4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE MARKETS, REMEDIES AND SURVIVAL: CUTTING EDGE ISSUES IN GLOBAL MERGER CONTROL

2 December 2016 I Paris ATTENDEES

54 CORPORATIONS 10 ENFORCEMENT AGENCIES

Air Liquide IBM Autorité de la concurrence Airbus Group Imerys Amundi ING Bundeskartellamt Ingen Apple Chilean Ministry of Economy Arkema Ipsen Competition and Markets Authority Atos La Poste LCL Banque Privée Avril DGCCRF Lefebvre Sarrut Axa Malakoff Mederic European Commission, DG COMP BNP Paribas Microsoft Bolloré Transports Federal Trade Commission MSD et Logistiques Newell Brands Fiscalía nacional económica Cargill Onxeo CIT Group International Competition Network Orange Computer & Communications Industry Association Paristransporter OECD Pierre Fabre Médicament Control Risks Qualcomm Danone Rothschild Global Advisory EDF SNCF Mobilités ENGIE Suez EPPA Tarkett Essilor Thales Eutelsat Total General Electric Trigano Groupe Lagardère Unilever Groupe Seche Veolia Groupe Suez Vivescia Groupon Voyages-sncf.com

1 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS PROGRAM

08.00 Registration & Breakfast 10 ENFORCEMENT AGENCIES 10.15 REMEDIES: CAN YOU DISARM THE 08.30 WELCOME & INTRODUCTORY REMARKS HARM? DIVESTITURES, UP-FRONT BUYERS… Mélanie THILL-TAYARA I Partner, Dechert, Paris Josep CARPI-BADIA I Head of Merger Case Support & Policy Unit, Michael L. WEINER | Partner, Dechert, New York DG COMP, Brussels Andreas BARDONG I Rapporteur, Financial services division, 08.45 OPENING KEYNOTE SPEECH Bundeskartellamt, Bonn Isabelle DE SILVA I Chairperson, Autorité de la concurrence, Paris Sheldon MILLS I Senior Director of Mergers, Competition and Markets Authority, London Jeremie SNEESSENS I Partner, McKinsey & Company, Brussels 09.15 ON-LINE MARKET MERGERS: VIEWS FROM BOTH SIDES Antoni VASSILEFF I Partner, Advolis, Brussels OF THE ATLANTIC Hans Jürgen MEYER-LINDEMANN I Partner, Dechert, Frankfurt/Brussels Liz KRAUS I Deputy Director for International Antitrust, Federal Trade Commission, Washington, D.C. Moderators: Paul T. DENIS | Partner, Dechert, Washington D.C. Andreas BARDONG I Rapporteur, Financial services division, Bundeskartellamt, Bonn 11.15 Coffee Break Sheldon MILLS I Senior Director of Mergers, Competition and Markets Authority, London 11.30 IN-HOUSE COUNSELS SHOWCASE François GARNIER I Executive Vice-President General SESSION: HOW WAS YOUR MERGER Counsel, Ipsen, Paris EXPERIENCE? MULTIPLE FILINGS, Moderator: Michael L. WEINER | Partner, Dechert, New York GUN JUMPING, SUBTANTIAL ISSUES... Alexander LUNSHOF I Chief Legal Officer, Essilor, Paris Susan HINCHLIFFE I Global Executive Counsel – Competition Law & Policy, General Electric, London Anne-Sophie POIRIER I Head of Legal – Mergers & Acquisitions, Atos, Paris Gabriel LLUCH I General Counsel Antitrust, Orange, Paris

Moderator: Mélanie THILL-TAYARA | Partner, Dechert, Paris

12.30 CLOSING KEYNOTE SPEECH: MERGERS IN THE BREXIT ERA William E. KOVACIC I Non-Executive Director, Competition and Markets Authority, London

13.00 Lunch

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 2 WELCOME REMARKS MÉLANIE THILL-TAYARA

élanie THILL-TAYARA introduced the conference to identify what it called an “enforcement gap”. This evolution led focussing on two major aspects of global merger control to a global reflexion, initiated in 2014 with the Commission’s White M which have recently been in the spotlight, both in Europe Paper and which is still on-going, on the necessity to revamp the and in the United States. European merger control thresholds in order to review mergers Firstly, new trends emerge with the development of the digital which, although they do not meet the current thresholds, may economy and online markets, which have an effect on competition nonetheless have a significant impact on European markets. dynamics in a given market. The impact of online markets has Ms. Thill-Tayara finally insisted on the growing importance of notably been taken into account by the French Competition remedies, which have become more frequently used to secure Authority in its recent decision, whereby it considered, Fnac/Darty clearance of a transaction. They are also a challenge for companies for the first time in France, that online sales and classic brick when it comes to ensuring and monitoring their effective and mortar sales belong to the same product market. implementation. It is therefore highly recommended that they Secondly, some recent mergers, notably in the digital economy are well prepared, with, as the case maybe, the early involvement or pharmaceutical sectors, have led the European Commission of consultants and economists.

3 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS KEYNOTE SPEECH ISABELLE DE SILVA

sabelle DE SILVA first stated that her main priority for merger control was that the strongest competition came from the online economy is to be reactive and to adapt to a global economy. and not from brick and mortar competitors. It had been rejected in I The changes brought by the rise of the online economy has led many an earlier case but here econometrics and other studies of consumer enforcers to be creative in their procedure and decision making. She behaviour revealed that consumer services are very close in brick and reminded that the French NCA intervenes only when necessary and mortar and online shops. The challenge was then to develop a new shows restraint in dealing with the cases where it does intervene. Remedies way to appreciate market share on a local market taking into account are required in only 4% of the overall cases handled by the Authority. the market share of online sales. The impact was decisive and the 40% of all mergers are handled within the framework of simplified result was that Fnac had to divert only six shops. This approach might notification, i.e. in less than three weeks, to avoid unnecessary delays. be used again in relation to other markets.

