French Supreme Court adopts a restrictive interpretation of attorney-client privilege

by Fatima Ghaddari | Feb 3, 2025 | Niet gecategoriseerd

Whereas the trend was to ensure legal privilege with the enactment of Law n°2021-1779 on Confidence in the judiciary, the French Supreme Court has adopted a strict interpretation of attorney-client privilege in the context of antitrust investigations leading to a harsh restriction of the scope of protected documents.

Indeed, this law has introduced at the article 56-1-1 of the French Criminal Procedure Code, a provision allowing individuals under a criminal dawn raid to raise an objection if they believe that documents being seized are covered by attorney-client privilege. In that case, the documents shall be placed under seal, subject of an independent report and subsequently forwarded to the liberty and detention judge, in charge to decide whether or not the documents can be joined to the files or must be returned.

In a judgement dated 24 September 2024, the Criminal Division of the French Supreme Court (‘Cour de Cassation’) ruled that conversations and documents exchanged between a lawyer and his client may be seized during an antitrust dawn-raids, if they do not fall within the scope of “the exercise of the rights of defense”.

In this case, the liberty and detention judge authorized dawn-raids, under the provision of article L.450-4 of the French Commercial Code during which digital and paper documents belonging to a company were seized by the DREETS (Direction régionale de l’économie, de l’emploi, du travail et des solidarités).

The company challenged the seizure of those documents before the First President of the Versailles Court of appeal, arguing that they were covered by the attorney-client privilege. As the Court of Appeal dismissed its action, the company brought the case to the Cour de Cassation. In its judgement, the Cour de cassation confirmed the ruling of the First President of the Versailles Court of Appeal and rejected the company’s claims.

First, the Cour de cassation explained that although all documents exchanged between attorney and client were covered by legal privilege, it was nonetheless possible to seize them in the course of a dawn-raid conducted under the provision of article L.450-4 of the French Commercial Code, i.e investigations regarding anti-competitive practices, as long as those documents do not fall within the scope of “the exercise of the rights of defense”.

Second, as the company argued that the DREETS had failed to apply the specific procedure laid down by article 56-1-1 of the French Procedure Criminal Code, introduced by the Law no. 2021-1729 on confidence in the judiciary, the Court ruled that this procedure was not applicable to a dawn-raid conducted in competition law matters but limited to criminal dawn-raids.

Third, the Cour de cassation dismissed the company’s argument that the judge had failed in his duty by not sorting out the documents that were subject to the exercise of the rights of defense among all the documents selected. The Court ruled that, in case of a dispute over the nature of the items seized, it is up to the company to identify precisely which privileged documents fall within the scope of “the exercise of the rights of the defense”.

The position of the French supreme court is particularly significant as it seems to be inconsistent with the judgement adopted by the Court of Justice of the European Union (CJEU) on 26 September 2024. Indeed, the CJEU ruled in favor of a broader scope of attorney-client privilege asserting that this protection, guaranteed by article 7 of the Charter of Fundamental rights, is fundamental to the right to a fair trial and must be respected in all legal proceedings. The CJEU stated that legal advice provided by a lawyer in matters of company law is covered by attorney-client privilege: as a consequence, any decision requiring a lawyer to disclose all related documentation and information relating to his or her relations with his or her client, concerning such legal advice to the authorities would interfere with the right to confidentiality between them. It stems from the above that this protection covers not only documents that fall within the scope of the “exercise of the rights of defense” but also legal consultations.

We can only hope that, in line with this reasoning, the position of the Cour de cassation will evolve in order to ensure a more effective right of defense of the companies visited. Indeed, this approach is really detrimental as Attorneys, when drafting a legal consultation, have to bear in mind the risk of this consultation to be seized by the competition authorities.

Grall & Associés

First experiences with the Danish Act on Unfair Food Practices

by Vibeke Hammershoi | Jan 28, 2025 | Niet gecategoriseerd

The Danish Act on Unfair Food Practices (“The UTP Act”) came into force on 1 July 2021, implementing the EU UTP Directive (2019/633). The aim is to regulate unfair trading practices in relations between businesses in the agricultural and food supply sector. Under the UTP Act, some trading practices are always prohibited (the black list), while other trading practices are prohibited unless the parties have entered a clear and unambiguous agreement (the grey list).

Evaluation of the UTP Act: Focus areas and approach

The Danish Competition and Consumer Authority monitors the effects of the UTP Act and came with their first evaluation in November 2024.

The evaluation focusses on six areas:

1. The impact on the competitiveness of Danish suppliers
2. Risk of smaller suppliers not being selected
3. The development of consumer prices
4. Unwanted effects on rural areas and local areas
5. The potential effect for companies to use credit facilitation

The evaluation is based on questionnaires sent to relevant companies, interviews and ongoing dialogue with business organizations and analysis of relevant figures and data.

Status on UTP in Denmark

The evaluation only shows limited signs of unfair trading practices. The reason is that companies have largely adapted their business practices to the rules in the UTP Act. When challenges do arise, suppliers, buyers and business organizations mostly handle disagreements through dialogue rather than formal complaints.

Based on the results of its monitoring and evaluation of the UTP Act, the authority concludes that the UTP Act adequately fulfils the purpose of the underlying UTP Directive.

