EU Mergers

Phase I Mergers

  • M.8227 RHEINMETALL / ZHEJAN YINLUN MACHINERY / JV (6 January 2017)
  • M.8259 GROUPE HIG / GUILLAUME DAUPHIN / ECORE (3 January 2017)
  • M.8302 KOCH INDUSTRIES / GUARDIAN INDUSTRIES (5 January 2017)
  • M.8317 KKR / CALSONIC KANSEI  (6 January 2017)

State Aid

Commission approves prolongation of Italy’s support to banks. On 29 December 2016, the European Commission (Commission) cleared plans by Italy to extend their bank guarantee scheme for a further six months, until 30 June 2017. The Commission approves the prolongation of such schemes in successive periods of six months in order to “be able to monitor developments and adjust conditions accordingly”. The Italian State aid covers liquidity support measures and are in line with the Commission’s 2013 Banking Communication. The Commission separately cleared support for Monte dei Paschi di Siena from a new €20 billion Italian State fund, as Monte dei Paschi di Siena did not qualify for the general liquidity support measures because of a capital shortfall. "Italy has asked the Commission to authorise such support for Monte dei Paschi di Siena for use in case of need." the Commission said, finding the support to be “in line with EU state aid rules”. The Commission added that the measures were separate from any public injections of capital.

UK Competition 

CMA publishes full decision on acquisition by Cineworld of five cinemas owned by Empire Cinemas. On 4 January 2017, the Competitions and Market Authority (CMA) published their decision to approve the completed acquisition of five cinemas owned by Empire Cinemas Limited by Cineworld Group plc. The CMA announced its decision not to refer the merger for a Phase II investigation on 12 December 2016, concluding that the small increase in Cineworld’s share of supply at the national level did not give rise to competition concerns. The CMA also noted that a number of strong national competitors remain present in the market. However, at a local level, the CMA found that the parties overlap in three of the five target cinemas: the Empire Bromley, the Empire Hemel Hempstead, and the Empire Leicester Square. After a thorough investigation, the CMA decided that the parties' cinemas did not compete closely and that sufficient competitive constraints will remain post-merger. Therefore, the CMA concluded that the merger “does not give rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects”.UK Competition 

CMA releases previous undertakings in Robert Wiseman Dairies / Scottish Pride merger. On 5 January 2017, the CMA published its final decision to release the undertakings given by Robert Wiseman Dairies plc (Wiseman Dairies) previously in 1997 under the Fair Trading Act 1973 in relation to its acquisition of Scottish Pride Holdings plc (Scottish Pride). In 1997, the parties accounted for around 80% of wholesale sales of fresh liquid milk in Scotland, and 70% of the fresh liquid milk sold to "middle-ground customers". The undertakings given at the time prohibited Wiseman Dairies from directly or indirectly acquiring any interest in a further milk supplier or acquiring any other milk supplier’s assets. The CMA announced in November 2016 that the undertakings given by Wiseman Dairies are no longer appropriate due to a change in circumstances. The CMA noted that the market now consists of three large suppliers of fresh liquid milk to middle-ground customers in Scotland, and that the share of supply of the company has fallen to around 37%, with a competitor gaining material market share, especially on a national chain level. The CMA considered that these changes make the undertakings no longer appropriate and its final decision is that the undertakings should be released.

CMA refers MasterCard’s acquisition of VocaLink to Phase II investigation. On 4 January 2017, the CMA announced its decision to refer the proposed acquisition of VocaLink Holdings Ltd (VocaLink), by MasterCard UK Holdco Ltd, a subsidiary of MasterCard International Inc. (MasterCard), to a Phase II investigation unless acceptable undertakings in lieu of reference are offered. MasterCard already owns and operates credit and debit card schemes MasterCard, Maestro and Cirrus, and has also bid to supply infrastructure services to UK interbank payment systems. VocaLink is a supplier of payment infrastructure services to three major UK interbank payment systems: BACS, the automated clearing system allowing credit and debit payments between bank accounts; the Faster Payments Service (FPS), which enables near “real-time” payments between bank accounts within the UK; and the LINK ATM network. The CMA has found that the merger may lead to a substantial lessening of competition in the supply of payment infrastructure services to the LINK ATM network in the UK; their investigation found that the parties are two of the three most credible providers of such infrastructure services. The CMA noted that “the merger would reduce the number of bidders and limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider”. The CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS since there are many credible alternatives to VocaLink and MasterCard. The parties have until 11 January 2017 to offer undertakings that may be acceptable to the CMA.

CAT rules on reserved matters in Sainsbury’s damages action against MasterCard. . On 6 January 2017, the Competition Appeal Tribunal (CAT) published its ruling of 21 December 2016, regarding how the interest was to be calculated on the damages awarded to Sainsbury's Supermarkets Ltd (Sainsbury’s) in the CAT's July 2016 judgment against MasterCard. In the July 2016 judgment, the CAT had found that MasterCard's UK multilateral interchange fee infringed Article 101(1) of the TFEU, and awarded damages to Sainsbury’s of £68,582,245 plus interest. However, Sainsbury’s and MasterCard disagreed on what witness report the judgment referred to when instructing how the interest was to be calculated, and the CAT reserved this matter for further hearing on 16 December 2016. At the hearing, Sainsbury’s argued that the rates of interest should be those stated in one report of an expert witness used by MasterCard (the pre-tax figures), whereas MasterCard argued that the rates used should be those stated in a subsequent report by the same expert witness (the post-tax figures).The CAT ruled in favour of MasterCard on the points raised; it found that it was clear that the subsequent report simply intended to update the first report, as the first report was calculated on the basis of incomplete data from Sainsburys. As a result of this ruling, Sainsburys must repay some of the monies paid by MasterCard to Sainsburys pursuant to the CAT's main judgment.