European Union Adopts 16th Package of Sanctions Against Russia, Further Impacting the Aviation Industry
On 24 February 2025, the European Union adopted the 16th Russia sanctions package.
The new measures amending the framework Council Regulation (EU) 833/2014 are found and included in Council Regulation (EU) 2025/395. They target systemically important sectors of the Russian economy including energy, trade, transport, infrastructure and financial services. The new package also includes restrictions directly impacting the aviation industry, through the amendment to Article 3d, “the flight ban”, and the inclusion of Article 5ae, “a full transaction ban” on ports and airports in and surrounding Russia.Below you will find a very brief note on the beforementioned articles.
Amendment to Article 3d:
A notable new provision is the new Article 3d(1b) which provides for the possibility to list any third country airlines operating domestic flights within Russia or supplying, selling, transferring or exporting, directly or indirectly, aircraft or other aviation goods and technology to a Russian air carrier or for flights within Russia. If listed in Annex XLVI, these air carriers, as well as any entity owned or controlled by them, will not be allowed to land in, take off from or overfly EU territory.
Are there any exceptions?
The flight ban will not apply:
In the case of an emergency landing or an emerging overflight; or
If such landing, take-off or overflight is required for humanitarian purposes.
Inclusion of Article 5ae:
The new package includes a full transaction ban, with immediate effect, on Russian ports and airports, which are believed to have been used to transport combat-related goods and technology, or to circumvent the oil price cap by transporting Russian crude oil via ships in the shadow fleet. The restrictions are broadly drafted and will apply to any transactions with relevant ports and airports (as listed in Annex XLVII), even if there is no direct transaction with the port authorities themselves. That includes access to facilities of the listed ports, locks and airports, and the provision of any services to vessels or aircrafts.
Are there any exceptions?
The exceptions include transactions which are strictly necessary for:
Humanitarian purposes;
The operation of flights required for attending meetings with the objective of seeking a solution to Russia’s invasion of Ukraine or of promoting the policy objectives of the restrictive measures;
An emergency landing, take-off or overflight;
Travel for official purposes of members of diplomatic or consular missions of Member States or partner countries in Russia or of international organisations enjoying immunities in accordance with international law;
Travel, for personal reasons, of natural persons to and from Russia or of members of their immediate families travelling with them; and
The purchase, import or transport of pharmaceutical, medical, agricultural and food products whose import, purchase and transport is allowed under the EU sanctions regime.
“Work of Equal Value” – If Apples and Pears Were Jobs (EU)
2023’s EU Directive 2023/970 to “strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms”, also known as the Pay Transparency Directive, must be implemented by European member states by no later than 7 June 2026.
With such a timescale you might be tempted to the view that this is an issue that can be pushed back until next year. We don’t recommend this. The Directive – which it is worth remembering sets the minimum standards employers must be ready to meet by June 2026 – sets out very clearly the potential implications of not being ready (information requests from individual employees, a joint pay assessment, claims and sanctions from national authorities, to name a few) . Employers would be well-advised to consider what it means for them sooner rather than later. Whilst 15 months may well be a long time in politics, when it comes to the Pay Transparency Directive, it is anything but.
At the heart of the Directive is the requirement that member states take the necessary measures to ensure that employers have pay structures ensuring equal pay for equal work or work of equal value (art. 4, §1). It seeks to achieve this objective in part by compelling them to provide information to their employees about the way in which their pay and benefits are determined, from the point of recruitment through to severance, and (for employers with a headcount of 100+) by introducing pay reporting obligations which extend some way beyond what most member states already have in place.
Both the information provisions and the pay reporting provisions refer specifically to the concepts of “equal work or work of equal value”. As of June 2026, every employee will have the right to request and receive information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value to theirs. Assuming their employer meets the minimum headcount threshold, it will also be required to prepare and publish various statistics in relation to the gender pay gap, including any gap between workers in the same ”category”, i.e. those performing the same work or work of equal value.
So, what does “work of equal value” actually mean? According to the Equal Treatment Directive (recital #9), the question is to be determined on the basis of criteria such as the nature of the work, training and working conditions. The Pay Transparency Directive, inspired by new case law of the European Court of Justice, takes this a step further in referring expressly to skills, effort, responsibility and working conditions. The criteria used and the way in which they are applied in the assessment of whether work is “of equal value” must be objective and gender-neutral.
Even though the European Court of Justice has considered the issue a number of times over the past 30 years, the concept of “work of equal value” will still be an entirely new one for many EU employers. Whilst many companies already have some form of job architecture in place, these tend to reflect a more traditional and hierarchical approach, arguably a reflection the “responsibility” criteria referred to in the Directive, but do not otherwise consider the demands of the work being done. And, as is clear from both those ECJ decisions and equal pay litigation in the UK, particularly in the public sector, this “demands-based” approach can lead to jobs which on their face appear completely different – refuse collectors and social care workers for example – being found to be “work of equal value”. Apples and pears indeed, leaving the employer firmly in the salad.
Collective bargaining agreements, which are particularly common across continental Europe, potentially present a similar concern. Very often, these collective agreements – which determine wage scales or pay bands to be applied across an entire industry sector – are still largely determined according to a management hierarchy and so do not take account of any of the other criteria put forward by the ECJ. A pay policy which depends wholly or even partly on these collectively-bargained wage scales or bands could potentially be inadequate in terms of identifying “work of equal value” and so make it difficult for an employer to meet the requirements of the new Directive. Quite how far the worker representatives – being the same worker representatives who have spent years negotiating hard with employers and employer bodies to put these very collective agreements in place – will now seek to challenge the validity of those arrangements in light of the provisions of the Pay Transparency Directive remains to be seen. However, this is just one of many issues all employers will need to grapple with sooner rather than later if they are to be properly prepared come June 2026.
Whether it’s assessing and potentially revising your company job grading scheme, or holding the industry-level wage scales up to the light, it is clear that these exercises will take time, and, if we want to be slightly dramatic about it, the Pay Transparency Directive is really only two pay cycles away. So now’s the time to start, even if local legislators haven’t really started implementing the Directive yet.
Rising Construction Costs in 2025: Tariffs, GMP, and Fixed-Price Contracts
Tariffs are a top concern in 2025, with postponements on imports that have been looming on the U.S. construction industry for the past month. A planned 25% import tariff is positioned to affect construction materials from Canada, Mexico, China, and soon several other countries., Economists fear the financial impact of the tariffs, amid other executive orders, on increasing costs for Americans, including for major construction projects.
Luckily, debate about the impending tariffs goes back farther than just the beginning of the year, so the construction industry has been proactive in considering the effects of these added costs on their prices.
What does this mean for construction law?