Only one UTP complaint

Since the law came into force on 1 July 2021, the authority have only received one complaint concerning a violation of the UTP Act. The complaint was later withdrawn. Therefore, no decisions have yet been passed on unfair trading practices.

UTP in Denmark: Always room for improvement

Although there has only been one complaint, there is room for improvement. This is the opinion of several business organizations, which especially highlight three types of trading practices where companies are experiencing challenges:

1. Suppliers are charged for services or conditions that are not directly related to the sale of agricultural and food products.
2. Buyers make unilateral changes to the supply agreement.
3. Suppliers are required to cover deterioration or loss, even if the deterioration or loss is due to the buyer’s negligence or fault.

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Andreas Christensen and Marie Løvbjerg, Horten

Foreign investment controls: The “foreign investor” test and “protected entity” test in the EU and the UK

by Fatima Ghaddari | Jan 20, 2025 | Niet gecategoriseerd

Foreign direct investment contributes to the growth of the economies where foreign money is invested, but can also undesirably interfere with resources of strategic importance to the functioning of the host country. In difficult times, security issues come to the fore at the national and EU levels, and protectionist tendencies rise. In recent years, the best example is implementation of regulations on control of FDI in the laws of various European countries (as reflected in the latest update to the procedural guidelines issued by the Polish competition authority).

In recent years, additional mechanisms have been introduced to protect European economies and markets from undesirable foreign investments (as we discussed in the article “Control of concentration of undertakings receiving foreign subsidies: New powers of the European Commission”), in response to economic expansion by some countries and investors. Primarily, this has to do with the leading contemporary totalitarian power, the People’s Republic of China (and the quasi-totalitarian Russian Federation). They take advantage of the opportunities provided by the functioning of the free market to expand their influence around the world, particularly in European countries with developed market economies. Investors from such countries have sought to take control of companies, technologies or assets of vital national security importance in European jurisdictions. Frequently, such investments have proved successful for dubious investors, to the obvious detriment of host states. But the controls also protect European economies from competition from other highly developed countries and companies from those countries.

The increasingly uncertain international situation has also undoubtedly contributed to the rapid development of these regulations. The immediate catalyst was the Covid-19 epidemic, which originated in China and affected the functioning of the global economy and national economies on a scale not seen in decades; and from 2000 onward, Russia’s increasingly aggressive policy toward its neighbours, culminating in its full-scale invasion of Ukraine in 2022 and the war now underway just across the European Union’s eastern border.

In this article, I compare legal solutions for control of FDI in selected EU countries and the UK. For this analysis, the main source of data was a multi-jurisdictional study on FDI regulations prepared for the Antitrust Alliance, an international organisation of independent law firms practising in the competition area (including Wardyński & Partners).

Development of FDI regulations in EU member states

State control of inbound foreign investment has a long tradition in European countries. Protectionist measures have been introduced with varying degrees of intensity depending on the socio-economic and political situation. The possibility of monitoring the influence of foreign capital within a country and blocking certain investments due to the interests of the host country is an emanation of the sovereignty of each country.

However, control of foreign investment is also driven by a conflict of values evident especially in states with a market economy model based on free competition mechanisms (including competition by foreign capital). In addition to the free market, countries must also take into account other objectives and values vital to their functioning and the well-being of their citizens. Primarily, such values protected and guaranteed by the state are security and public order in the broadest sense, but also protection of competition, consumers, social rights, and the environment. (For example, Art. 31(3) of the Polish Constitution allows limits to be imposed on the exercise of constitutional rights and freedoms “only when necessary in a democratic state for the protection of its security or public order, or to protect the natural environment, health or public morals, or the freedoms and rights of other persons.”) Implementation of these objectives and values requires a departure from the market paradigm.

We also face an identical conflict of values at the EU level. While the Maastricht Treaty of 1992 recognised the free movement of capital as a Treaty freedom, the freedoms of the EU internal market are not absolute. Under the EU treaties, these freedoms can be restricted (by the EU or member states) in particular when justified by the public interest (e.g. Art. 36 and 52 TFEU).

And it is important to note the specific position of member states operating within the international structure of the EU, to which member states have delegated some of their sovereign powers. In this structured economic and political organism, there are two tiers of regulation—in addition to national laws, there are also EU provisions applicable to the entire community of member states.

Individual countries have applied legal mechanisms to control foreign investments as diverse as the purposes they are intended to serve. In particular, these are solutions to control the movement of capital, the transfer of companies across national borders, or cross-border mergers of companies, in the broader public interest. Generally, in the first decades of the EU’s existence, national solutions included narrow sectoral regulations. Restrictions were imposed for example on foreigners wishing to purchase real estate, invest in media companies (particularly print and television), purchase energy assets, or operate or invest in the telecommunications or defence sectors (in Poland, see for example the Act on Acquisition of Real Estate by Foreigners; Art. 40a of the Broadcasting Act; Act on Special Powers of the Minister for Energy of 18 March 2010; and the preamble to the Act on Control of Certain Investments of 24 July 2015). For a while, a common solution was the “golden share,” a mechanism allowing the state to retain control over strategic companies undergoing privatisation.

