EU Mergers

Phase I Mergers

  • M.7805 APOLLO CAPITAL MANAGEMENT / RBH / LRG FINANCE (13 November 2015)
  • M.7678 EQUINIX / TELECITY (13 November 2015)
  • M.7766 HNA GROUP / AGUILA (18 November 2015)
  • M.7808 BAIN CAPITAL INVESTORS / AUTODISTRIBUTION GROUP (19 November 2015)
  • M.7789 THE CARLYLE GROUP / PA CONSULTING (19 November 2015)
  • M.7736 MAGNA / STADCO (19 November 2015)
  • M.7782 GENERALI HOLDING VIENNA / ZÜRICH VERSICHERUNGSAKTIENGESELLSCHAFT / GENERALI PENSIONSKASSE / BONUS PENSIONSKASSEN (19 November 2015)

State Aid

Commission opens two in-depth State aid investigations into French plans to remunerate electricity capacity. On 13 November 2015, the European Commission (Commission) announced that it has opened two separate State aid investigations to assess whether France’s plans for a country-wide capacity mechanism and a tender for a new gas-fired power plant in Brittany are in line with EU State aid rules. In relation to the former, such capacity mechanisms offer additional rewards to electricity capacity providers in return for maintaining security of supply, on top of income obtained by selling electricity on the market. The Commission is concerned that the planned mechanism may favour certain companies over their competitors and hinder the entry of new players. The second investigation relates to France’s launch of a tender to support the construction of a new gas-fired power plant (Combined Cycle Gas Turbine). The Commission is, in particular, concerned that France is supporting only one type of technology and is not open to other potential solutions including other types of power generation available in Brittany. In addition, at this stage, the Commission considers that there is a risk of creating a subsidy dependent market where investors will develop projects only on the basis of public tenders granting State aid.

Public Procurement

ECJ rules that tenderers can be required to provide declarations of minimum hourly wage for its workers. On 17 November 2015, the European Court of Justice (ECJ) handed down its ruling on a preliminary reference from a German court on whether, in the context of a public procurement procedure, contracting authorities can require bidders to submit declarations stating that they will comply with national legislation on employment conditions for their employees (and sub-contractors) in the performance of the public contract, including an hourly minimum wage requirement. The ECJ considered that Article 26 of Directive 2004/18 (the Public Sector Directive, which allows contracting authorities to lay down special conditions relating to the performance of a contract) does not preclude legislation of a regional entity of a Member State which requires tenderers and their subcontractors to undertake to pay staff who are called upon to perform the services covered by the public contract a minimum wage laid down in that legislation. The ECJ also considered that Article 26 does not preclude legislation that allows contracting authorities to exclude bidders who fail to provide a declaration of compliance with the minimum hourly wage.

Opinion on restrictions on use of sub-contracting in public procurement. On 17 November 2015, Advocate General Sharpston gave an Opinion on questions referred from a Polish court on whether it is permissible, under Directive 2004/18, to restrict a tenderer’s use of sub-contractors. In this case, the tender specifications provided that the tenderer was required to perform at least 25% of the works under the contract itself. The Advocate General considered that sub-contracting provides an incentive for businesses to become involved in tendering procedures and concluded that such a restriction breached Directive 2004/18. A contracting authority is precluded from stipulating that the successful tenderer must perform part of the works, in percentage terms, using its own resources.

Commission commences infringement action against Hungary for breach of EU public procurement rules. On 19 November 2015, the Commission announced that it has taken infringement action against Hungary for failure to comply with EU public procurement legislation which seeks to ensure that all economic operators have fair chances to participate in a call for tender and to win a contract. The Commission is concerned that Hungary has awarded contracts for the construction of two new reactors and the refurbishment of two additional reactors of the Paks II nuclear power plant without a transparent procedure. The Commission has sent Hungary a letter of formal notice which constitutes an official request for information. The Hungarian authorities have two months to respond.

UK Competition

CMA final guidance on water and sewerage mergers. On 13 November 2015, the Competition and Markets Authority (CMA) published guidance on its new approach for assessing water and sewerage mergers. The guidance outlines the legal framework, processes and methodology used by the CMA to take into account the special water merger regime in the Water Act 2014. The CMA has also published the final version of a separate statement of intent setting out the agreement between the CMA and Ofwat on the working arrangements between them for the water merger regime. The statement of intent confirms in particular that the decision as to whether the CMA refers a water merger to a Phase 2 investigation is for the CMA alone; and that Ofwat’s views will be its own, independent of the CMA and not binding on the CMA.

CMA guidance note on service of documents in competition court proceedings. On 17 November 2015, the CMA published a guidance note in relation to the service of documents on the CMA in court proceedings relating to competition law. UK court rules require parties in cases that raise competition issues to provide certain court documents to the CMA. This requirement applies to the High Court, the Court of Session and the Competition Appeal Tribunal. The guidance also confirms the email address and postal address to which documents should be submitted and notes that the parties should send the documents to the CMA at the same time they are served on other parties to the proceedings and in the same form.

CMA announces competition investigation in sports equipment sector. On 18 November 2015, the CMA published an announcement that it is investigating a suspected breach of the Chapter I prohibition of the Competition Act 1998 and Article 101 of the Treaty of the Functioning of the European Union in the sports equipment sector. No further details have been provided by the CMA regarding the parties involved or the potential anti-competitive conduct. The CMA estimates that it will make a decision by April 2016 as to whether to pursue or close the investigation.

CMA research on small businesses’ understanding of competition law and guidance materials on compliance. On 18 November 2015, the CMA published a report setting out the results of qualitative research on the understanding and attitudes of small and medium-sized enterprises (SME) towards competition law. The report reveals that SMEs have a low level of knowledge and understanding of competition law. That said, the research indicates that businesses would be open to receiving guidance on the same. Thus, the CMA has published guidance aimed at assisting small businesses understand competition law and how it affects them.

Speeches & Publications

CMA speech on implications of galvanised steel tanks case on criminal cartel offence and leniency. On 13 November 2015, the CMA published a speech by Stephen Blake, Senior Director in the Cartels and Criminal Group, on the implications of the galvanised steel tanks criminal cartel case in which three individuals were charged in 2014 with dishonestly agreeing to fix prices, sharing customers and rigging bids for the supply in the UK of galvanised steel tanks for water storage. Mr Blake explained that the case demonstrated the need to remove the requirement for dishonesty from the offence. Secondly, he commented on the CMA’s enhanced capabilities in both criminal investigation and prosecution. Thirdly, he reflected on the judge’s sentencing decision of one of the individuals who pleaded guilty and explained that it highlighted that those who co-operate early and plead guilty can hope to receive a lenient sentence, while those who do not and are convicted can expect a custodial sentence. The Enterprise Act 2002 enables the CMA and Serious Fraud Office to prosecute individuals for engaging in anti-competitive conduct. To date, of ten formal criminal cartel investigations, three, so far, have resulted in a prosecution.