Wednesday 19 February 2020 - University College London
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2 1st International Mergers Conference - University College London, 19 February 2020 PROGRAM
Wednesday 19 February 2020 - University College London 13.30 ÉMARGEMENT ET ACCUEIL
14.00 DISCOURS D’OUVERTURE 08.00 Coffee & Registration 14.00 Merger control and ‘non-competition Daniel FASQUELLE I Député - Pas-de-Calais, Vice-Président 08.45 concerns’: Industrial policy, geopolitics, de la commission des affaires économiques, Assemblée nationale Introductory remarks I Professeur, Université du Littoral-Côte-d’Opale Deni MANTZARI I Lecturer, Competition Law and Policy sustainability, privacy Acting Director, Centre for Law, Economics and Society, Faculty Hanna ANTTILAINEN I Head of Unit - B4: Energy and Environment of Laws University College London (mergers), DG COMP, Brussels Etienne CHANTREL I Head of Mergers Unit, Autorité de la 14.15 concurrence, Paris DONNÉES COMMERCIALES 09.00 Opening discussion - New challenges Damien NEVEN I Professor of Economics, The Graduate Institute ET PERSONNELLES : for competition law: Between a rock Geneva, affiliated to Compass Lexecon and a hard place: Brexit, FDI, public William E. KOVACIC I Professor, King’s College London DOIT-ON FORCER interest… Non-Executive Director, Competition and Markets Authority LE PARTAGE ? Sir John VICKERS I Warden of All Souls College, Oxford London I Professor, George Washington University Frédéric JENNY I Chairman, OECD Competition Committee Nicholas LEVY I Partner, Cleary Gottlieb, London Christian D’CUNHA I Head of the Private Office President, Concurrences Review International Committee Josh WHITE I Vice President, Analysis Group, London of EDPS Supervisor, EDPS, Bruxelles Professor, Co-Director - CEDE, ESSEC, Paris Chair: Ioannis KOKKORIS I Professor, Queen Mary University, London Daniel KANTER I Chief antitrust counsel, IATA, Montréal 15.30 09.45 Rethinking the judicial scrutiny of merger Coffee break Timothy LAMB I Associate General Counsel - Concurrence et régulation, Facebook, Londres enforcement in the digital era: 16.00 Merger hotchpotch - Enforcement and Economic analysis, administrative burden, Jacques MOSCIANESE I Executive Director & Group Head procedure: Due diligence, gun jumping, of Institutional Affairs, Intesa Sanpaolo, Milan standard of proof and judicial review due process, remedies Eugène BUTTIGIEG I Judge, General Court of the EU, Luxembourg Modérateur : Miranda COLE I Avocat associée, Peter FREEMAN CBE QC (Hon) I Chairman, Competition Appeal Sara ASHALL I Counsel, Shearman & Sterling, London/Brussels Covington & Burling, Bruxelles Tribunal, London Manish DAS I Head of Competition Law, Lloyds Banking Group Matthew JOHNSON I Partner, Oxera, Oxford London I Visiting Lecturer, King’s College London 15.30 PAUSE CAFÉ Colin RAFTERY I Senior Director for Mergers, Competition Irene DE ANGELIS I Head of Antitrust Affairs Intesa Sanpaolo, Milan and Markets Authority, London Ingrid VANDENBORRE I Partner, Skadden, Brussels Frank QI I Senior Legal Counsel, Qualcomm, San Diego Chair: Richard WHISH QC (Hon) I Emeritus Professor Anneleen STRAETEMANS I Head of Legal & Corporate Affairs King’s College London Europe, ZX Ventures, London Chair: Grant SAGGERS I Director, NERA Economic Consulting, London 11.15 Coffee break 17.30 Closing discussion 11.30 Digital mergers: Need for reform? Simon HOLMES I Ordinary Member, Competition Appeal Tribunal Luisa AFFUSO I Chief Economist, Ofcom, London London Thilo KLEIN I Executive Vice President, Compass Lexecon London/Berlin/Düsseldorf Ioannis LIANOS I President, Hellenic Competition Commission Claire JEFFS I Partner, Slaughter & May, London Professor of Global Competition Law and Public Policy, Faculty Nathan MILLER I Expert, Cornerstone Research I Saleh Romeih of Laws, University College London (on leave) Associate Professor, McDonough School of Business Georgetown University, Washington D.C. 18.00 Reception Pierre REGIBEAU I Chief Economist, DG COMP, Brussels Chair: Amelia FLETCHER I Professor, University of East Anglia, Norwich
13.00 Lunch
1st International Mergers Conference - University College London, 19 February 2020 3 Conference Summary*
Introductory remarks Deni Mantzari
1 gainst a backdrop of increasingly protectionist political rhetoric, there has been renewed interest in recent years A in the ability of governments to intervene in the merger control process to protect national interests. Depending on the applicable legal framework, this has concerned both the ability of merger control regimes to take into account wider public interests, and the establishment and use of separate foreign direct investment (“FDI”) screening mechanisms.
But also, merger control is not immune to the challenges of digital markets: from data mergers and killer acquisitions to broader discussions on the role of innovation considerations in merger control, the digitalisation of our economy has shed new light on established doctrines and has put into question the procedural and substantive framework governing merger control.
Opening discussion New challenges for competition law: Between a rock and hard place: Brexit, FDI, public interest...
Sir John Vickers
he hard-won consensus on how merger policy should However, this would take us back to the bad old days of politicised operate subject to the rule of law, not politics, crystallised policy. Indeed that would be even worse now given the increased T by the 1989 Merger Regulation, the UK’s Enterprise Act complexity of markets and polarisation of politics. But there is of 2002 and Regulation 1/2003, is now at risk. Criticism comes scope to apply the screwdriver to tighten policy, while maintaining from left and right. On one view, competition policy is too soft in the consensus of twenty years ago. Perhaps, the CMA decision its own terms - in protecting the consumer. On another view, it is in Sainsbury/Asda illustrated that. And the effect of mergers on too narrow, and should aim at redistribution, labour market issues, competition to innovate is an area deserving more attention but national security, foreign ownership and so on. On the latter views, requires the development of rigorous evidence-based disciplines a hammer, not a screwdriver, should be taken to merger policy. on policy.
*Concurrences has drafted the present synthesis. The views and opinions expressed in this document do not necessarily represent those of the speakers’ institution or clients.
4 1st International Mergers Conference - University College London, 19 February 2020 1 Deni MANTZARI 2 Sir John VICKERS Lecturer, Competition Law Warden of All Souls College, Oxford and Policy I Acting Director Centre for Law, Economics 3 Frédéric JENNY and Society, Faculty of Laws Chairman, OECD Competition University College London Committee I President, Concurrences Review International Committee I Professor, Co-Director CEDE, ESSEC, Paris
2 3
Frédéric Jenny
here is increasing scepticism on the benefits of competition between competition and industrial policy which were seen as law, due to globalisation which has led to the development opposites rather than as complements (as they should be seen). T of unfair international competition among countries with The Alstom/Siemens case revived these debates. The French different domestic rules and the fact that neither capital nor labour minister Mr Le Maire argued that the Commission used the wrong exhibit the flexibility assumed in the economic theory of competition criteria in its assessment, that the relevant market was the world and which would lead to an efficient allocation of resources. Thus the States should intervene through industrial policy and facilitate market, and that European firms should defend themselves against the necessary reallocation of resources required by climate change the onslaught of subsidized Chinese firms. Mr Altmaier, the German and the developments of the digital economy. Minister argued for the development of European champions.
Thirty years ago, during the negotiation of the EU Merger regulation Although I believe that the EU test should not change, we could (EUMR), there were two interrelated issues, which were discussed. make useful adjustments to the way we analyse mergers. First, Should merger control remain in the hands of national authorities we could recognize that some mergers can reduce competition or be trusted to the EU Commission? How broad should be the in the EU market while providing efficiency benefits making them test used in merger control? France and Italy argued for a test more competitive on the world market. Thus, in admittedly rare that would consider all the effects (both in Europe and abroad) of cases, there can be a conflict between static and dynamic benefits. mergers. They also called for a reciprocity clause in case a foreign Second, for the time horizon of merger analysis which is crucial power used competition law to unfairly target European firms. for market definition and the assessment of potential entries must The UK argued for a strict consumer standard approach because also be reconsidered and lengthened even if this means a lesser it was concerned that the EU Commission would be too open to level of certainty in the merger control. Third, we should pay more industrial policy considerations. There was a negotiated agreement attention to assessing the possible efficiency benefits of mergers under the leadership of Sir Leon Brittan, which was close to the and accept that efficiency benefits in related markets can outweigh UK position. Thus the discussions were already dealing with the competition restrictions in the market in which the merger takes issue of the unfairness of international competition and the fight place (as we have started doing in the case of multi-sided platforms).
1st International Mergers Conference - University College London, 19 February 2020 5 Panel 1
Rethinking the judicial scrutiny of merger enforcement in the digital era: Economic analysis, administrative burden, standard of proof and judicial review
Richard Whish QC (Hon) Regarding the burden of proof, it is for the Commission to produce convincing evidence showing the compatibility or The number of merger cases before the Court has increased, incompatibility of the merger with the internal market. particularly after the introduction of the duty to refer between A particular difficulty with merger cases is that the assessment Phase I and Phase II. While the initial cases remained is forward-looking. So the assessment is in part theoretical procedural, judicial review on the substance is increasing. – the Commission must present a theory of competitive harm and produce evidence to show that this harm is likely to materialize with the merger, applying a counterfactual Eugène Buttigieg test. It has to demonstrate a causal link between the completion of the merger and the competitive harm. How So far, only 5 cases have led to the annulment of a prohibition much evidence the Commission must bring to prove this decision but these cases, especially the three judgments causal link depends also on the theory of competitive harm in 2002, had a great impact on the development of EU presented. In Tetra Laval the Court of Justice said that merger control as the Court emphasized the need for proper where a merger is challenged on conglomerate grounds, economic analysis and the importance of the proper use the evidence on which the Commission relies must be of such tools in the interests of the companies’ rights of particularly convincing, given that the chains of cause and defence. The General Court has unlimited jurisdiction to effect between the merger and the predicted adverse effects review fines, eg. for misleading information or gun jumping. ‘are dimly discernible, uncertain and difficult to establish’. Merging parties can also challenge the remedies imposed However, in Bertelsmann and Sony, the Court clarified that in the merger decision even though they are the one who the complexity of the theory of competitive harm put forward offered the commitments on which the remedies are based. does not, of itself, have an impact on the standard of proof Third parties can challenge a decision before the Court, if that is required. This assertion by the Court is probably they prove their direct and individual concern. particularly pertinent for the review of digital merger decisions.
