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Antitrust M&A Snapshot | Q1 2022

In the United States, antitrust agencies continue with their aggressive merger enforcement posture. The agencies challenged four transactions this quarter, including multiple vertical mergers. The agencies are increasingly skeptical of merger remedies, including behavioral remedies and divestitures. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are working together to update the current Horizontal Merger Guidelines. The updated guidelines will likely signal a more aggressive enforcement posture.

The European Commission (Commission) blocked one transaction in Phase II and cleared two transactions. Three transactions were abandoned after the Commission initiated a Phase II investigation. The Commission made use of partial referrals to member state national competition authorities in two cases. It also ordered Hungary to withdraw its decision to prohibit Vienna Insurance Group’s (VIG) acquisition of AEGON Group’s Hungarian subsidiaries on foreign direct investment grounds, holding that Hungary’s prohibition decision infringed Article 21 of the EU Merger Regulation.

In the United Kingdom, the first quarter of 2022 also saw a number of Phase II investigations. Specifically, the Competition and Markets Authority (CMA) cleared one transaction in Phase II and blocked two other transactions in Phase II. One transaction was abandoned after the CMA initiated a Phase II investigation. The CMA blocked the merger of Cargotec and Konecranes just one month after the EC cleared the transaction subject to commitments in Phase II. The parties abandoned the transaction following the CMA’s decision.

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Digital Markets Act Now Firmly on its Way

On March 24, 2022 the Council of the EU and the European Parliament reached political agreement on the “Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector” (Digital Markets Act or DMA). The political agreement comes just 15 months after the European Commission published its legislative proposal. The DMA aims to ensure fair and contestable markets in the digital sector. It will, once formally adopted, impose a set of prohibitions and obligations on “core platform services” providers that are designated “gatekeepers” under the DMA. It will also enable the Commission to carry out market investigations and sanction non-compliant behavior.

Along with the Digital Services Act, the DMA forms part of a comprehensive reform of the digital space in the European Union, and is a key component of the “European digital strategy” to make Europe fit for the digital age.

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Changes to the Legislative Landscape of Belgian Competition Law

On March 7, 2022, changes to both the Belgian Code of Economic Law (CEL) as well as the Belgian Criminal Code (BCC) were published in the Belgian Official Gazette (Belgisch Staatsblad, Moniteur belge).

The main changes include:

  • Introducing a filing fee in notifications of concentrations
  • Folding the rules and formalities relating to leniency programmes in the CEL and fine-tuning them
  • Fine-tuning the provisions on the cooperation with other NCAs and the European Commission
  • Expanding the circumstances in which periodic penalty payments and/or fines can be imposed
  • Clarifying which turnover needs to be taken into account for purposes of calculating fines imposed on associations of undertakings and how such fines are to be collected
  • Modifying the bid-rigging provision in the BCC to clarify that (criminal) immunity is available for bid-rigging infringements.

Save for the introduction of filing fees in concentration notifications, these changes were introduced to bring the Belgian competition law rules in line with “EU Directive 2019/1 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market” or “ECN+ Directive” for short.

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Annual European Competition Review 2021

In our super-connected age, we are inundated with information. It can be difficult to select what is really relevant to one’s business. The purpose of this Review is to provide legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy, to help keep you up to date on the latest requirements.

Inside you’ll find:

Cartels and Restrictive Agreements
From geo-blocking to pay-for-delay agreements and bid-rigging, find out the latest legal developments in restrictive practices.

Abuse of Dominant Position
Excessive pricing in the healthcare sector and a monopoly on online searches are key areas of development.

Merger Control
Gun-jumping remains a real focus for the European courts, with additional judgments on the provision of misleading information in merger proceedings.

State Aid
Transfer pricing and rules governing subsidiaries are hot topics, with the courts keeping an eye on excess profits and tax rate schemes.

Legislative and Policy Developments
Digital markets is the focal point of policy development in Europe, as verticals agreements also come under scrutiny.

Click here to read the full Review.




Antitrust M&A Snapshot | Q4 2021

In the United States, antitrust agencies have now filled senior leadership positions, although the Federal Trade Commission (FTC) awaits the appointment of a fifth commissioner. Challenges to mergers continue apace at both the FTC and the Department of Justice (DOJ). The agencies challenged two mergers in the fourth quarter and a third transaction was abandoned. Additionally, nine consent orders were approved. The FTC is also including prior approval provisions in consent orders across industries, requiring parties seeking to settle merger disputes to agree to provide the FTC with greater rights to reject potential future deals.