The situation began to change several years ago under the influence of the international situation, which forced further legislative steps to tighten FDI controls. The EU and national legislatures began taking a more comprehensive and restrictive approach to these controls. Uniform multi-sectoral regulations were introduced (generally in addition to existing sectoral regulations), typically for a specific but fairly broad group of sectors considered strategic for the functioning of the state.

The impetus for introduction of new national solutions was adoption of the EU’s comprehensive FDI Screening Regulation (Regulation (EU) 2019/452 of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union, which entered into force in April 2019). The majority of EU member states introduced comprehensive national FDI solutions in 2020–2021. (Regulation 2019/452 does not require member states to create national FDI screening mechanisms, but if they do, under Art. 3 of the regulation they must ensure that their controls have specific timeframes, are transparent and non-discriminatory, introduce procedures for recourse against national decisions on FDI control, and provide measures to prevent circumvention of FDI control mechanisms and related decisions.) Instead, the regulation introduced a mechanism for cooperation and information exchange between the European Commission and national authorities overseeing the investment control process in individual member states. (Regulation 2019/452 introduces a cooperation mechanism for foreign investments subject to screening in EU member states (Art. 6) and foreign investments not covered by screening (Art. 7). The principle of mutual cooperation between the European Commission and the member states within these mechanisms allows for protection of common interests. The Commission is the coordinating and initiating body for these interactions.)

Pursuant to the Commission’s latest FDI report (Fourth Annual Report on the screening of foreign direct investment into the Union, issued in October 2024), 23 of the 27 EU member states have adopted or updated cross-sectoral FDI control regulations (mainly between 2020 and 2023). New foreign investment control mechanisms were adopted in Belgium, Bulgaria, Estonia, Ireland, Luxembourg, Romania, Slovakia and Sweden, while the solutions already in place in Denmark, France, Germany, Hungary, Italy, Latvia, the Netherlands, Poland, Slovenia and Spain were updated. A cross-sectoral regulation was adopted before 2017 only in Portugal, and in three jurisdictions (Croatia, Cyprus and Greece) the legislative process for adopting analogous provisions was underway.

Comparison of current FDI regulations in selected jurisdictions

In this article, we examine the impact of these regimes on both active and passive stakeholders, i.e. the foreign investor and the entities protected by FDI provisions.

Entities are generally protected because of:

• The subject of their business (protected industries)
• Ownership of certain assets (e.g. critical infrastructure)
• Generating certain levels of turnover, above the de minimis exemption for FDI control in the given jurisdiction.

Clear, understandable provisions and easily verifiable criteria should help foreign investors evaluate planned transactions in light of the obligations imposed by FDI provisions, encouraging legal certainty and thus reducing investment risk.

A comparative analysis of the scope of these concepts across 16 jurisdictions (selected EU member states and the UK) is presented below. This sample reveals certain regularities found in legislation across various countries with developed market economies.

Active entities: Foreign investors

The table below compares the definitions of a “foreign investor” in 16 jurisdictions in terms of:

• Categories of entities included in the concept of “foreign investor”
• Geographic origin of the investor (how “third countries” are defined, and by implication, when an investor is regarded as “domestic” for purposes of FDI controls)
• Whether transactions carried out via a domestic entity (or entities from jurisdictions that do not trigger FDI controls) are counted as domestic investments (i.e. not subject to heightened state control), or as FDI potentially subject to control.

Foreign investor test

Analysis

The data show that the entities covered by the concept of a “foreign investor” are defined broadly and in a fairly similar manner in the analysed jurisdictions. The term generally encompasses all investors from third countries, both natural and legal persons (regardless of legal form, and thus not exclusively undertakings). As a rule, the determining factor for belonging to a given territory is citizenship or residence (for natural persons) or having a registered office (for legal persons) in that state.

By contrast, the geographic link for distinguishing between domestic and foreign investors (which territories are considered “domestic” and which are “foreign”) is defined in a much more varied way. This component of the definition of a foreign investor significantly affects the determination of whether a foreign investment should be reported to domestic control authorities.

In this aspect, the following ways of defining the concept of foreign investor can be distinguished in the analysed jurisdictions:

