Competition law appears to be at an inflection point. Over the past year, authorities, policy makers, and commentators across the globe have debated whether current laws and enforcement approaches are appropriately calibrated or whether they should be changed, including to try to protect interests that go well beyond the consumer welfare standard that has been
We recently presented to DG COMP the findings of the immunity and leniency survey 2020, which was conducted jointly by Covington and the Brussels School of Competition. The survey ran from December 2019 to March 2020 and asked competition law practitioners, enforcers and in-house counsels to share their observations on the perceived decline in immunity…
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.
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.…
Continue Reading UK Supreme Court lowers the bar for collective actions
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.…
Continue Reading UK CMA Published Recommendations for the Regulation of Digital Markets
Covington’s Brexit Task Force is pleased to offer the next installment in a series of on-demand briefings focused on the impact of Brexit on business.
The CMA after the Brexit Transition Period
In this briefing, James Marshall and Thomas Reilly discuss the impact of Brexit on the future role of the UK CMA and highlight…
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:
- 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
- expand the definition of “person”, creating new filing obligations for certain entities, including many investment entities.
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 The European Commission Adopts a White Paper on Foreign Subsidies to Protect the EU Single Market
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.
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.
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.
Continue Reading The CMA’s Guidance on Merger Assessments During the Coronavirus (COVID-19) Pandemic and Recent CMA Cases