Contractors and construction companies that bought up materials at the beginning of the year ahead of tariffs have at least some leeway with the price of goods and project timing. Those that did not now face an increased cost of 1.4% on input prices that do not include the tariffs that, as of March 10, 2025, have yet to be implemented. Contractors that are still negotiating contracts will need to consider the financial impact that tariffs will have on material prices and project timeline. For those that have existing contracts or are in the middle of a project, the outlook is more grave.
Two types of contracts may have a severe financial impact on the contractor:
Guaranteed Maximum Price (GMP): an agreed-upon amount that sets the highest possible reimbursement on material, labor, and fee costs by the client. This allows wiggle room to find cheaper materials.
Fixed-price contracts: an agreed-upon price that remains the same from negotiation to project completion.
For contracts negotiated prior to the Trump Administration’s tariff announcement, the additional cost for materials may have a negative financial impact on the contractors. With GMP and fixed-priced contracts, contractors may lose money if they did not proactively negotiate for the impending tariffs on construction materials such as cement, lumber, steel, and aluminum. Addendums on these contracts may be referenced as “material price escalation” clauses rather than mentioning “tariffs.” Most construction contracts have such terminology built in following the COVID-19 pandemic supply chain demand.
As tariffs are uncertain, what is certain is that the contracts for construction projects must have clauses and amendments that consider the economic influences on material cost, whether it’s imposing tariffs, environmental causes, a pandemic, etc. We cannot plan for these events, but we can plan for what we do if they happen.
EU to Impose Tariffs on US Goods – Steel, Aluminum, and More – in April 2025
Go-To Guide:
The EU will impose new tariffs on U.S. goods starting April 1 and April 13, 2025, in response to U.S. tariffs on EU steel and aluminum.
Affected U.S. goods will face 25% customs duties, impacting industries like steel, aluminum, textiles, and more.
The EU’s countermeasures may affect U.S. exports worth up to EUR 26 billion.
Importers of U.S. goods into the EU should explore duty mitigation and supply chain strategies to manage increased costs.
The EU remains open to negotiations with the United States to resolve the tariff dispute.
Key Aspects of the Measures
On March 12, 2025, the European Commission announced additional tariffs on U.S. goods. These measures respond to U.S. tariffs on EU steel and aluminum imports. The Commission believes that the measures are strong, but proportionate. The counter measures involve a two-step approach:
First, the Commission decided that the 2018 and 2020 countermeasure suspensions against the United States will expire April 1. These tariffs, which impact a broad range of U.S. goods, may be tied to the economic damage caused to EUR 8 billion worth of EU steel and aluminum exports to the United States. Examples of affected products include motorcycles, bourbon, and boats.
Second, in response to new U.S. tariffs affecting more than EUR 18 billion worth of EU exports, the Commission has proposed a package of new countermeasures on U.S. exports. These measures will take effect by April 13. On March 12, the Commission consulted EU member states and stakeholders about a preliminary list, after which the EU will pick certain product categories and decide on the final list of targeted goods. The proposed targeted products include steel and aluminum, textiles, home appliances, plastics, poultry, beef, eggs, dairy, sugar, and vegetables.
Considerations for Companies Importing U.S. Goods to the EU
There are numerous duty mitigation and supply chain strategies EU importers may consider to reduce the impact of the increased duty burden.
Duty mitigation strategies, for example, focus on the imported products’ origin and whether products qualify as U.S. origin if they were produced or assembled outside the United States. A (limited) revision of the production and supply chain may result in savings on EU imports. However, relocating U.S. production to another country solely to avoid additional EU duties may be perceived as manipulation and disregarded.1
Another approach involves reviewing the customs valuation of imported goods. It may be possible to calculate the customs value differently or make legal deductions from the transaction value used for customs. Additionally, when importing U.S. goods subject to the 25% EU tariffs for distribution within both EU and non-EU markets, importers may consider storing these goods in a customs warehouse rather than clearing them through EU customs immediately.
Conclusion
While the EU tariffs pose challenges, a proactive approach may help mitigate the EU customs duty burden and enhance overall compliance with EU trade and customs legislation. Staying informed and prepared is crucial for regular importers, as the tariff landscape could change if the United States and the EU initiate talks. Understanding the global trade landscape and implementing strategic measures may help organizations better mitigate the overall duty burden and safeguard their interests in an increasingly complex environment.
1 Judgment, European Court of Justice, 21 November 2024, case C‑297/23 P.
The Salaried Members Rules and the ‘Significant Influence’ Test – Does the BlueCrest Case Affect Me (As a Partner) or My Firm?
Salaried Members Rules
Limited liability partnerships or “LLPs” are common corporate vehicles utilised by the financial services sector to establish UK investment management operations and other financial businesses and, more recently, implement carried interest structures or act as fund investment/feeder vehicles. The most contentious aspect, and the subject of this client alert, has been the use of LLPs as business operating vehicles. As well as being more flexible than limited companies, in that it is easy to admit members and for them to leave the LLP, they are also commercially competitive since members (colloquially referred to as “partners”) of LLPs benefit from self-employed tax status.
When the Limited Liability Partnership Act 2000 introduced LLPs, it was relatively straightforward to become a member and benefit from self-employment status for tax purposes. The principal tax benefit was that partnership profit drawings are not subject to the employer’s national insurance contributions (NICs), currently 13.8 percent and rising to 15 percent on 6 April 2025, which applies to employee and director remuneration.
The Salaried Members Rules (Rules) were introduced in 2014 to tackle what HM Revenue and Customs (HMRC) perceived as widespread avoidance of employer NICs via “disguised employment” through LLPs. The Rules are intended to ensure that members of LLPs who provide services on terms more like those employees rather than self-employed partners are treated as employees for tax purposes.
Under the Rules, LLP members are deemed to be “disguised employees” of an LLP if an individual meets all three of the following conditions:
Condition A – 80 percent of the member’s profit share is “disguised salary,” i.e., remuneration that is fixed, or variable without relation to the overall profits of the LLP, or not in practice affected by those profits;
Condition B – the member does not have significant influence over the affairs of the LLP; and
Condition C – the member’s capital contribution to the LLP is less than 25 percent of their “disguised salary.”
If all the conditions are met, the member will be treated as a disguised employee or “salaried partner,” subject to the normal income tax and NICs deductions under Pay As You Earn (PAYE). Critically, the LLP itself will be obliged to pay the employer’s NICs with respect to that “disguised employee” or salaried partner.
On the other hand, if an individual fails any one or more of the above conditions, they will be treated as a partner (i.e., as self-employed) for tax purposes, and no employer’s NICs will be payable by the LLP, so somewhat counter-intuitively, it is a “good thing” to fail a condition if the aim is to be taxed as self-employed.
