EU Mergers 

Phase I Mergers 

  • M.8770 PRYSMIAN / GENERAL CABLE (14 May 2018)
  • M.8873 CARLYLE / TA ASSOCIATES / DISCOVERORG (18 May 2018)
  • M.8885 CARLYLE / ACCOLADE WINES HOLDINGS AUSTRALIA / ACCOLADE WINES HOLDINGS EUROPE (17 May 2018)
  • M.8886 AVENUE CAPITAL / PEMBERTON / PERMIRA / DELSEY (16 May 2018)
  • M.8888 APOLLO MANAGEMENT / CYPRUS COOPERATIVE BANK / ALTAMIRA CYPRUS (14 May 2018) 

EU Competition  

Commission publishes full text decision in relation to the optical disc drives cartel

On 16 May 2018, the European Commission (Commission) published its decision taken on 21 October 2015 in relation to a cartel concerning optical disc drives. The cartel lasted from 23 June 2004 until 25 November 2008. The undertakings involved exchanged commercially sensitive information and coordinated their behaviour in bidding events organised by Dell, Inc. and Hewlett Packard. The Commission found that these anti-competitive arrangements constituted a single, continuous infringement under Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and fined eight suppliers of optical disc drives a total of €116 million. 

EU Mergers 

General Court partially annuls Commission decision in relation to Lufthansa/Swiss merger.

On 16 May 2018, the General Court published a press release on its judgment annulling the Commission’s decision in relation to the merger between Lufthansa and Swiss International Air Lines Limited (Swiss) so far as it concerned the Zurich-Stockholm route. In 2005, the Commission approved the acquisition of Swiss by Lufthansa subject to conditions. Those conditions included pricing commitments given by both parties in relation to the Zurich-Stockholm and Zurich-Warsaw routes. On 4 November 2013, the parties requested a waiver of the pricing commitments on the grounds that a joint venture agreement previously entered into between Swiss and Lufthansa had terminated, there had been a change in the treatment of alliance partners in the context of the Commission’s merger review and there was increased competition in the market. The waiver request was subsequently rejected by the Commission and Lufthansa brought an action before the General Court. The General Court found that the Commission failed to examine the impact the termination of the joint venture agreement had on competition and did not adequately answer Lufthansa’s argument in relation to the Commission’s change in the treatment of alliance partners in its review. Therefore, the General Court held that the Commission failed in its duty to carefully examine all the relevant information in this case. The remainder of the action was dismissed by the General Court. 

State Aid 

Commission publishes notice on current state aid recovery interest rates and reference or discount rates for all Member States.

On 14 May 2018, the Commission published in the Official Journal of the European Union (OJEU) the current state aid recovery interest rates and reference or discount rates for all 28 Member States. The newly published rates will be applicable from 1 June 2018. There has been an increase in rates for Czech Republic and Denmark and a reduction of rates for Croatia. The rates for all other Member States have remained the same. 

Commission approves Czech Republic state aid for intermodal transport. 

On 15 May 2018, the Commission published its approval of a CZK 400 million (approximately €16 million) scheme by the Czech Republic to support the shift of freight traffic to road and inland waterways. The scheme will be in force until December 2023 and is intended to support the purchase of transport units such as intermodal road trailers and freight containers for combined transport. The scheme is partially funded by the EU Cohesion Fund. The Commission found that the measure is necessary to improve the competitiveness of intermodal transport services in Czech Republic and was proportionate under EU state aid rules. 

Commission approves extension of UK Enterprise Management Initiative Scheme. 

On 15 May 2018, the Commission approved the prolongation of the UK Enterprise Management Initiative Scheme which reduces the taxation of employee share options for small and medium sized enterprises (SMEs). Employees of SMEs under this scheme will enjoy reductions in income tax or national insurance contribution when exercising their share options. The scheme also aims to enable SMEs to recruit and retain employees and in turn, enable the SMEs to grow. This scheme was initially authorised by the Commission in 2009. The Commission concluded that the prolongation of this measure is necessary in order to help SMEs in the UK attract and retain talented and skilled personnel. 

General Court dismisses Netflix’s action against Commission decision approving German aid scheme for film funding. 

On 16 May 2018, the General Court handed down judgment dismissing Netflix’s action against the Commission. Previously, on 1 September 2016, the Commission found that Germany’s aid scheme for the funding of film production and distribution by extending a levy on video on demand services was compatible with EU state aid rules. The Commission’s decision was subsequently contested by Netflix. The General Court held that this action was inadmissible as Netflix failed to show that they were substantially affected by the decision and were not individually concerned applicants. Consequently, Netflix was ordered to bear its own costs and pay the costs incurred by the Commission. 

EU Directorate General for Internal Policies publishes report on state aid and EU funding.

. On 16 May 2018, the Directorate General for Internal Policies of the EU published a report on the compatibility of state aid and EU funding. The report explained that a public measure constitutes state aid when the criteria of Article 107(1) TFEU is satisfied, which includes the transfer of state controlled resources. On the other hand, EU funds are granted directly to undertakings without coming under the control of a public authority of a Member State and does not constitute state aid. However, the report noted that public officials are sometimes uncertain on whether state aid rules should be subject to EU funding. As such, the report recommended that such uncertainty should be eliminated through the revision of the relevant regulations so that reference is made to the need to avoid distortion of competition without mentioning state aid.

