EU Mergers

Phase I Mergers

  • M.8901 HSBC / GLOBAL PAYMENTS (20 June 2018)
  • M.8945 PERMIRA / CISCO (TARGET BUSINESSES) (20 June 2018)

EU Competition

ECJ dismisses appeal by Nexans requesting interim measures. On 12 June 2018, the European Court of Justice (ECJ) dismissed an appeal brought by Nexans France SAS and Nexans SA (together, Nexans) against a General Court decision rejecting Nexans’ request for the grant of interim measures. Nexans appealed for the grant of interim measures in the context of its decision on the power cables cartel, after the Commission refused to treat certain information as confidential. The appeal was brought by Nexans on two grounds: firstly, that the General Court refused to start from the premise that the information at issue may be covered by professional secrecy; and secondly, the General Court failed to assess Nexans’ right to an effective judicial remedy. The ECJ rejected both grounds of appeal, stating in its judgment that the General Court did consider the merits of Nexans’ claim that the information at issue was covered by professional secrecy, and that Nexans’ claim that the General Court failed to assess its right to an effective remedy was not well founded.

Coreper endorses agreement between Council and European Parliament on ECN+ Directive. On 20 June 2018, the European Council issued a press release announcing that the EU’s Committee of Permanent Representatives (Coreper) has endorsed the proposed ECN+ Directive. The ECN+ Directive consists of new measures to bring enforcement of competition rules in line with the digital age and to tackle illegal competition practices within the EU. The rules introduced by the ECN+ Directive will strengthen cooperation between national competition authorities in Member States (NCAs) and the Commission by ensuring that NCAs have independence, adequate tools and the relevant power and resources in order to enforce EU competition rules. The Council and European Parliament are expected to adopt the ECN+ Directive after the summer, which will be published in the Official Journal of the European Union (OJEU).

Commission opens investigation into restrictions to the EU gas supply sold by Qatar Petroleum. On 21 June 2018, the European Commission (Commission) announced in a press release that it has opened a formal investigation to assess whether the supply agreements between Qatar Petroleum companies (Qatar) supplying liquefied natural gas (LNG) and European importers of gas have hindered the free flow of gas within the European Economic Area (EEA). Qatar is the largest supplier of LNG both worldwide and in Europe, and it controls several companies that supply LNG to Europe. The Commission intends to investigate whether Qatar’s long-term supply agreements for LNG to the EEA (which typically last for 20-25 years) contain direct or indirect territorial restrictions, which may restrict EEA importers’ freedom to sell LNG in alternative destinations within EEA.

State Aid

Commission approves Cypriot measures for orderly market exit of Cyprus Cooperative Bank. On 19 June 2018, the Commission issued a press release, approving under EU state aid rules, Cypriot measures designed to facilitate the liquidation of Cyprus Cooperative Bank Ltd (CCB). These measures involve the sale of some of CCB’s assets and deposits to Hellenic Bank and are the final steps in CCB’s restructuring process that was initiated by the Cypriot authorities in 2014 and 2015. Following a sale process that failed to attract bids at a positive price, the Cypriot authorities notified the Commission of its plans to support the orderly liquidation of CCB. The Commission concluded that these measures are compatible with state aid rules, as the public support will finance the orderly exit of the bank and will not result in any new business being carried out, which limits the potential distortion of competition. The Commission also took into account the binding commitments made by Cyprus to reform its domestic and judicial framework to allow Cyprus to recover money overtime from the workout of CCB’s non-performing loans. Cyprus’ compliance with its commitments will be closely monitored by an independent monitoring trustee, which will report to the Commission on a regular basis. Additionally, the Commission also confirmed that the measures do not constitute state aid to Hellenic Bank because the bank was selected through an open, fair and transparent private sales process.

UK Competition

High Court issues order transferring Unlockd’s abuse of dominance claim against Google to the CAT. On 18 June 2018, the Competition Appeal Tribunal (CAT) published an order from the High Court, transferring the competition issues of Unlockd Limited’s (Unlockd) claim against Google to the CAT. Unlockd, a developer of software applications for Android smartphone users, alleged that Google abused its dominant position by withdrawing Google Admob services from Unlockd’s app and by removing Unlockd from the Google Play Store. The transfer order also directs an expedited trial of the preliminary issues of abuse and objective justification on the assumption that Google is dominant in the market for licensable operating systems for mobile devices, the distribution of apps for use on Android devices, and the supply of advertisements for use by Android app developers in the UK and EU. This order is made without prejudice to any disclosure that Unlockd or Google may be directed by the CAT to provide.

CMA issues initial enforcement order against CD&R. On 11 June 2018, the Competition Markets Authority (CMA) published an initial enforcement order made in relation to the acquisition of LDF9 Robin Topco Limited by CD&R Firefly Bidco Limited. The order is addressed to CD&R Firefly Holdco Limited, Clayton Dubilier & Rice, CD&R Associates IX L.P. and CD&R Firefly Bidco Limited (together, CD&R). The CMA is currently considering whether to refer this merger under section 22 and 33 of the Enterprise Act (EA) and this order ensures that CD&R does not take any pre-emptive action pending the CMA’s decision. It should be noted that this order does not prohibit the completion of this merger, provided that CD&R complies with the restrictions set out in the order.