1. The broadest definition (covering the largest range of potential investors) was introduced in the Netherlands and the UK. Pursuant to the FDI control provisions in these jurisdictions, any entity, whether foreign or domestic (Dutch or British, respectively) is considered a foreign investor.
2. A traditional definition (slightly narrower than the one above) applies in France. Indeed, entities from all other countries except France are considered foreign investors. Interestingly, French entities residing or registered outside of France for tax purposes are also considered foreign investors.
3. Some definitions recognise as “domestic” territory other countries belonging to a single supranational organisation. In six of the surveyed jurisdictions, entities from outside the EU are considered foreign investors (Belgium, Czechia, Estonia, Germany, Spain and Sweden). In three jurisdictions, the “domestic” area includes, in addition to the EU, other countries in the European Economic Area (i.e. Liechtenstein, Norway and Iceland), and in the case of Denmark (in principle) and Finland, also Switzerland (member states of the EU + the European Free Trade Association). Poland stands out in this group of states, as the geographic connector for defining a domestic investor is expanded the most—in addition to EU and EEA countries, it also includes OECD member states (the UK, Switzerland and eight non-European countries—the Organization for Economic Cooperation and Development comprises 30 countries, of which Australia, Canada, Japan, Mexico, New Zealand, South Korea, Turkey and the US are not members of the EU or the EEA). A contrario, entities from outside the OECD are considered foreign investors. Thus from this perspective, Polish laws defines a foreign investor in the most limited way among the jurisdictions identified here. As 10 of these 16 jurisdictions (including, as an extreme case, Poland) use a similar method of defining the origin of a foreign investor (generally outside the EU, the EEA or the EFTA), this is something of a standard in these jurisdictions.
4. Mixed definitions, combining the classic definition (point 1) and definitions narrowing the concept of a foreign investor to entities originating from outside countries affiliated with one or more international organisations (point 3). We encounter such cases with Lithuania and Hungary, where two categories of foreign investors were introduced. In Lithuania, there is a group of “closer” foreign investors (i.e. from outside Lithuania, but from the EU, the EFTA, NATO or the OECD) and third-country investors, i.e. “further” foreign investors from states not affiliated with these organisations (and this category is treated more rigorously in the Lithuanian FDI control provisions than the category of foreign investors in the strict sense). In Hungary, entities from outside that country are considered foreign investors for the most significant investments (transactions involving acquisition of control and investments exceeding de minimis thresholds), and for other investments subject to oversight, only investors from outside the EU, the EEA or Switzerland are considered foreign investors.

In all the analysed national provisions, the principle was introduced to extend FDI control to transactions formally carried out by domestic entities, but over which decisive influence (directly or indirectly) is exercised by entities qualified as foreign investors (indirect investments). In determining whether the activity of direct investors is influenced by third parties, evaluation criteria are used deriving from notions commonly applied in antitrust, trade or tax law, such as control, dominance, or beneficial ownership. Such provisions are intended to prevent foreign investors from circumventing FDI controls.

Protected entities and protected activities (strategic sectors for state security)

The table below describes the protected entities in each country (i.e. those with special status for protecting state interests). Additional determinants for protected entities are:

• Carrying out certain activities (in sectors of particular importance to state security)
• The de minimis threshold for foreign investments
• Whether investments involving only acquisition of assets from protected entities are subject to FDI control.

Protected entity test

Analysis

In the studied jurisdictions, protected entities are defined in two ways. In most jurisdictions (11 of 16), this concept refers exclusively to undertakings, or a certain subset of undertakings (e.g. companies). In five cases, a broader definition of protected entity was used, which can be any entity (regardless of whether it has the status of an undertaking in the given legal system) engaged in activity covered by investment protection (as a rule, this is a category of entities with legal personality). This is the case in Denmark, France, Latvia, Portugal and the UK.

A domestic entity is usually understood to mean an entity with its registered office in the host country (in 11 of 16 jurisdictions). By contrast, in five cases (Czechia, Estonia, the Netherlands, Portugal and the UK), any entity engaged in activity within protected sectors or holding assets within sectors deemed strategic in the given state is considered a protected entity.

Inherent in the definition of a protected entity is a determination that it operates in a sector strategic to state security. Here, two main trends can be noted.

On one hand, protected sectors may be defined by identifying them in detail (a closed list) and possibly specifying additional criteria that must be met. This is the approach, for example, in the current Polish act as amended in 2020, which lists more than 20 types of activities covered by FDI protection. It is similar in Latvia, where the different types of strategic activities are defined in great detail, introducing additional criteria (e.g. a threshold of installed energy capacity at electricity producers, the size of agricultural or forest holdings, or the length of a thermal network).

The second method of defining sectors is more general (less precise), covering a very wide range of activities. Such a broad definition leaves a lot of room for interpretation and discretion on the part of the authority. This is the approach for example in France (sectors considered sensitive for reasons of public safety and order, or with operations related to national defence) and in Finland (manufacturing and supply of key goods and services related to the statutory duties of state authorities and necessary for ensuring public order and security).

Regardless of the adopted method for defining strategic sectors, the scope of protected activity can be defined relatively narrowly by identifying only a few protected areas (e.g. in Czechia and Lithuania), or broadly (e.g. in Estonia, Hungary, Poland, Spain, Sweden and the UK). As a rule, protected activities are defined broadly. Despite the differences in indicating a number of strategic sectors for each state, there is a canon of activities considered sensitive to public security in all these jurisdictions, such as:

• Cybersecurity (including software and digital technologies)
• Defence (including dual-use products/technologies)
• Energy
• Financial
• Food
• Healthcare
• Telecoms
• Transport
• Critical infrastructure more broadly.

Another criterion for protected entities is the turnover generated by the entity (or its protected assets). Sometimes, instead of turnover, another financial criterion is used, e.g. the minimum value of the investment in protected goods. Such criteria set a de minimis threshold and were adopted in some jurisdictions to obviate controls of foreign investments of minor importance and negligible impact on state security.

The jurisdictional overview above shows that eight of the countries do not apply the de minimis construction at all, while another four (Denmark, Estonia, Hungary and Latvia) include such exemptions as an exception to the rule and only for selected branches.

Four jurisdictions establish a de minimis threshold as a rule. In the case of Belgium, two turnover thresholds are set for protected entities (EUR 100 million or EUR 25 million per year), depending on which strategic sectors are affected by the investment. Spain sets a standard threshold of EUR 5 million in annual turnover, while in the case of public companies listed in Spain, the company must have a value exceeding EUR 500 million to be subject to FDI scrutiny.

