United Kingdom

Merger control

 Interim measures rules revised.

Although the UK merger regime permits acquisitions to be completed without CMA clearance, the CMA can investigate a completed merger any time up to four months from the later of completion of the transaction and public announcement of the transaction. This intervention power is reinforced through the CMA’s power to impose interim measures on the acquirer, requiring it to suspend integration of the target until the CMA’s investigation has completed and clearance has been granted. The CMA’s increasingly strict use of this power, in imposing penalties for non-compliance and refusing derogations from the acquirer’s “hold-separate” obligations, has been the subject of challenge recently. In December 2021, the CMA published guidance to clarify when interim measures will apply and the steps the parties must take to ensure compliance.

JD Sports/Footasylum.

On Dec. 6, 2021, the CMA provisionally approved JD Sports’ divestment of Footasylum, after a prolonged engagement lasting over two years. The CMA’s investigation of the completed acquisition started in mid-2019 and, after a phase 2 investigation, led to a decision in mid-2020 to block the transaction. JD Sports appealed this prohibition to the CAT, which upheld JD Sports’ claim that the CMA had acted irrationally by failing to make sufficient inquiries about the impact of the COVID-19 pandemic on Footasylum. The CMA failed in its appeal of the CAT’s decision in the Court of Appeal. As a result, CMA’s decision blocking the transaction was quashed, and a fresh investigation of the acquisition resulted in a new CMA decision, on Nov. 4, 2021, to block the transaction. Shortly afterwards, on Nov. 8, the CMA announced it was investigating JD Sports and Footasylum for breach of the interim measures put in place at the start of CMA’s second investigation. This is the second such investigation, the first one having ended with the CMA withdrawing in October 2020 the £300,000 penalty imposed on JD Sports in July 2020.

Veolia/Suez.

Standing out from a number of pre-holiday merger clearances, Veolia’s proposed public takeover of Suez has been referred for a phase 2 investigation based on CMA concerns that it would result in a loss of competition in the supply of certain waste and water management services in the UK, leading to higher costs to local authorities and taxpayers. The CMA had offered Veolia the option of providing undertakings in lieu of a reference to resolve these concerns, but Veolia opted to proceed to phase 2, which is scheduled to conclude June 6, 2022.

Cargotec/Konecranes.

This proposed merger involves the first phase 2 investigation the CMA has conducted in parallel with a review by the European Commission since Brexit. The merger is also being reviewed by a number of other competition authorities, and the CMA has engaged with them and the European Commission to progress its investigation. On Nov. 26, 2021, after the parties opted to use the UK fast-track procedure to phase 2, the CMA issued its provisional findings. The deadline for the CMA’s final decision is April 1, 2022.

Circle Health/BMI Healthcare.

Circle Health completed its acquisition of BMI in January 2020 and, after a CMA phase 1 investigation, agreed to avoid a phase 2 investigation and resolve the CMA’s competition concerns by undertaking to divest two of its own businesses. The undertakings were provided to the CMA in June 2020, but Circle was unable to find a buyer for one of the divestment businesses within the relevant deadline. It applied to the CMA to vary the undertakings, on the basis of a change in circumstances since the undertakings were originally given. On Nov. 26, 2021, the CMA issued a provisional finding report indicating it was inclined to accept that there had been a change in circumstances and to agree to alternative remedies. Its final decision is due in February 2022.

New national security rules affecting merger timetables.

On Jan. 4, 2022, a mandatory filing regime began for acquisitions of 25% or more of any business operating in one of the below-listed 17 sectors. This regime will impact merger timetables because completion of any transaction subject to the regime is prohibited until the UK Secretary of State has granted approval.

Antitrust Investigations – penalties.

On Dec. 16, 2021, the CMA published its revised Guidance as to the appropriate amount of a penalty (CMA73). While confirming that the CMA is not bound by previous cases, the guidance also confirms that the CMA should ensure there is broad consistency in its approach to cases. It highlights the CMA’s duty in multi-party cases to observe the procedural requirements of fairness and rationality and provides more detail on its approach to assessing whether a penalty presents sufficient deterrence, is proportionate, and the basis on which it will reduce a penalty on grounds of financial hardship.

Antitrust litigation.

The CMA has for the first time joined a private antitrust action as an interested third party. On Dec. 6, 2021, the CAT gave it provisional permission to intervene in an action by Epic Games against Google.

European Union

 European Commission

European Commission fines certain European money center banks for taking part in forex trading cartel.

On Dec. 2, 2021, the European Commission announced the completion of its cartel investigation into the Foreign Exchange (Forex) spot trading market and imposing of fines totaling EUR 334 million on certain European money center banks. One bank received a 100% discount of its fine as a successful immunity applicant; and others received discounts under the European Commission’s Leniency Notice and the Commission’s Settlement Notice.

The European Commission’s investigation revealed that some traders of the Forex spot trading of G10 currencies – the most liquid and traded currencies worldwide – acting on behalf of the banks fined, had exchanged sensitive information and trading plans, and had sometimes coordinated their trading strategies online in violation of the cartel prohibition of article 101 TFEU. The information exchanges enabled traders to make informed market decisions whether and when to sell or buy the currencies in their portfolios, as opposed acting independently with the risk inherent to these decisions.

