EU Mergers

Phase I Mergers

  • M.8251 BITE / TELE2 / TELIA LIETUVA / JV (19 July 2017)
  • M.8416 THE PRICELINE GROUP / MOMONDO GROUP HOLDINGS (17 July 2017)
  • M.8452 SUEZ / GE WATER AND PROCESS TECHNOLOGIES (19 July 2017)
  • M.8456 INEOS / FORTIES PIPELINE SYSTEM (14 July 2017)
  • M.8500 CENTRAL / SIGNA PRIME / JVCO (14 July 2017)
  • M.8546 INTERMEDIATE CAPITAL GROUP / DOMUSVI GROUP (14 July 2017) 

EU Competition

Commission publishes decision granting derogation in relation to Banco Santander and Banco Popular Group merger. On 19 July 2017, the European Commission (Commission) published its decision to grant a request for a derogation from the suspension obligation under Article 7(3) of the EU Merger Regulation in relation to the proposed acquisition by Banco Santander S.A. (Santander) of sole control over Banco Popular Español S.A. (BPE). The Commission may grant a derogation from the normal obligation to suspend completion of an acquisition until clearance on the basis of a reasoned request. In doing so, the Commission will consider the effects of suspension and the threat to competition. In this case, Santander applied for a derogation under Article 7(3) on the ground that BPE, which the European Central Bank had decided was failing or likely to fail, had suffered a rapid deterioration in its liquidity situation and lost 40-50% of its market capitalisation. Santander believed BPE needed to be rapidly acquired by a stable market player to preserve its financial stability. The Commission accepted that BPE was in serious financial trouble. In particular, the Commission considered that the grant of a derogation would be appropriate, and that the suspension obligation could lead to serious harm to BPE, its customers and creditors, and to financial stability in general. Moreover, the Commission found no negative effects arising in relation to third parties, and that the proposed acquisition by Santander was not likely to pose any threat to competition in the EEA. The Commission therefore concluded that the conditions for granting a derogation from the suspension obligation had been met.

State Aid

Commission approves restructuring plan for Danish Vestjysk Bank. On 18 July 2017, the Commission approved a restructuring plan for Danish Vestjyst Bank. The plan will ensure the bank’s long-term viability without any new aid. As part of the plan, the Danish State has signed an agreement with a consortium of Danish private investors to acquire the State’s share in the bank so that it will be fully private. The Commission found the sales process was conducted on a fair, open, and transparent basis, and that Denmark did not grant any further aid to the bank through the sale. The Commission also gave final approval to the DKK 8.941 million (approximately €1.2 billion) aid to Vestjyst Bank which was temporarily approved in 2012. The Commission concluded that the aid remained in line with EU state aid rules.

Commission finds Belgian support to three airlines to be incompatible with EU state aid rules. On 18 July 2017, the Commission found the public support granted by Belgium to three airlines flying from Brussels Airport was incompatible with EU state aid rules. This was because it gave the airlines, namely Brussels Airlines, TUI Airlines Belgium, and Thomas Cook Airlines Belgium, an unfair advantage over other airlines. The scheme was introduced in 2014 and foresaw approximately €19 million of public funding per year to the operator of Brussels Airport which would then be passed onto certain airlines. The Belgian authorities cooperated with the Commission and in March 2017 they abolished the scheme and recovered the aid granted to each airline with interest.

Commission approves public service compensation to Inverness airport. On 18 July 2017, the Commission approved the public service compensation granted to Highlands and Islands Airports Limited (HIAL) for the operation of Inverness airport in the UK under EU state aid rules. The compensation will be granted for five years to HIAL. It was found that the funding would contribute to the area’s economic and social development, without distorting competition. The Commission found, in particular, that the compensation allows for the provision of a genuine service of general economic interest in that the airport provides access to the Highlands of Scotland and to some of Scotland’s most remote islands. This decision will apply until the UK ceases to be a member of the EU.

UK COMPETITION

CMA publishes its final decision in relation to Standard Life and Aberdeen Asset Management merger. On 18 July 2017, the Competition and Markets Authority (CMA) published its final decision in relation to the anticipated acquisition by Standard Life plc (Standard Life) of Aberdeen Asset Management PLC (Aberdeen). The parties overlap in the supply of active asset management services and in the supply of business-to-business platform services in the UK and elsewhere. The CMA therefore reviewed the transaction in relation to the supply of active asset management services, and adviser platforms. In doing so, the CMA found that the parties had a relatively modest share of supply and face a significant number of competitors in the provision of both. Moreover, third parties confirmed that the parties are not particularly close competitors. The CMA concluded that taken together, these constraints were sufficient to ensure the merger did not give rise to a realistic prospect of a substantial lessening of competition. Therefore, the CMA decided not to refer the transaction under section 33(1) of the Enterprise Act 2002.

CMA publishes its final decision in relation to Bacs, Faster and Cheque & Credit merger. On 19 July 2017, the CMA published the full text of its decision in relation to the anticipated merger of Bacs Payment Schemes Limited (Bacs), Faster Payments Scheme Limited (FPS), and Cheque & Credit Clearing Company Limited (C&CC). The parties operate and provide different types of interbank payment systems for use by payment service providers, such as banks and building societies. The CMA assessed the impact of the transaction in relation to the supply of interbank payment services in the UK. The CMA found that the transaction did not raise any competition concerns as there was no material competition between the different payment systems operated by the parties at present. For example, each of the three payment schemes offered a different type of payment, processed at a different speed, via a different channel, and typically involved different transaction values. As a result, almost all banks participate in all three of the payment schemes. The CMA concluded that the transaction did not give rise to a realistic prospect of a substantial lessening of competition and therefore did not make a reference under section 33(1) of the Enterprise Act 2002.

CAT dismisses collective proceedings application in MasterCard action. On 21 July 2017, the Competition Appeal Tribunal (CAT) handed down its judgement on the collective proceedings order (CPO) application in the MasterCard collective damages action. The application was brought by Mr Walter Hugh Merricks CBE, who sought permission to bring opt-out collective proceedings under section 47B of the Competition Act 1998 as a class representative. The claims were brought on a follow-on basis following the Commission’s decision which found MasterCard’s multilateral interchange fees breached Article 101 of the Treaty on the Functioning of the European Union (TFEU). The CAT must approve collective proceedings and a CPO will only be made if the CAT believes the claims are eligible for inclusion in that they must be brought on behalf of an identifiable class, raise common issues, and be suitable to be brought in collective proceedings. In this case, the CAT concluded that the claims were not eligible for inclusion in collective proceedings. The CAT found a number of claims could not be described as common issues. For example, to bring a claim against MasterCard for damages arising from the multilateral interchange fees, an individual would have to show the degree to which the retailer passed through the overcharges, and, as there was likely to be significant variation between different goods and different retailers, this could not be described as a common issue. Whilst the CAT noted that there is no requirement for all the significant issues in a claim to be common issues, the CAT also found that the claims were not suitable for collective proceedings. This was because the applicant did not put forward a sustainable methodology which could be applied to calculate a sum which reflected the aggregate of individual damages claims, or a means of estimating any individual loss which could be used as the basis for distribution. The CAT therefore did not make a CPO in this case.