Only Poland has a set uniform annual turnover threshold for protected entities of EUR 10 million (except for a list of specific companies, currently 17, found in a government regulation to be of special importance to national security). Meanwhile, in Lithuania, the value of the foreign investment must exceed 10% of the protected entity’s annual revenue for the de minimis threshold to be exceeded (although this criterion does not apply to investments relating to nuclear energy).

All of the surveyed national FDI provisions indicate that foreign investments in assets (and relating to critical infrastructure) should be treated on a par with investment in protected entities (in all jurisdictions, without exception, share deals are subject to FDI control, in addition to asset deals). If asset deals were ignored, investment control regulations would not be very effective in ensuring public safety.

Summary: FDI control in Poland compared to other countries

According to the European Commission’s latest FDI Report, in 2023 a total of 1,808 foreign investment authorisation cases were processed in EU member states (both upon application and at the authority’s own initiative). Of these, 56% were subjected to formal review proceedings and 44% were found to be ineligible for consideration. For the vast majority of cases accepted for hearing (85%), unconditional approval was granted for the investment. This means that such transactions were approved without the need of any further action by the investors. In 10% of the cases, permission was granted subject to meeting conditions or applying mitigating measures. National FDI control authorities blocked transactions in only 1% of all cases in which decisions were issued. Additionally, 4% of applications were withdrawn by the investors before a decision was issued. In 2023, the main foreign investors in the EU27 were from the US (about 30%) and the UK (about 25%).

Against this background, what is the decision-making practice of the FDI control authority in Poland—the president of the Office of Competition and Consumer Protection (UOKiK)? (In the case of the specific companies listed as vital to national security, the Minister of State Assets and the Minister of National Defence are the control authorities.) From introduction of a comprehensive, cross-sector control mechanism in Poland in July 2020, through May 2024, UOKiK conducted 15 foreign investment control proceedings (according to an UOKiK communiqué of 9 May 2024). To date, the authority has not issued a single ban on conducting a foreign investment in Poland. In 2023 alone, UOKiK conducted four investment control proceedings, in which two cases resulted in issuance of a no-objection decision (UOKiK Activity Report for 2023).

In 2023, Poland accounted for only 0.2% of all cases covered by control proceedings within the EU27. However, the percentage of decisions issued by UOKiK on reported foreign investments was similar to the level for all decisions issued in FDI control cases in EU countries during this period. The very small number of control proceedings in Poland results directly from the definition of “foreign investor” and “protected entity” in the Act on Control of Certain Investments.

Against the backdrop of other European solutions, the Polish provisions stand out in several areas. First, the Polish definition of a foreign investor is the most liberal of all the national solutions analysed here. The Polish act excludes the most countries of origin of investments as not subject to FDI control. Investments originating from such countries are effectively equated with domestic investments. Unlike the other analysed jurisdictions, FDI control in Poland does not cover investors from, for example, the UK or Turkey, or, from outside developed countries in Europe, investors from Australia, Canada, Japan, South Korea, or the US. Lithuania applies solutions somewhat similar to those in Poland. At the other extreme are regulations (e.g. in the Netherlands and the UK) recognising as a foreign investor, in principle, all entities, regardless of whether they originate from the host country or from abroad.

Second, the Polish provisions recognise as protected entities only undertakings operating in protected sectors (much like the solutions adopted in most of the analysed jurisdictions, apart from Denmark, France, Latvia, Portugal and the UK).

However, a de minimis threshold is included in the Polish act, exempting an investment from notification if the protected entity does not reach an annual turnover of more than EUR 10 million in Poland. This de mininis exemption means that by definition, a significant number of transactions are not monitored by UOKiK. On one hand, this limits the investment control to significant transactions that could have an obvious impact on national security, but on the other hand, FDI control may not extend to a number of important investments, e.g. involving startups introducing new technologies or innovations that could have a significant impact on security in many sectors.

Upcoming changes: Proposal for a new EU regulation on FDI screening and its impact on the existing FDI arrangements of member states

The foregoing analysis confirms that currently EU member states have considerable freedom in introducing and applying their own policies and regulations through which they can control and restrict foreign investments they deem undesirable. But this freedom is diminishing with continuing EU integration and assumption by EU bodies of more and more of the individual competencies of member states. This process is also underway in the area of FDI controls, as the European Commission has issued a proposed regulation establishing a new framework for the EU’s foreign investment control system (the proposal of 24 January 2024 is at the legislative stage of first reading in the European Parliament).

The proposal would change the Commission’s existing approach to national FDI control systems. First, it would oblige all EU member states to maintain their own foreign investment control systems. Second, it introduces minimum standards common to the entire EU (resulting in unification of mandatory FDI control mechanisms at the level of the member states). Such changes will have to be introduced by member states within 15 months after the new EU regulation comes into force.

The planned EU regulation would introduce mandatory standards for the concepts discussed in this article, i.e. who is regarded as a foreign investor and which entities and sectors are protected.

With regard to the origin of foreign investors, investment control at the national level will be extended to investments by all entities originating from outside the EU. This means that unlike the current Polish system (investors from outside the OECD), the new national provisions will also have to apply to investments originating from countries such as Canada, Norway, South Korea, Switzerland, the UK or the US.

