EU Mergers

Phase I Mergers

  • M.8015 SYNTHOS / INEOS STYRENICS (29 August 2016)
  • M.8019 ADVENT INTERNATIONAL / NUPLEX INDUSTRIES (1 September 2016)
  • M.8033 BMW / ALBA / ENCORY (1 September 2016)
  • M.8118 OPENGATE CAPITAL / UMICORE ZINC CHEMICALS (1 September 2016)
  • M.8135 CERBERUS / GE MONEY BANK / SOREFI / SOMAFI-SOGUAFI / GE FINANCEMENT PACIFIQUE (2 September 2016)
  • M.8163 AC / EYSA / JV (2 September 2016)
  • M.8168 STEINHOFF INTERNATIONAL / POUNDLAND (1 September 2016)

Phase II Mergers

Commission conditionally approves Hutchison/VimpelCom joint venture. On 1 September 2016, the European Commission (Commission) announced that it has decided under Article 8(2) of the EU Merger Regulation to grant conditional clearance to the proposed joint venture between the telecommunications activities of Hutchison and VimpelCom in Italy. The proposed joint venture would combine Vimpelcom’s subsidiary WIND with Hutchison's subsidiary H3G, respectively the third and fourth largest operators in the Italian retail mobile telecommunications market. The Commission was concerned that the joint venture would eliminate competition between two strong players in the Italian retail mobile market along with reducing incentives amongst the remaining mobile network operators (MNOs) to compete and resulting in less consumer choice and higher prices. The Commission was also concerned that the joint venture would make it easier and more likely that the remaining MNOs would be able to coordinate their competitive behaviour on the retail market. Further, the Commission found that the joint venture would have reduced the number of MNOs effectively willing to host virtual network operators. To address these competition concerns, the Commission and the parties agreed a “fix-it-first” remedy whereby the parties will divest sufficient assets to allow a French telecoms company, Iliad, to enter the Italian market as a fourth MNO. This proposal involves the transfer of spectrum blocks and mobile base station sites, as well as a transitional agreement allowing use by Iliad of the joint venture's network. The Commission is satisfied that this structural remedy will fully address its competition concerns by replacing the competition that would be lost as a result of the transaction.

EU Competition 

Appeal by Czech railway company against Commission dawn raid decision. On 29 August 2016, details were published in the Official Journal of an appeal to the General Court by České dráhy a.s, the Czech national railway operator, against a Commission decision to conduct an unannounced inspection. The inspection decision related to suspected anti-competitive conduct by the applicant in connection with Case AT.40156 — Falcon (no public information about this case is currently available). In Its appeal, the applicant relies on six pleas in law: (i) the contested decision, or the inspection itself, constitutes an arbitrary and disproportionate interference in the private sphere of the applicant; (ii) the statement of reasons for the Commission’s decision was insufficient; (iii) there is no evidence, even circumstantial, to suspect that the applicant has engaged in anti-competitive conduct; (iv) the Commission did not have the power to adopt the contested decision or carry out the inspection; (v) the adoption of the decision and the carrying out of the inspection is contrary to the principle of legal certainty and the principle of the protection of legitimate expectations; and (vi) the contested decision and the associated approach of the Commission interfered with the applicant’s rights guaranteed by Articles 7 and 48 of the Charter and Article 48 of the Charter of Fundamental Rights of the European Union.

State Aid

Commission approves Greek support to improve electricity generation on non-interconnected islands. On 29 August 2016, the Commission announced that it has decided under the State aid rules to approve Greek plans to provide state support to the modernisation of electricity generation on non-interconnected islands. In December 2015, Greece notified plans to the Commission concerning the proposal to grant the Greek electricity company, PPC, a state guarantee. According to the notification, the guarantee would enable PPC to secure a EUR190 million loan from the European Investment Bank (EIB) to cover half of the costs for the necessary upgrade, expansion and refurbishment of existing power plants on 18 islands not connected to the Greek mainland’s electricity grid. PPC will finance the other half of the costs from its own budget. The Commission found that the notified measure involves State aid because the terms of the guarantee are more favourable than those that a commercial operator would have accepted. However, the Commission found that the measure is in line with EU State aid rules. According to the Commission, the measure is necessary to allow PPC to continue to supply consumers on the non-interconnected islands with affordable electricity. It also ensures the availability of the required electricity generation capacity on the islands concerned.

Commission decision on Ireland’s selective tax treatment of Apple. On 30 August 2016, the European Commission announced that it has decided that tax benefits granted to Apple by Ireland (totaling EUR 13 billion) constitute illegal State aid. The Commission found that two Irish tax rulings endorsed an artificial method to internally allocate profits within two Apple companies (Apple Sales International and Apple Operations Europe, which are both incorporated in Ireland). According to the Commission, the rulings gave Apple a significant unfair advantage over other businesses that are subject to the same national taxation rules. The Commission also found that the profits of the two Irish companies were internally attributed to a “head office” that only existed on paper and had no trading activities. These profits were, therefore, not taxed. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International. The Commission has ordered the recovery of the illegal State aid granted to Apple for a ten-year period preceding the Commission's first request for information in 2013. Following the Commission’s decision, Ireland must now recover the unpaid taxes from Apple for the years 2003 to 2014 (inclusive) which amount to approximately EUR 13 billion, plus interest.

UK Competition

CMA refers acquisition by Diebold of Wincor Nixdorf to a Phase 2 investigation. On 30 August 2016, the Competition and Markets Authority (CMA) announced that it will refer the completed acquisition by Diebold, Incorporated of Wincor Nixdorf AG to a Phase 2 investigation under the Enterprise Act 2002. In its initial investigation, the CMA found that both parties compete closely in the supply of customer-operated ATMs (cashpoints) in the UK. On 19 August 2016, the CMA announced it would make such a reference unless acceptable undertakings in lieu were offered. In its most recent press release, the CMA states that Diebold has not offered satisfactory undertakings. As a result, the CMA will investigate further the its concerns that, as the parties are close competitors and there is only one other credible competitor, the merger could substantially lessen competition in the supply of customer-operated ATMs in the UK. The deadline for the CMA to report on this merger is 13 February 2017.

CMA refers acquisition by VTech of LeapFrog to a Phase 2 investigation. On 30 August 2016, the CMA announced that it will refer the completed acquisition by VTech Holdings Limited of LeapFrog Enterprises Incorporated to a Phase 2 investigation under the Enterprise Act 2002. On 18 August 2016, the CMA announced it would make a such a reference unless acceptable undertakings in lieu were offered. In its most recent press release, the CMA states that VTech did not offer any undertakings. As a result, the CMA investigate further its concerns that the merger may result in a substantial lessening of competition in the supply of electronic learning toys for toddlers, child laptops/tablets and child electronic reading systems in the UK. The deadline for the CMA to report on this merger is 13 February 2017.

CMA makes initial enforcement order to Cineworld Group. On 2 September 2016, the CMA announced that it has made an initial enforcement order under section 72 of the Enterprise Act 2002 addressed to Cineworld Group plc (Cineworld) in relation to Cineworld’s completed acquisition of the following cinemas owned by Empire Cinemas Limited: Empire Basildon, Empire Bromley, Empire Hemel Hempstead, Empire Leicester Square and Empire Poole. Section 72 of the Enterprise Act (as amended) allows the CMA to make initial enforcement orders to prevent pre-emptive action in both completed and anticipated mergers.