i Prioritisation and resource allocation of the enforcement authorities
The current competition regime in Belgium is based on two acts, adopted by the Belgian Parliament on 3 April 2013, which inserted a new Chapter IV entitled 'Protection of Competition' and a new Chapter V entitled 'Competition and Price Evolution' into the Belgian Code of Economic Law (BCEL). On 6 September 2013, the BCEL entered into force.
Following the entry into force of the BCEL, the Belgian Competition Authority (BCA) consists of four distinct components:
- the President of the BCA;
- the Competition College, entrusted with decision-making powers;
- the Competition Board; and
- the Prosecution Body, tasked with investigative powers under the direction of the General Prosecutor.
The Prosecution Body must play the role of an 'independent filter' in order to refuse the opening of instructions and to dismiss cases in view of the priority policy and of the available means, or because a complaint is unfounded or time-barred. The Prosecution Body has been granted the power to dismiss a case by adopting a reasoned decision.2 Such a decision is open to appeal before the President of the BCA.
The BCEL also reiterates the possibility for the Competition College to declare, in a reasoned decision, that according to the elements in its possession, there are no grounds for acting in a case submitted to it by the Prosecution Body.3
Another new feature under the BCEL is the introduction of a settlement procedure. A 10 per cent reduction in the antitrust fine will be offered to undertakings concluding such a settlement with the Prosecution Body. In such cases, the Prosecution Body will be competent to adopt a final decision, which is deemed equivalent to a decision of the Competition College, despite the fact that no appeal can be lodged against such a settlement decision. On 22 June 2015, the Prosecution Body adopted its first settlement decision in the household, body care and hygiene products case. In the meantime, this procedure has grown in popularity, with the latest settlement decision taken on 24 January 2019.4
Another interesting development is the entry into force on 22 June 2017 of a law inserting the action for damages for infringements of the competition law in Title 3 of Book XVII of the BCEL, transposing into Belgian law Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union. Based on the new provisions inserted in the BCEL, any natural or legal person having suffered harm caused by an infringement of the competition law has the right to obtain full compensation for such harm. These provisions apply to any infringements of Articles 101 and 102 TFEU or of their Belgian counterparts, or of both. If there is a decision by the BCA finding an infringement, such a finding is deemed irrefutably established for follow-on damage proceedings before national courts.
ii Enforcement agenda
On 27 April 2018, the BCA published a document explaining the strategic objectives that will guide its choice when selecting the cases it will focus on.5 In that regard, as in previous years, the BCA continues to take the following four factors into account when assessing its interest in starting an investigation into a given case:
- the impact of the case on the functioning of markets in Belgium and on consumers;
- the strategic importance of that case, notably in view of the economic sectors considered as having priority;
- risks: the BCA is less inclined to invest resources in the investigation of a possible infringement if there is an important risk that such an investigation cannot succeed; and
- resources: the BCA also takes into consideration the amount of resources necessary to start the investigation.
After having indicated that it will investigate every serious infringement of competition law, the BCA nevertheless specified in that document that it would focus its actions on the following economic sectors, considered as having priority:
- the liberalised sectors and network industries;
- the wholesale distribution sector and relationships with its suppliers;
- media and digital economy;
- the public procurement sector;
- the pharmaceutical sector;
- the logistics sector; and
Specifically for public procurement, the BCA published a Guide for purchasers in charge of public contracts, which explains in detail the different types of bid rigging. It also provides a list of indications and suggestions to detect and avoid possible collusion and concerted submissions.6
iii Leniency Guidelines
On 22 March 2016, the new Leniency Guidelines entered into force.7 They apply to all leniency applications submitted after that date. The most important change introduced by the Guidelines consists of practical rules for leniency applications submitted by individuals. Clarification regarding how these rules are implemented was required, particularly since the option for individuals to obtain immunity for 'whistle-blowing' became part of the BCEL in 2013, and in light of potential sanctions against individuals for certain types of competition law infringements. Individuals are always granted full immunity, regardless of where they rank in the order of applications submitted, provided that they meet the other conditions set out in the Guidelines. In addition, the first undertaking can still enjoy full immunity even when an individual has already contacted the BCA. The Guidelines also clarify that individuals may apply for leniency alone or together with the undertaking or association of undertakings for whom they work or used to work.
