market conduct.
Eventually, the joint venture agreed to the following commitments in order to remedy the FCO's concerns:
These commitments limited the joint venture to a mere 'working bench' of the parents and the FCO had no competitive concerns in that regard, applying the European Commission's Horizontal Guidelines:
The decision shows that production joint ventures between competitors are typically treated far more leniently than commercialisation agreements. In particular, the FCO explicitly stated that parents do not usually have an incentive for coordination in case of a mere production joint venture. In contrast, the FCO again applied the presumption in the case law of German courts that a commercialisation joint venture leads to market coordination between the parents if they remain active in the joint venture's markets.
The FCO did not assess competition concerns as regards the competitive relationship between each of the parents and the joint venture. In that regard, the FCO referred to a decision of the Dusseldorf Court of Appeal from 2013, where the court made clear that with view to Paragraphs 36 and 40 of the European Commission Notice on Restrictions Directly Related and Necessary to Concentrations, a joint venture cannot be held to infringe Article 101 of the Treaty on the Functioning of the European Union merely because it does not fully compete with its parents (for further details please see "Prohibition of joint venture – Dusseldorf Court of Appeal grants interim relief").
For further information on this topic please contact Christoff Soltau or Tobias Duhe at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email (firstname.lastname@example.org or email@example.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.
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