HMRC v BlueCrest Capital Management (UK) LLP
The interpretation of the Rules has been the subject of ongoing disagreement between industry and HMRC. One principal area of contention related to Condition B which relates to the “significant influence” over the affairs of the partnership. Given that the LLP legislation does not define the meaning of “significant,” HMRC has been issuing fairly extensive guidance setting out its view of the concept mainly via practical examples. However, on several occasions, HMRC has subsequently amended its guidance, which has generally created a disadvantage for the taxpayer.
The first time that the interpretation of Condition B came before the English courts was in the case of HMRC v BlueCrest Capital Management (UK) LLP. BlueCrest sought to claim that a number of its members should not be taxed as employees, while HMRC sought to invoke the “salaried member” legislation to claim that they should be. It is fair to say that in both tax tribunals, the taxpayer prevailed in its challenge of HMRC’s guidance on Condition B, including that influence over the LLP’s affairs did not mean the LLP as a whole.
The case was most recently heard by the Court of Appeal (CoA), which considered the scope of Condition B. The CoA focused on whether an individual member has “significant influence” over the affairs of the LLP and whether Condition B could be failed if the member only had influence over a part of the affairs of the LLP (as opposed to the whole affairs of the LLP). The CoA stated that significant influence over the whole affairs of the LLP is likely to be had in cases where the individual is part of the strategic decision-making function of the LLP. By contrast, if the individual only has influence over the financial matters of the LLP, for example, then this is likely to be controlled only over part of the LLP, and therefore, Condition B would not be failed.
The CoA judgment stated that Condition B would only be failed if (i) a member has significant influence over the whole affairs of the LLP; and — critically — (ii) that authority must be rooted explicitly in the LLP agreement itself.
This decision overturned that of the lower courts by confirming that the scope for failing Condition B is much narrower than previously thought. Notably, the CoA rejected the parties’ agreed interpretation of Condition B, which was that significant influence could include de facto influence outside the provisions of the LLP agreement. In other words, the CoA ignored the position which — notwithstanding disagreements as to certain aspects — both industry and HMRC had been labouring under via the HMRC guidance since the legislation came into force. The case has now been remitted to the First Tier Tribunal for another review of the facts in light of the CofA’s construction of Condition B, and BlueCrest has requested leave to appeal to the Supreme Court. As a result, this issue likely has a long way to go before it is finally resolved.
What Should LLPs Do In the Meantime?
This case will be particularly important for those LLPs who have relied on failing Condition B in their assessment of whether the LLP’s members are true members.
In our experience, professional services firms have tended to rely predominantly on failing Condition A or C, so this decision may not require you to revisit your assessment of the Rules. However, if failure of Condition B has been central to your analysis (as is often the case of larger investment management firms), we recommend the following next steps:
Review your LLP agreement to understand how significant influence is articulated in the agreement;
Consider whether it is possible or necessary to rely on either Condition A or C being failed instead of Condition B; and/or.
Consider whether any shares or partnership interests have been issued to LLP members in any investment vehicles because “salaried member” treatment could turn these into employment-related securities (which may have different tax treatment).
Federal Circuit Expands Scope of Activities That Can Establish a ‘Domestic Industry’ Under Section 337
On March 5, the US Court of Appeals for the Federal Circuit issued a decision in Lashify, Inc. v. International Trade Commission, No. 23-1245, vacating in part the International Trade Commission’s (ITC) determination that Lashify failed to satisfy the economic prong of the Section 337 domestic industry requirement and affirming in part the finding that Lashify failed to satisfy the technical prong of the domestic industry requirement.
This ruling expands the types of activities that a complainant can use to establish a domestic industry, including domestic sales, marketing, warehousing, quality control, and distribution activities.
Background
Lashify, Inc. filed a Section 337 complaint at the ITC, alleging that importers infringed three patents (one utility and two design patents) covering artificial eyelash extensions. The ITC found no Section 337 violation because Lashify failed to establish a domestic industry. For the economic prong, the ITC excluded Lashify’s evidence about expenses relating to sales, marketing, warehousing, quality control, and distribution. Without that evidence, the ITC held that Lashify failed to establish a “significant employment of labor or capital” domestically under 19 U.S.C. § 1337(a)(3)(B). The ITC excluded many expenses such as warehousing, quality-control, and distribution because there were “no additional steps required to make these products saleable” upon arrival into the United States, and because the quality-control measures were “no more than what a normal importer would perform upon receipt.” Further, the ITC excluded sales and marketing expenditures because “Lashify did not meet its burden to establish significant qualifying expenses in other areas.” Lashify appealed.
Federal Circuit Decision
Economic Prong of the Domestic Industry Requirement
The Federal Circuit vacated the ITC’s ruling that Lashify failed to establish a domestic industry under 19 U.S.C. § 1337(a)(3)(B) because the ITC improperly excluded Lashify’s expenditures on sales, marketing, warehousing, quality control, and distribution. The court explained that Section 337(a)(3)(B) requires a “significant employment of labor or capital” without any limitation of the type of activities that could constitute labor or capital. The statute does not exclude sales, marketing, warehousing, quality control, or distribution activities, nor does it require such activities to be tied to employment or manufacturing considerations.
The court further clarified that there is no requirement that a stock of accumulated goods be manufactured domestically. As long as the activities relate to providing the goods or services in demand in a domestic economy, they can be counted toward the domestic industry requirement. The court also cited with approval its previous decision in Wuhan Healthgen Biotechnology Corp. v. International Trade Commission, No. 2023-1389 (Fed. Cir. Feb. 7, 2025), which held that smaller market segments can still be significant and substantial enough to meet the domestic industry requirement.
The ruling marks a departure from the ITC’s longstanding approach of excluding certain types of expenditures as insufficient to establish a domestic industry absent domestic manufacturing. The Federal Circuit’s reasoning opens the door for more Section 337 actions by companies that design products in the United States but manufacture them abroad, as long as they make significant domestic investments in activities such as marketing and distribution.
Technical Prong and Claim Construction
The court affirmed the ITC’s construction of the claim term “heat fused,” holding that the artificial hairs in Lashify’s products must be “joined by applying heat to form a single entity.” Based on this construction, the court upheld the ITC’s finding that Lashify’s products, which use a heated adhesive instead of actually using heat to bond hairs, did not meet the technical prong.
Key Takeaways
Expanded Scope of Domestic Industry: The decision clarifies that Section 337 complainants may rely on investments or expenses in sales, marketing, warehousing, quality control, or distribution activities to establish a domestic industry. This expands the types of activities, investments, or expenses that a complainant may use in satisfying the economic prong of the domestic industry requirement.