As for the intensity of the Court’s review, the current standard Before the General Court, a merger case can take on of review is the one set in Tetra Laval, where the Court of average around 39 to 40 months. This might be due to the Justice, while acknowledging that the Merger Regulation lengthy written procedure (two rounds of written pleadings, confers on the Commission a certain degree of discretion, prolonged further when there are interveners), and complex especially with respect to assessments of an economic confidentiality and translation issues. However, an expedited nature, and that the EU Courts must take account of that procedure can reduce the length of proceedings to an average of 10 months. It is up to the main parties to request margin of discretion when reviewing the Commission’s such a procedure (though the Court can also ‘in exceptional assessments, emphasised that this margin of discretion circumstances’ use the procedure of its own motion) and with regard to economic matters does not mean that the the Court will decide favourably if it deems that the particular Union Courts must refrain from reviewing the Commission’s urgency and the circumstances of the case justify such an interpretation of information of an economic nature. It is expedited procedure. The complexity of the case might not thus still a full review, with the Court checking whether the always allow for the use of such a procedure, which economic evidence relied on is factually accurate, reliable abbreviates the written procedure but the Court has and consistent, whether all the relevant facts have been granted 18 out of the 33 requests received so far. collected and whether this evidence is sufficiently robust to substantiate the legal conclusions, which the administration draws from it. So the so-called ‘manifest error test’ simply implies that these Courts cannot substitute their own views Peter Freeman CBE QC (Hon) to those of the administration. Though the Court is yet to Speaking from the UK judicial perspective, judicial control have its first digital merger case, none of this is likely to pre-supposes a coherent body of decisions, based on a change in the case of digital mergers. discernible doctrine, for courts to consider. The courts
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themselves do not have or make any policy on the has issues with implementation, or a test that is 1 Richard WHISH QC (Hon) “Big Tech” or any other sector. broader but more straightforward to implement? Emeritus Professor King’s College London UK judicial review of mergers is “light-touch” since 2 Eugène BUTTIGIEG prohibition decisions occur only after Phase II Judge, General Court of the EU Colin Raftery Luxembourg consideration and commercial considerations require a speedy decision. At present, appeals tend to be Digital markets are characterised by strong market 3 Peter FREEMAN CBE QC (Hon) against procedure and remedies, rather than the possession and barriers to entry and expansion, levelling Chairman, Competition Appeal substance of the decision. strategies and they experience frequent changes and Tribunal, London developments. Digital markets also involve the GAFAM, 4 Matthew JOHNSON Partner, Oxera, Oxford The system of judicial review of merger decisions is which acquire new firms that are at a preliminary stage. currently working well, but if the Authorities’ approach Thus, the economic implication of these mergers is 5 Colin RAFTERY Senior Director for Mergers towards controlling mergers changes, so may the difficult to assess. Competition and Markets nature and intensity of the judicial review and there Authority, London From the UK side, three principles from the case law may be more focus on the substance of the case. 6 Ingrid VANDENBORRE are relevant for digital cases. First, the meaning of Partner, Skadden, Brussels substantial is broadening. Second, the courts do not Courts are there to hold the authorities to account. draw the line between static and dynamic analysis. Contrary to what some suggest, a more interventionist Third, the Authority’s assessment is specific and based merger policy against e.g. “Big Tech” mergers may on the evidence. require more intensive judicial scrutiny, not less. The need for speedy decisions will remain, however. Ingrid Vandenborre Matthew Johnson Digital markets are characterised by returns on scale, network effects and the use of data. Market definition Some outcomes of digital mergers are uncertain, but should imply an analysis of side markets and of the this is also the case for other sectors with high risk direct effects on the market. and high reward. We must think more about the business models at the preliminary stage and The sliding scale of efficiencies needs more guidance. understand why the companies are investing. For example, excessive pricing in pharmaceuticals is difficult to assess from a static point of view. The CMA is not keen on the balance of harm test. Is The price levels will change over time in many markets. it better to have a test that is conceptually sound but The time horizon is thus crucial.
1st International Mergers Conference - University College London, 19 February 2020 7 Panel 2
Digital mergers: Need for reform?
Amelia Fletcher in the UK engaged in marketing pipeline products. In the recent Phase 2 Provisional Findings in Sabre/Farelogix the The debates will focus on jurisdictional thresholds, legal CMA looked at revenues receivable (but not received) for standards for intervention in mergers, and specific substantive the purposes of the share of supply test. This raises issues theories of harm. of legal certainty and workability for business, especially in Regarding jurisdictional thresholds, there might not be a the context of global deals where filings might be reviewed need of reform in the UK: the share of supply test is flexible in multiple jurisdictions. and can capture most mergers that raise concerns. However, As for evidential standards we need to consider carefully there may well be jurisdictional issues in other countries, what type of evidence is probative. We should look carefully which could create barriers to coordinated trans-national at economic evidence including valuation evidence, which merger review. is currently in vogue. Internal documents are also important As for potential reforms, Germany and Austria have set a but we need to be careful to take into account the context threshold related to acquisition value. US and UK authorities when deciding how much weight to give to them. can review mergers that fall below the mandatory notification thresholds. Neither of those changes must be specific to digital mergers, but they would hopefully allow the review Pierre Régibeau of those that raise competition concerns. As for jurisdictional thresholds, we can follow the Austrian Regarding legal standards for intervention in mergers, there example. Although the Austrians have caught some cases is a growing view that authorities have been too laissez-faire, they have not found anything actionable yet. The Commission particularly in the digital. Some specific theories of harm is not thinking of reforming the EU jurisdictional threshold. may not have been given sufficient credence. The Furman report explains how to implement the balance of harm test However, the Member States can change theirs and refer without over-interventionism. Another approach could be the cases to the Commission. a reversal of the burden of proof for digital platforms with Another approach would be introducing ex-post control, bottom-neck market power. though it can raise serious additional competition concerns Finally, regarding specific substantive theories of harm, key if it leads to the annulment of a merger. Another concern concerns relate to assessing potential competition from is ex-post fallacy. currently small players, mergers of complements, the Finally, as for specific substantive theories of harm, mergers of particular characteristics of multi-sided platforms markets complements require to take into account the mechanisms of and associated market effects such as tendencies toward platforms: their overlapping might encourage fierce competition. tipping and bottleneck market power, data-related issues, and innovation effects. The CMA is currently re-writing the EU law does not address monopolisation, but we can UK merger assessment guidelines to incorporate its latest presume that mergers of complements are not problematic thinking on digital mergers. unless there is a reliable theory of harm that is not necessarily brought at the time of the merger: it can be used during antitrust enforcement, although this might not be possible Claire Jeffs for the digital. Thus, the foreclosure assessment should be tougher at the time of the merger. As regards jurisdictional thresholds, the key points are legal certainty and territorial nexus (to reduce risk of divergent outcomes from different regulators reviewing global deals). The UK’s share of supply test is grounded Nathan Miller in the UK, but raises issues of legal certainty given the Applying special rules in digital mergers might be dangerous flexibility enjoyed by the CMA. for political consensus. Moreover, entry has too much weight In its recent Phase I Spark/Roche merger decision, the in merger analysis; we should be more sceptical towards CMA looked at the share of supply by reference to employees defence and the ability of markets to self-correct ex-post.
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Regarding specific substantive theories of harm, in digital expect the target to become a successful entrant then the markets there could be a change in tactics of the DoJ or transaction value will reflect this. The experience with the the DG COMP. The economics might make competition German transaction-value threshold of €400m has so far more intense. However, there is competition for the market been encouraging. The additional burden has been more than competition in the market. The easiest way to manageable, with only about a dozen transactions per year enter a market is to already have the necessary technology being notified on that basis. Certainly Facebook/Whatsapp or a stake in the market. Many digital merging firms are on would have been caught by the threshold. The majority of adjacent markets or complements. These mergers eliminate the transactions happened in industries where the prospective entrants that are supposed to create the “potential-competitor” theory would be expected to be competition for the market. particularly relevant – most targets were digital, chemical or pharmaceutical companies. We could think about these mergers in terms of evolving monopolisation; using Section 2 of the Sherman Act. It implies As for the legal standard of intervention: the adoption of a showing that the acquiring firm has a monopoly power on a reversed burden of proof would be worrying. The experience segment of the market, and that the acquisition of the target with the “efficiency defence” in the EUMR, which has never would either raise the entry barriers or eliminate a possible been successful, suggests that the authorities tend to apply entrant. However, showing monopolising power is a hurdle. a much higher standard of assessment when the burden is Only a few mergers would be caught, although they would on the parties. Against that background it seems likely that be the ones that raise concerns (e.g. Facebook/Instagram). there would be over enforcement if the parties now had to prove that a digital merger is not anticompetitive. For the same reason it is also of concern that a reversed burden of Thilo Klein proof for cases in the area of unilateral behaviour is on the edge of being introduced into German competition law. Regarding jurisdictional thresholds, if the aim is to capture cases where a dominant firm acquires a potential competitor Finally, regarding specific theories of harm, digital mergers with as of yet low turnover then the transaction value is the often involve digital platforms acquiring large databases, right indicator: if the current shareholders and/or the market which raises interesting issues. First, there have been a few
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1 Amelia FLETCHER cases (e.g. Google/DoubleClick and Facebook/ of blocking or clearing a merger, being creative with Professor, University of East Anglia, Norwich WhatsApp) where the data acquired were not traded behavioural remedies? An example is Google/ITA, on the market, so standard horizontal or vertical issues where the DoJ suggested the use of an accessory 2 Claire JEFFS Partner, Slaughter & May could not arise. Rather, the Commission investigated remedy: Google would have to provide access to this London whether the data might enable the acquiring platform software in a non-deteriorated quality and with all the 3 Pierre REGIBEAU to offer better-targeted advertising, thereby increasing upgrades it would use to others on FRAND terms, Chief Economist, DG COMP Brussels its advantage over other competitors. But such product and there would be a strict obligation to continue the improvements are of course pro-competitive, and R&D on the software. 4 Nathan MILLER Expert, Cornerstone Research there is a real concern that the Commission might be This is particularly important for vertical mergers, - Saleh Romeih Associate regressing to outdated “efficiency offence” theories. Professor, McDonough where the risk of leverage is especially acute in digital School of Business Second, there is a lot of debate about potential merger Georgetown University markets. Although vertical mergers generally generate Washington D.C. effects on firms’ incentives to offer high levels of privacy efficiencies, we now understand that the theories we 5 Thilo KLEIN protection. It will be interesting to see how authorities have been relying upon for a long time to presume Executive Vice President approach this: privacy protection is a quality parameter, Compass Lexecon these efficiencies do not necessarily apply to many London/Berlin/Düsseldorf and authorities’ experience assessing merger effects cases, making it an empirical question whether on product quality is fairly limited. 6 Luisa AFFUSO efficiencies would materialise and of what scale. This Chief Economist, Ofcom is the case for the Elimination of Double Marginalisation, London for example. Often the same efficiencies can be Luisa Affuso achieved via contractual arrangements (Comcast/ NBCU was an excellent example where these were The question of legal standards for intervention in carefully assessed. This contrasts with the approach mergers goes beyond digital markets. Other markets, followed in AT&T/Time Warner). such as the media and broadcasting, have a high pace of innovation and technological change. The risk One important final point to bear in mind is that of not capturing those transactions is high. Even competition in digital markets might be unlikely to higher is the risk of not capturing the potential harm succeed because of market failures, e.g. behavioural as the counterfactual at the time of the merger is biases in consumers’ choices such as salience and default bias, or network externalities which would unable to account for changes in technology. A very jeopardise the long-term commercial success of an simple example is how the switch from linear to entrant. In these circumstances we need to address non-linear content consumption can give rise to the market failure via the appropriate policy tool (e.g. foreclosure risk via the adoption of AI-led content ex-ante regulation) instead of merger policy. Blocking recommendations to audiences. a merger would not be a way to ensure that future The balance of harms could be a solution, but we competition emerges when we are facing fundamental should avoid black-and-white views: why not, instead market failures.