Ms. de Silva then explained more precisely how the French NCA The President of the French Competition Authority also discussed adapts to market changes by presenting the recent Fnac/Darty case. the issue of remedies, stressing the need to be pragmatic and adapt The problem in that instance was that on many local markets the remedies to the situation of the market. Divestitures are preferred combined market shares of the parties exceeded 50%. Fnac’s argument because they are clear-cut, final and easy to monitor. However sometimes the Authority has to be inventive and behavioural commitments are the only solution. The issue of compliance is also central, as is most clearly illustrated by gun jumping cases. The Authority sometimes has to intervene to ensure that everybody follow the rules, as this year in the Altice/SFR case. The fine was very high for several reasons: it was a very large merger for the sector, many distinct actions were parts of the gun jumping, all happened during the standstill period and Altice behaved in the same way in two separate but simultaneous merger cases. More generally, commitments have to be adapted on a wider time basis. For instance, a consultation was launched to see if it was necessary to impose for five more years the commitments issued when theCanal Plus merger was cleared, or adapt them to a changing market.

Finally, Ms. de Silva insisted on the international dimension of mergers. It means complexity for companies that are confronted to different procedures, delays and, in the worst cases, conflicting decisions. Enforcers try to avoid that, but as regard to substance the same rules do not apply everywhere, thus creating an unavoidable risk of inconsistent remedies. The ICN provides much help to the dialogue and to invent common approaches to remedies and makes merger enforcement more homogeneous. Things are moving in the right direction as solutions have been found to avoid discrepancies at the procedural and substantive levels. Very often firms have a better view of what is required in every Member State so their point of view is important and valuable. In any event, solutions can only be found through dialogue with European counterparts, ICN and, on daily basis, with lawyers representing companies.

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 4 PANEL 1 ON-LINE MARKET MERGERS: VIEWS FROM BOTH SIDES OF THE ATLANTIC

ichael L. WEINER introduced the panel explaining prefer the old way. The facts should be taken into consideration the difficulty of defining online markets. They are for each case. If competition from online businesses is real, M usually opposed to brick and mortar sales but the the merging companies’ business plan and documents most common business model now is a combination of should reveal how it affects one’s own business. If there is online and brick and mortar sales. That is why today a threat, it should be reflected in their strategy. geographical markets are more complex. In a way, online Andreas BARDONG agreed that a one size fits all approach markets are even more localised because online vendors does not work for online markets. Some online platforms know how to locate people and take that into account. offer additional functionality when compared to off-line Mr. Weiner stated that market power may be very ephemeral products, for example online real estate portals. A merger on online markets, as competition is only one click away. between two major platforms in Germany (Immowelt.de It means market entry costs can be very low. However, they and Immonet.de) was cleared. In this case, the issue was can be very high too when access to data is essential but not so much, whether real estate classified ads in the printed difficult. Furthermore, online markets imply a transparency press were in the same market as online classifieds. More which can enhance competition but also help collusion. important was whether competition between online platforms They may facilitate agreements by humans on a mechanism was significantly reduced. Substantial network effects in to adapt prices, but even more worrying are computer-based this two-sided market meant that the merged entity would price-adapting mechanisms that can have terrible effects be in a better position to challenge the market leader. Online on prices without actual human agreements. dating agency portals (Elitepartner, Parship) were the subject of another recent online merger case. The combination of Liz KRAUS remarked that, in the U.S., the assessment of these matching platforms also raised the question whether product market definition and the impact of online competition the market would be likely to tip as a consequence of the on market definition is a fact dependent inquiry. There are merger. Ease of entry, was another important factor. U.S. cases similar to the French Fnac/Darty case. Ms. Kraus The case was also cleared. focused on the FTC’s trilogy of cases relating to office superstores to illustrate how the U.S. authorities assess the François GARNIER focused on the development of online competitive dynamics raised by online sales. Mergers that markets for drugs. New entrants were encouraged but were blocked twenty years ago based on a market definition there is no price sensitivity on these very local markets. limited to retail sales through office superstores Staples/( National regulatory constraints to control the distribution Office Depot) may now face different competitive constraints of drugs are important and apply also to online businesses. due to the explosive growth of online retailers in the market Consequently, it does not impact business strategies of (Office Depot/OfficeMax), and not be challenged. Yet, online pharmaceutical companies and distribution channels retailers do not provide meaningful competition in all markets, remain mostly unaffected. Public authorities have due to the specific nature of the customer needs or services nonetheless made sure that pharmaceutical companies involved (Office Depot/Staples). do not discourage the development of online drug retailers. A parallel can be made with the banking sector, also a Sheldon MILLS underlined that shifts in the ways suppliers heavily regulated market where online services are booming. and consumers act make market definition changes Mr. Barnier also stated that data is a key component of necessary. Online markets do not always produce such strategy and access to market and that a big merger might shifts because online content is not always a substitute for raise concerns in that respect. brick and mortar needs. For instance, betting shops and online betting companies do not compete exactly on the Andreas BARDONG explained that big data, digital markets same market. Studies show that some consumers know and platform issues are now very topical subjects. about online betting but remain uninterested because they The German Competition Authority has recently published

5 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS ON-LINE MARKET MERGERS: VIEWS FROM BOTH SIDES OF THE ATLANTIC

1 2

3 4

1 Michael L. WEINER, Partner, Dechert, New York 2 Liz KRAUS, Federal Trade Commission, Washington, D.C. 3 Sheldon MILLS, Competition and Markets Authority, London 4 Panel 5 Andreas BARDONG, Bundeskartellamt, Bonn 6 François GARNIER, Ipsen, Paris

5 6

two papers on these issues, including one with the French Liz KRAUS added that data is not only addressed as a Competition Authority. Access to data can be one element product in and of itself, but may also be examined as an of market power, just like critical IP rights. However, in many essential input. She concluded that all enforcers are cases, data on potential customers can be duplicated, i.e. experiencing the same market developments in real time. the same data can also be collected by other companies. As each enforcer works to improve its knowledge and In other words, in contrast to exclusive IP rights, they are understanding of these areas, we all benefit from sharing then a non-rivalrous good. our views and experience.