No Absolute Dollar Requirement: The decision reinforces the notion that the economic prong analysis considers whether investments or expenses are significant and substantial enough relative to the company’s US footprint, and not the absolute dollar values of the investments themselves.
Potential Impact on Foreign Companies: The decision is not limited to US companies. It potentially allows a foreign company to satisfy the domestic industry requirement if it invests in US distribution and marketing efforts.
Enforcement Update: Regulatory Attention Focused on Deletion Requests
Data protection authorities worldwide are intensifying their focus on individuals’ rights to have their personal data deleted. This heightened regulatory attention underscores the importance of organizations implementing robust compliance mechanisms to handle deletion requests effectively. For example:
In October 2023, California enacted pioneering legislation to strengthen consumer data protection. The California Delete Act (Senate Bill 362), signed into law in October 2023, establishes a centralized mechanism for consumers to request the deletion of their personal information held by data brokers. Under this law, data brokers are mandated to register annually with the California Privacy Protection Agency (CPPA) starting January 2024 and to process deletion requests submitted through the centralized platform beginning August 2026. This legislation aims to simplify the process for consumers to manage their personal data and imposes stringent requirements on data brokers to ensure compliance. Since November 2024, the CPPA has fined seven data brokers for failing to register and to pay the annual fee required under the California Delete Act.
In March 2025, Oregon released an enforcement report highlighting that “the number one right consumers have requested and been denied, is the right to delete their data.”
In March 2025, the European Data Protection Board (EDPB) initiated its Coordinated Enforcement Framework (CEF) action, centering on the right to erasure, commonly known as the “right to be forgotten,” as stipulated in Article 17 of the General Data Protection Regulation (GDPR). This initiative involves 32 Data Protection Authorities (DPAs) across Europe collaborating to assess and enhance compliance with erasure requests. Participating DPAs will engage with various data controllers, either by launching formal investigations or conducting fact-finding exercises, to scrutinize how these entities manage and respond to erasure requests, including the application of relevant conditions and exceptions. The findings from these national actions will be collectively analyzed to facilitate targeted follow-ups at both the national and EU level.
These developments reflect a broader global trend toward empowering individuals with greater control over their personal data and ensuring that organizations uphold these rights. For businesses, this signifies a need to evaluate and, if necessary, enhance their data management practices to comply with evolving regulatory standards concerning data deletion requests.
Given the intensified regulatory focus on data deletion rights, organizations worldwide should consider proactively assessing and strengthening their data protection practices. By implementing robust mechanisms to handle deletion requests effectively, businesses may not only ensure compliance with current regulations but also build trust with consumers who are increasingly concerned about their privacy rights.
Defence – A Sustainable Investment? A View From The UK’s Financial Conduct Authority
On 11 March 2025, the Financial Conduct Authority (the “FCA”) published a statement clarifying that their rules, including with regards to sustainability, do not prevent investment in or financing of defence companies. The FCA confirmed that it is at the discretion of investors or lenders as to whether they provide capital to defence companies.
The UK’s Sustainability Disclosure Requirements (“SDR”) introduced in 2023 aim to ensure that information about investments claiming to be sustainable can be trusted and readily understood. The SDR has never explicitly addressed the defence sector in SDR.
However, asset managers commonly apply exclusionary screening of investments related to weapons, typically limited to “controversial weapons” whose production and use have been deemed unacceptable under international conventions and even illegal within certain jurisdictions. Examples of such weapons include cluster munitions, anti-personnel landmines and chemical weapons. The clarity on weaponry exclusions came into sharp focus following the Russian invasion of Ukraine, prompting many to tighten their exclusionary criteria on cluster munitions in particular.
The FCA announcement follows lobbying from several Members of Parliament seeking clarity on defence investments and FCA sustainability rules. It also follows on from the statement from the previous government that directly confirmed “investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed”. Whilst the current Prime Minister has committed to increase defence spending recently, so far there is no statement from him or the Chancellor, Rachel Reeves, on their perspective on whether defence investments could be sustainable investments.
We wait to see if other regulators will make similar pronouncements as defence spending, and increases in it, becomes more and more in relevant to countries around the world.
Companies in Mexico Must File Annual Tax Reports by March 31, 2025: What to Know About Profit-Sharing Obligations
By March 31, 2025, companies in Mexico need to file their annual tax returns for the prior fiscal year with the Tax Administration Service (Servicio de Administración Tributaria (SAT)). In addition to complying with tax obligations, filing the annual tax return sets the starting point for complying with the statutory profit-sharing (PTU) obligation mandated by the Mexican Federal Labor Law (FLL).
Quick Hits
Companies in Mexico must file their tax returns by March 31 of each year.
Annual corporate tax returns show the yearly financial results of any entity and whether there were gains or losses. Tax returns are the starting point for the obligations mandated by the FLL regarding profit sharing.
General Content and Rules for the Annual Tax Return
In the annual tax return, taxpayers file a report of their income, deductions, withholdings, and tax payments during the tax year—which in Mexico runs from January 1 to December 31. March 31, 2025, is the last day to file the financial report for the 2024 tax year. A failure to timely file the annual tax report may result in SAT fines ranging from MEX $1,800 to $35,000 (USD $88.02 to $1,711.52), as well as fines and/or sanctions that may arise from the FLL.
Annual Tax Return’s Relevance for Profit-Sharing Obligations
Employees need to be notified of the filing of the annual tax return with the SAT, and once the employees are notified, a joint commission consisting of an equal number of representatives for the employees and the company is required to analyze the tax return, define whether profits have been generated, make the necessary calculations, determine the 10 percent of the profits (if any) to be distributed among the employees (with some exceptions), and/or determine if some caps apply for the distribution.
The final PTU amount must be paid to the employees, at the latest, on May 30, 2025.
Regardless of whether profits are generated during the tax year, the FLL requires employees to be notified about the filing of the yearly tax return.
Failure to comply with profit-sharing requirements—starting with properly filing the tax return—could result in fines between MEX $28,285 to $565,700 (USD $1,382.04 to $27,640.76) from the Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social (STPS)). Note that fines may be imposed per each affected employee, depending on the Labor Ministry’s consideration.
Forget It!: EDPB Announces Focus on Right to Erasure in 2025
Right of erasure (or “right to be forgotten”) has been selected by the European Data Protection Board as its priority enforcement topic for 2025. This work is being done under the “Coordinated Enforcement Framework” or “CEF.” The EDPB created the CEF in 2022 as a way to streamline and coordinate enforcement across EU data protection authorities. Past topics have included the right of access, and the role of data protection officers in organizations.