10 1st International Mergers Conference - University College London, 19 February 2020 Panel 3
Merger control and ‘non-competition concerns’: Industrial policy, geopolitics, sustainability, privacy
Ioannis Kokkoris Étienne Chantrel Non-competition considerations in merger control are a risky Should the objective of industrial policy be to have bigger slope to go down to, unless we know how to approach these firms? Half of the mergers do not increase the firms’ profita- issues. There is room, and maybe a need, to take into account bility. If we agreed that we need bigger firms, is merger control such considerations, but we should not rush into this. We need an obstacle? Indeed, very few mergers are blocked or lead a proper legislative framework in place to address such to heavy remedies. considerations before asking competition authorities to embark At what cost can we relax merger control for the sake of on such analysis within the framework of merger assessment. industrial policy? The few European countries (e.g. France and Germany) that allow political interference into merger control rarely use this provision. Hanna Anttilainen As for non-pricing considerations, in principle economists should not take into account non-competitive effects. However, Competition policy contributes to the objective of competi- there might be different ways to look at the latter. For tiveness, and is an integral part of any industrial strategy but employment, the question is different if it relates to employer it is not the substitute for industrial policy. European companies oligopoly or if it is a problem of job creation. In reality, the do face a number of challenges in global markets but we French Authority sometimes takes into account non-compe- need to be careful what are the right tools to tackle those titive considerations. For example, it took into account the challenges. First, we must understand the key concern as diversity of opinions in media cases, but in addition to and regards the competitiveness of European companies: is it not as a substitute for price effects. different depending on where the company is from, is it State subsidies, is it the ability to innovate, or the size of the companies? Different tools may be needed for different Damien Neven challenges and an understanding of the consequences of We should debate an issue with China. Discussions only arise each tool, for example, how other countries like US or China when there is a perception that European firms do not have might respond. the same access to foreign markets as foreign firms have to Taking into consideration non-economic factors would require the European market. We should have tolerance in respect a change of policy. It is not a new discussion. At the moment, of market power within Europe and start thinking about the purpose of competition policy is to maintain competition reciprocal market access approach with foreign markets. in the market. In the first draft Merger Regulation from 1973, There are issues with market access in China, firstly regarding an article suggested that even if a merger were blocked, if it rules on foreign direct investment: China has a strategic list was indispensable to the attainment of an objective which is of sectors where foreign direct investment is encouraged or given priority treatment in the common interest of the prohibited. Other issues are the selective support to state-hold Community, the prohibition could be overturned. A policy enterprises for foreign acquisitions and merger control. choice was ultimately made not to include such an article in The important Chinese mergers are not reviewed by the the first adopted Merger Regulation. competition authorities but by the agency in charge of managing the State assets. Other issues involve the Chinese authorities’ The claims to take into consideration non-competition factors approach towards foreign mergers, and the selective use of such as environment and employment are commendable, competition rules. but other tools may be better placed to achieve that than We are currently giving market access to the Chinese merger control (State aid, regulatory tools). Bringing in those authorities for free. Thus, we could deny such market access elements could politicise the process of merger control. in order to negotiate our market access back. The chain of effects in approving an anti-competitive merger on the basis of positive effects in other areas makes the analysis difficult. Who would decide on the trade-off? Who would gain the benefits and who would suffer? Moreover, William E. Kovacic how could we ensure that those objectives are maintained Two concerns arise beyond price quality, dynamism or after the merger? Finally, how would the EU Courts scrutinise innovation. First, why focusing on merger review? Pre-merger merger decisions? notification and mandatory waiting periods converted what
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1 Ioannis KOKKORIS used to be the litigation into a negotiation. Normally, reduce transparency, consistency, and legal certainty Professor the agency has to pursue the firm but in merger review and could jeopardize the EC’s hard-won reputation for Queen Mary University, London the parties come to the agency and can exercise the consistent, objective, and sound decision-making. 2 Hanna ANTTILAINEN regulation leveraging. Second, why focusing on Head of Unit - B4: Energy and As to Brexit, the CMA has viewed it as an opportunity Environment (mergers) microeconomic analysis? This opens the door for DG COMP, Brussels to secure additional funding, to recruit more staff, to interference or guidance of the legislator. An agency flex its powers, and to pursue a stricter and less 3 Etienne CHANTREL can add some greater discipline to the process by Head of Mergers Unit permissive approach to merger control. Among other Autorité de la adding considerations such as national security. concurrence, Paris things, the CMA has taken an expensive view of the As for taking non-competition concerns into account, “share of supply” test applied to establish jurisdiction, 4 Damien NEVEN Professor of Economics it depends what we mean by industrial policy. Is the has focused on a series of transactions involving the The Graduate Institute Geneva affiliated to Compass Lexecon objective to have a more targeted and disciplined digital sector, and has challenged transactions that process as with DARPA? Is it to have public funds to might previously have been approved. As to the future, 5 William E. KOVACIC Professor, King’s College serve pro-competitive events? there are two major uncertainties: the scope and London interpretation of UK FDI rules, and the extent of political Non-Executive Director Competition and Markets engagement in merger control. Authority, London Professor, George Washington Nicholas Levy University We stand at an important inflection point in EU antitrust 6 Nicholas LEVY Partner, Cleary Gottlieb, London enforcement as the consensus established over 30 years Josh White is increasingly being challenged. Three main strands 7 Josh WHITE The CMA has set out acting priorities: protecting Vice President, Analysis Group of criticism can be identified. The first is that the London vulnerable consumers, improving trust in markets, traditional consumer welfare standard should be digital markets, enhancing economic growth, and rethought to enable account to be taken of non-eco- climate change. For the two last areas, there is no nomic considerations in merger control. The second explicit mention of merger control. For the others, is that merger control rules should be modified to however, the CMA is not moving away from a tradi- make them fit for the digital age. And the third is that tional approach. EU merger control should be changed to facilitate the creation of national or European champions. As for taking into consideration non-economic factors, the question is a slippery slope. The economic tools The Commission’s view on the third strand of criticism are there: consumer welfare does not have to be is clear: the enforcement of competition rules should defined solely on the basis of output and prices, we remain independent and anti-competitive transactions can consider longer term and more dynamic impacts should not be permitted even where they involve national on it. Should we do it, however? or European champions. Most practitioners share this view and believe that introducing a right of appeal to There is a key interplay between privacy and broader the Council would fundamentally change the architecture ideas. In privacy, we can think about it as for non-price of EU merger control, replacing an independent, effects, consumer choice... More centralised data technical analysis with political decision-making. collection could be positive, for example by reducing A merger regime subject to political influence would the points of failure.
12 1st International Mergers Conference - University College London, 19 February 2020 Panel 4
Merger hotchpotch - Enforcement and procedure: Due diligence, gun jumping, due process, remedies
Grant Saggers Third, it concerned information exchange referring to the concepts of sensitive information, referencing horizontal cooperation In-house counsel has to navigate the complex landscape of guidelines. It is difficult to determine whether the information different merger clearance rules and approaches across interna- exchange can be gun jumping in itself, or whether it is just an tional jurisdictions. This panel discusses, from the vantage point Article 101 infringement. In Altice, it was described as a contri- of in house counsel, some of the key issues of gun-jumping, clean buting factor. teams, new theories of harm, and how to keep senior clients Three procedural reforms are worth mentioning, the first one on-board. Importantly, we discuss the different approaches to being the increased use of documents pools in the EU, particu- merger remedies taken by different authorities around the world. larly in Phase II. This process is often criticised by US clients. The level of experience of people drafting the document request is often low, and they are uneasy to put together. The second Irene de Angelis procedural issue stems from the UPS/TNT prohibition decision. The Court annulled the decision on procedural grounds: the Clean team has become the gold standard in managing due parties did not have sufficient time to answer the Commission’s diligence in M&A transactions, i.e. avoiding gun jumping and modification of the economic model. The third procedural issue preventing the risk of exchange of sensitive information. Moreover, is the role of politics: Phase II merger decisions are taken by a a clean team can be an increasingly useful tool to manage college of 27 politically appointed commissioners. horizontal cooperation.
How big must a clean team be? A team of hundreds of people is hard to work in an effective and time-efficient way. Thus, we Frank Qi should not cover the entire company’s structure. The Altice case recalled the companies that huge financial amounts Who must be involved in clean team? People from the business are at stake if they do not comply with the rules. Gun jumping risks side are necessary: they properly understand the information and are exacerbated in deals with more substantive risks. From the report to the top management. The latter must not be part of the business side, if both parties are in the same sector there may be clean team, as recalled by the Commission in its latest decisions a strong implementation planning desire. From the legal process on gun jumping. However, top management must have the right side, because the deal presents substantive issues the time period information and data in order to assess the transaction. between the signing and the closing will be longer.
The scope of the clean team must be sometimes clarified. The US have not reconsidered the merger notification regime due Companies tend to put under clean team information unrelated to various factors: the fact that authorities can investigate unreported to commercial and sensitive information endangering the effective or consummated deals, the possibility of private actions or the work. Thus, it is worth spending more time in agreeing on which FTC order requesting certain tech companies to provide a list of information must be treated.
Informal guidance on how to manage exchanging the information and a clean team for the purpose of an M&A transaction, like in the US, would be useful.
Sara Ashall The Altice decision is the most recent one in the field of gun jumping and has 3 constituent parts. First, it covers interim governance, i.e. what sort of involvement the buyer can have over the target business between the signing and completion. This is difficult to assess.
Second, it covered actual exercises of decisive influence. The buyer had a say and gave instructions on the running of businesses. This principle is difficult to implement: companies want to know what is going on, particularly regarding the implementation planning.
