EU Mergers

Phase I Mergers

  • M.8384 CARLYLE / CITIC / McDONALD's / McDONALD's CHINA (10 May 2017)
  • M.8387 AXA / CAISSE DES DEPOTS ET CONSIGNATIONS / CIBLE (II) (5 May 2017)
  • M.8391 TOYOTA INDUSTRIES EUROPE / VIVE (5 May 2017)
  • M.8426 LINDE / PJSC POWER MACHINES / JV (10 May 2017)
  • M.8427 KKR / TELEFONICA / TELXIUS (10 May 2017)
  • M.8455 STRABAG / ROHÖL-AUFSUCHUNGS AG / JV (5 May 2017)
  • M.8462 KKR / CDPQ / USI INSURANCE SERVICES (10 May 2017) 

EU Competition 

Commission publishes its final report on the e-commerce sector inquiry. On 10 May 2017, the European Commission (Commission) published its final report (Report) following its inquiry into the e-commerce sector. The Commission launched its e-commerce sector inquiry in May 2015 as part of its Digital Single Market strategy. The Report identified certain business practices that may restrict competition in the e-commerce market. Such restrictions could limit consumer choice and increase prices. At the same time, the Commission found that there is a need to balance the interests of both online and “brick-and-mortar” retailers. The Report confirms that the growth of e-commerce has had a significant impact on companies’ distribution strategies and on consumer behaviour, and it notes various market trends including an increase in the use of selective distribution systems and an increase in the use of contractual restrictions to better control product distribution. Furthermore, the sector inquiry confirmed that one of the key determinants of competition in the digital content market is access to the relevant rights such as licensing rights to content. According to the Report, the insight gained from this inquiry will help the Commission target EU antitrust enforcement in the e-commerce markets and broaden the dialogue with national competition authorities on e-commerce-related enforcement.

Commission conditionally approves merger between Reichhold and Polynt. On 12 May 2017, the Commission approved the merger between Reichhold and Polynt, subject to conditions. Both parties are active in the manufacturing of chemicals and both produce and sell unsaturated polyester resins, which are used to make products such as cultured marble and solid surface counter tops and bowling balls. Following its investigation, the Commission concluded that the proposed transaction raised competition concerns in the market for the production and sale of unsaturated polyester resins. This was mainly due to the relatively high combined market share of the parties. To address the Commission’s concerns, the parties have agreed to divest Reichhold’s largest unsaturated polyester resin plant, along with the plant’s customers and product information, to the proposed purchaser, Ashland. The Commission concluded that these commitments addressed its competition concerns and so approved the merger on the condition that the commitments are fully complied with.

Commission conditionally approves acquisition of Brocade by Broadcom. On 12 May 2017, the Commission approved the proposed acquisition of Brocade by Broadcom, subject to conditions. Brocade and Broadcom supply different networking products for communications and datacentre infrastructures and applications which are typically used by financial institutions and telecommunications and media companies. The Commission believed that the proposed transaction raised competition concerns due to the relationship between the parties and the complementarity of their products. The Commission focused its investigation on two main areas, first, chips needed for Fibre Channel Storage Area Network and Internet Protocol networking products, and second, switches and cards needed for Fibre Channel Storage Area Networks, as these were complementary products. In particular, the Commission had concerns relating to the use of third party confidential information and the interoperability between the products of the merged entity and those of competing vendors. To address the Commission’s concerns, Broadcom has committed to closely cooperate with competing suppliers to achieve the same level of interoperability and to protect third party confidential information. The Commission concluded that the transaction, as modified by these commitments, would not give rise to competition concerns.

UK Competition

CMA publishes final decision in relation to Stanley Black & Decker’s acquisition of Newell Brands. On 8 May 2017, the Competition and Markets Authority (CMA) published its final decision in relation to the completed acquisition of Newell Brands, Inc. (NTB) by Stanley Black & Decker, Inc. (SBD). The parties overlap in the supply of various power tools and hand tools including both lower quality products for DIY users and higher quality products aimed at professional users. The CMA therefore assessed the impact of the merger on the supply of each overlapping DIY product and the supply of each overlapping professional product in the UK. However, the CMA concluded that the merger did not give rise to a realistic prospect of a substantial lessening of competition. This was because of the low combined share of supply each party had and the lack of product-specific concerns raised by third parties. For those products where the parties had a higher share of supply, the CMA found that the parties were not particularly close competitors and that there was a sufficient number of other competitors. The CMA therefore did not refer the completed merger for a more detailed investigation under section 22(1) of the Enterprise Act 2002.

CMA accepts final undertakings from Diebold Nixdorf. On 10 May 2017, the CMA accepted undertakings offered by Diebold Nixdorf, Incorporated (Diebold Nixdorf) in relation to its completed acquisition of Wincor Nixdorf AG (Wincor). Following a Phase 2 investigation, the CMA concluded that the merger may be expected to result in a substantial lessening of competition in the market for the supply of customer-operated ATMs in the UK and that undertakings should be offered in order to remedy the substantial lessening of competition and any adverse effects arising from it. Diebold Nixdorf has now offered to divest either its Diebold’s or Wincor’s customer-operated ATM business in the UK to a purchaser approved by the CMA. The divestment package includes the transfer of all skilled staff, use of the relevant brand, exclusive rights to sell the divested business, and access to the relevant software. In its final report published on 16 March 2017, the CMA had set out that this was the only remedy which would address its competition concerns.

CMA publishes full text of its decision in relation to Hutchison’s acquisition of Transvision Investments. On 10 May 2017, the CMA published the full text of its decision in respect of Hutchison 3G UK Limited’s (Three) acquisition of Transvision Investments Limited (Transvision) and its wholly owned subsidiary UK Broadband Limited (UKB). The parties were found to overlap in the supply of retail fixed broadband services and the acquisition of UK mobile spectrum licences. However, in relation to the supply of retail fixed broadband services, the CMA found that the parties hold a negligible share of supply on a UK-wide basis, were not particularly close competitors, and would continue to be constrained by a number of larger competitors. In relation to the acquisition of mobile spectrum licences, the CMA found that a number of likely bidders for these licences would still exist post-merger. The CMA concluded that there were no competition concerns arising from the anticipated acquisition and therefore the CMA did not make a reference under section 33(1) of the Enterprise Act 2002.

CMA publishes full text of its decision in relation to BT Group’s acquisition of IP Trade. On 11 May 2017, the CMA published the full text of its decision in relation to the anticipated acquisition of IP Trade SA (IP Trade) by BT Group plc (BT). The parties overlap in the supply of turret systems used in voice trading applications to customers based in the UK. BT supplies its turret systems directly to end-customers, whereas IP Trade supplies its turret systems through third parties. In terms of horizontal concern, the CMA found that the merged entity would only have a modest combined market share. Moreover, IP Trade would not be a viable alternative to BT for larger customers and, in relation to smaller customers, the CMA found that the parties were not close competitors and a number of alternative suppliers exist. In terms of vertical concerns, the CMA found that the merger would not enable BT to foreclose third parties from supplying turret systems. As a result, the CMA concluded that the merger would not give rise to a substantial lessening of competition and should not be referred under section 33(1) of the Enterprise Act 2002.