Data Protection Authorities in the various member states (and seven state-level authorities in Germany) this year will examine how companies are complying with GDPR obligations around erasure requests. The topic was selected, the EDPB indicated, because it is the most common right requested by individuals . . . and also the one about which DPAs often receive complaints.
As they did with the actions for right of access, DPAs will take steps ranging from fact finding to formal investigations. The DPAs will also work together to analyze the results of the initiative, and the EDPB will publish a report at the conclusion of the initiative. This will be similar to the report issued on the 2024 right of access actions (adopted this January).
Putting It Into Practice: The announcement about the right of erasure priority, as well as the release of the right of access report, can serve as a reminder for companies to revisit their process for responding to rights requests.
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Competition Currents | March 2025
United States
A. 1.FTC secures $5.68M HSR gun-jumping penalty from 2021 deal.On Jan. 7, 2025, the FTC, in conjunction with the Department of Justice (DOJ) Antitrust Division, settled allegations that sister companies Verdun Oil Company II LLC and XCL Resources Holdings, LLC exercised unlawful, premature control of EP Energy LLC while acquiring EP in 2021. This alleged “gun-jumping” violation involved Verdun and XCL exercising various consent rights under the merger agreement and coordinating sales and strategic planning with EP during the interim period before closing. In settling, the parties agreed to pay a total civil penalty of $5.68 million, appoint or retain an antitrust compliance officer, provide annual antitrust trainings, use a “clean team” agreement in future transactions involving a competing product, and be subject to compliance reporting for a decade.
Further information about this settlement and the factual background can be found in our January GT Alert. 2.2025 HSR thresholds took effect Feb. 21, 2025. On Jan. 10, 2025, the FTC approved updated jurisdictional thresholds and filing fees for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. These revisions are made annually, with the size-of-transaction threshold for reporting proposed mergers and acquisitions under the Clayton Act increasing from $119.5 million to $126.4 million for 2025. These changes took effect on Feb. 21, 2025. The adjustments are based on changes in the gross national product and consumer price index as mandated by the HSR Act and the 2023 Consolidated Appropriations Act. 3.FTC releases staff report on AI partnerships & investments. In January 2025, the FTC issued a report under former Commissioner Khan examining several partnerships among participants in the AI technology chain. Broadly, participants in the AI chain include (1) providers of specialized (and scarce) semiconductor chips used to provide the computational power to train and refine generative AI models, as well as generate the actual output (be it text, images, or data); (2) cloud service providers that enable access to computing infrastructure; (3) AI developers; and (4) AI application creators. The report highlights several areas of concern with respect to such partnerships, including traditional antitrust concerns around competitor access to important resources, increased switching costs for participants, and the exchange of sensitive technical and business information.
Current FTC Chairman Andrew Ferguson—then commissioner—issued a concurring and dissenting statement (joined by Commissioner Holyoak) shortly after the report’s release. While signaling areas of disagreement and discouraging the Commission from “running headlong to regulate AI,” the dissent does not appear to depart significantly from FTC views with respect to a focus on Big Tech when it comes to AI. According to Ferguson, “AI may [] be the most significant challenge to Big Tech firms’ dominance since they achieved that dominance.” He cautioned, however, that the Commission must strike a delicate balance, safeguarding against regulation that hinders U.S. AI technology development while ensuring that “Big Tech incumbents do not control AI innovators.” 4.FTC secures settlement with private equity firm in antitrust “roll-up” case. On Jan. 17, 2025, the FTC settled a second administrative case against private equity firm Welsh, Carson, Anderson, and Stowe and its affiliates for allegedly monopolizing certain local Texas anesthesiology markets through an anticompetitive “roll up” strategy. In May 2024, a federal judge dismissed Welsh Carson from a similar FTC action, but held that Welsh Carson’s conduct could be challenged in federal court in the future if the FTC can allege specific facts that it controls a company actively engaged in ongoing violations or is otherwise directly involved in another attempt to violate the law, “beyond mere speculation and conjecture,” and could still pursue an in-house administrative case against the private equity firm.
The FTC settled its in-house case, discussed in a May 2024 GT Alert, in a consent order designed to both limit Welsh Carson’s investment in this space and identify future investment strategies in this or an adjacent space, which in the view of the Commission would risk becoming another anticompetitive “roll up.” The order requires Welsh Carson to:
freeze its investment in USAP at current levels and reduce its board representation to a single, non-chair seat;
obtain prior approval for any future investments in anesthesia nationwide, as well as prior approval for certain acquisitions by any majority-owned Welsh Carson anesthesia group nationwide; and
provide 30-days advance notice for certain transactions involving other hospital-based physician practices nationwide.
The Commission voted 5-0 to accept the consent agreement for public comment. 5.Federal court denies Commission’s bid to block Tempur Sealy’s $4B Mattress Firm deal. On Jan. 31, a Texas federal court denied the FTC’s challenge to preliminarily enjoin Tempur Sealy International Inc.’s planned $4 billion purchase of Mattress Firm Group Inc. The parties thereafter closed the merger, and the FTC then withdrew the matter from in-house adjudication, effectively ending its challenge. The FTC challenged the deal in July 2024, asserting that the combination of the world’s largest mattress supplier, Tempur Sealy, with the largest retail mattress chain in the United States, Mattress Firm, would give the new firm the ability and incentive to suppress competition and raise prices for mattresses by blocking rival suppliers from selling in Mattress Firm stores.
In September, Tempur Sealy offered to sell 178 stores and seven distribution centers to Mattress Warehouse, in an effort to alleviate the FTC’s concerns. The companies offered to preserve 43% of premium “slots” in Mattress Firm stores for rival manufacturers, up from a previous offer of 28%. The FTC countered that the court should not give weight to this “unenforceable promise” that Tempur Sealy could break at any time. The judge did state that “the proposed acquisition won’t substantially harm competition … [b]ut even if assumed to the contrary, Defendants’ commitments to divest certain stores and to maintain going-forward slot allocations resolves any lingering concern.” 6.Daniel Guarnera named FTC Bureau of Competition director. On Feb. 10, Chairman Ferguson appointed Daniel Guarnera as director of the Bureau of Competition. Guarnera previously served as chief of the Civil Conduct Task Force at the DOJ Antitrust Division. During his tenure, the task force filed monopolization suits against certain Big Tech companies, as well as multiple cases involving agriculture and labor markets. Prior to that role, he was a trial attorney with the Antitrust Division during the first Trump administration. He also served as special counsel to U.S. Senate Judiciary Committee Chairman Charles Grassley during the confirmation of President Trump’s Supreme Court appointee, Justice Neil Gorsuch.
