Brussels Update (25 November 2008)

UK COMPETITION

Dwr Cymru Found To Have Abused A Dominant Position

The Competition Appeal Tribunal (CAT) has found that Dwr Cymru,

the Welsh water and sewerage provider, has abused a dominant

position in the market. Albion Water Limited (Albion) successfully

appealed against a decision by the Director General of Water

Services (now the Water Services Regulation Authority or

"Ofwat"), which had earlier cleared the company of

allegations of abuse. The CAT ruled, on 7 November 2008, that

prices Dwr Cymru had quoted to Albion were both excessive and

unfair, as they materially exceeded the costs attributable to the

services provided. The CAT concluded that this unfair pricing

policy did amount to an abuse of a dominant position.

Bookmakers Held Not To Have Colluded

On 6 November 2008, in the case of BAGS -v- AMRAC, the

High Court dismissed a counter-claim by a number of British

racecourses in the proceedings against a number of UK bookmakers

that, among other things, they had colluded to jeopardise the entry

into the market of a new horseracing picture service, Turf TV.

Although the court acknowledged that there was some evidence of

parallel behaviour among the bookmakers and opportunity for them to

discuss their attitude to Turf TV, it concluded that there was

insufficient evidence to demonstrate actual illegal collusion. This

latest decision follows an earlier judgment of 8 August 2008, where

the Court dismissed the claim by the bookmakers that Amrac and a

number of UK racecourses had acted anti-competitively in the

creation of Turf TV, to rival the incumbent betting channel SIS

FACTS. Nabarro acted for one of the defendants, and a shareholder

of Turf TV, in this case.

Air France/VLM Deal Approved With Divestment Of Airport

Slots

The OFT has approved Air France KLM Group's (AF) acquisition

of VLM Airlines N.V. (VLM). The merger had raised competition

concerns on flights between London City Airport and Schipol

Amsterdam Airport. As AF also owns KLM Royal Dutch Airlines, the

merger would have given AF a market share of over 70% of the weekly

take-off and landing slots available on this route. Following

AF's offer to divest the newly acquired slots on this

London-Amsterdam route, the OFT indicated that this was

insufficient and that the merger would only be cleared if an

immediate purchaser for the slots could be found. This was intended

to ensure the purchaser of these slots would maintain competition

on the route. The OFT has now approved the transfer of the slots to

Eastern Airways (UK) Limited, which is a new entrant on this route.

The OFT is increasingly requiring an up-front purchaser in relation

to divestment remedies, as was also the case with Dunfermline's

acquisition of Berkshire Regional Newspapers Limited earlier this

year.

OFT Discloses Its New Prioritisation Policy

Following a lengthy consultation, the OFT has published new

criteria for how it intends to prioritise its investigations. The

OFT acknowledges that it has finite resources and therefore has to

prioritise the most relevant cases. In order to try to ensure some

fairness and transparency to this process the OFT establishes and

publishes criteria on which to base its prioritisation decisions.

The OFT will generally take into account and balance a number of

factors (although it may take into account other relevant issues).

The principal factors to be taken into account will be: the direct

and indirect impact of the behaviour on consumers and the likely

economic impacts on the market; the strategic importance of the

case and whether the OFT is best placed to act in the

circumstances; the risk of a successful outcome; and the

implications of the work upon the OFT's resources. In practice,

these criteria establish a hurdle that any complainant must

overcome before the OFT will expend resources to investigate

allegations of anti-competitive activity.

Lloyds/TSB/HBOS Approved Despite Competition Concerns

On 31 October 2008, the Secretary of State (SoS) cleared the

anticipated acquisition by Lloyds TSB Group PLC (Lloyds) of HBOS

plc (HBOS). Earlier, in...