EU Mergers

Phase I Mergers

  • M.7973 GERDAU / SUMITOMO / JV (3 August 2016)
  • M.7978 VODAFONE / LIBERTY GLOBAL / DUTCH JV (3 August 2016)
  • M.7984 BRIDGESTONE / PNEUHAGE / JV (2 August 2016)

Phase II Mergers

Summary of Commission’s decision to approve the acquisition of Dresser-Rand by Siemens. On 3 August 2016, a summary of the European Commission's (Commission) June 2015 decision to approve the acquisition by Siemens of Dresser-Rand, under Article 8(1) of the EU Merger Regulation, was published in the Official Journal (OJ 2016 C281/7) (M.7429). The Final Report of the Hearing Officer and the Opinion of the Advisory Committee have also been published. As a result of its Phase II investigation, the Commission ruled out its concern that the merger would reduce competition in relation to: (i) the supply of aero-derivative gas turbine (ADGT) driven turbo compressor trains; and (ii) the supply of small steam turbines of less than 5 MW. The Commission also found that the parties' activities are largely complementary and that they are not close competitors. In addition, the Commission identified a substitutable product to ADGT which resulted in a finding that a major supplier competed for the supply of certain ADGT driven turbo compressor trains. In relation to small steam turbines, the Commission found that, in addition to other major suppliers, there are a number of smaller competitors active on the market, and also that market entry for new entrants is possible.

State Aid

Commission approves public investment for the completion of Berlin airport. On 3 August 2016, the Commission announced that it has decided that a German public investment package to complete the construction of Berlin Brandenburg (FBB) airport, which is part-owned by the Federal Republic of Germany, is in line with EU State aid rules. In January 2016, Germany notified plans by the airport's public shareholders to grant a EUR 1.1 billion shareholder loan, and a shareholder guarantee covering additional debt financing of up to EUR 1.1 billion, to FBB. In assessing the aid measure, the Commission considered that interventions by public authorities in companies can be deemed to be free of State aid when they are carried out on market terms and conditions. After a detailed economic assessment, the Commission found that expanding and completing the FBB airport was the most profitable option, especially taking account of steadily increasing passenger numbers, as forecast by independent market studies. On the basis of several hypotheses, the Commission found that, even in the worst-case-scenario, the investment would remain profitable. The Commission therefore concluded that a private investor seeking long-term profitability would have provided the same funding/investment package on similar terms and conditions, to make sure that the airport is completed and made operational. The Commission also found that the terms of the shareholder guarantee were in line with market practice and, therefore, the guarantee conferred no selective advantage on the airport operator.

UK Competition

High Court ruling on territorial application of Article 101 TFEU and jurisdictional issues in damages action concerning LCD cartel. On 29 July 2016, the High Court gave a ruling on preliminary issues in an action claiming damages for harm allegedly caused as a result of the defendants' participation in the Liquid Crystal Display (LCD) cartel. Two of the defendants (both South Korean companies) claimed that the High Court had no jurisdiction to hear the claims against them. Three other defendants (being UK companies) argued that the claims against them should be struck out on the basis that the claimants had no reasonable grounds for bringing the claims. In examining whether the claims fell within the territorial scope of Article 101 Treaty on the Functioning of the European Union (TFEU), the High Court found that the Commission had decided that the cartel was implemented in the EU and therefore there was a breach of Article 101 TFEU. The High Court held that it was not relevant that the conduct and activity which amounted to implementation within the EU did not involve the supply chains in this case. According to the High Court, the real question was whether the claimants could show that they had suffered harm by reason of the implementation of the cartel in the EU. It concluded that the claimants had pleaded an arguable case in this regard. The High Court also held that the claimants had an arguable cause of action against the UK defendants (subsidiaries of one of the South Korean companies), even though they were not addressees of the cartel decision. It therefore, refused to strike out the claims or give summary judgment dismissing the claims. The High Court also concluded that it had jurisdiction over the South Korean defendants and that it was appropriate for it to exercise such jurisdiction. It found that the claims fell within the High Court's jurisdiction and that England and Wales was the most appropriate jurisdiction for the claims to be heard in. In particular, it held that it would not be appropriate for an action based on breach of Article 101 TFEU to be brought against the UK defendants in England and Wales but against the foreign defendants in either Japan or Taiwan (Iiyama (UK) Ltd & Ors v Samsung Electronics Co Ltd & Ors [2016] EWHC 1980 (Ch)).

UK Mergers

CMA clearance of AXA’s Sunlife and Embassy businesses by Phoenix. On 2 August 2016, the Competition and Markets Authority (CMA) announced that it has decided not to refer the anticipated acquisition by Phoenix Group Holdings of AXA's SunLife and Embassy businesses to a Phase II investigation under the Enterprise Act 2002.

CMA consultation on undertakings in lieu in relation to Tullet Prebon’s anticipated acquisition of ICAP’s voice and hybrid broking services. On 2 August 2016, the CMA announced a consultation in respect of undertakings in lieu offered by Tullett Prebon plc (Tullett) in relation to its anticipated acquisition of ICAP plc’s (ICAP) voice and hybrid broking and information businesses. The CMA found that the merger may be expected to result in a substantial lessening of competition in the supply of voice/hybrid broking of oil products, and that the transaction would be referred for an in-depth Phase II investigation unless acceptable undertakings were offered. To address the CMA’s concerns, Tullett has agreed to divest ICAP’s London based oil desks responsible for providing broking services to customers based in Europe, the Middle East, and Africa to an up-front buyer approved by the CMA. The CMA considers that the proposed undertakings are appropriate to remedy its competition concerns, and has accepted them in principle. The CMA invites comments on the proposed undertakings by 17 August 2016.

Publications / Speeches / Documents

Commission publishes most recent updated statistics on cartels. In late July 2016, the Commission published a document setting out statistics about cartel decisions. The statistics contained in the document show the total fines imposed by the Commission in each year from 2012 until July 2016 (both adjusted and non-adjusted for European Court judgments). The document also lists the ten highest total and individual cartel fines since 1969 (all of which have been since 2001), the ten highest cartel fines per undertaking since 1969, the number of undertakings involved in the decisions and the number of cartel decisions taken by the Commission for each year since 2012 until July 2016.

Commission Competition Merger Brief July 2016. On 1 August 2016, the European Commission published the latest version of its "Competition Merger Brief". This briefing paper is written by DG competition staff members and provides their analysis of important recent merger cases.