The Commission voted 4-0 to approve Guarnera’s appointment as director of the Bureau of Competition, with Chairman Ferguson stating “[h]e has tremendous experience litigating antitrust cases in critical markets, including agriculture and Big Tech” and “using the antitrust laws to promote competition in labor and healthcare markets—two of my top priorities.” 7.FTC chair clarifies 2023 merger review guidelines remain in effect. On Feb. 18, 2025, FTC Chairman Ferguson issued a public statement to FTC staff stating if “there is any ambiguity, let me be clear: the FTC’s and DOJ’s joint 2023 Merger Guidelines are in effect and are the framework for this agency’s merger-review analysis.” Ferguson explained that FTC should “prize stability and disfavor wholesale recission,” to provide predictability for businesses, enforcement agencies, and the courts. In Ferguson’s view, the guidelines reiterate prior policy statements, guidelines, and decisional case law. 8.FTC launches inquiry on tech censorship. On Feb. 20, 2025, the FTC launched a public inquiry into how technology platforms deny or degrade users’ access to services based on the content of their speech or affiliations. The Commission’s press release said, in announcing the inquiry, “Censorship by technology platforms is not just un-American, it is potentially illegal. Tech firms can employ confusing or unpredictable internal procedures that cut users off, sometimes with no ability to appeal the decision. Such actions taken by tech platforms may harm consumers, affect competition, may have resulted from a lack of competition, or may have been the product of anti-competitive conduct.” The FTC is requesting public comment on how consumers may have been harmed by technology platforms that “limited their ability to share ideas or affiliations freely and openly.” Comments are open until May 21, 2025. B. Department of Justice (DOJ) Civil Antitrust DivisionDOJ sues to block Hewlett Packard Enterprise’s proposed $14 billion acquisition of rival Juniper Networks.
On Jan. 30, 2025, the DOJ Antitrust Division sued to block Hewlett Packard Enterprise Co.’s proposed $14 billion acquisition of wireless local area network (WLAN) technology provider Juniper Networks Inc. The Division alleges that HPE and Juniper are the second- and third- largest providers, respectively, of enterprise-grade WLAN solutions in the United States and that the deal would “eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice.” The Division says that the proposed transaction between HPE and Juniper would further consolidate an already highly concentrated market.
“HPE and Juniper are successful companies. But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market. The threat this merger poses is not theoretical. Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers,” Acting Assistant Attorney General Omeed A. Assefi said. The Division asserted that Juniper has been a “disruptive force that has grown rapidly from a minor player to among the three largest enterprise-grade WLAN suppliers in the U.S.,” and that its innovation has decreased costs and put competitive pressure on HPE that HPE seeks to alleviate by acquiring Juniper. C. U.S. Litigation
1.Goldstein v. National Collegiate Athletic Association, Case No. 3:25-00027 (M.D. Ga. Feb. 20, 2025). On Feb. 20, 2025, the Honorable Judge Tilman E. Self III denied a college baseball player’s request for a temporary restraining order that would have prevented the National Collegiate Athletic Association (NCAA) from barring the student from the 2025 baseball season. The plaintiff filed a suit earlier this month that joins other similar suits seeking to invalidate the NCAA’s eligibility rule which gives college athletes no more than five years to play four seasons of college sports. In denying the temporary restraining order, Judge Tilman scheduled a follow-up hearing to allow for a more fulsome evidentiary hearing on a longer injunction. 2.State of Arkansas v. Syngenta Crop Protection AG, Case No. 4:22-cv-01287 (E.D. Ark. Feb. 18, 2025). Federal Judge Brian S. Miller denied two large pesticide manufacturers’ motion to dismiss the State of Arkansas’ lawsuit alleging that the manufacturers conspired to prevent generic pesticides from gaining market entry. In the lawsuit, Arkansas alleges that these manufactures entered into “loyalty programs,” which pay distributers and retailers incentives if they limit or refuse to sell generic crop-protection products whose patents have expired. In allowing the lawsuit to proceed, Judge Miller noted that the State has sufficiently alleged that these loyalty programs foreclose generic competitors from entering the market successfully. 3.Earth’s Healing Inc. v. Shenzhen Smoore Technology Co., Case No. 3:25-cv-01428 (N.D. Cal. Feb. 11, 2025). A Chinese-based vape manufacturing company and its U.S.-based distributors were sued in a putative class action, alleging that the defendants conspired to keep the price of marijuana vaping pens and cartridges high by limiting competition among distributors. The complaint alleges that Shenzhen Smoore Technology forced its distributors to enter into a horizontal conspiracy not to solicit each other’s retail customers and report any distributor who violated this non-solicitation policy. The proposed class includes any licensed cannabis business in the 24 states that have legalized marijuana for recreational use that have sold Shenzhen’s products since November 2016. 4.Alliance of Automotive Innovation v. Campbell, Case No. 1:20-CV-12090 (D. Mass. Feb. 11, 2025). On Feb. 11, 2025, the Honorable Judge Denise L. Casper dismissed a lawsuit an automakers’ advocacy group brought that sought to block the State of Massachusetts’s “right-to-repair,” which allows customers and mechanics open access to vehicles’ “telematics” systems. These systems are used to electronically track a vehicle’s location, speed, fuel efficiency, and other metrics. The automakers claimed that applying this state law to automobiles violates the National Traffic and Motor Vehicle Safety Act and the Clean Air Act and raises the risk of impairing the cybersecurity protections installed in these systems. Judge Casper’s order dismissing the case was filed under seal, and the has automakers have already indicated an intent to appeal the decision to the U.S. Court of Appeals for the First Circuit.
The Netherlands
A. Dutch Competition Authority (ACM) Dutch commitments decision spotlights ACM’s enforcement policy.
The Authority for Consumers and Markets (ACM) recently closed a cartel investigation into three chiropractic trade associations without imposing sanctions. The investigation concluded after the associations promised not to prohibit their members from offering discounts and free examinations. This decision was intended to promote competition, but critics raised concerns about transparency and the fair treatment of other companies that may have received harsher penalties for similar violations. Critics also pointed out that the ACM appears more reluctant to penalize the healthcare sector, leading to additional questions about its policy’s fairness and consistency. B. Dutch Court Decision Rotterdam District Court confirms egg purchasing cartel violation.
The Rotterdam District Court confirmed the findings of the ACM against three egg-product manufacturers who were fined for price-fixing, supplier allocation, and sharing competitively sensitive information in the egg-purchasing market. In 2021, the ACM sent a statement of objections, concluding that the three companies had violated the cartel prohibition provisions of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and Article 6(1) of the Dutch Competition Act. Coordinating purchasing prices leads to such a significant restriction of competition (“by object” violation) that the ACM was not required to analyze the effects of the practice. The court acknowledged the companies’ objections to the amount of the fines and, since the proceedings exceeded the reasonable timeframe by a few weeks, all fines were reduced by EUR 5,000. The court set the fines at EUR 995,000, EUR 7,655,000, and EUR 15,736,500.
