New era of FDI in the European Union – EU FDI Regulation now in full force and effect

By Peter Camesasca, Horst Henschen, Katherine Kingsbury and Sarah Hachmeister on Posted in Foreign Direct Investment, Regulation

On October 11, 2020, the EU FDI Screening Regulation (EU) 2019/452 – the “Regulation”) entered fully into force.

The Regulation, which was approved and adopted in March 2019, establishes a framework for the screening of foreign direct investments (“FDI”) by EU Member States in which decision-making powers rest at the Member State level. Significantly, from October 11, an element of EU-level cooperation in FDI is introduced and in particular will bring into effect (i) regular information sharing among Member States and the European Commission about transactions subject to national FDI screening, and (ii) a mechanism through which other Member States and the European Commission can coordinate and comment on FDI that has an “EU-dimension”.

In this blogpost, we look at the overall status of national measures in FDI at this juncture and describe in overview the EU-level cooperation and information sharing mechanisms. Continue Reading

U.S. Antitrust Agencies Announce Proposed Changes to HSR Rules

By Covington Competition on Posted in Competition Law, Mergers, US Competition law

Changes Would Create New Exemption for Minority Acquisitions and Increase Filing Obligations for Certain Entities

Agencies Also Seek Public Comments that Could Lead to Additional Changes to the HSR Rules

The Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice (“DOJ”) (the “Agencies”) announced proposed changes to the premerger notification rules (“Rules”) promulgated under the Hart-Scott-Rodino (“HSR”) Act on September 21, 2020. Although the Agencies’ proposals are extensive, most significantly they would:

  1. create a new exemption for certain acquisitions that result in holding 10% or less of the voting securities of a target, so long as the acquirer and target do not “already have a competitively significant relationship;” and
  2. expand the definition of “person”, creating new filing obligations for certain entities, including many investment entities.

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The European Commission Adopts a White Paper on Foreign Subsidies to Protect the EU Single Market

By Sophie Bertin and Peter Camesasca on Posted in Competition Law, European Commission, European Union, State Aid

On 17 June 2020, the European Commission (‘Commission’) published a White Paper “on levelling the playing field as regards foreign subsidies” which outlines a proposal for a series of new investigatory and enforcement tools, intended to identify and counteract the possible distortions of competition in the EU single market due to foreign subsidies. A public consultation ran until 23 September 2020, inviting stakeholders to provide their views on the options set out in the White Paper. Continue Reading

UK is left out of EU cooperation on Foreign Direct Investment, and will soon be “foreign”

By Peter Camesasca, James Marshall, Katherine Kingsbury and Greg Lascelles on Posted in Competition Law, Foreign Direct Investment

The EU Regulation on Foreign Direct Investment (2019/452) (the “EU FDI Regulation”) will enter into force fully on October 11, 2020. Most notably, on this date, a cooperation and information sharing mechanism among Member States and the European Commission in respect of foreign direct investment (“FDI”) that has an ‘EU-dimension’ will come into effect.

As October 11 approaches, there is renewed attention on how the EU cooperation and information sharing mechanism will operate in practice and impact upon transactions entered into by foreign investors in the EU.

In addition, many EU Member States have been making preparations to ensure that their domestic laws permit the gathering and sharing of information on FDI to a degree necessary to engage in such cooperation activities among EU partners and the European Commission. In Sweden, for example, a recent legislative proposal has provided for implementation of the EU FDI Regulation in the near-term, while wider ranging measures that will otherwise enhance and update FDI laws and screening powers in Sweden are proposed to be brought into law at a later date.

In this blogpost, we consider the implementation of the EU FDI Regulation in the UK particularly, and in light of the forthcoming end to the Brexit transition period.

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The CMA’s approach to jurisdiction in recent merger cases

By Miranda Cole and Rolf Ali on Posted in Competition Law, Mergers, United Kingdom

The Enterprise Act 2002 (“EA02”) affords the CMA broad discretion in asserting jurisdiction over mergers that may affect a UK market. Under the EA02, a relevant merger situation (“RMS”) exists where (i) two or more enterprises cease to be distinct; and (ii) either the UK turnover of the target exceeds £70 million (the “turnover test”) or the parties supply or acquire at least 25% of a particular good or service in the UK (the “share of supply test”).

The first limb of the RMS test can be satisfied by the acquisition of de jure control, of de facto control (where it is able to control another company’s policy without holding a majority of the voting rights) or of material influence (where it can directly or indirectly materially influence policy without having a controlling interest ). The material influence test continues to be subject to significant debate.

