European Competition Law Update

Transcription

1 European Competition Law Update Merger Control: EU & UK Developments Keith Jones Laura Cleminson Wedneday 13 March 2013

2 EU Merger Control Statistics and the 5 Merger Control Myths

3 Overview of Commission merger cases over time - notifications Yearly notifications

4 Overview of Commission merger cases over time - clearances Year Jan 2013* Notifications Remedies (Phase I) Remedies (Phase II) Cleared (Phase II) Prohibited *Statistics published by the European Commission on its official website ( as of 31 January

5 1. They don t know my business Dictating to the Commission is unlikely to be helpful UPS/TNT Express (COMP/M.6570) Commission s price concentration analysis predicted price rises in 29 countries and higher prices than UPS model Key focus is on likelihood of price rises see Ryanair/Aer Lingus (blocked), Outokumpu/Inoxum (conditional clearance), Hutchison 3G Austria/Orange Austria (conditional clearance) Closeness of competition (UTC/Goodrich; Deutsche Börse/NYSE Euronext ) and barriers to entry (Hutchison 3G Austria/Orange Austria) remain important 5

6 3. Efficiencies make you weak Deutsche Börse/NYSE Euronext (COMP/M.6166) Commission recognised benefits from collateral savings but, savings likely achievable without the merger and not sufficient to outweigh harm to consumers DB s appeal alleges assessment is incorrect, unsupported by evidence and breaches right to be heard UPS/TNT Express Commission recognised savings in air network costs but they would not outweigh likely price increases Chief Economist: some countries dropped from SO due to efficiencies but arguments raised too late in proceedings to have a significant impact 6

7 4. Remedies what remedies? Remedies must be credible and address all concerns Deutsche Börse/NYSE Euronext the remedies offered fell far short of resolving the concerns (Almunia) remedies were insufficient in scope, difficult to implement, unlikely to be effective Ryanair/Aer Lingus (COMP/M.6663) proposed purchaser had insufficient experience/finances merged entity remained dominant Ryanair: unprecedented and revolutionary remedies package UP/TNT Express upfront purchaser remedy would be necessary to satisfy Commission doubts about effectiveness 7

8 5. It s all politics anyway Commission does not want its independence to be called into question wary of decisions being appealed Chief Economist: political lobbying may make prohibition decision almost more likely: GE/Honeywell (COMP/M.2220) and Deutsche Börse/NYSE Euronext Ryanair press release: this prohibition is a political decision to pander to the vested interests of the Irish Government and is not one that is based on a fair and reasonable application of EU competition rules or precedent airline merger approvals in Europe 8

9 Notable cases in the EU courts Western Digital/Hitachi (Case No. COMP/M.6203) Western Digital/Hitachi s appeal to the General Court as to whether the priority rule is unlawful was discontinued uncertain whether EU will continue to apply the priority rule EC v Editions Odile Jacob SAS (Case C-404/10) and EC v Agrofert Holding AS (Case C-477/10) Court of Justice clarified relationship between secrecy rules in EUMR and disclosure obligations in Reg. 1049/2001 general presumption that disclosure undermines investigatory activities and notifying parties commercial interests 9

10 UK Merger Control Statistics and Interesting Developments

11 Overview of Office of Fair Trading merger control decisions Financial Year (1 April 31 March) 2012/2013 (11 months) References 13 Clearance with remedies Unconditional clearance Found not to qualify 19 Total decisions 92 *See the OFT s website ( 11

12 Overview of Competition Commission merger control decisions Financial Year (1 April 31 March) 2012/2013 (11 months) References 13 Completed mergers 10 Cancelled enquiries 2 Prohibition 0 Clearance with remedies Clearance (no SLC) 4 Total decisions 7 *See the CC s website ( 3 12

13 Limited success for failing firm defence Accepted where compelling evidence that exit is inevitable Stena/DFDS Seaways and Sector Treasury Services/Butlers (both cleared by CC) Rejected in Arlingclose/Sterling Consultancy (cleared by OFT) Will not be accepted if alternative purchasers exist Lion Capital/Cumbrian and American Greetings/Clinton (both cleared by OFT as no SLC) Accepted by OFT for 10 stores in Kingfisher/Focus DIY because no less anti-competitive purchaser available 13

14 Ryanair/Aer Lingus saga continues May 12: Court of Appeal confirms that OFT was in time to review the minority stake acquisition June 12: OFT refers minority stake acquisition to CC July 12: Ryanair notifies bid for Aer Lingus to European Commission Aug Dec 12: CAT / Court of Appeal reject Ryanair challenge to CC s jurisdiction during European Commission investigation Feb 13: European Commission blocks Ryanair bid Feb 13: CC recommences review of minority stake acquisition. Final date for publication of the CC s report is 11 July

15 Current CC merger references A.G. Barr/Britvic high diversion ratios/variable profit margins = likely unilateral effects despite evidence that Coca-Cola may be a closer competitor to IRU BRU than Britvic Royal Bournemouth and Christchurch/Poole Booker/Makro Eurotunnel/SeaFrance (consulting on remedies; note cleared conditionally by French authority in November 2012) Global Radio/GMG (consulting on remedies) Rank/Gala Casinos (consulting on remedies) Akzo Nobel/Metlac (prohibition likely unless remedies agreed) Ryanair/Aer Lingus 15

16 Reform is coming New CMA likely to be operating by April 2014 Merger control highlights: regime remains voluntary phase 1 - CMA Board; phase 2 - independent panels 40 working day statutory time limit for phase 1 new powers to suspend integration More information to come 16

17 Any Questions..