Furthermore, the Guidelines introduce new reduction percentages in relation to partial exemptions. When the BCA already has information regarding the cartel, it may grant a partial reduction to undertakings that submit evidence with a significant value. The fine reduction available to the first partial leniency applicant remains the same, namely between 30 and 50 per cent. The second partial leniency applicant can obtain a reduction between 20 and 40 per cent (previously 10 to 30 per cent). Subsequent applicants can receive a 10 to 30 per cent reduction, which is the same as in the previous Guidelines. While the conditions to be respected by the applicants, including the information that they should provide, are still more or less the same as those under the former leniency provisions, the 2016 Guidelines do provide some practical clarifications. These include:
- the confidentiality obligations of a leniency applicant;
- the language to be used in the application;
- how to contact the Auditor General to submit such an application or to obtain information about the availability of an immunity application for the first undertaking; and
- the possibility to obtain a marker.
The Guidelines are still limited to cartel cases, with the express exclusion of other types of horizontal agreements and vertical agreements. To the extent that a hub-and-spoke cartel can be qualified as a cartel, it will be covered.8
iv Guide on information exchange
On 12 September 2018, the BCA published a draft guide on information exchange for public consultation. All interested parties were given until 15 November 2018 to comment. A final version of the guidance document is expected in the course of 2019.
i Significant cases
In 2018,9 the Competition Council did not take any fully fledged decision on the basis of Article IV.1 BCEL, which prohibits 'agreements between undertakings, all decisions by associations of undertakings and all concerted practices, the aim or consequence of which is to prevent, restrict or distort significantly competition in the Belgian market concerned or in a substantial part of that market'. A decision, however, is expected in the course of 2019 involving the Professional Body of Pharmacists (PBP). This case follows on from a preliminary measures decision taken in 2017 where it was found that prima facie the PBP had infringed Article IV.1 BCEL by engaging in different legal proceedings, defamatory practices, etc. directed against a new entrant, MediCare-Market.10 A report was filed by the Auditor on 31 October 2018.11
No settlement decisions were taken in 2018. On 24 January 2019, the Prosecution Body issued a settlement decision in the area of infrared cabins. It imposed a fine of €98,000 on HM Products Benelux for fixing the maximum discount levels its distributors could grant. HM Products Benelux imports and distributes infrared cabins of the brand Healthmate that are used to alleviate muscle and joint pains.
The BCA concluded that fixing maximum discount levels that distributors can grant amounts to resale price maintenance. Abiding by the maximum discount levels was a necessary precondition for being allowed into the distributor network. The system was accompanied by price monitoring and possible sanctions. The whole system was perceived as a single and continuous infringement spanning eight years and six months.
The investigation started following information received by the Investigation and Prosecution Service, and led to a dawn raid in October 2016. Following settlement discussions started in July 2018, the BCA adopted a settlement decision on 24 January 2019. The basic amount of the fine exceeded the 10 per cent Belgian turnover threshold. As a consequence, the amount of the fine was limited to the 10 per cent ceiling. As HM Products Benelux is not part of a large international group, the BCA agreed to further reduce the fine on proportionality grounds. Finally, the amount was reduced by an additional 10 per cent because HM Products Benelux agreed to settle.
ii Trends, developments and strategies
One of the major changes under the BCEL is the introduction of the possibility of imposing administrative penalties on individuals for direct involvement in hardcore antitrust infringements (with the exception of abuse of a dominant position). At the time of writing, the BCA has not yet imposed administrative penalties on individuals on that basis. However, these sanctions have caused individuals to consider whether they would, separately or jointly with the undertaking that is their employer, file an application for immunity. This possibility has been used by individuals and it is expected that this will be a growing source of information for the BCA.
Another interesting development in 2018 was the judgment by the Belgian Supreme Court confirming the Brussels Court of Appeals 2015 ruling that the dawn raids carried out by a number of stevedores did not meet the constitutional requirements for carrying out such a raid.12 As a consequence, the BCA was prevented from using any documents collected during the dawn raids. This was ultimately one of the reasons why the BCA decided to close the investigation on 5 February 2019.
Finally, in two separate cases, the Brussels Market Court clearly established the rules for the composition of the BCA when the latter has to rule again in a case where the first decision was (partly) annulled by the Brussels Market Court. Members of the BCA who ruled on the first case cannot be part of the BCA who will rule on the same case (or part of it) the second time.13 If these rules are not respected, the second decision will be annulled by the Brussels Market Court.
Over the past few years, a number of inspections have taken place, which is an indication that further decisions may be expected.
In May 2016, inspections took place of a number of Belgian undertakings operating in the sale of non-prescription products in pharmacies, given the fact that the BCA had information about possible infringements of Article IV.1 BCEL and Article 101 TFEU. In November 2016, other inspections took place at companies active in the wholesale distribution of pharmaceutical and para-pharmaceutical products to pharmacies in relation to alleged participation in anticompetitive agreements and concerted practices between wholesalers active in Belgium relating to services that they provide to pharmaceutical laboratories on the one hand, and to pharmacies on the other.
