Merger Remedy-Related Arbitration: une innovation suprenante

Tyagi, Kalpana

doi:10.1007/978-3-662-58784-3_14

Kalpana Tyagi³

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 10))

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Abstract

This chapter presents an overview of merger remedy-related arbitration, a novel and supranational paradigm in the making. The chapter maps the evolving and novel nature of arbitration in merger control and offers recommendations to better the practice.

This chapter and Chap. 15 offer a detailed discussion on merger remedy-related arbitration and RTI v. Sky, the first reported case of merger remedy-related arbitration in the EU. Merger remedy-related arbitration is an erga omnes offer to arbitrate, meaning it is a binding offer by the merged entity to third parties such as consumers and competitors. As this offer to arbitrate emerges from a commitment in merger control, it creates a complex relationship between the merging parties, the third parties, the arbitrators and the Commission. This raises complex questions related to the public policy dimension of competition law and the private nature of arbitration. Issues such as the role and the extent of intervention by the Commission in case of merger remedy-related arbitration are discussed in detail. Moreover, considering that such an arbitration may concern complex issues of competition law, the arbitrators may occasionally need to refer the question to the Commission for interpretation.

The two chapters together, using RTI v. Sky as a case study, seek to highlight the innovative nature of this innovation surprenante and offer some recommendations to further improve these arbitration clauses.