Poland
A. UOKiK president tightens the noose on price fixing agreements.
The president of the Office of Competition and Consumer Protection continues to focus on alleged price-fixing agreements, in particular those maintaining minimum prices (so-called RPMs) in online sales. Recent proceedings indicate an increased level of scrutiny on pricing practices, particularly around online distribution. 1.Fines imposed on pet-food distributor, Empire Brands. The UOKiK president has imposed a fine on Empire Brands, a pet food distributor, for engaging in resale price maintenance practices in online sales channels (online stores and digital marketplaces). Resellers were required to set prices that were at least equal to those Empire Brands offered in its own online store. According to the UOKIK president, the company penalized resellers by sending warnings, altering payment terms, restricting access to promotions, and terminating business relationships. Following the investigation, the UOKiK president imposed a fine of approximately PLN 353,000 (approximately EUR 84,000/USD 87,000) on Empire Brands. In addition, the UOKIK president also penalized the company’s managers, who received individual fines of PLN 82,000 (approximately EUR 20,000/USD 20,000) and PLN 39,000 (approximately EUR 9,000/USD 10,000), respectively. 2.Charges brought against sanitary equipment distributor, Oltens. UOKiK president also announced charges against Oltens, a distributor of sanitary equipment, for allegedly fixing online resale prices. The UOKiK president suspects that Oltens has entered into a price-fixing agreement with independent resellers of its products. The company allegedly imposed minimum resale prices for online sales, preventing retailers from offering lower prices (including within promotional campaigns). According to the UOKIK president, Oltens may have ensured compliance by actively monitoring resellers and intervening against those who deviated from set prices, including by refusing to supply or terminating cooperation agreements. The proceedings are pending. 3.Trend of enforcement. The Oltens and Empire Brands cases add to a growing list of resale price maintenance investigations the UOKiK president has conducted. In recent years, the competition authority has taken similar actions against multiple companies. For example, in 2024, Dahua Technology was fined PLN 3.7 million (approximately EUR 900,000/USD 900,000) for restricting the pricing policies of its distributors, and Kia Polska was fined PLN 3.5 million (approximately EUR 800,000/USD 900,000) for imposing minimum resale prices on its dealers. The UOKiK president considers RPMs to be particularly harmful to competition, given their capacity to restrict freedom of establishing prices, therefore negatively affecting market competitiveness and consumer interests. Infringing companies may be subject to significant financial penalties, which can be up to 10% of their annual turnover. The UOKiK president may also impose individual fines on managers of up to PLN 2 million. Moreover, anticompetitive contractual provisions would be void, and affected entities can seek damages in civil courts.
Italy
A. Italian Competition Authority (ICA) 1.Mulpor and IBCM fined for repeatedly failing to comply with ICA ruling. In January 2025, ICA fined Mulpor Company S.r.l. and International Business Convention Management Ltd. (IBCM) EUR 3.5 million for repeated non-compliance with a 2019 prohibition decision on unfair trading. In ICA’s view, the two companies sent allegedly deceptive communications to businesses and micro-companies, under the pretext of requesting business data verification, while in fact leading recipients to enter into multi-year contracts for advertising services. ICA considered these communications, resembling those that led to earlier fines in 2019 and 2021, to be disguised as updates to a database called the “International Fairs Directory.” But by signing the forms, business and micro-companies committed to a three-year advertising contract.
ICA concluded that these communications were deceptive, causing recipients to unknowingly subscribe to unwanted services. IBCM also allegedly used undue pressure by threatening legal actions to collect payments for the unsolicited services. 2.Radiotaxi 3570 fined for repeatedly failing to comply with ICA ruling. ICA imposed an approximately EUR 140,000 fine on Radiotaxi 3570 for repeated non-compliance with a June 2018 ruling, which found certain agreements in Rome’s taxi service market to be anticompetitive. According to ICA, the company failed to eliminate allegedly restrictive non-compete clauses in its statutes and regulations that ICA believed hindered competition. Radiotaxi 3570 did not comply with the measures ICA required, including submitting a written report outlining corrective actions, nor did it pay the imposed fines. ICA is considering imposing further penalties, including daily fines, and may consider suspending the company’s operations for up to 30 days in the event of persistent non-compliance. 3.Redetermination of Imballaggi Piemontesi S.r.l.’s cartel penalty. In 2019, Imballaggi Piemontesi S.r.l. was fined more than EUR 6 million for its participation in an anti-competitive cartel in the industry that produces and markets corrugated cardboard sheets. In 2023, after a Council of State ICA judgment– which involved a EU Court of Justice referral for a preliminary ruling on that matter (C-588/24) – ICA had to reassess the fine imposed on Imballaggi Piemontesi S.r.l. on the basis, inter alia, of the effective involvement in the cartel.
The company argued for a reduced penalty, but ICA determined that its participation was to be considered “full” in any case. As a result, ICA maintained the fine at EUR 6 million, which was equal to 10% of the company’s total turnover, within the legal limit.
European Union
A. European Commission Commission sends Lufthansa supplementary statement of objections.
The European Commission has issued a supplementary statement of objections to Lufthansa, ordering the airline to restore Condor’s access to Lufthansa’s feed traffic to and from Frankfurt Airport as agreed in June 2024. This step follows an investigation into potential competition restrictions by Lufthansa’s transatlantic joint venture with other airlines. The European Commission has preliminarily assessed that this joint venture restricts competition on the Frankfurt-New York route and that interim measures are needed to prevent harm to competition on this market.
Previously, Lufthansa and Condor had special prorate agreements (SPAs) allowing Condor to access Lufthansa’s short-haul network to feed its long-haul flights. In 2020, Lufthansa notified Condor of the termination of their SPAs. The European Commission expressed preliminary concerns that without these agreements, Condor could struggle to operate sustainably on the Frankfurt-New York route, further undermining the competitive market structure. To ensure the effectiveness of any future decision, Lufthansa must reinstate the previous agreements. This case falls under Articles 101 of the TFEU and 53 of the EEA Agreement, which prohibit agreements that restrict competition. B. ECJ Decisions
1.CJEU addresses preliminary questions on the restrictive nature of technical specifications. The Court of Justice of the European Union (CJEU) ruled on the interpretation of Article 42 of the EU’s Public Procurement Directive (Directive 2014/24/EU) regarding technical specifications for public procurement. The case involves a dispute between DYKA Plastics, which produces plastic drainage pipes, and Fluvius, the Belgian grid operator for electricity and natural gas in all municipalities in Flanders. Fluvius required that only drainage pipes made of stoneware and concrete can be used. DYKA argued that this requirement violates the principles of procurement, leading to four preliminary questions addressed to the CJEU.