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 6 PANEL 2 REMEDIES: CAN YOU DISARM THE HARM? DIVESTITURES, UP-FRONT BUYERS…

aul T. DENIS noted that remedies are a huge part of ones. They look at what might go wrong and try to anticipate merger professionals every-day job. The German problems. A competition authority’s best preparation for P Competition Authority recently published a draft assessing remedy proposals is an earlier deal in the same Guidance on remedies in merger control, illustrating the growth sector with remedies that were not fully successful. Enforcers in that field. Mr. Denis further remarked that phase 2 cases have a better chance to require the right remedies in their are very different as they end almost certainly with remedies second remedies case in the same sector. or abandonments. In that respect, one key question is the Sheldon MILLS recalled that the CMA has two pieces of viability of the package of assets to be divested and the identity guidance inherited from the Competition Commission and of the buyers who takes on these assets. the Office of Fair Trading. Eventually both documents will have Josep CARPI-BADIA stressed that guidance on remedies to be merged but they are already pretty similar. They cover is not an entirely new development as remedies have always most topics and rely on flexible principles. They help strengthen been an important part of merger control and several agencies the enforcers’ job through clarity. As remedies get more have provided guidance for already quite some time. Things complex, global and sophisticated, a specific team deals with can go wrong in designing or implementing remedies, so a designing them. great deal of care is necessary. Notices/Guidelines, best Jeremie SNEESSENS remarked that guidance is useful as practices and model templates for divestiture commitments industries are more consolidated than 15 years ago. It is often and for monitoring trustees are some of many instruments needed for very pragmatic questions. The question to ask is the European Commission has made available to help ensuring how remedies will work in practice and be able to create real everything goes right. Mr. Carpi-Badia added that abandonments competition, which is something merging parties often overlook in phase 2 may often be explained by the competition concerns preliminarily identified in the proceedings. He stressed that Antoni VASSILEFF added that while the guidelines often focus there is typically an asymmetry of information between enforcers on the design of commitments, they remain very useful for and merging parties, which needs to be addressed when trustees who intervene after the decision of enforcers. However, evaluating possible remedies. In the implementation phase, more dialogue is needed between enforcers and trustees because in particular, enforcers look at the business plan of proposed trustees see first hand difficulties, failures and successes. In buyers and use monitoring trustees to assess proposals, while terms of design of divestiture packages, Competition Authorities ensuring that the divestment business is held separate and do a good job. The real problematic issues are often not on the ring-fenced in the meantime. Relevant evidence depends on mind of enforcers or even merging parties when designing the type of remedies. It is important that all the assets essential remedies. Mr. Vassileff also observed that the conventional tools to the activity of the divested business (workforce, IP rights) available to enforcers already constitute strong incentives for are transferred with it. Purchasers must be independent, have companies to comply with the commitments. The rush to sale the necessary financial resources and proven expertise as means no due diligence can be seriously done by buyers, which well as incentives to maintain and develop the assets. excludes sophisticated buyers that could be dangerous on the market. It remains difficult to turn down a buyer because the Andreas BARDONG explained that the recently published requirements are quite low and easy to fulfil while there is pressure German Guidelines provide detailed guidance on the design from everywhere to complete the deal. and implementation of merger remedies that are acceptable in a merger case in Germany. More guidance means more Hans Jürgen MEYER-LINDEMANN stated that upfront clarity and better remedies. This is why the document is rich buyers are more and more frequent in Europe, even though in detail, sets out practical case examples and contains many not as much as in the US. There are no special requirements references to case practice. Enforcers want remedy proposals for them and they can help the transaction can go through that are effective in order to avoid wasting time with useless more quickly, which is major advantage.

7 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 1

2 3 4

1 Panel 2 Paul T. DENIS, Dechert, Washington D.C. 3 Josep CARPI-BADIA, DG COMP, Brussels 4 Andreas BARDONG, Bundeskartellamt, Bonn 5 Sheldon MILLS, Competition and Markets Authority, London 6 Jeremie SNEESSENS, McKinsey & Company, Brussels 7 Antoni VASSILEFF, Advolis, Brussels 8 Hans Jürgen MEYER-LINDEMANN, Dechert, Frankfurt/Brussels

5 6

7 8

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 8 PANEL 3 IN-HOUSE COUNSELS SHOWCASE SESSION: HOW WAS YOUR MERGER EXPERIENCE? MULTIPLE FILINGS, GUN JUMPING, SUBSTANTIAL ISSUES...