In terms of protected entities and sectors, member states will be required to extend investment control to such areas as advanced semiconductors, artificial intelligence, biotech, quantum technologies, advanced sensory and robotic technologies, energy technologies, as well as certain activities key to the functioning of the EU financial system. (A detailed list of technologies, assets, plants, facilities, equipment, networks, systems, services and economic activities of particular importance to security or public order of the Union is set forth in Annex II to the proposed regulation.) For this reason, Polish lawmakers will need to revise and expand the current catalogue of protected economic sectors.

Consequently, there will soon be changes in the control of foreign investments at the EU level and in member states, including Poland (perhaps this year, and certainly in 2026, as the current provisions on cross-sectoral controls remain in effect until 24 July 2025, under a Covid-19 relief act from 19 June 2020). The number of FDI applications processed by UOKiK is expected to increase significantly.

Andrzej Madała, Competition & Consumer Protection practice, Wardyński & Partners

Prohibition of unfair trade practices in the purchase of agricultural and food products: unilateral modification of contract terms

by Fatima Ghaddari | Jan 2, 2025 | Niet gecategoriseerd

Last year 2023, the Swedish Competition Authority (”the SCA”) conducted a major investigation into unfair trading practices, which resulted in several cases. Here is a summary of the most interesting case handled by the SCA so far.

Overview on unfair trading practices (in sweden)

The Swedish Act (2021:579) on the Prohibition of Unfair Trading Practices in the Purchase of Agricultural and Food Products (“LOH”) entered into force on 1 November 2021. The Act is based on UTP Directive.[1] The Directive sets a minimum level of protection against certain trading practices and contractual arrangements.

The Directive is based on the premise that imbalances in bargaining power between suppliers and buyers of agricultural and food products are common – which is the reason for legislative protection against the stronger trading partner.

Two provisions are central. The first concerns the so-called “black list”, which sets forth trading practices that are prohibited in all circumstances. The second concerns the so-called grey list, which contains trading practices that are prohibited unless clearly agreed in advance by the parties.

As supervisory authority for LOH, the SCA initiated a major investigation into unfair trading practices. The inquiry resulted in several cases, including the one below – which is of particular interest.

Prohibition of unilateral amendments

Following a complaint, the SCA investigated whether a buyer of egg had unilaterally amended the terms of price and payment with its suppliers, who in this case were farmers. More specifically, the buyer had introduced what was known as a “market-adjusted price”, which mean that prices were adjusted weekly. This implied that the buyer, based on its own sales, unilaterally adjusted the price paid to the supplier. The buyer bought directly from farmers, repacked the eggs and sold to both the retail and food industries, where the eggs were used in food processing.

The SCA investigated in detail how the supplier’s pricing model with the so-called market-adjusted price related to the prohibition of unilateral changes in LOH.

Assessment by the sca – no violation

In particular, the SCA analysed if the buyer had unilaterally enforced a change to the contractual terms. Under section 5(1)(3) of LOH, a buyer is prohibited from unilaterally modifying the terms of the contract regarding the interval, method, place, time or volume of delivery, quality requirements, payment or price. It is clear from the wording that the provision is aimed at modifying the terms of an existing contract.

The SCA concluded that it was the buyer who contracted the supplier for a certain period. The buyer also amended standard contracts, but that there was no particular term as to how often the price would be communicated to the farmer. Instead, according to the SCA, it was the buyer who set the price and could independently raise or lower it in relation to the egg producers, depending on market developments. The price was communicated to the farmer prior to delivery. The farmer was free to opt out and not supply the eggs to “market-adjusted price”. Against this background, the SCA closed the case without investigating the matter further.

[1] DIRECTIVE (EU) 2019/633 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

Danowsky & Partners

Dutch Authority for Consumers and Markets: lack of a price-fixing system is an unfair trading practice

by Eric Janssen | Nov 12, 2024 | Niet gecategoriseerd

In a decision of 4 September 2024 (Dutch only) the Dutch Authority for Consumers and Markets (ACM) imposed a cease and desist order on cheese producer Royal Lactalis Leerdammer B.V. for violating the Unfair trading practices in the agricultural and food supply chain Act (UTP Act). Royal Lactalis Leerdammer B.V.  had not agreed in advance on a transparent price-fixing system with its suppliers (Dutch dairy farmers), but unilaterally set the monthly remuneration after the lapse of each month. 

The UTP Act

In the agricultural and food supply chain, producers of primary agricultural products are often the weakest link. In order to protect their market position against unfair trading practices (UTP), the European legislator listed in the UTP Directive a number of trading practices that are deemed to be always unfair. The Dutch transposition of this directive, the UTP Act (Dutch only), entered into force on 1 November 2021.

The ACM is the designated enforcement authority as referred to in Article 4 UTP Directive. In connection with this, the ACM has the power, inter alia, to impose fines and cease and desist orders. The ACM can act not only on its own initiative, but also in response to complaints. In Dutch administrative law, a complaint from an interested party is regarded as a request for enforcement. A complaint from a third party is considered a tip-off.