In May 2017, the BCA conducted a series of inspections for different suspected infringements. On 5 May 2017, inspections took place at the premises of one undertaking that distributes and sells water softeners for an alleged infringement of Article IV.1 BCEL and Article 101 TFEU. Three days later, an undertaking active in the distribution and sale of cooking utensils and wine accessories was searched by the inspectors of the BCA in relation to possible infringements of Article IV.1 BCEL and Article 101 TFEU. Finally, on 29 May 2017, the BCA conducted searches of some manufacturers and wholesalers of tobacco products, again in relation to possible infringements of Article IV.1 BCEL and Article 101 TFEU.
Also in 2018 a number of inspections were carried out. One concerned the sector of immunoglobulins and was carried out at the request of the Romanian authority. A second inspection was carried out jointly with the French authority and involved cosmetics. The last inspection concerned fire safety equipment and was carried out at one company's premises.
At the time of writing, none of these inspections has led to a decision of the Prosecution Body or of the Competition College.
Also, as discussed earlier, the Prosecution Body filed a report on 31 October 201814 in relation to the Professional Body of Pharmacists. A decision can be expected in 2019.
III ANTITRUST: RESTRICTIVE AGREEMENTS AND DOMINANCE
i Significant cases
Article IV.1 and Article IV.2 BCEL are the Belgian competition rules equivalent to Articles 101 and 102 TFEU. Article IV.1, Section 1, BCEL stipulates that 'without the need of a prior decision to that effect, all agreements between undertakings, all decisions by associations of undertakings and all concerted practices, the aim or consequence of which is to prevent, restrict or distort significantly competition in the Belgian market concerned or in a substantial part of that market are prohibited'; whereas Article IV.2 BCEL states that 'without the need for a prior decision to that effect, the abuse by one or more undertakings of a dominant position in the Belgian market concerned or in a substantial part of that market is prohibited.'
On 20 December 2018, the Prosecution Body closed an investigation into anticompetitive practices by the International Federation for Equestrian Sports (FEI) after the latter had given commitments. The investigation was launched following several complaints. Even though the complaints were withdrawn, the BCA continued the investigation. The complaints concerned (1) some provisions of the FEI General Regulations which stipulate that the participation of athletes, horses or officials in events that have not been approved by the FEI could be subject to a penalty of six months renewable; (2) the lack of transparency of the FEI approval process; and (3) the sanctions imposed on athletes, horses and officials participating in competitions not approved by the FEI. They were likely to foreclose competitors from the market for the organisation and commercial operation of five-star competitions. One of these complaints concerned a provision of the FEI General Regulations, which provides that the organisation of five-star competitions must be subject to an application for registration in the FEI calendar two years before the date of the first edition of the contest. The FEI offered commitments as regards the procedure for approval of new series, in the immediate establishment of a transparent procedure. Regarding the rules concerning the participation in events not recognised by the FEI and the conflict of dates, procedural and substantive changes were adopted by the board of the FEI on 20 November 2018. The board committed to support these changes at the next general assembly of the FEI.15
With regard to abuses of a dominant position, it is important to recall that in 2015, the Prosecution Body adopted a settlement decision in relation to an abuse of a dominant position, which was a first in Belgium.16 The European Commission, for example, does not apply the settlement procedure to abuses of a dominant position.
No infringement decisions relating to an abuse of a dominant position were taken in 2018. However, in one case the BCA imposed interim measures on ABB Industrial Solutions BVBA in respect of its pricing policies for lids for electricity meter boxes.17 Following a tender organised by Eandis, ABB was selected as the exclusive supplier of lids for smart electricity meter boxes. Any supplier of a full smart electricity meter box, consequently, had to buy the lid from ABB, which also sold complete smart electricity meter boxes. The complainant claimed that ABB replied late to requests for quotations; that orders were confirmed late or sometimes even not at all; that delivery times were changed unilaterally and were invariably long; that it was giving priority to Eandis' orders; that it charged substantially lower prices to Eandis, while the Eandis tender had specified that all installers should be able to obtain the lids at a market price; and, finally, that ABB was charging a price for the lids equivalent to 38 per cent of the total cost of a complete meter box and that ABB had dropped the price for a complete meter box, where it had not lowered its price for the lids. After an investigation, the BCA found that interim measures had to be imposed as ABB prima facie had abused its dominant position. In fact, it found that each of the earlier described practices constituted separate abuses. The interim measures imposed were that (1) ABB had to apply an April 2018 price reduction for Eandis also to other customers; (2) ABB must apply to the prices of the concerned lids the price reductions it would decide for electricity boxes or their components, regardless of the configuration in which they are ordered, and refrain from any not objectively justifiable price increase for these lids; and (3) ABB must commit to continue to process orders for lids according to the 'first in, first out' principle without distinguishing between the configurations in which they are ordered, including for lids that ABB uses itself for the production of electricity meter boxes.
ii Trends, developments and strategies
The BCA has shown its willingness to adopt settlement decisions. It remains to be seen whether this trend will continue in 2019. Another interesting evolution to watch will be how the entry into force of the 2016 Leniency Guidelines will have an influence on the activities of the BCA and whether more leniency applications will be introduced.