UK Mergers

CMA acknowledges abandonment of towbars merger. On 18 June 2018, the CMA issued a press release noting that towbar companies, Horizon Global Corporation and Brink International B.V. have abandoned their plans to merge. This decision by the parties follows the CMA’s Phase 1 investigation findings that the merger of two of the largest towbar companies in Europe could damage competition in the UK. During the Phase 1 investigation, the CMA worked closely with the German competition authority, the Bundeskartellamt, which was also conducting its own investigation in relation to this proposed merger. Both authorities reached similar views about the harmful impact the merger would have on the supply of towbars to car manufacturers in Europe. Although both parties to the merger had the option, at this stage, to offer solutions to address the CMA’s concerns or to proceed to a Phase 2 investigations, they have decided to abandon the transaction.

DCMS publishes notice of consultation on the undertakings given by Fox and Disney in relation to Fox’s acquisition of the remaining shares in Sky. On 19 June 2018, the Department for Culture, Media and Sport (DCMS) published a consultation notice on the undertakings given by 21st Century Fox (Fox) and The Walt Disney Company (Disney) in relation to Fox’s acquisition of the remaining shares of Sky. These undertakings follow the CMA’s conclusion that the divestiture of Sky News to Disney could remedy the CMA’s concern of the adverse public interest effects this merger would produce. The proposed undertakings include a commitment by Disney to operate and invest in Sky News for at least 15 years, as well as, a commitment not to sell Sky News without the approval of the Secretary of State. Further details of the proposed undertakings by Fox and Disney can be found here and here respectively. DCMS is now seeking views on whether these undertakings are sufficient to remedy the public interest concerns in relation to media plurality arising from the merger of Fox and Sky. Responses must be made by 5pm, 4 July 2018.

Secretary of State issues Public Interest Intervention Notice in relation to the anticipated acquisition of Northern Aerospace by Gardner Aerospace. On 17 June 2018, the Secretary of State for the Department of Business, Energy and Industrial Strategy issued a Public Interest Intervention Notice (PIIN) in relation to the proposed merger between Northern Aerospace Limited (Northern) and Gardner Aerospace Holdings Limited (Gardner). This PIIN is issued pursuant to Section 42 of the Enterprise Act 2002 on the grounds of national security public interest and was issued after taking into account the representations received from the Secretary of State for Defence. This notice also requests that the CMA prepare a report on the competition and national security aspects of the proposed transaction. The CMA will have to submit this report by 13 July 2018.

CMA publishes updated guidance on Competition Act investigation procedure for consultation. On 21 June 2018, the CMA published draft updated guidance for consultation in relation to the Competition Act investigation procedure. The last guidance on this was published by the CMA in 2014 and the guidance has not been updated since. The Commission in particular, is seeking views from interested parties on the proposed changes made in the guidance, including those related to complaint and information handling, interim measures, and engagement with the parties. The Commission is also seeking suggestions on whether there are any areas within the guidance that can be simplified or streamlined.

Speeches and Publications

Commission publishes speech by Margrethe Vestager on state aid rules for fair competition. On 19 June 2018, the Commission published a speech given by its Commissioner, Margrethe Vestager at the High Level Forum on State Aid Modernisation in Brussels. Her speech discussed the types of cases the Commission has been dealing with in the context of state aid and highlighted the Commission’s Notice on the Notion of Aid, which is designed to provide clarification on the types of investments that do not count as state aid. The Commissioner indicated that while it does not intend to review its state aid guidelines, the Commission is planning on updating its Best Practices Code to ensure greater transparency. Her speech also provided an update about the Commission’s progress in seeking a global commitment to end harmful subsidies in other countries outside the EU.

Commission publishes speech by Director-General of Competition on how state aid rules can contribute to European and national funding working together. On 19 June 2018, the Commission published a speech given by Johannes Laitenberger, Director-General of Competition at the state aid High Level Forum. His speech discussed the General Block Exemption Regulation as part of the state aid modernisation reform that entered into force in 2014 and the Commission’s efforts in streamlining state aid rules to accompany the EU’s next Multiannual Financial Framework. The Director-General also noted the three areas that the Commission is intending to address in its planned modification to the General Block Exemption Regulation: the financial instruments; the research, development and innovation; and the European Territorial Cooperation. The modifications to be introduced in these areas include the introduction of national financing combined with InvestEU fund, the replacement of a new flagship programme (Horizon Europe) to replace the current one, and the simplification of state aid rules in relation to European Territorial Cooperation.

Andrew Tyrie begins role as Chair of the CMA. On 20 June 2018, the CMA announced that Andrew Tyrie, the former Chair of the Treasury Select Committee and Parliamentary Commission on Banking Standards, has assumed his new role as the Chair of CMA. Mr Tyrie reiterated his comments in April, stating that “competition can and should be put closer to the centre of British economic life, reaching to every sector, rooting out monopoly and unfair trading practices.” In relation to Mr Tyrie’s new appointment, outgoing CMA Chair David Currie said that he is confident that Mr Tyrie and the CMA will take the organisation to a new phase of development.