1st International Mergers Conference - University College London, 19 February 2020 13 1 2 3
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1 Grant SAGGERS their unreported deals over the last decade. In the For authorities, the obsession with internal documents Director, NERA Economic context of the 2020 presidential elections, whether to try to predict what will happen in the market, in an Consulting, London the US keep the same administration might have an era in which so much data is available, is often ineffective 2 Irene DE ANGELIS Head of Antitrust Affairs impact on antitrust reform and enforcement. and largely outdated. Algorithms can provide a better Intesa Sanpaolo, Milan and more accurate analysis of where markets are going 3 Sara ASHALL compared to what individual employees may set out Counsel, Shearman & Sterling in emails. London/Brussels Anneleen Straetemans 4 Frank QI Senior Legal Counsel The difference between gun jumping and the unlawful Qualcomm, San Diego exchange of competitively sensitive information is Manish Das 5 Anneleen STRAETEMANS clear-cut: gun jumping is about not implementing a Head of Legal & Corporate Affairs transaction that is not cleared yet and unlawful The UK will step out of the one-stop-shop for the EU Europe, ZX Ventures, London merger regime. For companies that used to notify information exchange is about not sharing information 6 Manish DAS Brussels, some procedural points become suddenly Head of Competition Law, Lloyds until closing Keeping this distinction helps drive relevant: the rules around public interest intervention, Banking Group London - Visiting discipline internally and helps dispel the myth that a Lecturer, King’s College London the fact that the system is not really voluntary or the clean team is a fix for everything. amount of merger fees. Other elements must be borne Clean team membership should also not be taken in mind: what will the attitude of the CMA be towards lightly. If a clean team involves in-house people certain types of sectors and transactions, especially validating assumptions on the deal evaluation, they in the digital space? For the transitional period, there have a huge responsibility internally, eg board members will be a harmony between the EU and the UK. But might be acting upon their confirmation to agree a given the current Government’s attitude, will that be a price. A wrong assessment might in turn lead to soft or a more open influence in terms of having the board liability. UK set itself up towards digital transactions and direct investment? Alongside that is the issue of State aid, There is a proliferation of more novel theories of harm, which hints on the potential politicisation of the UK regime. in the merger and the pure antitrust space. It is unclear After an investigation in the banking sector, a remedy to what extent these novel theories are applicable in implemented by the CMA was to introduce distinct a certain industry only or are more broadly applicable. open banking, i.e. To allow entities to access data to For example, is an overlap in an innovation pipeline the incumbent banks, to create apps that allow to of two FMCG companies an issue? More guidance compare prices and services, and to share the data would be welcome when a new theory is launched, with third parties. This was funded by the main banks, to make it clear whether it is new in general or new which was a big give: open banking is designed to in a particular industry or jurisdiction. allow everybody to play on a playing field that was The key to a successful global deal is to know what to predominantly served by a few players. keep and what is not at the heart of the transaction, Even in small transactions, especially in the tech space, and to craft a structural remedy strategy accordingly. the cost of the merger procedure ends up being a We should also be creative in crafting behavioural substantial portion of the transaction cost. Anticipating remedies to address regulators’ concerns (which may is important for the stakeholders, and it helps to manage not be strictly antitrust-related). the relationship with the authorities.
14 1st International Mergers Conference - University College London, 19 February 2020 Closing discussion A brief discussion of 2 recent papers: - Climate change, Sustainability and Competition Law - The future of Competition Law: Competition law and industrial policy Simon Holmes
y paper on “Climate Change, Sustainability and Competition Law”, like this conference, explores the boundaries of competition M policy and merger control and what issues can be taken into account. We should assess the technical and economic progress to which the merger gives rise, which is a similar exercise to the one carried out on the basis of Article 101 (3) TFEU. We could also look at the efficiencies and make more use of remedies. Member States could look at ways to exceptionally block a deal on non-competition grounds. Finally, for deals that are not caught by the EUMR, national laws often provide for other factors to be considered.
Ioannis Lianos
recent joint letter of the German, Italian and Polish Ministers domestic competition is key to preparing the firms for international of Economics asked for a plan to clear the path for competition. A European champions. They called for an evaluation of the The question is how industrial policy concerns might integrate Commission’s guidelines on horizontal mergers and on the definition the merger assessment. A first narrative is the technocratic one. of the relevant market. Finally, they asked for a more justified and Another one, supported by the memorandum and the joint letter, reasonable flexibility in order to take better account of third is a political perspective. The choice to put forward the Council, countries’ State intervention, and potential competition. and the fact that this pressure comes out of specific ministries, Some countries share concerns about capital markets and their pushes towards a political analysis. Moreover, in the Council, ability to fund efficient national firms. Developing large domestic Member States with the most weight are precisely the ones champions could help attract international capital. In addition, asking for a reform. industrial and competition policies are complementary: intensive
1st International Mergers Conference - University College London, 19 February 2020 15 Speakers’ Interviews*
Rethinking the judicial scrutiny of merger enforcement in the digital era
INTERVIEW WITH PETER FREEMAN CBE QC (HON) (COMPETITION APPEAL TRIBUNAL) BY DENI MANTZARI (UNIVERSITY COLLEGE LONDON)
Deni Mantzari: Killer acquisitions: Should merger control be In relation to so called ‘killer acquisitions’, this is generally ‘reset’ to catch them? understood to mean those made by established or even dominant firms that stifle and extinguish possible new competitors. It is said Peter Freeman CBE QC (Hon): Merger control subjects normal that as there is no established business being acquired, such commercial transactions to public law control in the interests of mergers may fall outside most current merger control systems. competitive markets and the consumer. For many years the If the concern here is with the activities of major digital companies consensus has been that mergers should be considered under that have grown rapidly, often by acquisition, to positions of a competition test. Controlling mergers on other grounds such dominance it might be thought the first thing to look at is dominance, national security raises different issues (see below). Most systems how it should be assessed and whether it is working to the (not the UK’s, at least for now) provide for mandatory pre-notifi- detriment of the consumer. This points to possible use of abuse cation of mergers that might restrict competition. of dominance law, but in the UK context this would suggest a market investigation, covering the whole of a relevant sector, to Merger control is only one aspect of competition law as it applies examine whether competition is working effectively. Acquisition to digital undertakings and issues, and probably not the principal practice, ‘killer’ or otherwise, could be readily examined in that one. The main focus is on antitrust and, possibly, regulation rather context. This is in my view preferable to looking only at individual than on mergers. mergers as they come along. As for the specifics of merger
* The views and opinions expressed in these interviews do not necessarily represent those of the speakers’ institution or clients.
16 1st International Mergers Conference - University College London, 19 February 2020 control, there is always scope for reviewing qualifying thresholds Under the regime that has been in place since 2013, however, and the scope of the control to ensure that it reflects market both phases are conducted within a single authority, the CMA. realities. No doubt this is receiving the necessary attention. But Whilst the CMA no doubt makes strenuous efforts to ensure that the key is to ensure that any substantive examination takes phase II is conducted independently of phase I, this must be more account of the effect of an acquisition on potential competition open to question within a single authority than when the two as well as any current actual effect. But one must beware of phases were conducted by separate authorities. There may unintended consequences. In particular, by exercising too strict therefore be a case for strengthening the degree of judicial control a control over the acquisition of start-up competitors by incumbents, going forward. For the moment, however, all seems well, but there is a risk that a disincentive to setting up new businesses things may change. might be created, which could in turn harm innovation. So, a Deni Mantzari: Are public interest interventions tending towards cautious approach would be advisable, and it is necessary to be protectionism? clear what is the basis for the concern. Peter Freeman CBE QC (Hon): There have indeed been some If this is that the ‘killer’ acquisition is intended to ‘kill’ the target’s recent high-profile interventions by the UK government on grounds innovative ideas, this can be examined in an individual case, but of national security or in the specific context of media mergers. a more comprehensive examination of whether such harmful There have also been changes to the qualifying conditions for activities are widespread would be much better achieved through national security intervention. However, it is in my view too early a sector-wide investigation, preferably under the UK’s market to say that this represents any kind of trend, far less a protec- investigation regime. If the concern is instead that the innovative tionist trend. idea is not being ‘killed off’, but is rather that too many innovative ideas are falling under the control of a single firm, then that issue When the 2002 merger control regime was introduced, substituting can also be addressed, but this should also be done on the basis a substantial lessening of competition test for the old public of proper information, some of which may come from consideration interest grounds, the retention of specific public interest grounds of individual mergers, but which again would be better obtained for intervention was not given much attention. In fact, the ‘public through a market investigation. interest’ cases that have arisen have attracted quite a lot of interest from the public, and hence from politicians, whether it is Cadbury/ Deni Mantzari: Is the UK’s regime for judicial control of mergers Kraft in the confectionery field (where no intervention was possible) fit for purpose? or News International/Sky in TV (where it was). Of particular note Peter Freeman CBE QC (Hon): Recently, some have sought was the Lloyds/HBOS case, where a new financial stability public to question whether the scope and intensity of judicial control of interest criterion was enacted during the merger process, enabling authority decisions is too strict, with the effect, so they claim, that the government to intervene to allow the merger, which might the authorities’ activities are impeded. However, so far as I am otherwise have failed on competition grounds. aware, no-one has suggested that this unevidenced concern It is notable that there is no equivalent public interest regime at could apply to merger control, where the UK system, based on EU level, merely an acknowledgment that national controls may judicial review by the CAT, has operated speedily and effectively apply, subject to certain conditions. This means a merger can be for many years. It is indeed hard to see that the emergence of cleared at EU level but prohibited at national level. Whether the the digital age would in itself require any great change, as the EU should attempt to introduce its own public interest regime is CAT has shown (for example in the recent ASDA/Sainsbury’s for others to judge, but I can see substantial difficulties. case) that it can reach effective decisions in just a few days if necessary. What is clear is that the UK regime has the merit of an established framework in which the government can, on clearly specified That said, in the context of any wider consideration of the grounds, intervene if the necessary specific interest is established. relationship between the competition authorities and the courts The recent Lebedev case in the CAT shows that the mechanisms in the UK, it has to be noted that the current system has evolved and time limits for intervention must be strictly observed. Subject from that conceived in 2002, where the need for merger decisions to that, the public interest regime is applied through a broadly to be subject to judicial review only (as opposed to full merits similar process as with purely competition cases and is subject review in the case of antitrust) was mainly because the system to control by the CAT and the higher courts as necessary. As with involved consideration at ‘phase I’ and ‘phase II’ to be conducted merger control generally, all seems to be working satisfactorily at by separate authorities. The phase II examination by what was present, but things are liable to change, depending in part on then the Competition Commission was thought to be sufficiently how great a divergence from the existing EU regime occurs in thorough and independent to obviate the need for any further the UK. The issue of possible protectionism emerging in merger close examination of the substance of the decision. control is just a part of a far larger picture.
1st International Mergers Conference - University College London, 19 February 2020 17 Speakers’ Interviews
Digital Mergers: Need for reform?
