Predictions for 2016: Addleshaw Goddard
Bruce Kilpatrick and Rona Bar-Isaac both Partners from Addleshaw Goddard share their predictions for the year:
1. European Commission to ramp up state aid investigations into tax rulings: the Commission has already ordered Luxembourg and the Netherlands to recover €30m in tax repayments from Fiat and Starbucks, following the conclusion of its investigation into rulings dealing with intra-group transfer pricing arrangements, which the Commission believes constituted illegal State aid. In doing so, the Commission is seeking to establish an important legal precedent that the tax rulings (so-called comfort letters) artificially reduced the tax burdens of both companies. The Dutch finance ministry and Starbucks are appealing the Commission's ruling, arguing that the same principles were applied to all companies so there was no selective advantage. The Commission is expected to rule in 2016 on two high profile investigations into Apple (in Ireland) and Amazon (in Luxembourg), which could result in very substantial recovery orders and these developments will be watched closely by anti-trust practitioners.
2. European Commission to decide next steps in flagship Google investigation: the Commission is running two investigations into Google. In April 2015, it sent a Statement of Objections alleging that Google had abused its dominant position in the markets for general internet search services by favouring its comparison shopping services over those of its rivals. It has proposed that Google show ads sourced and ranked by other companies within its own ads on its search results page. Google is challenging the Commission's concerns and argues that the Commission's proposals would harm the quality and relevance of its results. Commissioner Vestager must now decide whether to move forward to a final decision, which would involve substantial fines and open the door to lengthy appeals before the European Courts, or try once more to reach a negotiated outcome which addresses these concerns. Separately, the Commission is investigating Google's Android operating system and whether Google has forced manufacturers to bundle its services with the open-source system.
3. CMA to conclude energy and banking investigations and continue focus on online markets: the CMA is focused on finalising its remedies proposals in the energy and banking markets, and its draft annual plan indicates that it will use its competition law powers to deliver greater productivity, drive economic growth and minimise the regulatory burden on business, in line with Government policy objectives. The CMA is also expected to continue its review of "legacy" markets and mergers remedies and review whether these remain fit for purpose, and will continue its focus on digital markets, with a probe into price comparison websites. We expect the CMA to conclude its investigations in the pharmaceutical sector (paroxetine and phenytoin sodium capsules) and move forward with other, recently-announced, investigations in the sports equipment and leisure sectors.
4. FCA to flex its muscles: the FCA has issued a call for inputs in November 2015 on the use of Big Data in the retail general insurance sector, which will focus on how Big Data affects consumer outcomes, whether it fosters or constrains competition and how this might affect particular customer segments (including vulnerable consumers). The anti-trust authorities in the US have been focusing on the intersection between anti-trust and Big Data for some time, and we would expect this to become a flagship market study for the FCA. Separately, the FCA is continuing its probe of competition in wholesale markets, which began with its call for inputs in February 2015 and developed into two studies into the investment banking and corporate banking sector and the asset management sector, which will gather pace in 2016. The FCA is also likely to find opportunities to use its new CA98 enforcement powers.
5. CAT to hear damages action in Mastercard: the CAT will hear a competition damages claim by Sainsbury's against Mastercard relating to the European Commission's 2007 decision that Mastercard's interchange fees infringed EU competition law principles. The case was recently transferred to the CAT from the High Court. The presiding CAT judge, Gerald Barling, has set a 7 week timetable for the trial, beginning on 25 January 2016, which will consider the extent of any overcharge by Mastercard (in respect of card fees levied in the UK) and to what extent any overcharge may have been passed on to consumers. Other retailers have brought similar actions against Mastercard and Visa.