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Notes

1.
Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C 267/01, para 69.
2.
American Express Co. et al v. Italian Colors Restaurant et al., Decided June 20, 2013.
3.
Mark A Lemley and Christopher R Leslie, ‘Antitrust Arbitration and Merger Approval’ (2015) 110 Northwestern University Law Review 1, 54. See also the footnotes therein.
4.
Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223, 226.
5.
Cost-effective not only in terms of monetary value but also non-monetary terms such as relationship with the competitors, reputation and ongoing business interactions.
6.
Fabiana Di Porto, ‘Abuses of information and informational remedies: rethinking exchange of information under competition law’ in Josef Drexl and Fabiana Di Porto (eds.) Competition Law as Regulation (Edward Elgar 2015) 322. The author presents this challenge in the framework of Article 102 TFEU behavioural commitments. The generalisation on the monitoring costs is equally applicable for merger remedies in the high technology sector where the remedies employed are largely behavioural in nature.
7.
ICN Merger Working Group: Analytical Framework Subgroup, ‘Merger Remedies Review Project, Report for the fourth ICN annual conference’, para 4.8 (Bonn June 2005) <https://www.uni-goettingen.de/de/document/download/b1dcf3398b09292b5ae557095337f655.pdf/ICN_Remedies_StudyFINAL5-10.pdf>accessed 06 January 2019.
8.
Fabiana Di Porto, ‘Abuses of information and informational remedies: rethinking exchange of information under competition law’ in Josef Drexl and Fabiana Di Porto (eds) Competition Law as Regulation (Edward Elgar 2015) 322.
9.
Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C 267/01, para 66.
10.
Gordon Blake and Philip Landolt (eds), EU and US Antitrust Arbitration A Handbook for Practitioners Volume 2 (Wolters Kluwer 2011) 1615–18.
11.
United States v. Google Inc., No. 1:11-cv-00688, Proposed Final Judgment at IV (B) (D.D.C. Apr. 8, 2011), available athttp://www.justice.gov/atr/cases/f269600/269632.pdf accessed 06 January 2019.
12.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2.
13.
Elf Aquitaine-Thyssen/Minol AG (Case No IV/M235) [1992] OJ C232/14.
14.
Elf Aquitaine-Thyssen/Minol AG (Case No IV/M235) [1992] OJ C232/14, Ibid., at para 13.
15.
Gordon Blanke, The Use & Utility of International Arbitration in EC Commission Merger Remedies: A Novel Supranational Paradigm in the Making? (Groningen: European Law Publishing 2006). See in particular the last chapter wherein Blanke highlights and summarises the supranational nature of merger remedy-related arbitration.
16.
Case T-158/00 ARD v Commission [2003] ECR II-3825.
17.
Marc Blessing, Arbitrating Antitrust and Merger Control Issues (Basel: Helbing Lichtenhahn Verlag 2003) 92.
18.
Laurence Idot, ‘Une innovation surprenante: l’introduction de l’arbitrage dans le contrôle communautaire des concentrations’ [2000] Revue de l’arbitrage 591, 598–99.
19.
Marc Blessing, Arbitrating Antitrust and Merger Control Issues (Basel: Helbing Lichtenhahn Verlag 2003) 85–86.
20.
Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223, 226.
21.
Ibid., pp. 223, 227.
22.
For a detailed discussion, see infra Sect. 14.5 Subject Matter of Arbitration Clauses.
23.
Siegfried H Elsing, ‘Performance as a Remedy: Non-Monetary Relief in International Arbitration’ in Michael E. Schneider and Joachim Knoll (eds.) Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (Juris 2011) 248.
24.
Case C126/97, Eco Swiss China Time Ltd. v. Benetton International NV [1999] ECR I-3055.
25.
Linda Senden, Soft Law in European Community Law (Hart Publishing 2004) 95.
26.
Formerly Article 234 of the EC Treaty under the Treaty of Amsterdam, the relevant article, following the Treaty of Lisbon entering force, is now re-numbered as Article 267 TFEU.
27.
Claus-Dieter Ehlermann and Isabela Atanasiu (eds), European Competition Law Annual: 2001 Effective Private Enforcement of EC Antitrust Law (Hart Publishing 2003).
28.
Patrick Wautelet, ‘Arbitration in EU Commission Cleared Merger Transactions’ (November 2004), 10 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=970253> accessed 06 January 2019.
29.
False Positive or Type I error result in direct welfare loss as authority approves a merger that has negative welfare effects. See Arndt Christiansen and Wolfgang Kerber, ‘Competition Policy with Optimally Differentiated Rules: Instead of Per Se Rules v. Rule of Reason’ (2006) Marburger Volkwirtschaftliche Beiträge No. 06-2006, p.9 <http://ssrn.com/abstract=872694 > accessed 06 January 2019.
30.
False Negative or Type II error result in welfare loss as authority prohibit a merger that has a positive welfare effect. See Arndt Christiansen and Wolfgang Kerber, ‘Competition Policy with Optimally Differentiated Rules: Instead of Per Se Rules v. Rule of Reason’ (2006) Marburger Volkwirtschaftliche Beiträge No. 06-2006, p. 9 <http://ssrn.com/abstract=872694 > accessed 06 January 2019.
31.
