January 7, 2015

European Commission Announces Agreement To Cap Interchange Fees For Card-Based Payments

A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission has announced that the European Parliament and the European Council have reached a long-awaited political agreement on the Commission’s proposal for a Regulation on Interchange Fees for Card-based Payment Transactions.

The Regulation will introduce maximum fees for four-party card schemes’ consumer debit and credit cards, prevent card schemes from forcing retailers to accept all types of cards regardless of their fees, and establish transparency rules for all transactions. The Commission has already ruled that interchange fees set by MasterCard are in violation of EU antitrust laws and, after a seven-year court battle, MasterCard lost its final appeal before the European Court of Justice in September 2014.

Interchange fees represent about 70% of the approximately 13 billion euros a year retailers pay banks to handle payment card transactions. The Regulation is expected to have a profound impact on the card industry as a whole but its effect is likely to be particularly felt in markets such as Germany, where average credit card rates stand at 1.8%, and Poland, where average debit card charges are 1.6%.

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Categories: Antitrust and Price Fixing, Antitrust Enforcement, Antitrust Legislation, Antitrust Litigation, International Competition Issues

    April 1, 2014

    NLRB’s “Student-Athletes” Ruling Is Seen As Exposing School For Hypocrisy

    Last week’s decision by the National Labor Relations Board granting Northwestern University scholarship football players the right to unionize is sparking a debate over the hypocrisy of college sports.

    Constantine Cannon lawyers Gordon Schnell and David Scupp, who examined the NLRB decision in a post on this blog, express their views on the decision – and what it reveals about the big business of college sports – in an op-ed on cnn.com.  As Schnell and Scupp discuss in The hypocrisy of big-time college sports, amateurism in college sports is basically a myth that masks the reality that college athletes are employees who are responsible for the billions of dollars the NCAA and its members rake in each year.

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    Categories: Antitrust and Price Fixing

      December 17, 2013

      Court Closes The Book On Bookhouse Antitrust Claims Against Amazon And Publishers

      By Allison F. Sheedy

      The U.S. District Court for the Southern District of New York has dismissed antitrust claims against Amazon and the six largest book publishers related to the publishers’ contracts with Amazon for the distribution of e-books requiring the use of digital rights management software (“DRM”) in The Bookhouse of Stuyvesant Plaza, Inc. et al. v. Amazon.com, Inc. et al.

      The Bookhouse plaintiffs are independent bookstores that sell both print books and e-books.  They alleged claims of unlawful restraints of trade under Section 1 of the Sherman Act against all defendants, and claims of monopolization and attempted monopolization under Section 2 of the Sherman Act against Amazon.

      Generally speaking, DRM limits the ability to use digital content after its sale.  The plaintiffs alleged that Amazon, manufacturer of the Kindle e-reader, employed more restrictive DRM technology than required by its agreements with the six publisher defendants – Random House Inc., Penguin Group (USA) Inc., Hachette Book Group USA Inc., Simon & Schuster Inc., HarperCollins Publishers LLC and Macmillan Publishers Inc.  Plaintiffs claimed that this DRM technology effectively restricted the devices on which e-books sold and distributed by Amazon could be read, which rendered Amazon’s e-book platform a “closed ecosystem.”  click here for more »

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      Categories: Antitrust and Price Fixing, Antitrust Law and Monopolies, Antitrust Litigation

        December 11, 2013

        Rough Regulatory Waters May Rock Massive Shipping Alliance

        By Jeffrey I. Shinder

        The proposed P3 shipping alliance among the world’s three biggest container shipping companies encountered more rough seas this past week.

        The U.S. Federal Maritime Commission (“FMC”) has requested additional information from the parties.  This request will delay the implementation of the proposed alliance because, after the parties comply with the request, a new 45-day regulatory review period will begin.  While this request should not be interpreted as indicating that the alliance will not be approved by regulators, it almost certainly reflects the significant issues that the proposed deal raises for competition.

        The proposed P3 vessel-sharing alliance among Maersk, MSC and France’s CMA CGM S.A has the expressed goal of dealing with overcapacity and declining freight rates through an agreement to share ships and engage in related cooperative operating activities, under a common management, while retaining individual commercial status and control of consignments.