élanie THILL-TAYARA observed that parties to Susan HINCHLIFFE stated that frustration with seemingly a merger are faced with a major challenge: adopting inconsistent results is understandable but that such variations M a coherent approach in their deals, and anticipating are not always a result of diverging interpretations. Market the impact of the position taken in one deal on parallel or dynamics may very well be different from a country to future deals. For example, a new entrant in a region may another. China often stands out, for instance. be in a dominant position in another or, in fast-evolving Anne-Sophie POIRIER agreed that, on fast evolving markets, a company’s position can change radically in a markets, companies need to explain how prevailing trends very short timeframe. With the multiplication of merger can justify the fact they change their positions even on key control regimes worldwide, companies also face many issues. different interpretations and application of substantive tests across jurisdictions, with the risk of possible contradictory Mélanie THILL-TAYARA raised the question of where outcomes. companies need to file and how they decide to do it. The Alexander LUNSHOF underlined the need for companies relevance of filing in a given country depends on a lot of to have coherent filing decisions in various jurisdictions, for factors. It is linked with business development plans in each one deal or for different deals in different jurisdictions. region, but companies should play transparency whenever Differences of approaches by national authorities on a same they can. issue are a challenge. More or less similar regulations exist Susan HINCHLIFFE remarked that 140 countries have filing in different countries but the interpretation can be very regimes. Most large transactions are filed in several countries different from one country to another, for instance when it but only in a small percentage of those 140. A wide variety comes to market definition. There is an internal dimension of factors help decide whether to file. Some are linked to to the problem as companies must ensure that they adopt the regime and whether it is operational, some are linked consistent positions in front of various jurisdictions and to the notifying parties. In-house counsels must be on top from case to case. The organisation of the group makes it of these issues because a problem not treated today will more or less easy. When group formed through many come back tomorrow. They have to document all decisions acquisitions and partnerships, entities compete against to file or not to file so that they are prepared if problems each other and it is not always easy to get data from them arise. They have to be able to explain why the company to ensure consistency. did not file, although it is often hard to explain that to Gabriel LLUCH confirmed that companies in such situations business clients who want to go as fast as possible. may engage in schizophrenic behaviours. They support Alexander LUNSHOF added that the problem is that in remedies in one case that they would oppose in other ones. many countries the process is very unclear and the timetable But in fact such apparent contradictions can often be even less. explained by differences in market structures or characteristics. Moreover, some markets evolve very quickly. Gabriel LLUCH stated that companies have to adapt to Companies have to convince authorities that their arguments the different approaches of individual authorities. Some are are not opportunistic. For instance, Orange had a hard time more recent than others and are in the process of establishing convincing the Commission that the proposed buyer for their own legitimacy, which may lead them to take extreme an asset to be divested in Spain was serious, but one year decisions. In those situations, a new form of dialogue must later bought a competitor that had been considered a more be found, perhaps different from what people are used to serious buyer. in Europe.

9 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 1

2 3 4

1 Mélanie THILL-TAYARA, Dechert, Paris 2 Panel 3 Alexander LUNSHOF, Essilor, Paris 4 Gabriel LLUCH, Orange, Paris 5 Susan HINCHLIFFE, General Electric, London 6 Anne-Sophie POIRIER, Atos, Paris

5

6

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 10 CLOSING KEYNOTE SPEECH WILLIAM E. KOVACIC MERGERS IN THE BREXIT ERA

illiam E. KOVACIC defined the Brexit era and analysed competition agencies are asked to perform new roles as tool its consequences for merger control and competition for redistribution and protection. In some respect they already W law. The UK referendum and the US elections are the do these things but do not advertise it enough. clearest and most recent of a long line of discontents. They In this light, Mr. Kovacic proposed a new political bargain. reveal profound distrust in economic and political integration, As competition law and trade expand society’s wealth, they scepticism towards trade, investment and immigration, as well should be further encouraged, but people will tolerate it only if as a desire to “take back control”. They also show that citizens governments accept to spend more to make sure that those are wary of competition and sometimes even schizophrenic: caught in the maelstrom are not left behind or just told “in the they like it as consumers, but not as workers or residents of the long run, it will be ok”. In other words, efforts to aid the process areas that have been victims of the Schumpeterian process of of domestic transition must be expanded and those who are at creative destruction. Competition often means violent destruction the edge of transition must be protected, not ignored. for incumbent firms. This only adds to a feeling of betrayal of the have-nots by the elites who live in the good neighbourhoods The narrative of competition law must also be revised. It should and went to the good schools. “It’s good for you in the long run” be clear that open markets bring economic performance and is not an acceptable answer to many. This applies not only to employment. But it will only be clear if those who believe it are the elites, but also to the organisations they are fond of. more attentive to the difficulties encountered by those who are affected by rapid changes. International work must be promoted None of this is good for competition law. It creates the potential as a mean to generate cost reduction. The focus on competition’s for greater fragmentation and complexity. With the Brexit, one distribution impact must be enhanced and positive redistribution more important competition authority will have to be taken into effects made clearer. This also means upgrading redistribution account. At the same time new networks are forming in the social programs. So in part this is a matter of repositioning the World overlapping previous ones. The diminution of pro-competitive story. Finally, international cooperation enhancements are forces, mostly trade, has clear long term effects. It is the same necessary. National experiences must be shared to expand the with immigration and the flow of knowledge and capabilities that practical know-how to do antitrust: not in terms of principles, comes with it. Reduced support for internationalism and but of really practical questions. This should come with deeper international institutions brings also dangers. In this context, formal and informal integration.

11 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS WRAP-UP REMARKS MICHAEL L. WEINER

ichael L. WEINER gave some indications as to what to expect from a Trump presidency in the field of antitrust. The President-elect has a history both as a defendant and a plaintiff in antitrust cases. During the campaign he said he M would block the AT&T merger and increase competition between health care companies. His transition team includes well-known and experienced antitrust figures. Chances are that despite the campaign rhetoric a measured model of antitrust enforcement will prevail. In any event, the challenge ahead seems to be the decreasing level of competition recently evidenced by a report of the U.S. Council of Economic Advisers. It concluded that 10% of the World public companies generate 80% of revenues.