INTERVIEW WITH NATHAN MILLER (GEORGETOWN UNIVERSITY) BY PIERRE REGIBEAU (DG COMP)
Pierre Régibeau: Can the standard approaches for assessing but this is also true of many other industries and we have already competitive effects in innovative industries be applied to been dealing with these issues for a while. digital markets, or do we need a special approach for digital? Pierre Régibeau: How can we help ensure that digital markets Nathan Miller: The main issue is product market definition, for remain contestable and does merger control have a role two main reasons. Firstly, because of information on individual in this? consumers, prices can be tailored to individuals. This invalidates Nathan Miller: The key world is interoperability. Applied to the traditional SSNIP tests since one cannot consider a uniform algorithms and data, interoperability addresses most of the price increase. One possibility would be to consider an increase “digital-specific” issues that one can think of. in the AVERAGE prices over a group of consumers, keeping the intra-group variation constant. What this implies for the traditional There is an argument for making merger review stricter in the link between market definition, market shares and market power following sense. We sometimes block (or ask for remedies) mergers is not yet clear. Secondly, different consumers are shown different which would facilitate abusive conducts (e.g. foreclosure). Of sets of goods between which they can choose. This also course, one can also address this conduct ex post and not make complicates the definition of markets and the analysis of mergers it a factor in merger review. The choice between the two approaches as the welfare effect of mergers now depend on the precise depends on how sure one is to catch the ex post abuse. Digital information that the merging parties have on each consumer. competition often means algorithms...which make conduct harder Again, we need ways/statistics to help us deal with this consumer to assess/monitor. This provides a rationale for relying more on specificity at the aggregate level. ex ante merger control and less on ex post antitrust enforcement. Another (antitrust) issue is data ownership and interoperability/ Pierre Régibeau: How would compatibility standards in digital access. In particular, should we distinguish between data which markets, for example related to portability of consumers’ is generated by the firm’s own activities (i.e. info on consumers) data, change the importance and efficacy of merger control? and data which is not generated by this activity (e.g. data to train Nathan Miller: See above about the role of interoperability. face recognition algorithms)? Standardisation makes post-merger abuse less likely. Of course, For the rest, digital markets tend to be fast moving and subject there should be continuing monitoring of SSO rules and of conduct to various forms of economies of scale (including network effects) within standard-setting organisations or standard setting consortia.
18 1st International Mergers Conference - University College London, 19 February 2020 Merger hotchpotch - Enforcement and procedure: Due diligence, gun jumping, due process, remedies
INTERVIEW WITH JACQUES MOSCIANESE (INTESA SANPAOLO) AND FRANCK QI (QUALCOMM) BY SARA ASHALL (SHEARMAN & STERLING)
Sara Ashall: The EC’s focus in recent years on procedural put into place. Whether or not the EC intended on making such a infringements in merger control has resulted in multi-million statement to the broader M&A community, the message has been fines for companies e.g. Canon/Toshiba EUR 28 million and received nonetheless: that illegal implementation of a transaction Altice/PT EUR 125 million. Do you think this uptick in enforcement will be severely punished and deterred. shows an effort on the Commission side to bring enforcement For companies considering M&A, the lessons to be drawn from the in line with US practices, or is the Commission being Altice/PT case in particular are clear, but also not surprising: best over-zealous? to continue following the well-established rules of appropriate How has the Altice decision in particular changed the way pre-close behaviour. Make sure due diligence is conducted with businesses conduct due diligence, draft interim covenants NDAs in place. Set up and use clean teams. Do not give the and conduct pre-closing? prospective buyer veto or decision-rights over ordinary course Frank Qi: For businesses that participate in M&A, the EC’s recent business not relevant to preserving the value of the target business. enforcement actions certainly present concrete examples of the Ensure the line between what is or isn’t ordinary course business is consequences of skirting the rules. To me, the fact that enforcement drawn using objective criteria readily verifiable. And, lastly, do not actions were brought here speaks to the importance of preserving exchange commercially sensitive information outside the clean team the sanctity of the pre-merger notification and control system. But safeguards. Repeat M&A participants should be very familiar with the level of the fines demonstrates how the extent and magnitude these rules, notwithstanding the fact that they are sometimes tricky of the conduct bear on the size of the penalty, and not so much a in application. There is heightened sensitivity especially where the reflection of any specific desire to mimic the US approach to merging companies have substantive overlaps. Here, the EC seems gun-jumping enforcement. Indeed, fine imposed by the EC in the to be sending the message that truly extensive transgressions that Altice/PT transaction was more than 10 times the highest ever fine border on Article 101(1) violations, such as those found in Altice/PT, imposed by a US antitrust agency (DOJ in the 2016 ValueAct matter). will be subject to heavy penalties.
Providing the appropriate notification and maintaining the requisite Jacques Moscianese: Actually, I would say that the sensational separation and independence of the merging parties, are fundamental part of the European Commission ruling in both cases was perhaps aspects of preserving the competitive status quo while the transaction the level of the fines, whereas the decisions themselves were not is reviewed or a remedy to fix the identified competitive problem is so surprising, according to Art. 14 of the EU Merger Regulation.
1st International Mergers Conference - University College London, 19 February 2020 19 Speakers’ Interviews
After all, the suspension of a concentration is a fundamental principle guidelines. Do you think that this is necessary to deal with of our legal system to guarantee both the power to intervene of the new business models in the digital economy or do you think European Commission and the stability of the competitive environment. this is a band-aid to head-off the sweeping reforms called in Thus, I would say that the Altice/PT and Canon/Toshiba cases have the wake of Siemens/Alstom? not substantially changed the way businesses have to conduct due diligence for M&A transactions. Frank Qi: My interpretation is that the Commission intends to address both product and geographic market definitions, not one Moreover, the EU Merger Regulation itself grants the right to ask the or the other. On the one hand, I see the potential value in European Commission a derogation from the stand-still obligation. re-assessing the guidelines. The types of businesses that tend Thus, in cases where the derogation from the suspension is capture today’s headlines are certainly different today than they reasonable and necessary, the European Commission can allow it were more than two decades ago. Competition law and policy and – consequently – there is already a degree of flexibility in the has also evolved based on its accumulation of experience and current legal framework. advances in economic theory. But at the same time, many of the Sara Ashall: Jurisdictional Thresholds: Under the previous competition law topics receiving significant attention today – network mandate, the Commission undertook a public consultation effects and barriers to entry, zero-price goods, multi-sided regarding the jurisdictional thresholds in light of companies platforms, dynamic vs. static competition – involve scenarios that with low revenues, but high competitive potential. With the antitrust, in one way or another, is already flexible enough Commissioner returning for a second mandate and the focus to address. on regulating tech, these reforms may well be back on the agenda. Do you think these reforms are necessary to cover The key to ensuring the guidelines are updated appropriately is that an enforcement gap or represent mission creep? Do you think the analytical framework be shifted from one that always begins with they could ever work in practice? What will the effect be in market definition to one that concentrates on competitive effects your industry? – whether that’s price, output, quality, or innovation. Once this Frank Qi: I think the Commission has demonstrated prudent restraint mindset is adopted and shifted from feeling duty-bound to calculate in declining thus far to pivot from its jurisdictional threshold approach market shares at the incipiency of an investigation, the true ability for merger control. Are there hypothetical anticompetitive transactions of antitrust to adapt to different industries and different eras that might escape EC merger review today due to insufficient shines through. turnover? Possibly. With any contemplated changes, it is important the Commission Theories about killer acquisitions or serial acquisition of potential looks beyond Europe, but not necessarily for the reasons raised by competitors are certainly en vogue today, but a material expansion some in the wake of Siemens/Alstom. I am talking about the impact of the transaction notification requirement could very well overwhelm on other antitrust agencies around the world. When leading the Commission with deals that are overwhelmingly procompetitive competition authorities like the Commission make a change in its or at least competitively neutral. A successful merger control regime substantive approach to antitrust, you can be sure that other more must be able to allocate its finite resources to investigate the up-and-coming agencies will mimic the shift. transactions most likely to have the most substantial effect on European community. The Commission should keep in mind how changes may be used The net effect of a sudden and substantial increase in notification and misused by agencies where the scope of discretion of authorities filings will diminish the ability of the Commission to focus on cases in merger control is quite significant. Beware the unintended with the largest potential impact. Indeed, the Commission has already consequence where the next deal receives quick EC clearance but recognised that its jurisdictional threshold-based approach enjoys runs into another agency that blocks it on grounds not tethered to supplementation by referrals from individual jurisdictions. substantive antitrust or economics.
Jacques Moscianese: In order to face the challenges posed by Jacques Moscianese: While the issue of the so-called European the digital economy, some reforms to competition law are necessary. Champions is at the centre of the EU debate, I don’t believe that Countries with an effective competition law framework such as we need a radical reform of the rules of market definition to promote Germany and Austria have already started to experiment with changes the creation of EU champions. I agree with Prof. Tommaso Valletti, to their respective law system, implementing value transaction thresholds. the former chief economist of DG COMP, on what he recently said I think we should wait and see how these reforms will work at the to the press that we should not be obsessed with the creation of national level in the next years, before introducing new thresholds European champions but, instead, we should find a sustainable for the merger assessment at the EU level. Indeed, the European model that fits well with our history and our economy. Commission’s aim must be wide in the digital economy, thus not limited to minor revisions of rules. By contrast, a reform of the market definition guidelines will be welcome if it will encompass new ways to both define the relevant In this regard, recently the Commission has already proposed new markets and calculate the market power, in “old” and “new” markets. rules on platform transparency and free flow of data, and I think that Such a reform must be conducted with the sole aim of promoting it must continue in that direction. That’s because the issues that arise fair and efficient competition. In fact, it is fundamental that we from the emergence of the digital economy are many: it is necessary preserve the specific nature of competition rules, specifically, its to correctly assess the value of data and to promote data portability independence from the political power. Obviously, it is legitimate and interoperability, to solve the problem of the relationship between for Member States to incentivise the creation of large companies vertically integrated online platforms and their users, just to name a few. that could be able to tackle competition at the global level. But Sara Ashall: One of the first actions of the Commissioner this is mainly a matter of industrial policy. So, Member State should under her new mandate has been to launch a public be very careful in handling competition rules trying to use them to consultation regarding a review of the market definition reach political targets.
20 1st International Mergers Conference - University College London, 19 February 2020 Press reports
Merger reviews risk being ‘hijacked’ if green goals are brought in, EU official says by Andrew Boyce, MLex, 20 February 2020
rotecting the environment, health and «How many jobs would have to be saved to At the same conference yesterday, Simon Holmes, jobs are «commendable» aims, but compensate for the anticompetitive effects, which a member of the UK’s specialized competition P regulators should beware of approving may actually lead to job losses in some other court, said climate change was an «existential anticompetitive mergers based on such non-com- parts of the European economy?» she asked. threat» and must be factored into merger decisions. petition goals, a senior EU official has said. «The chain of effects that this also has, in approving Anttilainen expressed concerns that taking Speaking in a personal capacity, Hanna Anttilainen an anticompetitive merger on the basis of positive non-competition goals into account risked the said tools such as state aid and environmental effects in some other areas — I think it’s a very process being «hijacked or given political regulation were better placed to deal with these difficult thought process,» she said. «If one were guidance.» issues and that bringing them into merger reviews to ever go down that road, I think you’d really «Who would make this trade off?» and «How risked politicizing the process. have to give it some careful thought.» would you make it?» she asked. «What would «How much greener would the merger have to Anttilainen’s comments come as part of a growing the court do?» be to compensate for the anticompetitive effects?» debate over whether EU merger reviews should She questioned how regulators would be able to Anttilainen, a head of unit in the European take more account of the environment. Some say «ensure that these non-competition objectives Commission’s competition department, said at regulators should broaden how they view «consumer would really be maintained after the merger» and Concurrences International Mergers conference welfare,» to consider the wider benefits to society «in such a manner that it negates any anticom- yesterday. of a reduction in carbon-dioxide emissions. petitive effects.»
