EU Mergers

Phase I Mergers

  • M.8309 VOLVO CAR CORPORATION / FIRST RENT A CAR (26 July 2017)
  • M.8440 DUPONT / FMC (HEALTH AND NUTRITION BUSINESS) (27 July 2017)
  • M.8498 TORAY / MITSUI / SODA (24 July 2017)
  • M.8509 LVMH / MARCOLIN / JV (27 July 2017)
  • M.8516 EPH / CENTRICA LANGAGE AND CENTRICA SHB  (20 July 2017)
  • M.8528 SEGRO / PSPIB / SELP / MORGANE PORTFOLIO (25 July 2017)
  • M.8557 CCMP CAPITAL / MSD AQUA PARTNERS / HAYWARD INDUSTRIES (26 July 2017) 

EU Competition 

Court of Justice dismisses appeal of AGC Glass in relation to car glass cartel. On 26 July 2017, the European Court of Justice (ECJ) dismissed the appeal of AGC Glass Europe SA, AGC Automotive Europe SA, AGC France SAS, AGC Flat Glass Italia Srl, AGC Glass UK Ltd, and AGC Glass Germany GmbH (AGC Glass) relating to the European Commission’s (Commission) decision which found a number of car glass manufacturers, including the appellants, to have participated in a set of anticompetitive arrangements in the automotive glass sector between March 1998 and March 2003 in the European Economic Area (EEA). The Commission’s Directorate-General (DG) for Competition informed the appellants of its intention to publish a non-confidential version of the decision on its website. The appellants requested that information containing customer names, descriptions of products, and any information which would enable a customer to be identified to be excluded from the decision. This request was rejected by the hearing officer, and on appeal, the General Court dismissed the action as unfounded. The appellants then appealed to the ECJ alleging first, that the General Court erred in law in holding that the hearing officer was not competent to examine their requests for confidential treatment; second, that the General Court erred in law in rejecting their argument for the infringement of the principles of the protection of legitimate expectations and equal treatment; and third, that the General Court’s judgment was vitiated by insufficient reasoning. Even though the ECJ held that the General Court had erred in law in finding that the hearing officer had been entitled to decline competence, the ECJ found that the error did not require the decision to be annulled. The ECJ rejected each of the appellants’ grounds of appeal, and the appeal was dismissed in its entirety.

State Aid

Commissioner and UK Government reach an agreement in relation to RBS commitment. On 26 July 2017, Commissioner Margrethe Vestager reached an agreement in principle with the Exchequer of the UK on the alternative package proposed by the UK for the Royal Bank of Scotland (RBS). This package would replace RBS’s commitment to divest its UK retail and small and medium-sized enterprise (SME) banking operations, William & Glyn. The commitments were given as part of RBS’s restructuring plan which was submitted in 2009 and amended in 2014, and aimed to mitigate the distortion of competition in the UK SME banking market arising from the state aid granted to RBS following the financial crisis in 2008. The divestment of Williams & Glyn is the last outstanding commitment. The Commission can only accept modifications to existing commitments that were given to obtain approval for restructuring aid, if the new commitments are considered equivalent to the original ones. The Commission opened an investigation to assess the alternative package and interested parties submitted their views on the new commitments. In light of the feedback, the UK authorities proposed enhancements to the package, namely, that RBS will provide more financing and set up an independent fund to enhance their SME banking capabilities, and that RBS will commit more financing to support the switching of a higher number of clients. The Commission considered the new package to be sufficient to replace the divestment and that the improved package will increase competition in the SME banking market. On this basis, the UK will notify the improved alternative package to the Commission and the Commission will adopt its formal decision under EU state aid rules.

Commission requires Belgium and France to end tax exemptions for ports. On 27 July 2017, the Commission required Belgium and France to abolish the corporate tax exemptions granted to ports in order to align their tax regime with EU state aid rules. In Belgium a number of inland waterway ports are exempt under Belgian law from the corporate tax regime, and subject instead to a different tax regime with a different taxable base and rates. In France 11 “grands ports maritimes”, the Port autonome de Paris, and ports operated by chambers of industry and commerce are fully exempt from corporate income tax. The Commission found that this provides the ports with a selective advantage in breach of EU state aid rules, in particular the exemptions do not pursue a clear objective of public interest. The Commission confirmed that port operators who generate a profit should be taxed under the normal national tax laws. Belgium and France now have until the end of 2017 to take the necessary steps to remove the tax exemption.