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 12 PRESS REPORTS

CONTENTS

On-line Market Mergers: Views from both Remedies: Can You Disarm the Harm? France’s new antitrust chief calls for Sides of the Atlantic 13 Divestitures, Up-front Buyers… 15 convergence in merger review – Interview with Simon Genevaz, Autorité de la concurrence Interview with Jeremie Sneessens, McKinsey Paris Merger Conference 17 Mélanie Thill-Tayara, Concurrences Review Hans Jurgen Meyer Lindemann, Concurrences Review Khushita Vasant, PaRR

Remedies: Can You Disarm the Harm? Remedies: Can You Disarm the Harm? Brexit is 'perilous' for competition law, Divestitures, Up-front Buyers… 14 Divestitures, Up-front Buyers… 16 Kovacic says 17 Interview with Sheldon Mills, CMA Interview with Josep Carpi-Badia, DG COMP Antoni Vassileff, Concurrences Review Paul Denis, Concurrences Review Vesela Gladicheva & Lewis Croft, MLex

ON-LINE MARKET MERGERS: VIEWS FROM BOTH SIDES OF THE ATLANTIC

INTERVIEW WITH SIMON GENEVAZ, AUTORITÉ DE LA CONCURRENCE BY MÉLANIE THILL-TAYARA, DECHERT

> Concurrences Review, 2 December 2016

ith the emergence of the digital comes out of the Commission’s public consul- extensively before. For example, in order to gather economy, some competition author- tation. In the current context, the Authority behavioral evidence useful to assess online/offline W ities consider being faced with a sort contributes to tackling the competitive issues substitution, we commissioned a customer survey of legal loophole for the analysis of concentra- raised by mergers and certain conduct in digital that we designed building on British precedents tions between online players where at least one markets. The Authority and the Bunderkartelamt in retail markets. This greatly contributed to the of them does not generate an important turnover recently issued a joint report on Competition Law review, on many levels. Behavioral data helped but yet is considered as very valuable, which and Data. The Authority will also host roundtable form the Authority’s assessment of the merger’s can be reflected in the price of the transaction. discussions on Nexus and Thresholds for the unilateral effects on prices, by confirming economic Some consider that such transactions should International Competition Network on December evidence showing that demand would divert be reviewed by competition authorities as they 3 which will specifically address challenges of significantly to online services in case of price can have a non-negligible impact on the market. the digital economy and low turnover transactions. increases. It also contributed to showing that The Commission has recently launched a public non-price theories of harm, like the merged entity consultation on the procedural and jurisdictional What are the lessons learnt by the FCA’s merger competing less on quality aspects of in-store aspects of EU competition law and may adjust unit from the past merger control cases involving services after the merger, were relevant. the EU thresholds in the near future with a view the very specific sector of online markets, in to attract under its jurisdiction the review of these particular the Fnac/Darty decision of 16 July Inevitably, Fnac/Darty will be interpreted by operations. Could / should a similar change be 2016 where the FCA considered that the merging companies as a roadmap in future retail envisaged under French law? competitive pressure exerted by online sale has cases for how to extend market definition to The Authority is aware of the concern that an become significant enough to be integrated in include online players. However, in many ways, enforcement gap may exist due to the current the concerned market, whether it comes from the Fnac/Darty decision cannot be generalized. notification thresholds. In practice, unlike other pure players (such as Amazon or Cdiscount) or Market conditions in the retail distribution of jurisdictions, I do not know of any case affecting from the stores' own websites which complete consumer electronics that were relevant to the French markets specifically that may have escaped in-store physical sales? outcome in Fnac/Darty displayed multiple a merger review due to the target’s low turnover. With Fnac/Darty, the Authority’s Mergers Unit characteristics, including aggressive competition Nevertheless, it will be interesting to see what experimented with methods it had not used from pure players, price decreases and diminishing

13 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS profit margins, market exit by both online and Authority’s understanding of the way the relevant The ICN’s Merger Working Group, which the physical retailers and the generalization of a new markets actually function and how companies Authority is currently co-chairing, has undergone business model in the form of omnichannel actually compete. Companies involved in certain an extensive assessment of its work product. retailing, that may not be prevalent in other sectors. recent cases sorely realized that numbers cannot It is now in the process of updating key parts So it remains to be seen whether the conclusion tell a convincing story when the results of our of its Recommended Practices to reflect current that the Authority reached in electronics retailing investigations tell another. In matters of evidence, practice. That work has recently focused on will hold in other retail markets. coherence matters more than the value of each remedies, with the adoption of a new Remedies On the other hand, the methods that we used in piece of evidence taken separately. If anything, Guide (http://www.internationalcompetition- Fnac/Darty are already being used in other cases. Fnac/Darty taught us that profound changes in network.org/uploads/library/doc1082.pdf). We Very much in the same way that UPP-type market definition require a large body of diverse are currently working on updating the Recom- quantitative tests were gradually generalized since and convergent evidence. mended Practices on Merger Notification and 2010, customer behavior data gathering and Review, focusing on notification thresholds. analysis will probably become increasingly routine What are the initiatives or hot topics currently As I mentioned earlier, the Authority will host in horizontal cases. However, like quantitative tests, being considered in the framework of the Inter- ICN roundtable discussions on notification behavioral data will not determine the outcome of national Competition Network (ICN) to allow thresholds and challenges posed by deals in merger matters alone. I know of no merger case merger proceedings on both sides of the Atlantic the digital sector on December 3, 2016. We are in which economic or behavioral evidence supported to achieve a workable level of convergence and also working on updating ICN work product on an outcome which would have been at odds with therefore ensure sufficient predictability for investigative techniques, a subject which will what is commonly called “qualitative analysis,” i.e., companies when transactions are reportable in be explored at the next ICN Merger Working the assessment of other types of evidence, the various jurisdictions? Group Seminar in February 2017.