Climate change an ‘existential threat’ and must factor into EU merger reviews, Holmes says by Andrew Boyce, MLex, 20 February 2020
limate change is an «existential threat» «Can you deal with the sustainability issue in that workers in France and reduce the noise and pollution and must be taken into account by context?» he asked. in Germany. C regulators in EU merger reviews, a «Is that inconsistent with the merger regulation?» Second, he said officials could look at a deal’s impact member of the UK’s specialized competition on the environment «from an efficiency point of he asked. «No, it’s not.» court has said. view.» Under the EU merger rules, case handlers Fourth, Holmes noted that Article 21(4) of the EU Instead of «bending over backwards trying to find can look at how «efficiencies» brought about by a merger regulation allows member states to take reasons not to do something, we should be trying merger might offset the effects on competition that into consideration «non-competition» factors such to find ways of doing something,» Simon Holmes it might otherwise have. as national security, suggesting that something could told at Concurrences International Mergers conference Third, he said there was scope for regulators to use be added to deal with environmental impact. in London. «creative» remedies to balance the environmental Finally, he pointed out that factors such as the Holmes — a member of the UK Competition Appeal harms of deals. environment can already been taken into account in deals that don’t qualify for review by the commission. Tribunal who has written a paper on sustainability He used the hypothetical example of merger The best example of this was a deal in the bearings and competition law — pointed to five ways in which between a company with a factory in France and sector between Miba and Zollern, which was blocked enforcers could factor climate change into merger one with a factory in Germany. As part of this by the German competition authority last year but decisions, adding that he wasn’t proposing changes deal the companies planned to close one of the then approved by the economy ministry «specifically in the EU merger control rules. plants and expand the other to achieve «economies on environmental grounds,» Holmes said. of scale and scope.» First, Holmes said that regulators should look at His comments come as a debate is emerging over what the «basic test» is for deciding whether a «It’s efficiency enhancing, but it’s going to create whether EU merger reviews should take more merger is «OK or not,» pointing out that, under the massive unemployment around the factory in France, account of the environment. Those in favor of EU merger regulation, officials are supposed to take it’s going to create massive pollution around the sustainable competition say the bloc won’t achieve into account how deals would affect «the development factory in Germany.» He proposed that the deal could its ambitious climate goals unless all of society of technical and economic progress.» be allowed with a remedy that would retrain the takes responsibility.
1st International Mergers Conference - University College London, 19 February 2020 21 Press reports
DG COMP official: European champions “not the way” to tackle competition from China by Emily Craig, GCR, 19 February 2020
reating European champions “is not the not have a knee jerk reaction” to change its rules She said aims regarding the environment, health way” to tackle competition from China, to accommodate European champions, because and jobs are “very commendable”, but she is not C a head of unit at the European Commis- this will do “more harm than good”. A successful certain they can be achieved through merger sion’s Directorate General for Competition has said. solution “will not happen overnight” and the EU control. Other tools including state aid and Hanna Anttilainen, head of unit at DG Comp’s “should not destroy” its competition policy to regulation may be more successful at addressing energy and environment mergers unit, said today reach a solution. such objectives, she said. that it is “way too simplistic” to create European Earlier this month, governments officials from She said bringing other elements into merger or national champions in response to “concerns” France, Germany, Italy and Poland called for the control “would politicise” merger review. It would about Chinese subsidies operating the UE. “We European Commission to revise its merger be difficult to know “where to draw the line” on should not lower our standard and start behaving guidelines to tackle “potential abusive behavior” how green a deal would need to be and how like China to deal with the problem that it is by non-EU companies and strengthen many jobs it would need to save to compensate causing,” she said. European industry. for anticompetitive effects, she added. Anttilainen was speaking at Concurrences In December, Margrethe Vestager announced Anttilainen also questioned how courts would assess such deals and how authorities would international mergers conference in London today. that the commission will review how the enforcer ensure the non-competitive objectives are She said it is necessary to understand the questions defines markets to take better account of how maintained after the merger. around the “argument that European companies globalization has affected EU markets. Former FTC commissioner William Kovacic – now are not competitive”, including whether the Etienne Chantrel, head of mergers unit at France’s a professor at George Washington University and problem only relates to Chinese subsidies and Competition Authority, also questioned whether a non-executive director at the CMA – and Nicholas determining the affected sectors. big companies should be “an objective”. He said Levy, a partner at Cleary Gottlieb Steen & Hamilton, “at least half of mergers” do not increase “It depends what the question is, what the answer also participated on the panel. Ioannis Kokkoris, is and what the tool is then needed to solve that companies’ profitability and “there are economic” a professor at Queen Mary University, moderated problem,” Anttilainen said. models that are very successful without relying the panel which also included Josh White, the She said the competition concerns caused by on big companies. vice president at Analysis Group, and Damien Chinese companies operating in Europe “are not Anttilainen also discussed the consideration of Neven, an economics professor at The an issue of merger control” and the EU “should non-competition elements in merger control. Graduate Institute.
UK tribunal approach “may need to change” if enforcer changes merger review by Emily Craig, GCR, 19 February 2020
he UK’s Competition Appeal Tribunal might The tribunal “may find itself being asked to consider Freeman was speaking at Concurrences’ inter- have to change its approach if the the substance of a decision more often” if companies national mergers conference in London. He was T competition enforcer’s merger review do not “like the results” of the enforcer’s changed appointed as a chairman of the tribunal in 2013, process changes, a tribunal chairman has said. merger control process, he said. Companies might after becoming an ordinary member in 2011. think they have “much less to lose from testing Peter Freeman said today the tribunal’s judicial Colin Raftery, senior director for mergers at the the approach in court, so the incentive to have a system “may need to change” if the Competition CMA, spoke on the same panel. He said there go will be stronger”, Freeman said. and Market Authority alters its approach for has not been an appeal against a digital merger assessing mergers, which would have “quite Freeman added that “the more independence is case at a UK or EU level, so its speculative to considerable implications”. eroded” between the CMA’s Phase 1 and discuss what an appeal would look like. Phase 2 investigations, “the weaker the argument Raftery said digital markets “can be a little He said the tribunal has a “light-touch” judicial is” that the tribunal light-touch judicial review different”, but the “well-established principles review process that works “well”, because most approach is sufficient. of judicial reviews apply equally” to digital mergers. appeals against CMA’s merger decisions are He said this is an “ironic reversal” of what the made on the grounds of “procedure, fairness, Eugène Buttigieg, a judge at EU’s General Court, Furman report suggested. The digital market also took part in the panel, along with Matthew evidence and remedies”, rather than “full inquiry report, published in March 2019, blown appeals”. Johnson, a partner at Oxera and Ingrid Vanden- recommends that the tribunal’s role should be borre, a partner at Skadden. The panel was However, if the authority reduces its investigation changed “to more limited standards and grounds”. moderated by Richard Whish QC. time to become “more nimble and agile” or applies But Freeman said changes to the UK merger a “new and untried” merger control policy, it may review could make the tribunal’s involvement in threaten the equilibrium”, Freeman said. appeals “heavier, not lighter”.
22 1st International Mergers Conference - University College London, 19 February 2020 UK merger appeals system may need beefing up if CMA steps up intervention, CAT chairman says by Victoria Ibitoye , MLex, 19 February 2020
eter Freeman said the UK currently has decisions — are at stage 2, after a separate establish jurisdiction, despite the companies «light-touch» judicial review. Companies in-depth investigation by the CMA,» he said. having only a limited presence in the UK. P rarely lodge full-blown challenges against «Now, if you move to make merger-control policy In the past, Freeman has been vocal about the the CMA’s merger decisions — but that could in general more interventionist, more agile,» need to ensure that his court, the Competition change if the mechanisms to ensure independence Freeman said, «you want to cut the case time, Appeal Tribunal, maintains its scrutiny of CMA during the regulator’s in-depth review phase are you want to base the control on some new, decisions. Currently, companies unhappy with perhaps quite untried, doctrine. That may threaten eroded, he said. the antitrust regulator’s handling of their mergers this happy equilibrium.» «The system for judicial control of merger decisions can appeal to the CAT under judicial-review in the UK is working clearly well at the moment. standards, meaning they can challenge the way «It seems to me, particularly because merger parties But if the authority’s approach to assessing in which a decision has been made, but not the or third parties may not like the results of that approach, mergers starts to change, then the nature of the rights and wrongs of the conclusion reached. and they also may feel — because everything’s up judicial control might well have to change,» he in the air — they have much less to lose from testing «The CAT decides cases very speedily to reflect the approach in the courts. So the incentive for having said at a Concurrences International Mergers the needs of the merger timetables,» Freeman a go may be stronger,» he said. conference in London today, where he was said, noting that there are currently «very few» «That means that the CAT may find itself being speaking in a personal capacity. full-blown appeals against merger decisions in asked to consider the substance of a decision The CMA takes a two-phase approach to merger the UK. «They are more about procedural, fairness, more often, albeit in the reference of a judicial equivalence and particularly remedies,» he said. investigations. If it identifies competition concerns review methodology. And the CAT may equally in its own phase I review, it hands over the case The CMA, however, has taken a less conventional be under pressure to be more stringent on issues to an independent panel of experts for a phase approach to assessing the deals, seen as of procedural fairness,» he said. II probe. This separation means the CAT isn’t interventionist by some, particularly in two recent He said it was ironic that the CAT — which has called on to take a «full merits» approach to merger cases — Sabre-Farelogix and Amazon-De- faced calls to curb its current full-merits review appeals, Freeman suggested. liveroo. In its phase I review of Sabre’s merger powers in relation to antitrust decisions — might «At present we have light-touch judicial review. with airline technology peer Farelogix, it applied need heavier, rather than lighter, appeal consi- This is because adverse decisions — the prohibition a «share of supply» test in an unusual way to derations in mergers.