Finally, decisions could be expected in the areas where dawn raids took place in the last three to four years.
IV SECTORAL COMPETITION: MARKET INVESTIGATIONS AND REGULATED INDUSTRIES
According to Article IV.44 BCEL, 'the President may, on its own initiative or at the request of the minister or of the minister with responsibility according to the sector concerned, carry out or order general or sectoral investigations, if there is serious proof of harming the functioning of the market'. In that regard, he or she may request the assistance of the Prosecution Body. To date, the President of the BCA has not yet used his powers in this area.
That being said, the BCA has participated actively in the hotel sector monitoring working group led by the European Commission. For Belgium, 981 hotels were questioned about most favoured nation clauses or equivalent provisions. For the moment, no actions undertaken by the BCA in this area have been made public.
V STATE AID
The BCA has no competence in the area of state aid. The European Commission is the only authority within the European Union that can approve state aid measures.
VI MERGER REVIEW
i Significant cases
In 2018, about 36 merger decisions were adopted by the BCA, which cleared the majority of the examined concentrations under the simplified procedure.18 Only one of the decisions involved commitments. This decision will be briefly discussed.
In Volvo/Kant,19 the BCA allowed the acquisition of Kant, owner of several independent Volvo distributorships and service points. Following the investigation by the BCA, the Auditor found that the transaction would create a significant impediment to effective competition. Although this created the possibility for Volvo to offer commitments, none were offered and a hearing was held. Following the hearing, the president invited Volvo to offer commitments and such commitments (appointing a new independent distributor in the disputed area and closing another distributorship operated by Kant) were accepted by the BCA, thereby avoiding opening a second phase investigation.
In last year's chapter, the BCA decision lifting certain conditions imposed on Kinepolis Group was discussed. These conditions were imposed following the merger of two independent movie theatre companies forming Kinepolis in 1997. They required prior approval for any acquisition of another movie theatre even when notification thresholds were not met. The commitments even required Kinepolis to obtain prior approval for internal growth, leading to a raft of closures of movie theatres in order to replace them by others in other commercially more interesting geographic areas and to avoid the prior authorisation process for internal growth. Finally, a number of commitments were also given relating to not concluding programming agreements with independent movie theatres, and not concluding exclusivity or priority deals between Kinepolis and its daughter, KFD, which is a movie distribution company. Following earlier attempts to lift the conditions between 2006 and 2010, Kinepolis filed a new request in 2017, resulting in a partial lifting of the conditions: as of 31 May 2019, Kinepolis will be allowed to grow internally without having to apply for prior approval. However, Kinepolis saw its potential to expand unchecked as of 31 May 2019 thwarted by two judgments rendered by the Brussels Market Court. First, on 28 February 2018,20 the 2018 BCA decision was annulled in as far as that decision lifted the requirement of prior approval by the BCA for Kinepolis' internal growth. Following that judgment, the BCA adopted a new decision on 26 April 2018 reconfirming the lifting of the prior approval condition for internal growth as from 26 April 2020.21 That decision was again annulled by the Brussels Market Court because the BMA was composed of the identical group of individuals that took the 2017 BCA decision.22
ii Trends, developments and strategies
Belgium has turnover thresholds that are too high when compared with its economy and the average size of companies active in Belgium.
A concentration must be notified when two of the undertakings involved in the transaction each have a turnover in Belgium amounting to €40 million. In addition, all the undertakings concerned must have jointly a €100 million turnover in Belgium.23 Of course, when a concentration meets the thresholds for a notification at the EU level, no notification at the national level is required. Exceptions to this rule are the referral provisions contained in Articles 4 and 9 of Regulation 139/2004 on the control of concentrations between undertakings. Article IV.11 BCEL clearly stipulates that in the case of the referral of a transaction to the Belgian level, a new notification must be filed with the Prosecution Body.
Accordingly, only a few transactions must in principle be examined by the BCA, since operations implying undertakings that do not meet these thresholds do not have to be notified, whereas transactions implying bigger companies must rather be notified at the European level.