The ACM took the first two decisions (Dutch only) based on the UTP Act early this year. Both decisions concerned unilateral price adjustments by Vion Food Group (Vion), an internationally operating Dutch food conglomerate with mainly slaughterhouses and meat processing plants for pork and beef. Of the three complaints lodged by an interested party, two complaints, according to the ACM, did not relate to a UTP but a commercial dispute. The requests for enforcement were therefore rejected. The third complaint concerned a practice that did qualify as a UTP. However, Vion offered to adjust that practice in line with the ACM’s requirements. That commitment was declared binding by the ACM. Consequently, a breach of the UTP Act was not determined and the complaint was dismissed as well.

The case at hand

The parties involved

Royal Lactalis Leerdammer B.V., a subsidiary of French multinational dairy company Lactalis (Lactalis), produces a Gouda style cheese under the name Leerdammer. Lactalis pays the dairy farmer who supply milk for the production of this cheese a monthly remuneration based on the quantity and the composition (protein and fat content) of the milk delivered. The dairy farmers concerned are united in the Leveranciersvereniging Leerdammer Collectief (LVLC).

Compliants by LVLC regarding Lactalis

On 5 July 2022 LVLC submitted several complaints with the ACM. LVLC alleged that Lactalis violated the UTP Act in various ways. According to LVLC Lactalis:

1.  determined the remuneration unilaterally

2.  demands payments not related to the sale of milk

3.  changes unilaterally the terms of delivery

4.  obtains and uses trade secrets unlawfully

Regarding the first complaint, LVLC claimed that Lacatalis’ retrospective and unilateral determination of the monthly remuneration based on fat and protein content qualified as a UTP. The remuneration changes from month to month without any influence from dairy farmers.  Moreover, a dairy farmer cannot verify whether the right price is paid to him, as there are no parameters on the basis of which the remuneration is actually determined.

Lactalis argued that it never changed the pricing mechanism and therefore it does not violate the UTP Act. The dairy farmers allegedly agreed to Lactalis’ pricing system consisting of Lactalis fixing the remuneration in retrospect. Thus, Lactalis does not change the terms when it sets the remuneration monthly. It is merely giving effect to an upfront agreement made with the dairy farmers, namely that the remuneration is based on the price that fat and protein have fetched in the market. In this regard, Lactalis referred to a decision of 4 July 2023 (Swedish only) by the Konkurrensverket, the Swedish competition authority. This authority reportedly ruled in a seemingly similar case that the contested trading practice did not qualify as a UTP.

With respect to the second complaint LVLC argued that dairy farmers have to pay various payments and surcharges not related to the sale of milk. In any case, dairy farmers cannot check whether this relation exists. Lactalis claimed that its monthly charges include milk sample testing, quality assurance, administration and preparation of the milk remuneration settlement.

Regarding the third complaint, LVLC alleges that Lactalis unilaterally changed the terms of supply in 2022 and 2023. Despite objections from both the LVLC and individual dairy farmers, Lacatalis implemented the amended terms of delivery. Lacatalis argued that there was agreement on the amended terms of delivery, as dairy farmers continued to supply milk.

The fourth complaint concerned the use of farm data that dairy farmers are required to provide to Lactalis to enable it to verify whether the individual dairy farmer meets contractual quality requirements. According to the LVLC, Lactalis shares this farm data with third parties, including Statistics Netherlands (CBS). Lactalis argued that dairy farmers authorise it to share the said data. Each authorisation specifies the purpose for which this data is requested and to whom it is disclosed.

The ACM’s assessment

Review of the complaints

The ACM agrees with the LVLC that Lactalis unilaterally changes the terms of supply by unilaterally determining fat and protein prices (and thus the amount of remuneration) on a monthly basis, without a transparent system agreed with the dairy farmer in advance. In doing so, Lactalis violates the UTP Act. The ACM notes that the prices for protein and fat are not fixed and that it is not transparent how these prices are determined on a monthly basis. In addition, a dairy farmer cannot negotiate fat and protein prices with Lactalis. Consequently, there is no transparent price-fixing system and there are no guarantees to prevent arbitrariness. Thus, in the opinion of the ACM, it cannot be said that Lactalis and its suppliers have agreed on a price or price mechanism.

The Konkurrensverket’s decision referred to by Lactalis, related to the supply of eggs. The buyer, Dava Foods, introduced so-called “market-adjusted” prices in 2022. This meant, among other things, that prices were adjusted weekly based on market conditions. In its decision, the Konkurrensverket concluded that there is no unilateral price change when Dava Foods pays egg producers a new price every week during the period of the agreement. The ACM does not share the interpretation adopted by the Konkurrensverket. In the ACM’s view, the Konkurrensverket merely interpreted Swedish law in a specific case. According to the ACM, this does not detract from its own reasoning and conclusion.

Regarding the payments and surcharges, the ACM considers that these do relate to the supply of milk. However, Lactalis should clarify certain components in its terms of delivery in order to make the relationship with the delivery of milk more transparent.

With respect to the unilaterally changed supply conditions, the ACM agrees with Lactalis that dairy farmers are given the opportunity to object to the changes. The agreement can be tacit, which the UTP Act does not prohibit.

As regards the fourth complaint, the ACM sides with Lactalis as well. According to the ACM the dairy farmers share their farm data with Lactalis to demonstrate compliance with legal and sectoral requirements. The ACM has no indications that Lactalis has obtained, used or disclosed farm data in an unlawful manner.

