EU Mergers

Phase I Mergers

  • M.8496 STRABAG / MAX BÖGL INTERNATIONAL / SMB (15 June 2018)
  • M.8660 FORTUM / UNIPER (15 June 2018)
  • M.8861 COMCAST / SKY (15 June 2018)
  • M.8875 OAKTREE CAPITAL GROUP / BITARTE / JV (11 June 2018)
  • M.8940 BLACKSTONE / CIRSA (15 June 2018)
  • M.8961 HPS / MDP / PFP (13 June 2018) 

EU Competition

Commission launches in-depth investigation into the acquisition of Tele2 NL by TMobile NL. On 12 June 2018, the European Commission (Commission) announced that it has opened an in-depth investigation into the proposed acquisition of Tele2 NL by T-Mobile NL under the EU Merger Regulation. The proposed transaction envisages the combination of Deutsche Telekom’s subsidiary, T-Mobile NL, with Tele2’s subsidiary, Tele2 NL. Both of these subsidiaries are respectively the third and fourth largest mobile network operators in the Netherlands. The Commission is mainly concerned that the transaction would negatively impact the retail mobile telecommunications market in Netherlands in two ways: through the reduction in the number of market players, and the decreased incentive for the merged entity to compete effectively with remaining operators. The Commission has until 17 October 2018 to make a decision on the investigation. 

EU Mergers

Commission publishes appeal by Polskie Linie Lotnitcze against Commission decision in relation to the acquisition of certain assets of Air Berlin by easyJet.  On 11 June 2018, the Commission published in the Official Journal of the European Union (OJEU) details of an appeal brought by a Polish company, Polskie Linie Lotnitcze (Polskie), against a Commission decision approving the acquisition of certain assets of Air Berlin by easyJet. Polskie alleges that the Commission incorrectly assessed the impact on competition in relation to the provision of passenger air transport services to and from certain airports. In its appeal, Polskie also claimed that the Commission did not provide an adequate statement of reasons and failed to carry out a proper assessment on the impact of the concentration on the internal market in the context of state aid previously granted to Air Berlin. 

State Aid

Commission approves Croatian investment of €165 million for the extension of the Istrian Y motorway. On 14 June 2018, the Commission issued a press release announcing its approval of Croatia’s plan to prolong the Istrian Y motorway concession agreement between Croatia and Bina-Istra. The Istrian Y motorway is a 145 km motorway linking the Istrian region with the rest of Croatia. It has been operated under a concession arrangement since 1995 which was awarded to Bina-Istra until 2027. Earlier this year, Croatia informed the Commission that it intended to prolong this concession agreement until 2032 in order to allow Bina-Istra to finance the construction of a second 28 km long carriageway on the north eastern side of the motorway. This investment is forecasted to cost €165 million. The Commission concluded that the Croatian plan would not overcompensate Bina-Istra and that the proposed prolongation of the concession agreement is proportionate to the amount needed to finance the construction of a second carriageway. As a result, the measures were held to be in line with EU state aid rules. 

UK Mergers

CMA publishes draft guidance for consultation on the exceptions to the duty to refer mergers. On 11 June 2018, the Competition Markets Authority (CMA) published draft guidance for consultation on the exceptions to the CMA’s duty to refer mergers for an in-depth Phase 2 investigation. The draft guidance sets out the CMA’s current and intended future practices. It explains that the CMA has a discretion not to refer a transaction for Phase 2 investigation where the markets concerned are not sufficiently important to justify a reference, where the arrangements of an anticipated merger are unlikely to proceed, or when customer benefits outweigh the substantial lessening of competition. The draft guidance considers each of these exceptions in further detail and, according to the CMA, should be read alongside the CMA’s guidance on jurisdiction and procedure in relation to mergers, which can be found here. The consultation on this draft guidance will run until 20 July 2018.

CMA publishes draft guidance for consultation on interim measures in merger investigations. On 11 June 2018, the CMA published draft guidance for consultation on interim measures in merger investigations. This draft guidance sets out a proposed update to the current system concerning interim measures, which was introduced in April 2014. It offers further clarification on the situations where interim measures will typically be granted, the type of interim measures that will likely be granted, the timing for imposing and revoking interim measures, and the grant of derogations from the interim measures imposed. The CMA is now seeking the views of interested parties to ensure that the proposed guidance provides clear and sufficient information for merging parties. Responses can be made by post or email and the deadline for this consultation is 20 July 2018.

