Mergers

Subscribe to Mergers

On September 29, 2022, the U.S. House of Representatives passed a package of three antitrust bills (H.R. 3843) by a vote of 242-184. The package includes: (1) the Merger Filing Fee Modernization Act; (2) the Foreign Merger Subsidy Disclosure Act; and (3) the State Antitrust Enforcement Venue Act.…

Continue Reading U.S. House of Representatives Passes Antitrust Legislative Package

On 22 June 2022, the EU’s General Court (“GC”) fully dismissed thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision to block its proposed joint venture (“JV”) with Tata Steel in 2019.

This is the first time that the GC has considered the prohibition of a “gap” case under the EU Merger Regulation (“EUMR”) since it annulled the Commission’s prohibition of CK Hutchison’s proposed acquisition of Telefónica UK (O2) in 2020 (“CK Hutchison”) (see our previous blog post here). A “gap” case is a merger in an oligopolistic market that does not result in the creation or strengthening of an individual or collective dominant position. Rather, it risks causing a “significant impediment to effective competition”.

This result may indicate a return to a more traditional approach by the GC as regards “gap” cases than that demonstrated in the CK Hutchison judgment. The judgment also provides helpful guidance on the interpretation of the EUMR and other legal instruments (such as the Market Definition Notice and the Notice on Remedies). The key findings are:

  • Standard of proof: In order to block a “gap” merger, the Commission must show with a sufficient degree of probability that the transaction significantly impedes effective competition in the internal market or in a substantial part of it.
  • SSNIP test: The Commission is not required to apply the SSNIP (small but significant and non-transitory increase in price) test when assessing substitutability between products — it is only one of the methods available to the Commission when defining the market.
  • Remedies: When assessing remedies, it is not necessary to demonstrate that the remedies remove the entire overlap between the merging parties or re-create fully the pre-merger structure in affected markets.
  • Requests for Information (“RFI”): There is no procedural error where the Commission fails to take additional steps (beyond sending systematic reminders) to ensure that recipients respond to an RFI.

…
Continue Reading EU General Court Upholds Tata Steel/thyssenkrupp JV Prohibition

When its Anti-Monopoly Law (“AML”) went into effect in August 2008, China immediately became a significant antitrust enforcer on the world stage.  On June 24, 2022, the National People’s Congress, China’s top legislature, passed the Amendment to the Anti-Monopoly Law of the PRC (the “Amendment”), the first significant changes to the AML in nearly fourteen years.  The Amendment, which was signed into law by President Xi Jinping and published on June 24, will become effective on August 1.  It marks a major milestone in antitrust enforcement in China.

The more significant aspects of the Amendment include:

  • significantly enhanced penalties for AML violations, including the introduction of fines for individuals;
  • the introduction of a discretionary “stop-the-clock” mechanism for merger reviews;
  • the codification of a burden-shifting framework created by China’s courts that gives companies the opportunity to defend resale price maintenance agreements; and
  • new safe harbor and burden of proof provisions for matters involving vertical agreements.

Consistent with trends in other jurisdictions around the world, the Amendment also features a special focus on key economic sectors such as the digital economy.

Following the publication of the Amendment, the State Administration for Market Regulation (“SAMR”), China’s lead antitrust enforcement authority, released six sets of draft implementing regulations for public comment.  These cover subjects such as merger control and notification thresholds, anti-competitive agreements, abuse of a dominant market position, and the abuse of intellectual property rights to exclude or restrict competition.  SAMR is accepting comments on these regulations until July 27, 2022.

How Covington Can Help

Covington’s global antitrust and competition practice guides clients through the often-complex web of antitrust and competition laws around the world to help them secure their most important business objectives. Our team, which includes many attorneys who have served in senior leadership roles at government enforcement agencies and in in-house positions, has decades of collective experience advising clients regarding their global antitrust and competition concerns.  If you have any questions concerning the material discussed in this client alert, please contact any of the following members of our Antitrust/Competition practice: Jim O’Connell, James Marshall, and Alexander Wang.