Decision

Only the complaint relating to unilateral fixing of the monthly remuneration hits the mark. The ACM orders Lactalis to change the terms of delivery insofar as these relate to the calculation of the monthly remuneration and to present the new system to its suppliers. The price system should be transparent, so that it is clear to milk farmers in advance how the remuneration is calculated and that this can be verified by the individual mil farmer. The LVLC’s request to formulate the cease and desist order more concretely in the sense of explicitly stating the requirements to be met by the milk price or pricing system to be used is not honoured. Based on a separate decision dated 28 October 2024 (Dutch only), Lactalis has been given until 4 April 2025 to comply with the cease and desist order. If it fails to comply, Lactalis will become subject to a periodic penalty.

The ACM’s decision is subject to objection and appeal. It cannot be ruled out that LVLC and/or Lacatalis will have made use of this possibility.

Concluding remarks

What stands out about the decision under discussion is first of all that Lactalis apparently has not been able to clarify how the remuneration was determined in actual practice. While Lactalis indicated that the remuneration was calculated based on the monthly prices of protein and fat, it was not able to make clear which prices it exactly used. Was it at all clear what exactly the parties had agreed on with regard to fixing the monthly remuneration? If the agreement was unclear, was there not simply a commercial dispute? In the Vion case, the ACM did not qualify such a dispute as a UTP

It is furthermore unfortunate that the ACM does not explain in more detail why the lack of a contractual system to calculate the monthly remuneration qualifies as a UTP. Perhaps the comparison can be drawn with a unilateral change clause that allows the buyer to unilaterally modify the contract. Such a clause is most likely to be prohibited by Article 3(1)(c) UTP Directive. According to the Commission’s proposal for the UTP Directive, parties are not allowed to contractually deviate from the UTP’s listed in Article 3(1) UTP Directive. These UTP’s are not subject to parties’ contractual discretion due to their “as such” unfair nature (p. 13). In any case, the absence of a contractual price-fixing system makes a formal unilateral change clause de facto redundant. Materially, the absence of a price-fixing system seems to have a similar effect to a unilateral change clause. After all, it allows the buyer to unilaterally set the price to be paid to the supplier.

On top of this, it is likewise a pity that the ACM does not address the substance of the Konkurrensverket decision cited by Lactalis. Without any content-related argumentation, the ACM states that the Konkurrensverket applied its national law in a specific case. It does not explain whether and if so where the Swedish legal framework and the Dava Food case differ from the Dutch legal framework and the Lactalis case the ACM had to rule on. From the Konkurrensverket ’s similarly cursory decision, it would seem that although Dava Foods unilaterally set the new prices, it then communicated them to egg farmers in advance. By then continuing to deliver, these farmers may have tacitly agreed to the new price. Lactalis on the other hand fixed the remuneration after delivery. This seems to be a relevant difference. Either way, the brief substantiation in the ACM decision is a miss for day-to-day practice. As noted above, the ACM has assessed only two cases since the introduction of the UTP Act in 2021. Thus, the number of examples is extremely limited. Leaving several questions unanswered.

This blog is partly based on the blog ACM legt last onder dwangsom op aan Lactalis vanwege eenzijdige prijsbepaling (Dutch only) written by my colleague Rémon van Wingerden.

Belgian Competition Law: the Act of 19 March 2024 gives new powers to the Belgian Competition Authority to support the European Commission’s competences under the Digital Markets Act (Carmen Verdonck and Nina Methens)

by Beatrijs Gielen | Sep 26, 2024 | Niet gecategoriseerd

On 28 March 2024, the Belgian Federal Chamber of Representatives adopted a new act implementing Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (“Digital Markets Act”), as well as amending various provisions related to the organisation and powers of the Belgian Competition Authority (the “Act”). The Act primarily grants more powers to the Belgian Competition Authority (the “BCA”) to improve its efficiency and allow it to adequately support the European Commission (“EC”) when the latter applies and enforces the DMA. The Act will enter into force ten days after its publication in the Belgian Official Gazette.

Introduction

The Act pursues four different objectives.[1] First, it aims to implement the Digitial Markets Act (the “DMA”) into Belgian law. Although the DMA is in principle directly applicable in all EU Member States, certain provisions must be implemented in national law to ensure legal certainty. Second, the Act aims to improve the efficiency of the BCA’s procedures, for example by providing a duty to cooperate for individuals requesting immunity, clarifying the starting point of the one-month period to reply to the draft decision submitted by the BCA’s prosecution service and giving the parties the right to copy, from the BCA’s file, preexisting documents on which a leniency request is based. Third, the Act adds a fifth member to the BCA’s Management Committee, namely the Planning and Budget Director, who will, however, not have any decision-making powers on the application of competition law. Finally, the Act excludes mergers between approved hospitals within the meaning of the coordinated law of 10 July 2008 on hospitals and other care institutions from prior merger control by the BCA, except for mergers between approved hospitals that meet specific notification thresholds.

To achieve these ends, the draft Act amends Books I and IV of the Code of Economic Law (“CEL”) as well as other relevant legislation. The present contribution focuses on the Act’s provisions related to the DMA’s implementation into Belgian law. (more…)