The European Commission (Commission) imposed interim measures for the first time in the context of the Commission’s determination that Illumina’s acquisition of GRAIL was premature. The Commission conditionally cleared, in Phase I, Veolia’s acquisition of Suez—a transaction involving two French incumbents in the water and waste sectors—following comprehensive commitments. IAG withdrew from its proposed acquisition of Air Europa following the Commission’s decision not to approve the transaction absent further concessions.

In the United Kingdom, the Competition & Markets Authority (CMA) imposed a record fine of £50.5 million on Facebook for breaching an initial enforcement order related to its acquisition of Giphy, and ultimately required Facebook to sell Giphy. The CMA also updated its merger guidance in parallel with the entry into force of the UK National Security and Investment Act, published a new template for initial enforcement orders and updated its guidance on interim measures.

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Antitrust M&A Snapshot | Q3 2021

In the United States, the US Department of Justice’s (DOJ) challenge of American Airlines and JetBlue’s “Northeast Alliance” after the joint venture’s approval by the US Department of Transportation earlier this year demonstrates the Biden administration’s commitment to aggressive antitrust enforcement. US President Joe Biden issued an Executive Order calling for tougher antitrust enforcement, including “encouraging” the DOJ and Federal Trade Commission (FTC) to modify the horizontal and vertical merger guidelines to address increasing consolidation. At the same time, the FTC, under Chair Lina Khan, continues its rapid pace of change to the merger review process.

Under a new interpretation of Article 22 of the EU Merger Regulation (EUMR), the European Commission (Commission) asserted jurisdiction over Illumina’s acquisition of GRAIL and Facebook’s acquisition of Kustomer, even though the transactions did not meet the Commission or Member State filing thresholds. The EU General Court confirmed a significant gun-jumping fine imposed on Altice for breach of the EUMR notification and standstill obligations.

In the United Kingdom, the UK government published plans to update antitrust rules, including revising its jurisdictional thresholds and expanding the “share of supply” test to allow the CMA to more easily capture vertical and conglomerate mergers, as well as acquisitions of startups. And the Competition & Markets Authority’s (CMA) handling of the Veolia/Suez transaction demonstrates the CMA’s willingness to engage with parties to seek practical interim solutions while it is investigating a consummated transaction for potential antitrust concerns.

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EU General Court Clarifies Rules on Gun Jumping

On September 22, 2021, the EU General Court (GC) upheld a decision from the European Commission (Commission) by which it fined telecommunications operator Altice for gun jumping (T-425/18, Altice Europe v Commission). In particular, the GC affirmed that the Commission could impose two separate fines: (i) a fine for implementing a concentration prior to its clearance by the Commission, and (ii) a fine for implementing a concentration prior to its notification. In coming to those findings, the GC also clarified the appropriateness of certain pre-closing covenants and information exchanges.

CASE HISTORY

  • In December 2014, Altice signed a share purchase agreement (SPA) with telecommunications operator Oi to acquire PT Portugal. The deal was subject to EU merger control.
  • Prior to signing, Altice began communications with the Commission to inform it of its intention to acquire PT Portugal. Shortly after signing, Altice sent a case-team allocation request to the Commission and commenced pre-notification discussions with the Commission. Altice formally notified the transaction in February 2015; in April 2015, the Commission cleared the acquisition subject to commitments.
  • A gun-jumping investigation arose following press reports of contacts between Altice and PT Portugal, which took place before the adoption of the Commission’s clearance decision.
  • Three years after clearing the acquisition, the Commission concluded that Altice infringed both the notification obligation and the standstill obligation under the EU Merger Regulation and imposed two separate fines with a total amount of EUR 124.5 million.
  • The Commission found that Altice had the possibility of exercising decisive influence or had exercised decisive influence over PT Portugal before the adoption of the clearance decision and, in some instances, before notification:
    • Certain pre-closing provisions included in the SPA gave Altice the right to veto decisions regarding PT Portugal’s commercial policy.
    • Based on these provisions, Altice had been involved in the day-to-day running of PT Portugal in several instances.
  • Altice brought an action for annulment before the GC, which was dismissed in part. The GC sided with the Commission, but reduced the fine relating to the infringement of the notification obligation by 10% (from EUR 62.25 million to EUR 56.025 million). The GC considered it appropriate to lower the fine because Altice had informed the Commission of the concentration before the signing of the SPA, and it had sent a case-team allocation request to the Commission shortly after signing.