REMEDIES: CAN YOU DISARM THE HARM? DIVESTITURES, UP-FRONT BUYERS…

INTERVIEW WITH SHELDON MILLS, CMA BY ANTONI VASSILEFF, ADVOLIS

> Concurrences Review, 2 December 2016

hat lessons have the CMA’s teams divestment business’ quarry could be sold for Finally, it is important to have a backup plan in case learned from the past implementation landfill. This would not have remedied the compe- the divestment process encounters difficulties. It is W of divestiture remedies and how have tition issues. The importance of a precisely usually appropriate for a backup remedy to be more those lessons impacted the structure of divesti- specified divestment package is especially onerous than the initial remedy, as otherwise it may ture remedies in subsequent cases? important where a whole business is not being create incentives for the parties to delay or under- The CMA has significant expertise in designing divested. Interim measures should be designed mine the implementation of the initial remedy, and and implementing remedies. In relevant cases, our carefully to ensure that the divestment business as the CMA’s approach in the first instance is to remedies advisors provided specialist analysis as is maintained until the divestiture is complete. accept the least onerous remedy which is required part of our case teams. We are conducting a rolling Second, a thorough assessment of potential to address its concerns. The CMA typically includes programme of research into past remedies which purchasers should be conducted. The CMA needs in its divestment remedies a provision for the sale feeds into our development of future remedies to balance the parties’ desire for transparency with of the package by divestiture trustees at no minimum policy. As part of this programme, we have learned its need to conduct a detailed assessment and its price, if the parties are unable to accomplish the several lessons which apply to divestiture remedies confidentiality obligations to bidders. Potential sale within a certain timeframe. in particular. purchasers’ financial viability and commitment to First, the final report must be clear about all elements the market are particularly important factors to In relation to the fate of the divestiture package, that should be included in the divestiture package. assess; these factors are reflected in the CMA’s would you have any success story to share? Has In the acquisition of FSS and Fife Resources by guidance on assessing purchasers. It can also be there been cases where the divestiture package Sibelco, referred to the Competition Commission important to consider a range of potential purcha- failed to become a viable and competitive force (CC) in 2001, the divestiture trustee (appointed sers, especially in the early stages of a remedies on the market? after the parties failed to sell the divestment process, to maximise the likelihood of finding a The CMA and its predecessors have used major business within the agreed timetable) asked if the suitable purchaser. divestiture packages to solve significant compe-

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 14 tition concerns in a number of mergers. phase 2 investigation. Our cases have often areas suitable purchasers could not be found, For example, in the joint venture between Anglo involved substantial divestments; for example even at no minimum price. American and Lafarge, referred to the CC in in the acquisition by Co-operative Group of 2011, the divestment package constituted a Somerfield in 2008, we remedied concerns in What is in your view a good monitoring trustee? significant portfolio of operations to enable a over 120 local areas. We also recently secured new entrant of sufficient scale to break into the the divestment of 14 ready-mixed concrete The CMA usually appoints a firm of accountants cement market. Another example would be sites in Breedon Aggregates’ acquisition of with a breadth of financial skills and business Ryanair’s acquisition of a stake in Aer Lingus, Hope this year, and 16 pubs in Greene King’s experience as monitoring trustees. Corporate referred to the CC in 2012, in which the CC acquisition of Spirit Pub Company in 2015. finance and restructuring skills are typically required Ryanair to sell its stake down to 5%; beneficial. It’s crucial that the monitoring trustee Some divestment remedies are more challen- the CC’s remedy stood up to scrutiny under be suited to the specific circumstances of the ging than others, particularly when there are appeal. case – for example, in the merger between few appropriate purchasers. For example, in We have also been able to successfully remedy Somerfield’s acquisition of 115 stores from Arqiva and the National Grid Wireless Group, many cases at phase 1 - last year, 9 of our Morrison, referred to the CC in 2005, the CC referred to the CC in 2007, a monitoring trustee 62 phase 1 cases involved undertakings in lieu found competition concerns in relation to with technical experience was appointed to of reference, which allow merging parties to 12 stores. For most stores the divestment monitor the parties’ compliance with interim offer early remedies to avoid a more extensive process went smoothly, but in some remote undertakings.

REMEDIES: CAN YOU DISARM THE HARM? DIVESTITURES, UP-FRONT BUYERS…

INTERVIEW WITH JEREMIE SNEESSENS, MCKINSEY & COMPANY BY HANS-JURGEN MEYER LINDEMANN, DECHERT

> Concurrences Review, 2 December 2016

lease explain how McKinsey can add to link competition rulings (e.g., divestitures) to At case level, we see a trend towards sophisti- value for companies involved in complex business outcomes and to model their financial cation of the merger control proceedings, for P merger control proceedings. impact. We do this by leveraging our network of instance: experts and industry specialists (at local and • While there is still a preference towards struc- Merger control proceedings are strategic in global level) and their experience in interacting tural rather than behavioral remedies, some essence: they shape companies’ portfolios, both with regulators. Lastly, we complement this key conditional Phase II decisions involved in terms of business lines and geographical expertise of merger control proceedings with behavioral remedies, including Licensing of a markets. As an example, in the EU, over the other offerings from our Corporate Finance and brand or asset (Liberty Global/Corelio/W&W/ period 2011-2016, 50% of deals going to phase 2 Merger Management practices, so as to provide De Vijver Media), Granting access to a network an end-to-end value proposition to our clients. have been approved with remedies and 10% (3G UK/Telefonica Ireland), Commitment to As such, we have found ourselves to be comple- have been blocked. As such, preparing for and supply competitors and/or customers (Airbus/ mentary to other advisors such as law firms, navigating through such processes require Safran/JV). in-depth strategic thinking, which is at the core PR and communication firms, etc. • Greater usage of more sophisticated economic of what McKinsey does. From your perspective, has the European and econometric analysis. One of the examples Further, while the framework is a legal one, the Commission’s policy on remedies changed over is a recent GE-Alstom case in which EC assessment itself relies much more on business the last few years? recurred to bidding analysis in order to assess and industry related topics: market trends, • At macro level, we see a trend towards more competitive positions of both parties, taking competitive and pricing dynamics, customer and in-depth reviews: into account such factors as their common participation in public tenders, win-loss ratio in consumer behaviors, synergies, etc. • Five deals were blocked in last five years instead 1 bids and influence in probability of winning a of one in the period 2006-2010 In such context, McKinsey can bring value tender if facing each other. through a deep understanding of companies’ 90% of Phase II reviews ended in abandonment, • New criteria are being developed for both businesses and strategic priorities, and the prohibition or remedies, up from an average of European Commission’s jurisdiction (number markets they operate in, combined with the ability 70% in the past decade of users) and market share analysis (dynamic

