Israel Mulls End to Airline Carve-out
Airline companies in Israel, long exempt from elements of the country’s competition law, may soon lose their safe haven.Local support is gathering for the annulment of the airlines’ exemption, amid calls to increase competition – and, it is hoped, to lower the cost of flights. The possible annulment comes in the form of a draft of the Budget Law for 2007.
If the new law is accepted, Israel’s airlines will have to change their practices immediately. All code-sharing agreements would in particular need to be approved immediately with the antitrust authority.
(Global Competition Review, 21.12.06)
Japan to Relax
Japan’s Fair Trade Commission (FTC) is considering relaxing its merger control policy.The Commission is expected to adopt the Herfindahl-Hirschman Index (HHI), which is used to measure market concentration in the US and Europe.The HHI index calculates the degree of control held by larger firms, as well as market share. The Commission may also begin to clear mergers where the market share exceeds the current limit of 35 percent.
The Commission received 1,093 merger filings in 2005. The new draft guidelines of the Commission are expected in February 2007.
(Global Competition Review, 28.11.06)
Korea Levies Record Fine
South Korea’s Fair Trade Commission (FTC) imposed fines totalling €164mn against 10 companies accused of price-fixing. The companies were accused of raising the costs for their products when oil prices increased, but failing to reduce them when oil prices fell. The Commission will hold a general meeting before the end of the 2006 to finalise the fines.
The fine dwarfs previous penalties imposed by the Commission. In 1996, the agency imposed 13 fines totalling US$11.5mn, while another 13 penalties totalled US$98mn in 2000.
(Global Competition Review, 28.11.06)
Telecom will ‘work with’ Operational Separation
Telecom said that the recommendation on its operational separation by a powerful Parliamentary Committee is not ideal, but it will do its best to work with it.
The Finance and Expenditure Select Committee report on the ‘Telecommunications Amendment Bill’ recommended operational as well as accounting separation for Telecom’s retail and wholesale businesses.
Wayne Boyd, chairman, Telecom Corporation, New Zealand said that they preferred a simpler form of operational separation which was better suited to New Zealand. The Committee has gone for a more complex, three-way separation.
Telecom shares, which lost a third of their value after the announcement by the Government to legislate to force Telecom to open up its network to rivals in May 2006, were little moved by the news.
They were already down 5 cents ahead of the announcement and remained there on US$4.25 soon after.
Boyd said that telecom had already made progress down the path outlined with a major reorganisation, including voluntary separation into retail and wholesale units, but the Committee had recommended a split into at least three divisions, including a network access division.
The Government will consider the recommendations before deciding on the next step in the progress of this Bill. The Committee, which reported back on November 28, 2006, stopped short of recommending separate ownership of Telecom’s wholesale and retail divisions.
(NZ Herald, 28.11.06)
Russia Moots New Competition Unit
Russia’s Antimonopoly Service has proposed that the Ministry of Internal Affairs establish a new competition department, similar to the ‘US model’.The Department would handle antitrust issues and serve as liason between the antimonopoly service and politicians. The announcement was made on September 19, 2006.
The Department would be put in place by December 2006. The proposition is the latest in a process to overhaul the competition regime in Russia. A new competition law will enter into force on October 26, 2006. Amendments to the law on administrative fines and the criminal code are expected to follow shortly.
The antimonopoly service has said that it needs more assistance from other public authorities so that it can free resources to focus on large cartel investigations, rather than on the many small antitrust violations that now occupy it.
(Global Competition Review, 27.09.06)
CCS Proposes Giving third Parties a Say in Merger Cases
The Competition Commission of Singapore (CCS) is to allow third parties to give their opinion on whether a merger will lessen a competition in a particular sector.The proposal is one of a number relating to changes to the Competition Act.
(Strait Times, 12.12.06)