Courts uphold equity in corporate dealings
EU LAW UPDATE:CORPORATE AND commercial matters have recently dominated the EU courts docket and important judgments have dealt with the integrity of the financial markets and the European Commission’s enforcement of rules on fair competition.
On June 28th, in its judgment in Markus Geltl v Daimler, the European Court of Justice (ECJ) gave a broad interpretation of “inside information” for the purposes of determining conduct prohibited as “insider dealing” by the Market Abuse Directives (Directives 2003/6/EC and 2003/124).
The ECJ held an intermediate step towards that decision may itself constitute inside information for the purposes of the directives, as persons possessing such knowledge would be in an advantageous position as compared to other investors. In this case, the price-relevant event was not the formal announcement of the company’s board that its chairman would unexpectedly resign, but information relating to his intention to do so and consequent preparations for it happening.
Proposals are well developed for enhanced regulation and enforcement with a new European Union Market Abuse Regulation, which aims to expand the scope of financial instruments covered by the EU rules and to adapt those rules to new technology, together with a directive on criminal sanctions for serious market abuse.
As regards competition, MasterCard’s multilateral interchange fees as applied to retailers participating in the MasterCard card payment system were found by the Luxembourg General Court to restrict price competition on the basis that they had the effect of setting a floor under costs charged to retailers (T-111/08).
An ECJ judgment on June 14th last entitled Auto 24 v Jaguar Land Rover France SAS (C-158/11) to deal with distribution systems which are selective on the basis of quantity. The court found a manufacturer was not required to ensure criteria for entry into such a system were objectively justified and applied in a uniform manner.
On June 27th, the Luxembourg General Court (in ruling T-167/08) substantially upheld a penalty payment of €60 million imposed on Microsoft by the European Commission for failure to disclose information to competitors at a reasonable price so as to allow inter-operability between the dominant Windows architecture and rival servers.
Vice-president Joaquín Almunia welcomed the important judgment and emphasised the commission’s commitment to enforcing EU competition rules to ensure consumers and businesses alike can benefit.
On the home front, the passing of the Competition (Amendment) Act 2012 on July 3rd last brings in enhanced enforcement measures of increased fines, prison sentences and company director restrictions with a view to more effectively combating anti-competitive practices affecting consumers, small business and the economy.
Margaret Gray and Roger Leviton are members of the Irish Society for European Law.