15 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS market penetration, network effects, online/brick In a context of increasing market concentration segments and what is the effect on the regulatory and mortar) to adapt proceedings to modern, and globalization, the bar for M&A is raising. assessment fast-changing markets (e.g. Facebook and This is illustrated by the fact that since 2013 every -- What will be competitors and customers reactions WhatsApp) month one deal with a value over EUR 1 billion involving a European player is withdrawn. We see and likely input to the Commission or other regu- Last but not least we see growing alignment in also multi-billion breaking fees appearing, e.g. lators in the merger control process (market testing approaches between main regulators in US, Europe Bayer-Monsanto with USD 2 billion or Halliburton- on merger impact, remedy assessment, etc.) and China like in the AB-Inbev-SabMiller case and Baker Hughes with USD 3.5 billion. --Preparation for potential press leaks further cooperation at international level, driven by increasing share of cross-border M&A. In such context, it is more important than ever to --Understanding of the stakeholder landscape and prepare well, including: EC decision processes, including not only the Would you have any general advice for companies case team and its hierarchy up to the Commis- currently considering deals that may involve • Upfront (pre-announcement) “regulatory due sioner, but also the Legal Service, the Chief complex remedies in the EU? diligence” to understand the likely risks and implications, not only from a legal but also from Economist, other units etc. Past deals illustrate that required concessions can a business perspective: what are likely hurdles, -- Post-merger management and remedy implemen- be considerable, if going through at all, not only what are possible remedies and divestments tation including carve-outs and divestitures. but including, because of regulatory review. Within strategies, what is the impact on the value the last 5 years the percentage of deals approved creation potential of the deal (e.g. foregone with conditions, either in phase I or II, more than synergies), etc. tripled. Over 50% of those decisions included • Preparation to the process itself, including for complex behavioral remedies, mentioned before, -- Jan 2011: Aegean Airlines / Olympic Air that require a long-term commitment and, there- instance: -- Feb 2012: Deutsche Börse / NYSE Euronext -- Jan 2013: TNT Express / UPS fore, can have a long-lasting impact and implica- --Market segmentation analysis and optimization: -- Feb 2013: Ryanair / Aer Lingus tions on business. what are possible customer and market -- May 2016: Hutchison / O2

REMEDIES: CAN YOU DISARM THE HARM? DIVESTITURES, UP-FRONT BUYERS…

INTERVIEW WITH JOSEP CARPI-BADIA, DG COMP BY PAUL DENIS, DECHERT

> Concurrences Review, 2 December 2016

ow important are remedies issues to a patchwork of assets and contracts, whereas Halliburton/Baker Hughes were abandoned by the Commission’s merger enforcement in principle a stand-alone business needs to the parties when remedy talks with the Depart- H program? be divested. A too minimalist approach by the ment of Justice foundered. Has that U.S. Most mergers that raise competition concerns are parties is generally counter-productive, because experience had an effect on the Commission’s not prohibited but cleared with remedies. This year, the proposal will not be accepted and instead consideration of remedies? for instance, until the end of October, we have it will take away valuable time of the merger We cooperate closely with our U.S. counterparts, issued 20 decisions clearing mergers with remedies review process. This, in turn, reduces the chance and only one prohibition decision. Remedies are that a solution can still be found within the including on remedies, and we learn from each therefore the most frequently used tool to make merger regulation's strict deadlines. other's experience. Halliburton/Baker Hughes sure a merger doesn't harm consumers. It is Another issue is whether there will be a suitable is a good example of such cooperation. therefore crucial that the remedies we accept are buyer. If there are doubts about that, an This exchange of experiences takes place with effective and truly remove the merger's harm. upfront buyer clause will be necessary. This many other agencies. Just recently, in April 2016, will prevent parties from closing their deal the International Competition Network issued a What are the principal issues facing the Commis- until they have found a buyer that is approved Remedies Guide, setting out the principles of sion in whether to accept a particular remedy? by the Commission. good remedies design and implementation. Most of our remedies involve a divestment, that The fact that so many agencies are able to reach is, a structural remedy for the anti-competitive Merger remedies have been in the spotlight in a consensus on the most important aspects of impact of the merger. But we need to be the U.S. The remedies in Hertz/Dollar Thrifty confident that the business that is divested and Albertsons/Safeway did not work out as remedies shows that there is a lot of mutual includes everything it needs to be viable and the Federal Trade Commission had planned. learning and a genuine effort to develop a competitive. All too often, parties initially propose Large transactions like Tokyo Electron and consistent approach to remedies.

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 16 FRANCE’S NEW ANTITRUST CHIEF CALLS FOR CONVERGENCE IN MERGER REVIEW – PARIS MERGER CONFERENCE