The second limb of the RMS test aims to ensure that a transaction has sufficient nexus to the UK. The share of supply test is designed to enable the review of transactions which, while they do not trigger the turnover test, are of competitive significance in the UK. This share of supply test has been central to the CMA’s expansive assertion of jurisdiction in a number of recent cases. In Amazon/Deliveroo the CMA took an expansive approach to the notion of material influence. In Sabre/Farelogix the CMA adopted an expansive interpretation of what constitutes the supply of services in the UK, and it also took an expansive approach to the share of supply test in each of Roche/Spark and Google/Looker.

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The CMA’s Guidance on Merger Assessments During the Coronavirus (COVID-19) Pandemic and Recent CMA Cases

By Miranda Cole and Jérôme de Ponsay on Posted in Competition Law, COVID 19, Mergers

On 22 April 2020, the UK Competition and Market Authority (“CMA”) published its guidance on ‘Merger assessments during the Coronavirus (COVID-19) pandemic’ (“the guidance”). Prior to the publication of the guidance, there was some speculation about whether the CMA would be more willing to accept ‘failing firm’ arguments as the economic impact of COVID-19 hit home. However, while the CMA has, as it acknowledged, “been working closely with the government to relax competition law where appropriate”, the guidance and a number of recent CMA cases make it clear that the CMA is not relaxing its merger assessments in response to COVID-19.

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The European Commission launches an antitrust sector inquiry into the sector of Internet of Things for consumer-related devices and services

By Kevin Coates, Johan Ysewyn and Andrea Zulli on Posted in Antitrust, Competition Law, Internet of Things (IoT)

On 16 July 2020, the European Commission (“Commission”) announced that it has launched an antitrust sector inquiry into “consumer-related products and services that are connected to a network and can be controlled at a distance, for example via a voice assistant or mobile device.”

Commission Executive Vice President and Competition Commissioner Vestager said that “[t]he sector inquiry will cover products such as wearable devices (e.g. smart watches or fitness trackers) and connected consumer devices used in the smart home context, such as fridges, washing machines, smart TVs, smart speakers and lighting systems. The sector inquiry will also collect information about the services available via smart devices, such as music and video streaming services and about the voice assistants used to access them.” Connected cars are outside of the scope of the inquiry. Continue Reading

The revision of the Vertical Block Exemption Regulation – What is likely to change?

By Johan Ysewyn and Daniel Muheme on Posted in Antitrust, Competition, Competition Law, Competition Law in Europe, E-Commerce, European Commission, Regulation, Supply Chain, Vertical agreements

Introduction

On 25 May 2020, the European Commission (“Commission”) has published its Final Report of the support studies for the evaluation of its Vertical Block Exemption Regulation (“VBER”) and the accompanying Guidelines on Vertical Restraints (the “Final Report”). The Final Report was published following a public consultation from 4 February to 27 May 2019 to gather views on the VBER’s functioning in the digital age. This was inspired by the growing importance of e-commerce and the interest in various online companies. This evolution has affected distribution and pricing strategies for both manufacturers and retailers, which the Commission decided warranted an evaluation of some of the current rules. Continue Reading

UK Introduces Targeted New Powers to Scrutinise Foreign Investment

By James Marshall, Greg Lascelles, Katherine Kingsbury and Peter Camesasca on Posted in Foreign Direct Investment, United Kingdom

On June 22, 2020, the UK Government introduced legislation to Parliament that further strengthens its ability to intervene in transactions on national security and other public interest grounds.

Specifically, the UK Government has sought additional powers to intervene in transactions where there is need to preserve the capability of the UK to respond to a public health emergency or mitigate its effects. These new powers relating to public health emergencies came into effect on June 23, 2020. This development in the UK is the latest in a line of measures introduced in other European jurisdictions to tighten foreign direct investment (FDI) screening rules in the context of the COVID-19 pandemic.

In addition, the UK Government took this opportunity to propose expanding the list of sectors for which lower intervention thresholds apply in the UK, to include artificial intelligence, cryptographic authentication technology and advanced materials. These measures relating to critical technology sectors will come into effect at a later date, following Parliamentary debate and approval by both Houses of Parliament.

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The New Normal? EU Commission Prepares a New Competition Enforcement Tool Aiming at Structural Competition Concerns

By Johan Ysewyn and Martin Juhasz on Posted in Antitrust, Competition Law, Enforcement, European Commission

The European Commission (”Commission”) is preparing the ground for a new competition enforcement tool. This new tool could substantially extend the competition authority’s current enforcement powers and allow for far-reaching intervention where the Commission identifies structural competition concerns. In particular, following the proposal, the standard for intervention could be lowered significantly as the Commission may no longer be required to establish dominance in order to impose behavioural or structural remedies on a company.

Executive Vice-President Margrethe Vestager, in charge of competition policy, explained “that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules.” She stated that the Commission “is seeking the views of stakeholders to explore the need for a possible new competition tool that would allow addressing such structural competition problems. Continue Reading

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