Covington’s four-part video series offers snapshot briefings on key emerging trends in UK Competition Law. In the first part, James Marshall and Sophie Albrighton focus on current trends in merger control. They are joined by guest speaker Louise Nash, Corporate Partner in Covington’s London office with over 20 years’ experience of global acquisitions, divestitures
Proposals published for radical overhaul of UK competition regime following Brexit
On 16 February, John Penrose MP published his long-awaited report into the UK’s competition regime. Penrose was tasked by the UK Government with reviewing how the UK’s competition regime can:
- Play a central role in meeting the challenges of the post COVID-19 economy and in driving recovery. The Government’s Policy Paper stated that “the pandemic is the biggest threat the UK has faced in decades and overcoming it will require all the dynamism and creativity that exists across all sectors and in all regions and nations of the UK“;
- Contribute to the Government’s aim of levelling up across all nations and regions of the UK;
- Increase consumer trust, including by meeting the Conservative Party’s 2019 Manifesto commitment to tackle bad business practices, and ensure the competition regime is strong, swift, flexible and proportionate;
- Support UK disruptors taking risks on new ideas and challenging incumbents; and
- Make best use of data, technology and digital skills which are vital to the modern economy.
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UK Supreme Court lowers the bar for collective actions
The UK Supreme Court has today ruled in favour of Walter Merricks, the former head of the UK Financial Ombudsman Service., in a hotly-anticipated judgment in the first opt-out competition class action brought in the UK.
Background
Mr Merricks is the proposed class representative for 46.2 million people who, between 22 May 1992 and 21 June 2008, purchased goods and/or services from businesses in the UK that accepted MasterCard cards. Mr Merricks has valued that claim at in excess of £14 billion (and this sum will likely now be even greater, with interest having continued to run since the claim was filed in September 2016). Our commentary on the earlier Court of Appeal decision in the case, with which the Supreme Court largely agreed, can be found here.
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UK CMA Published Recommendations for the Regulation of Digital Markets
The UK Competition and Markets Authority (“CMA”) has published advice to the UK Government on the design and implementation of a new regulatory regime for digital markets. The new regime, if implemented, will apply to certain digital businesses that are designated as having Strategic Market Status, or “SMS”. It will provide for ex ante regulation that governs the conduct of key aspects of SMS firms’ activities, including a mandatory merger filing regime for SMS firms. The new regime will be administered by a new Digital Markets Unit (“DMU”) that will sit within the CMA.
The CMA’s recommendations are released at a time when scrutiny of, and regulatory changes for, digital markets are common across a number of jurisdictions. This includes the EU where the Digital Services Act and Digital Markets Act are expected to be published before Christmas. This blog post highlights some key elements of the proposed new digital markets regime.
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UK FDI: National Security and Investment Bill is Published
Major Development in UK Foreign Investment Law and Policy
The UK government has published long-awaited draft legislation that, if made law, will introduce significant new powers to scrutinise Foreign Direct Investment (“FDI”). The National Security & Investment Bill (the “NSI Bill” or the “Bill”), is proposed to introduce mandatory filing obligations and pre-clearance requirements for all transactions in the most sensitive sectors, irrespective of transaction value and without the application of any other de-minimis thresholds.
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UK is left out of EU cooperation on Foreign Direct Investment, and will soon be “foreign”
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.
UK Introduces Targeted New Powers to Scrutinise Foreign Investment
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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Competition law in the time of coronavirus: UK regulators’ response and approach to the COVID-19 pandemic
As we now enter the third week of lockdown in the UK, this blog post rounds-up the steps that the UK Competition and Markets Authority (CMA) and certain other regulators have taken to address the unprecedented challenges facing the country. This includes targeted relaxation of certain elements of the rules to facilitate essential forms of coordination, for example in relation to grocery supply, in addition to wider guidance on the CMA’s approach to enforcement in respect of COVID-19-related cooperation between competitors.
While certain, limited, forms of competition may be necessary to address critical supply challenges, getting such cooperation ‘right’ from a competition perspective can be complex. Firms should be aware that competition law continues to remain in force and that regulators have resolved to act against those who take advantage of the current crisis by breaching competition rules.
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