UK Competition 

CMA announces investigation into pharmaceutical drugs sector.

On 15 May 2018, the CMA announced its decision to proceed with an investigation into anti-competitive agreements and conduct in the pharmaceutical sector. This investigation is undertaken pursuant to Chapter I and II of the Competition Act 1998 and Articles 101 and 102 of the TFEU. The Competition and Markets Authority (CMA) estimates that it will reach a decision by November 2018 on whether it intends to issue a statement of objections.  

UK Mergers 

CMA publishes the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2018.

 On 14 May 2018, the CMA published the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2018 (Turnover Test Order). The order amends section 23 of the Enterprise Act 2002 (EA), which sets out the criteria for a merger to qualify as a relevant merger situation for investigation by the CMA. The Order amends the turnover test so that where enterprises constitute a “relevant enterprise”, the test is met if that enterprise has a turnover of over £1 million instead of £70 million. “Relevant enterprise” includes enterprises that are involved in developing or producing restrictive goods, or activities that involve the designing and maintaining of quantum computing and communications. The full list of enterprises that are classed as “relevant enterprises” can be found in section 23A of the EA, which is a new section that has been included into the EA by the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 (Share of Supply Order). These Orders essentially expand the CMA’s jurisdiction to review transactions that may carry national security implications. The Turnover Test Order will only apply to mergers that arise after it comes into force. This Turnover Test Order comes into force immediately after the Share of Supply Order, which comes into force on 11 June 2018.

CMA publishes full text decision of Breedon Group/Tarmac Trading merger. 

On 15 May 2018, the CMA published its decision given on 26 April 2018 in relation to the anticipated acquisition by Breedon Group PLC (Breedon) of four aggregates quarries (including an asphalt plant) from Tarmac Trading Limited (TT). The CMA concluded that this acquisition did not raise any competition concerns in respect of aggregates, asphalt, concrete or vertically connected markets. 

CMA issues notice of termination of extension of investigation for Vanilla Group/Washstation merger. 

 On 15 May 2018, the CMA issued a notice of termination of extension of investigation under section 39(8) of the EA in relation to the completed acquisition of Washstation Limited by JLA New EquityCo (JLA) through its subsidiary Vanilla Group Limited. The CMA previously issued an extension of the investigation period due to JLA’s failure to provide the relevant information and documents within the deadline specified by the CMA. The CMA is now satisfied that the information and documents have been provided and has therefore terminated the extension period. The end of the reference period has now been set on 14 October 2018. 

CMA publishes final report requiring Electro Rent to sell its UK arm.

 On 17 May 2018, the CMA published its final report on its Phase 2 investigation of the completed acquisition by Electro Rent Corporation (Electro Rent) of Microlease, Inc. and Test Equipment Asset Management Limited (together known as Microlease). Both Electro Rent and Microlease supply testing and measurement equipment used to validate the performance of electronic devices. Both parties operate globally and supply these equipment across various sectors, including telecommunications, aerospace, defence, industrial, and information technology. In the UK, they overlap in the sale of the testing and measuring equipment. The CMA concluded that the merger may be expected to result in a substantial lessening of competition in the UK market and would cause customers to be worse off. As a result, the CMA has ordered the parties to divest Electro Rent UK to a suitable purchaser using a transparent and open sale process which the CMA will oversee.

CMA announces preliminary invitation to comment on the Sainsbury’s/ASDA merger

On 18 May 2018, the CMA published a preliminary invitation to comment on the anticipated merger between Sainsbury’s and ASDA. The CMA will be considering whether the proposed merger will result in a substantial lessening of competition in the UK for goods and services and wants to ensure that all interested parties have the opportunity to present their views and all relevant evidence to the CMA. All interested parties can submit their comments by email and will have to do so by 5pm on Monday, 4 June 2018. 

Sanctions

European Union takes steps to protect interests of EU companies doing business in Iran following U.S. announcement of withdrawal from JCPOA. 

On 18 May 2018, the Commission issued a press release announcing its decision to take action to demonstrate the EU’s commitment to the Joint Comprehensive Plan of Action (JCPOA) and protect the interests of European companies doing business in Iran. The Commission has indicated that it plans to take four steps with a view of countering the effects of President Trump’s decision earlier this month to withdraw the U.S. from the JCPOA. Specifically, the Commission intends to update the so-called Blocking Statute so that it will apply to the list of U.S. sanctions on Iran. It aims to have this measure in force before 6 August 2018, which is when the first set of U.S. sanctions take effect. Secondly, the Commission will launch a formal process to remove obstacles faced by the European Investment Bank (EIB) in making decisions under the EU budget guarantee to finance activities outside the European Union, including in Iran. Thirdly, the Commission will continue to pursue confidence building measures by strengthening the sectoral cooperation with and providing assistance to Iran. As part of this measure, Miguel Arias Canete, the Commissioner for Climate Action and Energy will be travelling to Tehran this weekend. Finally, the European Commission is looking into taking steps to encourage Member States to consider the possibility of one-off bank transfers to the Central Bank of Iran.