EU Mergers

Phase I Mergers

  • M.8346 MACQUARIE / USSL / OSW ASSETS OF UK GIB (22 May 2017)
  • M.8408  CINVEN / CPPIB / TRAVEL HOLDINGS PARENT CORPORATION (22 May 2017)
  • M.8424 SGAB/ ACCIONA/ SCCN (23 May 2017)
  • M.8466 BAIN CAPITAL / SEALED AIR DIVERSEY CARE DIVISION AND FOOD HYGIENE AND CLEANING BUSINESS (22 May 2017) 

EU Competition

Commission publishes its decision on referral of joint venture to Finnish competition authority. On 24 May 2017, the European Commission (Commission) published its decision to refer the joint venture between Kesko OYJ (Kesko) and Oriola-KD OYJ (Oriola) to the Finnish Competition and Consumer Authority (FCCA) under Article 4(4) of the EU Merger Regulation. Kesko is a Finnish retailing company with operations in grocery trade, building and technical trade and car trade. Oriola is a Finnish company active in pre-wholesale, distribution and services business in the pharmaceutical markets. The joint venture will operate on the parapharmacy retail market in Finland and the activities of the joint venture will relate to the selling of goods and the provision of additional product-related services to customers, such as advice and basic medical checks. According to the parties, affected markets exclusively arise in Finland and the preliminary assessment suggested that the principal affects will be restricted to Finland. Therefore, the Commission decided to refer the proposed transaction in its entirety to the FCCA. The Commission also considered that the FCCA was well placed to examine the case because it has experience in assessing daily consumer goods markets and has already dealt with several decisions relating to Kesko.

State Aid

Commission approves reductions on cogeneration surcharges for German and Italian companies. On 23 May 2017, the Commission approved reductions granted to energy-intensive companies on surcharges to finance support for cogeneration in both Germany and Italy and to support renewables in Italy. Under the 2014 Guidelines on state aid for environmental protection and energy, reductions on surcharges to help finance renewable support schemes for certain sectors and companies are allowed up to a certain level. This is to enable Member States to guarantee support for renewable energy. The Guidelines do not apply to reductions of surcharges used to finance support schemes for cogeneration, however, the Commission found that there were similarities between renewable and cogeneration schemes and so concluded that reductions may also be needed to ensure the sustainable financing of cogeneration support schemes. The Commission also found that the measures further EU energy and climate goals and ensure global competitiveness in energy-intensive industries, whilst preserving competition. Therefore, the Commission approved the reductions under EU state aid rules.

     

Commission approves Slovakia’s support for the construction of national football stadium. On 24 May 2017, the Commission approved Slovakia’s grant of €35.96 million of public support for the construction of a national football stadium in Bratislava. The football stadium will be available to professional teams such as the Slovak national football team, but also to non-professional clubs, unions, schools and for sport, social and cultural events. Slovakia will ensure that access to the stadium is non-discriminatory. The measure was assessed under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) which allows the grant of aid to facilitate the development of certain economic activities and certain economic areas. In doing so, the Commission found that the measure will further promote sport and culture, whilst preserving competition in the EU. The Commission therefore concluded that the public funding was in line with EU state aid rules. 

     

Commission concludes sale of Slovak healthcare centre does not involve state aid. On 24 May 2017, the Commission concluded that the sale of the public healthcare centre in Turzovka, Slovakia below market price does not involve state aid. The healthcare centre in question needed investment to bring it up to standard and the buyers, Turzovská Poliklinika s.r.o., have undertaken to make substantial investments into medical equipment and infrastructure and to maintain a range of healthcare services. The Commission found that the measure was unlikely to affect trade between the Member States and therefore concluded that it does not amount to state aid. 