European Commission conditionally approves the proposed acquisition by Veolia of Suez.

On Dec. 14, 2021, the European Commission announced it had approved the proposed acquisition by Veolia of Suez, subject to conditions. The parties are leading players in the water treatment and waste management sectors. The approval is conditional upon full compliance with a divestment package offered by Veolia in relation to the water and waste markets.

The European Commission’s investigation revealed that the transaction as initially notified would have led to competition concerns such as significant horizontal overlaps in various markets in France and the European Economic Area. This would have risked eliminating the competitive pressure exerted by Suez on Veolia and created a market leader at a European and national and/or local level.

EU Policy Developments

European Parliament greenlights EU Digital Markets Act.

On Dec. 15, 2021, the European Parliament adopted its position on the proposal for a Digital Markets Act (DMA) by giving approval to begin negotiations with EU Member States on rules setting out what big online platforms will be allowed to do within the EU. The DMA is a European regulation on contestable and fair markets in the digital sector that seeks to address the negative consequences arising from platforms acting as digital “gatekeepers” to the internal market. The Parliament has found the platforms have the power to act as private rule-makers that can create bottlenecks between businesses and consumers. Therefore, the DMA sets out rules defining and prohibiting unfair practices by gatekeepers and providing an enforcement mechanism based on market investigations. The mechanism aims to ensure that the obligations set out in the regulation are kept current in the evolving digital sphere.

EU-US Joint Technology Competition Policy Dialogue launched.

On Dec. 7, 2021, the European Commission, the United States Department of Justice Antitrust Division, and the United States Federal Trade Commission launched the EU-US Joint Technology Competition Policy Dialogue (Joint Dialogue), which—in addition to other cooperation efforts—is intended to collaborate to ensure and promote fair competition. In the Joint Dialogue, mutual interest was reaffirmed in cooperating on competition policy and enforcement overall and especially in the technology sector. This cooperation will include sharing insights and experience to coordinate as much as possible on policy and enforcement.

Through the Joint Dialogue, the agencies also intend to explore new ways to facilitate coordination and knowledge and information exchanges to ensure that enforcement authorities are sufficiently equipped to address new challenges together. In addition to enhancing enforcement and policy coordination, the Joint Dialogue will help inform similar domestic efforts, potentially contributing to greater alignment on these issues.

European Commission publishes first annual report on screening foreign direct investments into the EU.

On Nov. 23, 2021, the European Commission published its first annual report regarding the application of the EU Foreign Direct Investment (FDI) Screening Regulation. Prior to the Regulation taking effect Oct. 11, 2020, there was no EU-wide formalized cooperation among EU Member States, and the European Commission had no role in screening FDI into the EU.

Highlights from the report include: FDI figures and trends, legislative developments in EU Member States, screening activities by EU Member States in 2020, an overview of the Regulation’s cooperation mechanism from Oct. 11, 2020 until June 30, 2021, and the impact of the Regulation since its full implementation.

EU Platform Work Package.

On Dec. 9, 2021, the European Commission proposed a Platform Work Package (PWF) to improve the working conditions in platform work and to support the sustainable growth of digital labor platforms in the EU. These new rules aim to ensure that people working through digital labor platforms can enjoy the labor rights and social benefits they are entitled to. The PWF consists of a communication, a proposal for a directive, and draft guidelines.

The draft guidelines clarify the application of EU competition law to collective agreements of solo self-employed people (i.e., independent contractors), including those working through digital labor platforms. The draft guidelines aim to bring legal certainty and ensure that EU competition law does not obstruct worker efforts to collectively improve their working conditions, including remuneration in cases where they are in a relatively weak position (e.g., where they face a significant imbalance in bargaining power). As article 101 TFEU prohibits agreements that restrict competition, the European Commission recognized a need to clarify that EU competition law does not stand in the way of such collective agreements.

European Court of Justice (ECJ) answers a preliminary question regarding the principle of effective legal protection set forth in article 19 TEU (Treaty on EU).

On Dec. 21, 2021, the ECJ answered a preliminary question raised by the Italian Court of Cassation regarding whether an Italian domestic constitutional law that does not allow individual parties to challenge Italy’s highest administrative court conforms to the ECJ and is compatible with 19 TEU.

The ECJ ruled that such a provision is consistent with EU law. Indeed, given the EU principle of procedural autonomy, each Member State is entitled to establish procedural rules for remedies to ensure effective legal protection for individuals in any of the fields covered by EU law, provided (i) such rules are not less favorable than those applied in similar domestic situations (principle of equivalence) and (ii) they do not make it impossible or excessively difficult in practice to exercise the rights conferred to individuals by EU law (principle of effectiveness).

Nevertheless, the Court pointed out that the solution adopted by Italian law does not affect the right of individuals – who may have been harmed by the infringement of their right to an effective remedy as a result of a decision of a court of last instance – to invoke the responsibility of the Member State, provided that the conditions laid down by EU law to that effect are satisfied.