This communication is intended to bring relevant developments to the attention of Covington & Burling LLP’s clients and other interested colleagues. It is not intended as legal advice. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein. Please send an email to unsubscribe@cov.com if you do not wish to receive future emails or electronic alerts.…

Continue Reading Significant Changes to China’s Anti-Monopoly Law to Take Effect in August

When the UK left the EU on 31 December 2020, the Competition and Markets Authority (“CMA”) gained new powers, functions and responsibilities previously exclusively reserved to the European Commission (the “Commission”).

This blog explores how the CMA has tackled its increased workload in the first year post-Brexit, under the shadow of the global pandemic, and the extent to which the CMA’s practice has diverged from EU law.…

Continue Reading Trends, developments and divergence from EU law? The CMA’s first year as a global competition authority

Yesterday, the Federal Trade Commission (“FTC”) published revised thresholds for the Hart-Scott-Rodino (“HSR”) Act, which will take effect on February 23, 2022. Earlier, the FTC also announced new thresholds for Section 8 of the Clayton Act, which governs interlocking directorates. Each of these thresholds is higher for 2022, than for 2021. The HSR Act and Section 8 thresholds are adjusted annually based on the change in gross national product. The maximum daily civil penalty for violations of the HSR Act, which is tied to inflation, has also increased.
Continue Reading FTC Announces New Higher HSR Filing and Interlocking Directorate Thresholds, Higher Civil Penalties

The UK’s new National Security & Investment Act (NSIA) will come into force on January 4, 2022. The Act introduces mandatory notification and pre-clearance requirements applicable to certain acquisitions within 17 key sectors including energy, life sciences and technology.

In order to administer the Act, the Department for Business, Energy and Industrial Strategy (BEIS) has…

UK Government Confirms Commencement Date and Scope of NSI Regime

The UK Government has announced that the National Security & Investment Act (“NSIA”) will come into force on January 4, 2022. The NSIA introduces mandatory notification and pre-clearance requirements for certain qualifying acquisitions of control of companies active in 17 ‘core’ sectors.  The NSIA also enhances the powers of the UK Government to call-in for review other transactions which fall outside the mandatory notification regime but where national security concerns are considered to arise. The NSIA applies to all investors, irrespective of nationality, including those from the UK.  To support the legislation, the UK Government has established an Investment Security Unit (“ISU”) within the Department of Business, Energy and Industrial Strategy (“BEIS”) to manage and lead the assessment of filings that are received, including voluntarily, under the NSIA regime. An overview of the NSIA is provided in our earlier blogs – UK National Security and Investment Bill is published and the National Security & Investment Law is approved by Parliament.…

Continue Reading Update on the UK’s National Security and Investment Act – what investors need to know

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…

The Federal Trade Commission (“FTC”) announced on February 4, 2021, that it is temporarily suspending the discretionary practice of granting “early termination” of the Hart-Scott-Rodino (“HSR”) Act waiting period, with support from the Antitrust Division of the U.S. Department of Justice (“DOJ”). The Agencies cited “the unprecedented volume of HSR filings” and “challenging transition period” as the reasons for suspending grants of early termination.
Continue Reading Early Termination of HSR Waiting Periods Temporarily Suspended

Today, the Federal Trade Commission (“FTC”) published revised thresholds for the Hart-Scott-Rodino (“HSR”) Act, which will take effect on March 4, 2021. Earlier, the FTC also announced new thresholds for Section 8 of the Clayton Act, which governs interlocking directorates. Each of these thresholds is lower for 2021, than for 2020. This is only the second time the HSR Act thresholds, which—like the Section 8 thresholds—are indexed to gross national product, have fallen since annual adjustments began in 2005. In contrast, the maximum daily civil penalty for violations of the HSR Act, which is tied to inflation, has increased.
Continue Reading FTC Announces New Lower HSR Filing and Interlocking Directorate Thresholds, Higher Civil Penalties