     

Commission approves Latvian support to energy-intensive users. On 24 May 2017, the Commission approved plans to partially compensate energy-intensive users in Latvia for charges paid to support renewable energy. The support will run from 2016 until 2021 with a budget of €95 million, and it is estimated that the support will benefit around 100 beneficiaries. The Commission concluded that the measure strikes a balance between guaranteeing support for renewable energy and ensuring the competitiveness of energy-intensive industries. Therefore, the measure was approved under EU state aid rules. 

         

UK Competition

CMA refers car parts merger to a Phase 2 investigation. On 22 May 2017, the Competition and Markets Authority (CMA) referred the completed acquisition by Euro Car Parts Limited of the assets of the Andrew Page business to an in-depth Phase 2 investigation. Both parties supply car parts to garages across the UK and the CMA found that they were close competitors. The CMA was therefore concerned that the transaction could result in a substantial lessening of competition in the market for the supply of aftermarket car parts to independent motor trade in both local areas and on a national level. The CMA gave the parties an opportunity to offer undertakings in lieu of referring the merger to a Phase 2 investigation, however, the parties failed to offer any such undertakings. The CMA has therefore decided to refer the transaction for an in-depth investigation. 

     

CAT publishes judgment on action against The Law Society of England and Wales. On 26 May 2017, the Competition Appeal Tribunal (CAT) published its judgment on the damages action brought by Socrates Training Limited (Socrates) against The Law Society of England and Wales (the Law Society) under section 47A of the Competition Act 1998. The Law Society operates the Conveyancing Quality Scheme (CQS) which incorporates mandatory training in mortgage fraud and anti-money laundering (AML). Socrates is also a provider of training courses, including training in AML, and claimed that the CQS requirement that members of the scheme must obtain certain training courses exclusively from the Law Society was an abuse of a dominant position contrary to Chapter II of the Competition Act 1998 and/or an anti-competitive agreement contrary to Chapter I of the Competition Act 1998. The CAT found that the Law Society was in fact in a dominant position and that reserving a significant part of the demand for AML and mortgage fraud training potentially impaired competition and discouraged the entry of new suppliers. The CAT therefore concluded that the Law Society abused its dominant position. The CAT also found that the obligation to obtain training exclusively from the Law Society breached the Chapter I prohibition.

     

CMA publishes full text of its decision on Lloyds’ acquisition of MBNA Limited. On 26 May 2017, the CMA published its decision in relation to the anticipated acquisition by Lloyds Banking Group plc of MBNA Limited. The parities overlap in the supply of credit cards to UK consumers, so the CMA assessed the impact of the merger on the supply of all credit cards to consumers as well as considering more specific groups of customers. The CMA found that the parties will have a combined market share of the supply of all credit cards to UK customers of 15-30%. The CMA also found that the parties compete with each other closely in the supply of balance transfer cards. However, there were a number of other credit card suppliers competing with the parties in this segment and such competitors were found to rank higher than the parties in price comparison tables. The CMA concluded that post-merger there would remain a number of different credit card suppliers which would exert sufficient constraint on the parties and ensure the merger did not give rise to a substantial lessening of competition. Therefore, the merger will not be referred for a more detailed analysis under section 33(1) of the Enterprise Act 2002.

         

Brexit

Council authorises Commission to start Article 50 negotiations with the UK. On 22 May 2017, the General Affairs Council adopted the Council Decision authorising the opening of negotiations with the UK for its withdrawal from the EU.  The Council Decision is based on the Recommendation for a Council Decision adopted by the Commission on 3 May 2017. It nominates the Commission as the EU’s negotiator and adopts the negotiating directives set out in the Annex of the Recommendation. The negotiating directives set out the priorities for the first set of negotiations and cover matters which are necessary to ensure the UK’s orderly withdrawal from the EU; these include amongst others, guaranteeing the protection of citizens, a single financial settlement and administrative issues and governance. Formal negotiations will begin when the UK is ready and, in preparation for the first meeting between the EU and the UK negotiators, the Commission will share draft negotiating documents with the 27 Member States.