Commission approves Belgian rescue and restructuring aid scheme for SMEs. On 28 July 2017, the Commission approved a €20 million Belgian aid scheme aimed at facilitating the rescue and restructuring of SMEs in the region of Wallonia, under EU state aid rules. Under the scheme, the publically owned "Société Wallonne de Gestion et de Participation" (SOGEPA) will be able to provide support to a SME if the company’s default would likely trigger social hardship in the region. The Commission found that the aid was transparent and limited in time and scope. Moreover, the Commission found that the support will contribute to economic cohesion and development in the region, without distorting competition.

UK Competition

CMA publishes full text of its decision in relation to ZPG’s acquisition of Websky Limited.On 24 July 2017, the Competition and Markets Authority (CMA) published the full text of its decision in relation to the acquisition by ZPG plc (ZPG) of Websky Limited (Expert Agent) (Expert Agent). The parties overlap in the supply of customer relationship management (CRM) software for estate agents in the UK. This is software that helps estate agents manage their businesses by organising and automating data from various sources, this includes interacting with customers, storing information, marketing, tracking sales and lettings, and uploading information to online property portals. ZPG is active through its subsidiary Property Software Group (PSG). ZPG also owns Zoopla, an online property portal. As a result, there is a vertical relationship between the parties as CRM property software allows estate agents to upload property information to such portals. The CMA therefore assessed the transaction in terms of the horizontal effects in the supply of CRM property software, as well as considering whether the transaction could give rise to vertical effects via input foreclosure of property portals. In relation to horizontal unilateral effects, the CMA found that post-transaction, a sufficient number of credible and effective CRM property software alternatives would exist and continue to compete with the merged entity. Moreover, the CMA found that the parties’ offerings were differentiated in that PSG offer a more expensive and customised package, whereas Expert Agent provides a cheaper service targeted at smaller estate agents. Therefore, the CMA concluded that the transaction did not give rise to a realistic prospect of a substantial lessening of competition in the supply of CRM property software. In terms of vertical effects, the CMA found that the merged entity would not have the ability to degrade the quality of the upload feed to rival property portals. As a result, the CMA decided not to refer the merger for a more detailed assessment under section 22(1) of the Enterprise Act 2002.

CMA publishes full text of its decision in relation to Open International and Transactor Global Solutions merger. On 26 July 2017, the CMA published the full text of its decision in relation to the anticipated acquisition by Open International Limited (Open) of Transactor Global Solutions Limited and related businesses (Transactor). The parties overlap in the supply of insurance policy administration system (PAS) software solutions which connect intermediaries who sell insurance products with insurers. The CMA assessed the impact of the merger in the supply of all PAS solutions in the UK, and in the supply of PAS used for commercial-lines and personal-lines insurance. The CMA found that the parties’ share of supply was moderate, and that they were not particularly close competitors. Moreover, the parties would continue to be constrained by several significant competitors post-transaction. The CMA concluded that the transaction would not give rise to a realistic prospect of a substantial lessening of competition and therefore did not refer the anticipated merger under section 33(1) of the Enterprise Act 2002.

Brexit

BCLWG publishes report on its final conclusions and recommendations for competition law. On 26 July 2017, the Brexit Competition Law Working Group (BCLWG) published its final conclusions and recommendations on the implications of Brexit on UK competition law and policy. The aim of the report was to help achieve a smooth and effective transition for UK competition policy. The Report states that the UK economy is best served by continuing UK competition law and policy following Brexit, and that Brexit does not give cause for a radical reform of UK competition statutes or the role of the competition authorities. This is because Chapter 1 and Chapter 2 of the Competition Act 1998 mirror Article 101 and Article 102 of the Treaty on the Functioning of the European Union (TFEU). However, some primary legislation will need amending, in particular section 60 of the Competition Act 1998 which requires the UK authorities and courts to act consistently with EU jurisprudence. The Report recommends this section should be amended to a duty to “have regard” to the jurisprudence. Moreover, the Report recommends the repeal of section 10 of the Competition Act 1998 so that future EU block exemptions would have no effect on domestic law. In relation to mergers and acquisitions, the Report recommends retaining the “substantial lessening of competition” test. In relation to transition arrangements, the Report recommends the government give priority to agreeing transitional arrangements with the EU and put forward a number of recommendations on transitional issues relating to leniency arrangements and existing commitments. The Report also noted the need for a substantial increase in resources to enable the UK authorities to manage the increased workload following Brexit.