United Kingdom

A. Cartel investigation and director disqualifications.

In March 2021, three additional company directors were disqualified for several years, following a cartel investigation of their companies by the UK Competition and Market Authority (CMA).

The CMA’s investigation of leading rolled-lead manufacturers Associated Lead Mills and Royston Sheet Metal (both owned by International Industrial Metals) and H.J. Enthoven (owned by Eco-Bat Technologies and trading as BLM British Lead) (BLM) culminated in an infringement decision and penalties totaling £9 million (approx. EUR 10.5 million, USD 12.5 million). A key finding was that the infringements had taken place at a very senior level, involving directors who concealed actions that they knew, from having undergone competition compliance training, were in breach of competition law.

Although the companies settled the investigation, the three directors were still disqualified. Two directors who had been directly involved in the infringements were disqualified from being directors and from holding other roles in relation to companies for six and a half and four years, respectively. A third director who had been aware of the infringement but took no steps to prevent it was disqualified for three years. These disqualifications reflect the CMA’s continuing policy of considering director disqualification in most if not all cartel cases.

B. Mergers

Notable developments in UK merger control in March 2021 include:

• The CMA’s announcement on March 25, 2021, that it would refer the completed acquisition by Facebook, Inc. of Giphy, Inc. to an in-depth phase 2 review, unless the parties offer acceptable undertakings to address the CMA’s concerns. Giphy is an online database and search engine that allows users to share GIFs and stickers, including via Facebook and rival platforms. The CMA’s phase 1 investigation raised concerns that the transaction would result in a reduction in competition in display advertising and vertical foreclosure, as Giphy could stop supplying GIFs to rival platforms.

• The CMA’s provisional findings, published March 24, 2021, in its phase 2 investigation into the anticipated merger between Crowdcube Limited and Seedrs Limited and the abandonment of the transaction the following day. The parties are the two leading providers of equity crowdfunding (ECF) platforms in the UK, and the CMA provisionally concluded that the merger may be expected to result in a substantial lessening of competition in the market for the supply of ECF platforms to small- or medium-sized enterprise (SMEs) and investors in the UK.

• On March 29, 2021, proving that not all “tech” deals require in-depth scrutiny, the CMA announced its phase 1 unconditional clearance decision in relation to the anticipated acquisition by Uber Technologies, Inc. of GPC Computer Software Limited (Autocab). Autocab supplies booking and dispatch technology software to taxi companies. It also operates a referral network for taxi and private hire operators.

European Union

A. European Commission

On March 26, 2021, the Commission published a Notice on referrals under Article 22 of the EUMR, i.e., referrals made at the request of national competition authorities (or by invitation of the Commission itself). Under its previous policy, the Commission discouraged referrals from Member States that had no jurisdiction to review the transaction. Thus, the provision has rarely been used when the deal was not notifiable in the referring Member State (Sara Lee/P&G case). However, on Sept. 11, 2020, Commissioner Vestager stated that, in order to extend merger control rules to such transactions, the Commission will start accepting referrals from national competition authorities of mergers that are worth reviewing at the EU level – whether or not national thresholds are met.

According to the Commission’s notice, the categories of cases that will normally be appropriate for a referral under Article 22 EUMR, where the merger is not notifiable in the referring Member State(s), consist of transactions where the turnover of at least one of the undertakings concerned does not reflect its actual or future competitive potential. For instance, cases where the undertaking: (1) is a start-up or recent entrant with significant competitive potential that has yet to develop or implement a business model generating significant revenues; (2) is an important innovator or is conducting potentially important research; (3) is an actual or potential important competitive force; (4) has access to competitively significant assets (e.g., raw materials, infrastructure, data or intellectual property rights); and/or (5) provides products or services that are key inputs/components for other industries. In its assessment, the Commission may also consider how the value of the consideration received by the seller compares to the turnover generated.

While the referral is subject to the deadlines set out in Article 22, the fact that a transaction has already been closed does not preclude a Member State from requesting a referral. However, the Commission would generally not consider a referral appropriate where more than six months has passed after the implementation of the concentration.

B. State aid: the CJEU dismisses the appeal brought by the Commission against the General Court’s judgment in the Tercas case.

On March 2, 2021, the EU Court of Justice (CJEU) upheld the March 19, 2019, judgment of the General Court (GC), by which the latter annulled a Commission decision finding that certain measures (a financial contribution and guarantees) granted by the Italian deposit guarantee fund (FITD) to an Italian bank, Banca Tercas, were incompatible state aid. The CJEU confirmed the decision of the General Court that the measures at issue did not qualify as State aid because they did not entail the use of State resources and were not imputable to the State.

In its judgment, the CJEU dismissed the Commission’s argument that the GC set a higher standard of proof for demonstrating that a measure was imputable to the State where that measure was granted by a private entity – such as FITD, a consortium of Italian banks governed by private law – rather than by a public undertaking. Conversely, the CJEU pointed out that the Italian legislation did not confer to a public entity, namely the Italian Banking Authority (Banca d’Italia), the power to influence the content of the measures taken by FITD. Moreover, following the opinion given by AG Tanchev, the CJEU stressed that the elements adduced by the Commission did not demonstrate that the measures were imputable to the State, especially in light of the limited role of the Bank of Italy in the context of the adoption of said measures. Finally, the CJEU dismissed the argument of the Commission that the GC had not considered the elements of proof globally but rather examined them in an “atomistic” manner.

C. CJEU annuls the judgment of the General Court (GC) in the Fútbol Club Barcelona case.

On July 4, 2016, the Commission found that Spain had granted an unlawful and incompatible aid in favor of four football clubs by introducing a tax regime providing for a preferential corporate tax rate for clubs operating as nonprofit legal persons (as opposed to those operating as public limited companies). Such decision was then set aside by the GC which – in its judgment dated Feb. 26, 2019 – found that the Commission had not proved to the requisite legal standard the existence of an economic advantage conferred on the beneficiaries of the measure at issue.

On March 4, 2021, the CJEU annulled the aforesaid GC judgment, finding that the GC erred in law when it found that the Spanish measure had to be classified both as an individual aid and an aid scheme whereas – in the CJEU’s view – the measure had to be qualified solely as an aid scheme. That said, the CJEU found that such error in law invalidated the GC’s reasoning as to the standard of proof applicable to the Commission’s assessment of the advantage.

According to the CJEU, the GC erroneously required the Commission to assess the individual situation of each beneficiary in order to verify whether certain deductions available to beneficiaries were capable of offsetting the advantage deriving from the preferential tax rate. Given the above, the CJEU concluded that the aid scheme at issue was, from the time of its adoption, liable to favor clubs operating as nonprofit entities over clubs operating as public limited sports companies, thereby conferring on them an advantage.