Patrick Wautelet, ‘Arbitration in EU Commission Cleared Merger Transactions’ (November 2004), 10–11 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=970253> accessed 06 January 2019.
32.
Ibid.
33.
Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223, 230.
34.
See for instance, Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission para 83; NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission para 54.
35.
For a survey of some earlier merger commitments involving arbitration clauses see Christoph Liebscher, ‘L’arbitrage dans les procedures de contrôle des concentrations: des perspectives’ (2003) 1 Les cahiers de l’arbitrage 24; Dieter A Hofmann and Oliver M Kunz, ‘Arbitration Clauses proposed by the EU Commission in Antitrust and Merger Procedures - Current Approach and Deficiencies in Practical Aspects of Arbitrating EC Competition Law’ in Dieter A Hofmann and Oliver M Kunz, Practical Aspects of Arbitrating EC Competition Law (Zürich-Basel-Genf: Schulthess Juristische Medien AG 2007) 149.
36.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M 3680) [2005] OJ/C 139/37, Commitments to the European Commission D3, para 46–59.
37.
Elf Aquitaine-Thyssen/Minol AG (Case No IV/M235) [1992] OJ C232/14, para 13.
38.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission, Section 6.
39.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission, Section F, para 46.
40.
Ibid., Commitments to the European Commission, Section F, paras 46–47.
41.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission.
42.
Ibid., Commitments to the European Commission para 68.
43.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M 3680) [2005] OJ/C 139/37, Commitments to the European Commission D3 paras 44–45.
44.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission sec 6, para 68.
45.
Axalto/Gemplus (Case COMP/M 3998) [2006] OJ C196/34.
46.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission.
47.
Ibid., Commitments to the European Commission para 71.
48.
Ibid.
49.
Ibid.
50.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission para 72.
51.
Ibid., Commitments to the European Commission, para 73–74.
52.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission Section F, para 48.
53.
Award in Reti Televisive Italiane v. Sky Italia, ICC Case No. 16974/FM/GZ § 484–486. Source: Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223.
54.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M.3680) [2005] OJ/C 139/37, Commitments to the European Commission D3, paras 44–45.
55.
Ibid.
56.
NXP Semiconductors/Freescale Semiconductor (Case M.7585) [2015] OJ C375/2, Commitments to the European Commission sec F, para 52.
57.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission para 79.
58.
Newscorp/Telepiù (Case COMP/ M 2876) Commission Decision 2004/311/EC [2004] OJ L110/ 73, Commitments to the European Commission article 15.1(b) (iv).
59.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission para 80.
60.
NXP Semiconductors/Freescale Semiconductor (Case M.7585) [2015] OJ C375/2, Commitments to the European Commission sec F, para 52.
61.
Intel/McAfee (Case COMP/M 5984) [2011] OJ C98/1, para 38.
62.
Glaxo Wellcome/Smithkline Beecham (Case IV/ M.1846) [2000] OJ C170/6, para 77.
63.
Marc Blessing, Arbitrating Antitrust and Merger Control Issues (Basel: Helbing Lichtenhahn Verlag 2003) 106.
64.
Ibid.
65.
Helmuth Schröter, Thinam Jakob, Robert Klotz and Wolfgang Mederer (eds), Europäisches Wettwerbsrecht: Kommentar zum Europäischen Wettbewerbsrecht (Nomos 2003) 98.
66.
Case C126/97, Eco Swiss China Time Ltd. v. Benetton International NV [1999] ECR I-3055, para 39.
67.
Van Houtte Hans, ‘Arbitration and Article 81 and 82 EC Treaty: A State of Affair’ (2005) 3 ASA Bulletin 431, 436.
68.
The arbitration in RTI v Sky resulted from the breach of commitments in Newscorp/Telepiù, a conditional clearance decision by the European Commission in 2004, under the 1989 Merger Control Regulation.
69.
Newscorp/Telepiù (Case COMP/ M 2876) Commission Decision 2004/311/EC [2004] OJ L110/ 73, Commitments to the European Commission article 15.1(b) (vii).
70.
Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223, 231.
71.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M.3680) [2005] OJ/C 139/37, Commitments to the European Commission D3 paras 44–45.
72.
Axalto/Gemplus (Case COMP/M 3998) [2006] OJ C196/34.
73.
Last three years referred to the period preceding immediately the closing of the merger between Axalto and Gemplus.
74.
Third Parties referred to licensing firms in which neither Axalto nor Gemplus had any controlling interest and that licensed their patents from Axalto or Gemplus in three years immediately preceding the transaction.
75.
Liberty Global/Ziggo (Case COMP/M.7000) [2014] OJ C147/1, Commitments to the European Commission, Section G.
76.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission, Section F, para 54.
77.
Intel/McAfee (Case COMP/M 5984) [2011] OJ C98/1, paras 39–40.