CASE LEARNINGS

  • The notification obligation and standstill obligation can be subject to separate fines. The GC held that the notification obligation (obligation to act) and standstill obligation (obligation not to act) are separate obligations. Because each obligation was violated, the Commission was entitled to impose two fines.
  • Pre-closing provisions included in a SPA cannot afford a purchaser the possibility to exercise decisive influence over the target. EU merger rules do not preclude pre-closing provisions in a SPA aimed at protecting the value of the target between signing and closing. However, such provisions can only be [...]

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Antitrust M&A Snapshot | Q2 2021

In the United States, aggressive antitrust enforcement is likely to continue with the appointment of Lina Khan as Federal Trade Commission (FTC) Chair and the nomination of Jonathan Kanter to lead the Department of Justice’s (DOJ) Antitrust Division. The premerger notification landscape continues to shift as filings reach another record high. Technology companies remain in the “hot seat” as legislators in the US House of Representatives introduced five antitrust reform bills that would change the enforcement landscape for digital platforms, including seeking to preclude large digital platform companies from acquiring smaller, nascent competitors. And the US Department of Justice is making good on President Biden’s pledge to regulate “Big Ag” by challenging Zen-Noh Grain Corporation’s proposed acquisition of 38 grain elevators from Bunge North America, Inc.

Meanwhile, in Q1 2021, the European Commission (Commission) published its Guidance on Article 22 of the EU Merger Regulation. The Guidance encourages the EU Member States to refer certain transactions to the Commission even if the transaction is not notifiable under the laws of the referring Member State(s). In Q2, not long after the issuance of the Guidance, the Commission received its first referral request to assess the proposed acquisition of GRAIL by Illumina. In light of the growing global debate on the need for more effective merger control, EU Competition Commissioner Margrethe Vestager confirmed that the Commission will not soften EU merger policy going forward. The Commission’s statement was made despite the fact no deals have been blocked by the Commission in about the last two years.

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European Commission and National Authorities Take a Stand Against Excessive Pricing by the Pharmaceutical Industry

The European Commission and national competition authorities (NCAs) are very actively fighting a number of anticompetitive practices in the pharmaceutical industry. Enforcing the prohibition against excessive pricing has become a particular area of focus for competition authorities in Europe.

The European approach to excessive pricing differs from that followed in the United States, where excessive pricing does not amount to a violation of antitrust laws.

In the European Union (and the United Kingdom, for now), dominant businesses are not allowed to directly nor indirectly impose unfair purchase or selling prices. The Court of Justice of the European Union (CJEU) has established a two-pronged test for use in investigating excessive pricing. It must be determined i) whether the difference between costs actually incurred and the price actually charged is excessive, and, if yes, ii) whether or not a price has been imposed that is either unfair in itself or when compared to competing products.

In practice, competition authorities have historically been wary of prosecuting excessive pricing, partly because they do not want to act like price regulators, and partly because it can be difficult for an authority to establish that a price is excessive. In the last couple of years, however, the Commission and several NCAs have overcome their reticence.

Click here to read the full article in our latest International News.




Antitrust M&A Snapshot | Q1 2021

As the United States rounds the corner toward getting the COVID-19 epidemic under control within its borders, the US antitrust enforcers have seen a major spike in Hart-Scott-Rodino (HSR) premerger filings. In addition, the healthcare and technology industries can expect to remain under close watch by US enforcement agencies as the Biden administration continues to appoint progressive antitrust scholars to key leadership and advisory roles. And for the first time in many decades, the FTC has filed suit to block a vertical merger, indicating a more aggressive posture towards vertical transactions.

Meanwhile, the European Commission is focusing on “green killer acquisitions,” highlighting the interplay between the EU competition rules and the European Union’s environmental protection objectives. The Commission also published its evaluation of the functioning of the EU merger control rules in light of rapidly changing market realities. And in parallel with the publication of its evaluation findings, the Commission issued practical guidance that has the potential to create meaningful new transaction risk for mergers by subjecting more deals to in-depth Commission review.

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