CMA publishes draft guidance in relation to merger remedies. On 11 June 2018, the CMA published draft guidance for consultation on merger remedies. This draft guidance sets out the CMA’s approach and requirements in the selection, design and implementation of remedies in Phase 1 and 2 merger investigations. According to the CMA, it is intended to be the sole source of guidance on remedies for merger investigations and as such, supersedes the Competition Commission’s guidelines on merger remedies, Chapter 5 of the Office of Fair Trading’s guidelines on undertakings in lieu of reference, and Chapters 8 and 14 of the CMA’s guidelines on merger jurisdiction and procedure. The CMA is now seeking views on its draft guidance, particularly from merging parties and their advisers who have been involved in the merger notification process. Interested parties will have until 20 July 2018 to respond to this consultation.

CMA fines Electro Rent Corporation for failing to comply with the CMA’s interim order. On 11 June 2018, the CMA published a notice of penalty pursuant to section 94A of the Enterprise Act 2002 (EA) fining Electro Rent Corporation (ER) a sum of £100,0000 for failing to comply with requirements imposed on ER by an interim order. The interim order required ER to seek the consent of the CMA prior to issuing a notice exercising its break option under the lease over the premises of ER and its subsidiaries. The CMA found that it was appropriate to impose the penalty on ER as the lease was part of ER’s remedy package in relation to its acquisition of Microlease, Inc. and Test Equipment Asset Management. Although ER had taken steps to remedy this breach by entering into a new lease, the CMA concluded that the £100,000 penalty reflects the seriousness of ER’s failure to comply with the interim order and that it acts as a deterrent for future breaches of this kind.

CMA accepts undertakings provided by Tarmac Trading in relation to Tarmac Trading/Breedon Group merger. On 15 June 2018, the CMA announced that it has accepted the undertakings offered by Tarmac Trading Limited (Tarmac) in lieu of the CMA’s reference of Tarmac’s acquisition of certain assets from Breedon Group plc (Breedon) for a Phase 2 investigation. Tarmac previously agreed to acquire 27 ready-mix concrete plants, a marine aggregates terminal at Briton Ferry, and certain assets utilised in connection with the ready-mix concrete plants from Breedon. In April 2018, the CMA found that the proposed acquisition gave rise to a realistic prospect of substantial lessening of competition within UK markets for the supply of ready-mix concrete. Following the CMA’s decision, Tarmac offered undertakings in order to address the CMA’s competition concerns. The undertakings offered by Tarmac, which has now been accepted by the CMA, include a commitment not to acquire assets in areas which would create a substantial lessening of competition in the supply of ready-mix concrete and a commitment to comply with written directions from the CMA as given from time to time.

Speeches and Publications

Commission publishes annual activity report for 2017. On 11 June 2018, the Commission published the annual activity report of the Directorate-General of Competition (DG). Annual activity reports are the main instruments of accountability within the Commission. This report sets out the key results and progress towards the achievement of the DG’s objectives, the Key Performance Indicators for the illustration of policy highlights and key conclusions on financial management and internal control. The report also notes that the DG has been facing a strain on resources due to mergers becoming more complex and the increase in the number of merger notifications (by 36% between 2013 and 2017). 

BEIS publishes guidance in relation to changes to the turnover and share of supply tests for national security UK mergers.  On 11 June 2018, the Department for Business, Energy and Industrial Supply (BEIS) published a guidance on the new changes to the EA in relation to the turnover and supply tests for mergers connected to or otherwise impacting national security in the UK, known as the national security public interest merger regime. This guidance provides an explanation for the relevant amendments to the EA, describes the legal and practical effects of the amendments, and offers advice to businesses on how to proceed in light of these changes. BEIS has made clear, however, that the guidance is not statutory guidance and is only intended to provide an indication of how the national security public interest merger regime will operate in practice. The guidance also notes that the Secretary of State is likely to take a case-by-case approach when considering transactions caught under this new regime and recommends that businesses seek their own individual legal advice in such cases.