KHUSHITA VASANT > PaRR, 2 December 2016

t is challenging for companies doing international possibly conflicting or inconsistent remedies,” On a separate note, de Silva said that the French mergers to master antitrust procedures and de Silva said. competition authority has been in discussion with I regulators across multiple jurisdictions, the new stakeholders over whether to develop guidelines for While the Autorité attempts to make merger control chief of the French competition authority said today cases of gun-jumping. enforcement “more homogenous” with that of other (2 December), calling for more convergence in the NCAs in Europe, the agency does not necessarily Last month, in the first decision of its kind for the merger control process. have all the tools at present, she added. The French agency, the Autorité fined Altice EUR 80m for jumping “It is complex for the companies who have to deal authority is trying to further its agenda by discussing the gun when its subsidiary Numericable acquired with several jurisdictions, several procedures and the matter at the European and international compe- SFR and OTL in 2014. It found that Altice/Numericable several delays. I think the worst-case scenario is tition forums, de Silva said. had acted as the owner of SFR and OTL before the when there are conflicting solutions to mergers,” “Maybe some further thought could be invested in agency cleared the mergers. Isabelle de Silva, the head of Autorité de la concur- this issue, to try to have more effective ways to avoid de Silva cautioned that companies awaiting antitrust rence, told delegates at a conference on merger discrepancies both on the procedural level and clearance on proposed mergers need to be extremely control in Paris. substantive level,” she said, given that in some cases careful not to implement a merger prematurely, noting Without citing a specific example, de Silva said that in the past the implementation of national merger that keeping a close eye on gun-jumping is “essen- there have been cases in the past where the French control was “not absolutely perfect”. tial” to its activity as a merger regulator. authority cleared a merger while another jurisdiction De Silva said that France will use the forum of the “We wanted to send a message to all those under- decided not to. She explained that this is a situation European Competition Network’s (ECN) working taking merger procedures that they need to be much that regulators “prefer to avoid.” groups for a discussion. more careful about not implementing the merger De Silva’s remarks came at Concurrences’ 4th Global She noted that the European Commission’s (EC) before its due time, and to take all type of precautions Merger Control Conference in Paris on 2 December. move to launch a public consultation has posed with regard to transfer of strategic information,” she added. “We really wish for a system in which there would interesting and stimulating points on the appreciation not be some major divergence on the solution of of merger thresholds. The French authority also sees antitrust concerns in clearing of the mergers,” de Silva said. The French While she expressed the hope that EU member states the digital economy as a priority and “a very serious agency, she said, will seek actively to place this matter would be able to reach a consensus on this issue, challenge.” on the European agenda for an effective solution. she noted that it is a big change, and that “some In May, the Autorité, together with the German member states [may be] reluctant to see a new De Silva saw difficulties in the fact that within Bundeskartellamt, published a paper on so-called approach to thresholds.” Europe there are not always common rules "big data" and competition, which presented a regarding the substantive aspect of mergers, The French authority, she said, plans to focus on number of theories of how possession of large even though the procedures for merger review recommendations it issues at the procedural as well datasets can lead to competition problems. and clearance are common across national as the substantive level, to try to avoid the risk of However, they concluded that a case-by-case competition authorities (NCA). “There is a risk of divergence and inconsistencies. analysis was needed.

BREXIT IS 'PERILOUS' FOR COMPETITION LAW, KOVACIC SAYS

VESELA GLADICHEVA & LEWIS CROFT > MLex, 2 December 2016

he UK's decision to leave the EU is "perilous" "This is dangerous," he told a conference* in Paris. additional jurisdiction that will have considerable for competition law and represents a "terrible "For starters, it creates the potential for greater capacity to affect the wellbeing of individual transactions." T challenge" to how the entire system works, fragmentation. It is happening." He warned that restricting trade would impact the William Kovacic, former US regulator and non- The UK's decision to leave the EU will lead to the "competitive forces" at the heart of global growth. It executive director of the UK's Competition and establishment of a separate competition regime, would be "playing with a fundamental force that has Markets Authority said. responsible for reviewing mergers and investigating made competition more important and more effective Speaking in a personal capacity, he said Brexit cartels. This could mean separate UK investigations in many jurisdictions," he said. created the "potential for greater fragmentation," and running in parallel to EU probes. Kovacic warned that merger review and competition the UK would become a jurisdiction with "conside- "The United Kingdom suddenly has a much more enforcement in the Brexit era were "perilous" and rable capacity to affect the wellbeing of individual important competition authority than it did before June there was a "terrible challenge to how the entire transactions." 23," he said, referring to the referendum date. "It will now enterprise functions." Kovacic, who was a member of the Federal Trade stand on its own. It will be another gate through which He suggested authorities could craft new forms of Commission from 2006 through 2011, said Brexit competition policy passes through in merger review." cooperation in the wake of Brexit and there was a and the election of Donald Trump in the US presented Kovacic said it was "too early to tell" what form the UK's "productive path" out of the situation. a risk for competition law. new regime would take, but he warned it would be "one "But it won't happen by accident," he said.

17 4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS VIDEOS TESTIMONIALS

> PaRR, 2 December 2016 During the conference some of the speakers summarized their speeches in short videos. These can be watched at concurrences.com As with all Concurrences (Events > 2 December 2016 > Paris). events, the Fourth Annual Global Merger Control conference in Paris was excellent. The Concurrences format, focused on dialogue and practical discussion, always encourages insights and new Paul T. DENIS William E. KOVACIC Dechert, Washington D.C. Competition and Markets ideas. “ Authority, London CHRIS MEYERS, Microsoft

Interesting and insightful panel discussions. Having Liz KRAUS Alexander LUNSHOF speakers from a variety Federal Trade Commission, Essilor, Paris Washington, D.C. of backgrounds was very interesting. “

WOO YOUNG HONG, ING

High caliber presentations; high caliber audience. Interesting Sheldon MILLS Jeremie SNEESSENS conversations both during the Competition and Markets McKinsey & Company Authority, London panel presentations and during coffee breaks! “

MICHAEL WEINER, Dechert

Mélanie THILL-TAYARA Michael WEINER The discussions on the Dechert, Paris Dechert, New York remedies panel were thought provoking and confirmed that purchaser approval process is clearly closely monitored by both the EC and the Monitoring Trustee. “

NASOUL GOPAL, Smith and Williamson

4TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 2 DECEMBER 2016 - PARIS 18 885 Avenue of the Americas # 32 G 68 rue Amelot 10001 New York, NY – USA 75011 Paris - France