78.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M3680) [2005] OJ/C 139/37, Commitments to the European Commission D3, paras 44–45.
79.
Axalto/Gemplus (Case COMP/M 3998) [2006] OJ C196/34, Commitments to the European Commission, Section F.
80.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission, Section G.
81.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission, Section G.
82.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission, Section F, para 45.
83.
Ibid., Commitments to the European Commission, Section F, para 46.
84.
Ibid., Commitments to the European Commission, Section F, paras 46, 47.
85.
Luca G Radicati Di Brozolo, ‘EU Merger Control Commitments and Arbitration: Reti Televisive Italiane v. Sky Italia’ (2013) 29(2) Arbitration International 223, 235.
86.
This implied that a potential purchaser who could not receive a commitment from the merged entity to offer it the product on the reasonable prices as specified in the commitments, could make a request for arbitration to resolve any supply or price-related disputes. Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M 3680) [2005] OJ/C 139/37, Commitments to the European Commission, Section D3, paras 44–45.
87.
Ibid.
88.
Ibid.
89.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M 3680) [2005] OJ/C 139/37, Commitments to the European Commission, Section D3, paras 44–45.
90.
Axalto/Gemplus (Case COMP/M 3998) [2006] OJ C196/34, Commitments to the European Commission, Section F.
91.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission, Section G.
92.
Intel/McAfee (Case COMP/M 5984) [2011] OJ C98/1, para 344 and Commitments to the European Commission, Section D, para 28.
93.
Ibid., at paras 344–45 and Commitments to the European Commission, Section D, para 28.
94.
Thomson Corporation/ Reuters Group (Case COMP/M.4726) [2008] OJ C212/5, Commitments to the European Commission.
95.
The lex arbitri refers to the procedural rules governing a given dispute. This may refer to the procedural rules of the arbitration institution or the arbitration rules and/or conflict of law rules applicable at the place of arbitration.
96.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M.3680) [2005] OJ/C 139/37, Commitment to the European Commission, Section D3, para 53.
97.
Liberty Global/Ziggo (Case COMP/M.7000) [2014] OJ C147/1 Commitments to the European Commission, Section G.
98.
Intel/McAfee (Case COMP/M 5984) [2011] OJ C98/1, para 344 and Commitments to the European Commission, Section D, para 41.
99.
Ibid.
100.
NXP Semiconductors/Freescale Semiconductor (Case M 7585) [2015] OJ C375/2, Commitments to the European Commission, Section F, para 55. It reads: “The Arbitral Tribunal shall decide the dispute on the basis of the Commitment and the Decision. Issues not covered by the Commitment and the Decision shall be decided(in the order as stated) by reference to the Merger Regulation, EU law and general principles of law common to the legal order of the Member States without a requirement to apply a particular national system.”
101.
Marc Blessing, Arbitrating Antitrust and Merger Control Issues (Basel: Helbing Lichtenhahn Verlag 2003) 83.
102.
Ferdinando Emanuele, Milo Molfa et Pierantonio d’Elia, ‘L’arbitrage relative aux engagements en matiere de concentrations au sein de l’union européenne: Principales Caractéristiques et enjeux stratégiques a la lumière de la première sentence arbitrale’ (2013) 5 Revue de Droit des Affaires Internationales 445, 457.
103.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/1, para 344 and Commitments to the European Commission, Section D, para 42.
104.
Ibid., at para 344 and Commitments to the European Commission, Section D, para 42.
105.
Ibid., at para 344 and Commitments to the European Commission, Section D, para 43.
106.
Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (Case No COMP/M.3680) [2005] OJ/C 139/37, Commitment to the European Commission D3 paras 44–45.
107.
Liberty Global/Ziggo (Case COMP/M 7000) [2014] OJ C147/1, Commitments to the European Commission, Section G.
108.
Case No COMP/M.2876 NEWSCORP/ TELEPIÙ, Commitments to the European Commission, Article 15.1(b)(vi).
109.
Case No COMP/M. 5984 Intel/McAfee, para 344 and Commitments to the European Commission Section D, para 33.
110.
Orange/Jazztel (Case COMP/ M7421) [2015] OJ C407/26, Commitments to the European Commission.

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Center for Legal Informatics in the Department of Law, Aarhus Universitet School of Business and Social Sciences, Aarhus, Denmark
Kalpana Tyagi

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Tyagi, K. (2019). Merger Remedy-Related Arbitration: une innovation suprenante. In: Promoting Competition in Innovation Through Merger Control in the ICT Sector. Munich Studies on Innovation and Competition, vol 10. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-58784-3_14

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DOI: https://doi.org/10.1007/978-3-662-58784-3_14
Published: 22 June 2019
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