        The issues that are raised by this plan to create the world’s largest shipping alliance came into sharp focus last week when reports surfaced that the FMC is apparently questioning “operational contradictions” and “gaps” in the duties of the liners.  See Lewis Crofts,  “P3 shipping lines face questions over alliance’s scope ahead of US, EU, China meeting,” http://www.mlex.com/US/Content.aspx?ID=479918 (MLex, Dec. 6, 2013) (subscription required).  click here for more »

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        Categories: Antitrust and Price Fixing, Antitrust Enforcement, International Competition Issues

          November 27, 2013

          Cargo Shipping Companies’ Price Signaling Could Run Aground In EU Probe

          By Jeffrey I. Shinder

          The steady stream of cartel investigations and lawsuits on both sides of the Atlantic in recent months highlights the need for vigilant antitrust enforcement to protect consumer welfare, despite the views of those, like the Wall Street Journal editorial page, who question the wisdom of antitrust law.

          These alleged cartels range from the apparently venal manipulations of the financial services industry, where pure greed and opaque markets have resulted in the Libor, Euribor, and foreign exchange market investigations, to claimed conspiracies of expedience in stagnant or depressed industries, where the protagonists are alleged to have colluded to manage supply and “maintain” price in the face of weak demand.  Given the slow growth that has plagued the industrialized world in recent years, we almost certainly will be hearing about more such cartels.  Rigorous antitrust enforcement is often the only check against consumers suffering massive overcharges in numerous, even critical, industries.

          At the end of last week, European Union (“EU”) regulators disclosed yet another significant investigation with their announcement of an inquiry into whether 14 of the world’s major container shipping companies—including the two leading firms of Danish shipping group A.P. Moller-Maersk A/S and Swiss-based MSC Mediterranean Shipping Company S.A.—have been coordinating price hikes on European routes dating back to 2009.

          This new investigation follows raids on some of these companies two years ago by the European Commission (the “Commission”).  According to the Commission, major shipping companies have been using press releases on their websites to signal impending price increases to each other.  While such signaling, standing alone, would be insufficient to support an antitrust violation in the United States, it could be found to violate EU law if it has resulted in higher prices and harm to competition.  However, the targets of the investigation undoubtedly will argue that their price increases were necessitated by competition in the industry and that their conduct reflected individual, and lawful, conduct that did not harm competition.

          Notably, this investigation is taking place against the backdrop of separate U.S. and EU regulatory scrutiny of the planned “P3” vessel-sharing alliance among Maersk, MSC and France’s CMA CGM S.A.  The alliance would purportedly address persistent overcapacity and declining freight rates through an agreement to share ships and engage in related cooperative operating activities, under a common management, while retaining individual commercial status and control of consignments.

          Last month, the three shipping companies filed their proposed agreement with the U.S. Federal Maritime Commission (“FMC”) under the U.S. Shipping Act of 1984.  The FMC is taking public comments on the agreements until November 29, 2013.  If the FMC declines to enjoin the alliance or require additional information, the agreement will become effective on December 8, 2013.  While that would confer antitrust immunity under U.S. law on the alliance, in this instance such immunity is not available under EU competition law.

          Although EU law does exempt certain agreements among shipping companies from Article 101(1) of the Treaty on the Functioning of the European Union, the proposed alliance does not meet the requirements of that exemption.  Thus, even if the alliance survives FMC scrutiny, which is not a given, it may receive a rougher ride in the EU.

          Moreover, while the Commission claims that its price-signaling investigation is separate from its ongoing review of the P3 alliance, the cartel investigation could conceivably influence the Commission’s willingness to approve the alliance.  It would not be surprising if the price-signaling investigation causes the Commission to impose additional restrictions on the alliance, even if it is approved.

          Given the significance of the shipping industry to the global economy, the progress of these regulatory efforts in Brussels is well worth watching.

          Edited by Gary J. Malone

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          Categories: Antitrust and Price Fixing, Antitrust Litigation, International Competition Issues

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