The CJEU ruled that technical specifications must describe the characteristics of the works, supplies, or services, and that contracting authorities may not make specific mentions of materials—like references to stoneware or concrete—that favor or eliminate certain companies. The CJEU also explained that unless the use of a specific material is unavoidable, references to that material must be accompanied by the words “or equivalent.” In conclusion, the CJEU stated that eliminating companies or products through incompatible technical specifications necessarily conflicts with the obligation to provide equal access to procurement procedures and not to restrict competition per Article 42 of Directive 2014/24. 2.Beevers Kaas BV v. Albert Heijn België NV raises preliminary questions about parallel obligation. The case involves a dispute between Beevers Kaas, the exclusive distributor of branded dairy products in Belgium and Luxembourg, and Albert Heijn, a distributor in other markets. Beevers Kaas alleges that Albert Heijn violated exclusivity arrangements by selling in Belgium, while Albert Heijn argues that it cannot be prohibited from actively selling and that the exclusivity agreement offers insufficient protection. The case was referred to the CJEU to address the application of Article 4(b)(i) of the former EU Vertical Block Exemption Regulation (Regulation (EU) 330/2010 – old VBER), which has since been replaced.
First, the CJEU asked whether the “parallel obligation” requirement (where a supplier granting exclusivity to one buyer in a territory must also restrict other buyers from actively selling in that territory) may be fulfilled merely by observing that other buyers are not actively selling in the exclusive territory. Advocate General Medina’s January 2025 opinion states that the mere observation that other purchasers are not actively selling in the area is insufficient.
Second, the CJEU was asked to clarify whether proof of compliance with the “parallel obligation” must be maintained throughout the entire applicable period, or only when other purchasers show their intent to sell actively. According to Advocate General Medina, the supplier must generally demonstrate that the parallel obligation is fulfilled for all its other buyers within the EEA during the entire period for which it claims the benefit of the block exemption.
Japan
A. JFTC orders mechanical parking garage manufacturers to pay a surcharge of approximately JPY 520 million for bid-rigging allegations. In December 2024, the Japan Fair Trade Commission (JFTC) issued cease-and-desist orders to five manufacturers of mechanical parking garages and other facilities for bid-rigging allegations. The JFTC also ordered four manufacturers to pay a surcharge of approximately JPY 520 million in total.
According to the JFTC, the manufacturers repeatedly engaged in bid-rigging to determine which companies would receive orders from major general contractors, and at what price. The manufacturers are suspected to have engaged in bid-rigging, but one of them is also suspected of avoiding JFTC orders under the leniency program. The JFTC sent the proposed disciplinary measures to the manufacturers and will issue an order after receiving feedback from each. B .JFTC issues cease-and-desist orders to a cloud services company for the first time. In December 2024, the JFTC issued a cease-and-desist order to MC Data Plus, Inc., a company providing cloud services regarding labor management, for unfair trade practices that allegedly prevented customers from switching to other companies’ services. The order comes after the JFTC conducted an on-site inspection of MC Data Plus in October 2023.
According to the JFTC, starting in 2020, MC Data Plus refused to provide its clients with information on their employees, which the client registers on the cloud, in a form compatible with other labor safety services, due to the protection of personal information. The JFTC determined that such an act falls under the category of “interference with transactions (unjustly interfering with a transaction between its competitor),” which Japanese antimonopoly law prohibits.
This is the first time that a cease-and-desist order has been issued in connection with transactions regarding cloud services. MC Data Plus has filed a lawsuit to have the order revoked and has also filed a petition to suspend the order’s execution.
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.
EU Advocate General Recommends Overturning Decision Annulling Harmonized Classification and Labeling of Titanium Dioxide
On February 6, 2025, the European Union (EU) Advocate General (EU AG) recommended that the European Court of Justice (ECJ) overturn the 2022 decision of the General Court annulling the 2019 harmonized classification and labeling of titanium dioxide as a carcinogenic substance by inhalation in certain powder forms. As reported in our December 6, 2022, memorandum, the court annulled the European Commission’s (EC) decision to classify titanium dioxide as a suspected human carcinogen. The French government and the EC appealed the decision, arguing that the court exceeded the limits of permissible judicial review of an EC decision and that the court incorrectly interpreted the concept of “intrinsic properties” as it appears in the Classification, Labeling, and Packaging (CLP) Regulation.
According to the EU AG, “[i]n cases of scientific uncertainty relevant for the identification and classification of hazardous substances, the CLP Regulation bestows the role of final interpreter on the Commission, which in turn renders its decision on the basis of an assessment by the [Risk Assessment Committee (RAC)]. In other words, the Commission chooses the ‘correct’ interpretation of scientific data.” In the judgment under appeal, the court did not agree with the conclusion of the European Chemicals Agency’s (ECHA) RAC. The court “explained that taking into consideration the standard particle density value of titanium dioxide for the purposes of the Morrow overload calculation would be wrong; a lower density value should have been used in the circumstances at issue.” The EU AG concludes that “by going further than simply judging whether the administration was aware of and had assessed all of the aspects that current scientific knowledge required it to take into consideration,” the court exceeded the limit of its power of judicial review and annulled the EC’s decision “not because that institution did not take into account all of the relevant (scientific) factors, but because it disagreed with how the administration had assessed those factors.”
The lower court excluded the possibility that the carcinogenicity arising from the inhalation of titanium dioxide in powder form may be connected to its intrinsic properties because (1) carcinogenicity appears only if a certain quantity of that substance is inhaled and (2) carcinogenicity results only from inflammation in the lung due to the accumulation of titanium dioxide particles therein. The court concluded that these are properties that are extrinsic to the substance itself. The EU AG disagrees, stating that “in the light of the context and purpose of the CLP Regulation, the concept of ‘intrinsic properties’ must be interpreted broadly” and that the court “erred when attributing a narrow interpretation to the concept of ‘intrinsic properties.’”
The EU AG proposes that the ECJ:
Set aside the November 2022 judgment in CWS Powder Coatings and Others v Commission (T‑279/20, T‑283/20 and T‑288/20, EU:T:2022:725);
Refer the case back to the General Court for the resolution of the remaining pleas in law; and
Order that the costs be reserved.
EU AGs assist the ECJ. They are responsible for presenting, with complete impartiality and independence, opinions in assigned cases. Their opinions are non-binding. The ECJ is expected to issue its decision later this year.