Digital merger regulation can draw on principles from UK case law, CMA Director says by Victoria Ibitoye , MLex, 20 February 2020
ow should competition law adapt to «First, it’s clear that the meaning of ‘substantial’ Lastly, Raftery said the case law makes it clear regulate digital mergers? It’s a question in terms of a substantial lessening of competition, that the CMA’s statutory assessment is an H that antitrust authorities across the or SLC, is broad-ranging,» he said, pointing to assessment of the available evidence rather than globe are grappling over, and one UK case law the CAT’s decision in Global Radio v Competition a detailed roadmap of the specifics of the merger is starting to answer. Commission where it found that «substantial» — i.e. The granular details of what might happen Colin Raftery, Senior Director of Mergers at the falls within a spectrum, and doesn’t have to be or which competitors may or may not enter. Competition and Markets Authority, said there large or weighty. «The CAT made it clear that the CMA has to be are three principles emerging from UK case law «The existing statutory test is broad and supports satisfied that it has a sufficient basis, in the light which could all be relevant to the future assessment intervention where appropriate, in a wide variety of the totality of the evidence, to reach the decision of digital cases. of circumstances,» Raftery said. it does at the end point of an investigation,» It comes as the CMA prepares to update its merger Raftery said, pointing to CAT’s decision in BSkyB. assessment guidelines for the first time in ten «Second, to my mind, the case law doesn’t seem years — with a focus on digital deals. to draw the same qualitative distinction between — Regulating digital mergers — Speaking at Concurrences International Mergers static and prospective analysis,» Raftery said The CMA has been thinking hard about how to conference in London yesterday, Raftery said referencing Tetra Laval then pointing to ICE where better regulate digital mergers and stay alert to three conclusions could be drawn from the case the CAT was clear there’s no special elevated «killer acquisitions» — where tech giants snap law that has emerged from the UK’s specialized evidential burden for prospective theories of harm up smaller rivals, often for a price that seems competition court — the Competition Appeal (updated on Feb. 21, 2020 at 10:50 GMT: Adds out of proportion unless the value of removing Tribunal — and can be applied to digital mergers. clarification to comments). future competition is factored in.
1st International Mergers Conference - University College London, 19 February 2020 23 Press reports
Last June it published the findings of a report The CMA is currently in the process of updating greater need to protect competition in circums- which reviewed previous merger-control analysis its merger assessment guidelines, which haven’t tances where there is already limited competition. by its predecessor — the Office of Fair Trading changed since 2010. The report also recommended that empirical — in tackling digital markets (see here). The CMA The Furman Report on digital competition — evidence should always be considered within the succeeded the OFT in 2014. commissioned by the Treasury and led by economist context of an economic framework that takes Following the report, undertaken by Italian Jason Furman — put forward some recommen- into account underlying economic theory and consultancy Lear, the CMA’s chief executive dations on what the guidelines might look like principles, so that certain inferences can Andrea Coscelli suggested the watchdog should last March. be made. employ its existing tools, such as dawn raids, Among the recommendations was that the new and be more dynamic in its assessment of the guidelines should clarify that the substantiality counterfactual — what would have happened if of lessening of competition may depend on the the merger hadn’t occurred — to better regulate. extent of competition pre-merger, reflecting the
UK CMA filing question looms over cross-border merger remedy talks ahead of brexit, lawyers say by Lucinda Guthrie, Dealreporter, PaRR Global, 10 March 2020
dvisors are proactively reaching out to There could be a secondary need, for example, there are US overlaps so it is easy to narrow the the UK Competition and Markets Authority if the agency wants to be able to replace the scope of the hold separate to the UK. A (CMA) as they approach cross-border merging party in the market, they said. For the “They would jealously guard their territory,” this remedy negotiations ahead of the expiry of the buyer, the sale may need to include more assets, lawyer said. Brexit transition phase, lawyers have told this so it can step into the shoes of the merging parties There is more co-operation between agencies, news service. in the market. and the CMA is more open to a pro-active The UK merger control rules stipulate a voluntary Stryker’s [NYSE:SYK] bid for Wright Medical engagement, this lawyer said. There is a case by filing requirement, but delegates at the Interna- [NASDAQ:WMGI] falls in to the category of a heavy case analysis with all sorts of people engaging tional Mergers Conference organised by overlap in one market, with a need for more early. It slightly depends if you have all ducks in Concurrences and University College London last approvals in other jurisdictions. a row then you might as well speak to the CMA, month noted that the CMA is increasingly being The parties have a combined 70% share of the he added. treated as a mandatory regime. US total ankle replacement market. They have Other cross-border mergers that could fall under The UK will remain under the European Commission’s received a second request from the US Federal the CMA’s jurisdiction include E*TRADE Financial (EC) one-stop shop filing procedure until 31 December. Trade Commission (FTC). According to the merger [NASDAQ:ETFC] / Morgan Stanley [NYSE:MS] and This means that any cases notified to the EC before agreement, Stryker and Wright have anticipated Anixter [NYSE:AXE] / Wesco [NYSE:WCC]. it breaks up for the Christmas holidays would fall possible filings in Austria, Colombia, Germany, under European jurisdiction. In most deals with global markets, remedies are Saudi Arabia and the UK. more likely to be assessed at the European However, the lawyers were wary of what they A second lawyer suggested that in such a case Commission level right now. Post Brexit, it remains felt was an increasing risk of hold separate orders though the parties would be expected to engage that could cut across a whole transaction or block to be seen how the CMA will engage in these a disposal required to appease another early with the CMA, the agency may prefer to deals given its mandate to protect the UK consumer, agency’s concerns. wait to see the outcome of the review in the other the third lawyer pointed out. jurisdiction to see if that remedied its compe- One lawyer explained that parties would typically At another event, City & Financial’s UK M&A forum, tition concerns. assess whether the market is national or regional CMA Senior Director of Mergers Colin Raftery to weigh up the filing requirements and the risk The first lawyer pointed out that different agencies noted that “the perception of the UK as a regulator associated with the UK market before filing. preferences for remedies could also play into that looks only at UK centric deals in the retail considerations. They pointed out that typically a sector is undoubtedly outdated, but taking A global market is applicable to the semiconductor jurisdiction over the largest international pharma market, whereas for pharmaceutical devices or «fix-it-first» remedy, where a disposal is proposed or agribusiness cases does raise some practical consultancies the markets are very national, so with an agreed buyer before the review completes, and analytical challenges.” the co-ordination between the agencies can be would be proposed to remedy US competition very different, the lawyer explained. concerns. However, the CMA «doesn’t like During Q&A at the forum, Raftery added that the fix-it-first», this lawyer said, noting that there is CMA may take a wait and see approach in some The risk of an agency disagreeing with a remedy a view this could prejudice the outcome of the package targeted at another jurisdiction is real, cross-border cases with remedies. He also pointed agency’s review. the first lawyer noted. In practice the markets out that some parties may take advantage of can be very different commercially, this lawyer A third uninvolved competition lawyer pointed going straight to remedy talks or an in-depth noted. “It may be a case where the overlap is out that in a case in a sector such as pharma- review to align regulatory review timetables in only in the US, but it is not viable to have a buyer ceuticals with a big public buyer in the UK, such differing jurisdictions. for only that business since no one wants to be as the NHS, and where most overlaps are in the As reported, the CMA is not able to reopen merger only in just France,” this lawyer said. US, the CMA would not automatically say that cases after the EC has made a decision.
24 1st International Mergers Conference - University College London, 19 February 2020 Digital mergers don’t deserve ‘knee-jerk’ suspicion, Régibeau says by Natalie McNelis, MLex, 20 February 2020
ith tech company mergers, «There’s an idea that for a number of acquisitions «Member states are free to change their thresholds regulators must be very careful by large platforms, had we known what those if they are really concerned, and they’re also free W about «guessing» where the market acquisitions might have turned into, maybe we then to refer the cases to us if they get something is going, the European Commission’s new chief should have blocked them despite the fact that they think is interesting and complex and there economist Pierre Regibeau told a conference in we didn’t have jurisdiction.» is a need for an EU-wide kind of decision.» London yesterday, at Concurrences International «That’s a lot of ifs, mights and shoulds ... I am «If anything happens in the next few years, this Mergers conference. not totally convinced that we have a problem.» is much more the scenario from our point of view.» Speaking on a panel on whether digital mergers «One of the benefits of federalism is that you can necessitate reform of merger control, Regibeau Addressing the question of whether the thresholds experiment at the local level, learn from there, rejected what he called an «almost knee-jerk for EU merger control should be lowered to catch sort of ‘free ride’ on the member states,» he joked. reaction» that digital markets are «tipping markets,» more deals, Regibeau said the commission where consumers all converge on one platform is «wary.» Regibeau also cautioned against changing the and are reluctant to shift later. rules so that regulators can address problems «My own impression is that the commission is «Some might have tipped, some clearly haven’t, «ex post,» that is after the merger has not really thinking about changing the threshold so let’s not be too brusque in this direction,» he been completed. at the European level,» he said. «If you start said. «I am especially afraid of this characterization «Undoing mergers is a very, very messy business.» fishing with a net with a finer mesh, you are going of ‘oh, with those industries, you cannot survive, to catch a lot of small fish that we frankly don’t «Actually, finding somebody else that could acquire you can’t have more than two or three, because have the resources to deal with.» them without creating additional competition of network effects, winner takes all’.» issues might be very hard.» «I actually don’t see that. If you look at all of those Plus, he cautioned about the financial damage Second, he cautioned against what he called the big platforms, they are slowly going right and this could do to companies that get swept into «ex post fallacy.» left, starting to overlap here and there.» the merger review process. «Who tells us we are not moving towards a model He said it’s easy after the fact to say «oh, now Rather, for right now, he said the commission is of competition with six, seven, eight platforms we know for example that WhatsApp has developed, more interested in «exploiting» the experience with different complementary patterns, some of and it could have been a challenger.» of individual countries of the bloc that have them overlapping, and this could give us quite But he said, even ex post, the standard should experimented with changing their jurisdic- fierce competition?» be «what would we have figured out ‘x’ years tional criteria. «I don’t think we should presume we are not ago, if it had been notified at that time and we going there.» He was referring to Germany and Austria’s addition didn’t have any information about what it Overall, Regibeau downplayed the need for of «deal-value» thresholds to their merger control would become.» changes to merger control, saying there’s more systems, where a large purchase price can trigger «That’s a very, very hard exercise to conduct in of a «perception» of a problem than a real problem. a review even if the company acquired is small. conscience,» he said.
CAT chair says UK merger control streamlining would require more court oversight by Jacob Parry, PaRR Global, 19 February 2020
roposed changes in the Competition and were employed by the CMA, then it could lead Freeman said that the system of judicial control Markets Authority’s (CMA) approach to parties to be more litigious. works well as it is. P assessing mergers or in its merger control “They might feel that they have less to lose by mandate would require the Competition Appeal In its report on competition in digital markets, having to go to court,” noted Freeman. Tribunal (CAT) to take on a more stringent approach the panel of advisors led by Prof. Jason Furman in its judicial reviews of appealed merger cases, said Freeman said that if the barriers between the recommended in March 2019 that the UK Peter Freeman, Chairman of the CAT at Concurrences’ Phase I and Phase II parts of a CMA merger government place limits on certain CAT powers, International Mergers Conference in London. investigation were to be eroded for the purpose such as its ability to consider new evidence withheld in merger control proceedings. “The CAT might come under pressure to be more of speed or efficiency, then the argument for a “light touch” review by the CAT would weaken. stringent on issues of legality and procedural The Furman report followed a series of proposals fairness,” said Freeman. “The appeals process might need to be heavier, by the chair of the CMA that criticised the “protracted Freeman said that if changes were made to make not lighter, as we move further into the digital and cumbersome” appeals process and made the process nimbler, or if “new, untried doctrines” age,” said Freeman. several recommendations to that end.