In May 2017, the BCA published an evaluation report regarding the notification thresholds for concentrations in Belgium. It concluded that these thresholds are already sufficiently high and should not be raised, and that there is also no need to lower them.24 The Prosecution Body nevertheless proposes that in the event that the notification thresholds would be lowered, this should happen only in relation to certain specific sectors, as this is the case in France, but not in general. In any event, the BCA indicates that a public consultation should be organised should a concrete proposal to modify the notification thresholds be discussed.
The volume of significant decisions rendered by the BCA is clearly increasing. 2018 saw the BCA involved in a number of demanding interim measures and merger control cases. In addition to that, it had to deal with cases coming back to it after the first decision was annulled by the Brussels Market Court, which always keeps the BCA in check. The bulk of the resources is still used in simplified merger cases.
As rightly indicated in the explanatory memorandum of the proposal for the BCEL, in view of the fact that the European Commission does not take more than eight decisions per year establishing an infringement, it cannot be expected that the Belgian authority conducts more than four investigations a year that result in the discovery of an infringement. Moreover, the BCA focuses on finding cartels, as does the Commission and many other national competition authorities. Part of the reasoning is that cartels are most damaging to consumer welfare. However, another, less encouraging, explanation is that the entire detection system is directed towards cartels (leniency is available only for cartels), and that more difficult analyses (i.e., does an agreement infringe Article 101 TFEU or Article IV.1 BCEL?) are not undertaken because of the lack of resources (legal and economic) and the greater likelihood of the Competition Authority's decision being overturned on appeal. Developments in 2017 and 2018, however, seem to indicate that the BCA has now shifted up gears in going after resale price maintenance, imposing interim measures in several sectors, adopting commitment and settlement decisions, and, occasionally, taking on an abuse of a dominant position case.
1 Hendrik Viaene is a partner at Laga (Deloitte Legal).
2 According to Article IV.42, Section 2 BCEL.
3 According to Article IV.47 BCEL.
4 Decision ABC-2019-I/O-03-AUD of 24 January 2019, Case MEDE-I/O-16/0030 – HM Products Benelus NV, available on the BCA website.
5 Available on the BCA website.
6 Available on the BCA website.
7 Available on the BCA website.
8 The BCA has already granted immunity and leniency in a hub-and-spoke cartel case in 2015; See decision No. ABC-2015-I/O-19-AUD of 22 June 2015, case CONC-I/O-06/0038, Hausses coordonnées des prix de vente de produits de parfumerie, d'hygiène et de droguerie, available on the BCA website.
9 As it mainly relates to 2018, the present contribution takes into account developments that occurred up to 31 December 2018.
10 Decision No. ABC-2017-V/M-24, 19 June 2017.
11 Press release BCA 38/2018, 8 November 2018.
12 Supreme Court, 26 April 2018, case c.15.0524.N.
13 Brussels Market Court, 7 August 2018, 2018/AR/1293, and Brussels Market Court, 21 November 2018, 2018/MR/3.
14 Press release BCA 38/2018, 8 November 2018.
15 Ever since the BCA started its investigation into the FEI's practices, there has also been a parallel track of interim measures proceedings, which resulted in two judgments rendered by the Brussels Market Court on 27 June 2018 (Case 2018/MR/1) and 7 August 2018 (Case 2018/AR/1293) respectively.
16 Decision No. BMA-2015/K-28-AUD of 22 September 2015 in cases MEDE-P/K-13/0012 and CONC-P/K-13/0013, Stanleybet Belgium NV/Stanley International Betting Ltd and Sagevas SA/World Football Association SPRL/Samenwerkende Nevenmaatschappij Belgische PMU SCRL, available on the BCA website.
17 Decision No. BMA-2018-V/M-28 of 3 September 2018, available on the BCA website.
18 28 out of 36 cases in 2018. The simplified procedure can only be used if certain conditions are met, for instance if two or more of the parties to the concentration are engaged in business activities in the same product and geographical market (horizontal relationships) provided that their combined market share is less than 25 per cent. The simplified procedure has the advantage that the prosecutor will render a decision within 15 working days. See the rules adopted by the General Assembly of the Competition Council on 8 June 2007, available on the BCA website.
19 Decision BMA-2018-C/C-04, 31 January 2018, Volvo/Kant.
20 Brussels Market Court, 2017/AR/1139, joined with 2017/MR/1, 28 February 2018.
21 BMA-2018-C/C-12, Kinepolis.
22 Brussels Market Court, 21 November 2018, 2018/MR/3.
23 Article IV.7 BCEL.
24 Available on the BCA website.