1st International Mergers Conference - University College London, 19 February 2020 25 Press reports
UK case law gives CMA broader scope for theories of harm in digital mergers by Jacob Parry, PaRR Global, 20 February 2020
K case law allows the Competition and mature industries, he noted. “Markets where the merger. Instead, the competition authority Markets Authority (CMA) a more flexible nobody is expected to break even shouldn’t be can make an assessment in the round based on U approach that could impact its future looked at in the same way as a more mature all available evidence. This means that the CMA reviews of digital mergers and there shouldn’t industry,” he said. isn’t required to make a probabilistic finding in be a bias against intervention where uncertainty Raftery said that there are a handful of aspects relation to each of the constituent elements of is predominant, said a CMA official. that distinguish the CAT’s case law from the EU its theory of harm, said Raftery. The Competition Appeals Tribunal’s (CAT) approach legislation that could be relevant to potential By contrast, EU case law leans towards a more to judicial review could allow for future future assessments of digital cases. stringent approach to forward-looking theories assessments of cases involving fast-moving, First, the CAT has allowed the CMA to take a broad of harm, said Raftery. He noted that the Tetra digital markets to be less stringent on forward- ranging approach when it comes to substantial Laval case stipulated a careful review of the basis looking effects than those conducted by their lessening of competition, said Raftery, adding that of EC decisions to be more necessary when European Commission (EC) counterparts, said the CAT defines a spectrum of ‘substantial’ that conducting a prospective analysis of conglomerate Colin Raftery, senior director of mergers at the ranges from complete to not trifling. This means effects. CMA at Concurrences International Mergers that the CMA does not need to find the lessening This approach to forward-looking theories of Conference in London. of competition to be large, said Raftery. harm is reflected in the outcomes of judicial The degree of uncertainty that can be observed Second, Raftery said that the CAT’s case law does review cases which tended to put more scrutiny in digital markets should not lead to a bias against not draw the same qualitative distinction between on such theories, rather than on conglomerate intervention and theories that are spurious in static and prospective analyses and that this does or vertical effects, Raftery concluded. nature shouldn’t form the basis of intervention, not add “special element” when it comes to said Raftery. determining prospective theories of harm. Digital mergers can be problematic as they are Finally, Raftery said that the CAT’s case law makes always liable to a greater degree of uncertainty clear that the CMA does not need to devise a than those assessments of mergers in more detailed roadmap based on the static effects of
Big tech should be required to inform regulators about each merger, says French official by Arezki Yaïche and Victoria Ibitoye MLex, 20 February 2020
ig Tech companies should be required including systemic merger notifications, on Google, he was supportive of the emergence of «European to notify each merger to antitrust Apple, Facebook and other major tech companies. champions» as part of an EU single industrial policy. B regulators regardless of the size of the The bill still needs to be discussed by the National Chantrel said it was hard to evaluate whether deals, a top French competition official has said. Assembly, and the lower chamber is yet to decide merger rules were the real problem, given the Etienne Chantrel, head of mergers at France’s on whether it should put the proposal on its low number of mergers that are blocked or must Autorité de la Concurrence, told at Concurrences legislative agenda. undergo heavy remedies. International Mergers conference in London Last December, French competition watchdog He also wondered about the costs and benefits yesterday that there should be a list of systemi- head Isabelle de Silva said she was hopeful the of relaxing merger-control rules for the sake of cally important companies that have to inform new EU executive would encourage the introduction European industrial policies. watchdogs about M&A activity, as is already the of specific rules to oblige dominant tech platforms «There are a few EU countries where political case in Norway. to notify all their acquisitions — a move intended interference is allowed: this is the case in Germany, to avoid «killer acquisitions,» where tech giants Chantrel said he was speaking in a personal capacity. where it is not used very often but ... once to buy smaller rivals, often for a price that seems «In Norway, a thousand companies have to inform twice a year.» In France, it was only used once, out of proportion unless the value of removing the authority on any mergers whatever the he added. future competition is factored in. threshold. It’s just an information, but if something In July 2018, plans by Financière Cofigeo to buy seems worthy of interest the Norwegian authority — European champions — Agripole’s ready-meal brands William Saurin, uses its power to revoke cases,» Chantrel said. Following the recent Franco-German push to Panzani and Garbit were approved by the Yesterday, French Senate lawmakers unanimously introduce «industrial considerations» in EU government, overturning a decision by the national approved a bill that creates new obligations, competition rules, Chantrel was asked whether competition authority.
26 1st International Mergers Conference - University College London, 19 February 2020 CMA using ‘inventive’ ways to intervene in transactions, practitioners say by Alex Wilts, Reorg, 20 February 2020
he U.K. antitrust agency’s system for particular description, and will, after the merger, As Reorg reported, the CMA’s recent investigations determining whether it has the authority supply or acquire 25% or more of those goods of certain deals are likely part of an attempt by T to review a transaction continues to or services, in the U.K. As a whole or in a the authority to maintain its appearance as a create uncertainty for companies, according to substantial part of it.” forceful and innovative regime post-Brexit. London-based competition law practitioners. Claire Jeffs, a partner at Slaughter and May, said Mark Jephcott, a partner at Herbert Smith Freehills, During an international mergers conference the issue regarding the share of supply test is told Reorg that if companies want certainty about yesterday, Feb. 19, at University College London, potentially legal certainty. “The CMA has said whether the CMA will investigate their deal, their two practitioners speaking on panels noted the they have a lot of flexibility, and boy, they do,” only real option is to file. “Increasingly, parties Competition and Markets Authority’s, or CMA’s, she said. are faced with the fairly stark choice of having wide interpretation of its jurisdictional share of Jeffs noted the CMA’s decision regarding the to file almost any merger unless there is absolutely supply test in recent cases. purchase of Spark Therapeutics Inc. By Roche no overlap [in business] at all, or run the unenviable Nicholas Levy, a partner at Cleary Gottlieb, said, Holding AG, which the authority published last risk of facing many months subject to a rigorously “I think deliberately they have taken an expansive week. “They looked at share of supply by reference enforced IEO [Interim Enforcement Order] view of the share of supply test, which is one of to employees in the U.K. engaged in marketing preventing integration, such that the regime is the jurisdictional thresholds in the U.K.’s voluntary pipeline products,” she said. “That is in danger of becoming mandatory in all but name,” system to assert jurisdiction over mergers that pretty inventive.” he said. under a more conservative view one might have Several practitioners have commented that the thought they didn’t have jurisdiction on.” Spark/Roche case demonstrates the CMA’s According to CMA guidance, under U.K. willingness to apply the share of supply test competition law, the share of supply test is creatively to intervene in a transaction even when satisfied only if the merged companies “both the company being acquired has no marketed either supply or acquire goods or services of a products in the U.K.
1st International Mergers Conference - University College London, 19 February 2020 27 Testimonials
Very high calibre, insightful and The conference was very well thought-provoking speakers.” organized with terrific speakers. LUISA AFFUSO The choice of topics was also great.” Ofcom MARTIN ROTT
Havel & Partners
Fresh ideas, knowledgeable and experienced speakers.” This conference is an important and CLAUDIO CALCAGNO worthy addition to the Competition
Analysis Group debate and landscape in London. An impressive array of senior speakers and attendees discussing the complex issues in international Highly relevant, outstanding mergers. I look forward to attending intellectual and personal interaction.” again in future years.” PEDRO CALLOL GRANT SAGGERS Callol, Coca & Asociados NERA Economic Consulting
The conference covered some very Excellent conference with top interesting topics with high-quality speakers and a lively informed speakers. It was an enjoyable mixture audience.” of the academic and the practical.” OMAR SHAH EMMA GRIFFITHS Morgan Lewis Rolls-Royce
A well organised exchange of some Excellent all around view on mergers. of the leading minds in the business SATU-ANNELI KAURANEN on current topics.” Merilampi ROB VAN DER LAAN OmniCLES
28 1st International Mergers Conference - University College London, 19 February 2020 Videos
During the conference, some of the speakers summarised their speeches in short videos. These can be watched at concurrences.com (Conferences > 19 February 2020).
Luisa Affuso Irene De Angelis Sara Ashall Eugène Buttigieg Ofcom Intesa Sanpaolo Shearman & Sterling General Court of the EU
Etienne Chantrel Manish Das Simon Holmes Frédéric Jenny Autorité de la concurrence King’s College London King’s College London OECD I ESSEC
Matthew Johnson Ioannis Kokkoris William E. Kovacic Deni Mantzari Oxera Queen Mary University King’s College London I CMA University College London GW University
Damien Neven Frank QI Colin Raftery Pierre Régibeau The Graduate Institute Qualcomm Competition and Markets Authority DG COMP Compass Lexecon
Grant Saggers Ingrid Vandenborre Sir John Vickers Josh White NERA Economic Consulting Skadden All Souls College Analysis Group
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1st International Mergers Conference - University College London, 19 February 2020 29 Concurrences REVUE DES DROITS DE LA CONCURRENCE | COMPETITION LAW REVIEW
Gun Jumping in Merger Control A Jurisdictional Guide
Catriona Hatton - Yves Comtois - Andrea Hamilton International Bar Association, Mergers Working Group of the Antitrust Section
Foreword by Richard Whish As gun jumping comes to the forefront of antitrust enforcement in a number of important jurisdictions, this book is a timely and helpful guide for both in-house and outside counsel involved in cross-border transactions. The Mergers Working Group (“MWG”) of the Antitrust Committee of the International Bar Association has formulated a comparative guide concerning gun-jumping across 21 major jurisdictions, encompassing all global regions and both established and emerging merger control systems. Each country chapter comprises of a series of questions and answers based around the relevant legislation and illuminated by recent cases and decisions. These have been contributed by distinguished practitioners from around the world, and are followed by annexes on actual and hypo- thetical enforcement of specific conduct. The book also provides a high-level overview by the MWG of the survey’s key results, to provide insight to the international business community, their advisors as well as to competition authorities.
Catriona Hatton is the Partner in charge of the Baker Botts’ Brussels office and Co-Chair of the firm’s Global Antitrust and Competition Law group. Foreword by Richard Whish Yves Comtois is Legal Consultant with the Antitrust and Competition Practice of Baker Botts’ Brussels office.
Andrea Hamilton is a Partner at McDermott Will & Emery in Brussels.
This well-researched and highly informative guide is comprehensive in its coverage of merger law and practice throughout the world. It will undoubtedly be a ‘go-to’ document on the key issue of what merging parties can or cannot do before they obtain formal approval for their transaction from competition authorities. Sir Philip Lowe, Oxera
A Jurisdictional Guide Consummated mergers can harm competition and consumers irretrievably, and as such, enforcement against gun-jumping is critical regardless of the system of merger notification. The publication of this book is timely given the increased enforcement around the world in this area. Han Lih Toh, Competition Commission of Singapore
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