The Law Society

Competition Section seminar:

UK mergers update

Chair: Matt Evans, chair, Competition Section Advisory Committee, and

partner, Jones Day

Speaker:

• Colin Raftery, senior director of Mergers, Competition and

Markets Authority

Tuesday 10 March 2020

The Law Society

About us - The Competition Section

The Competition Section is a subscription-based Law Society membership group.

It promotes knowledge and awareness of competition law developments and

addresses current issues and challenges facing competition law practitioners

For more information about the Competition Section or to join -

www.lawsociety.org.uk/competition

http://www.lawsociety.org.uk/competition

The Law Society

Your SRA Continuing competency codes:

The Competition Section have compiled a list of competency codes in a new training tracker, to help you record your professional development.

Go to our web site > www.lawsociety.org.uk/competition and then Home > About us > Keep track of your professional learning to see the codes to add to your training record.

Here is a sample…

http://www.lawsociety.org.uk/competition

The Law Society

The Competition Section covered these SRA codes between 1 November 2018 and 29 February 2020

When Name of product Product type SRA codes

Nov 2018 Competition Section webinar: The interface between public

procurement and competition law

Inclusive A2, A5, B1

Nov 2018 Competition Section seminar: UK national security law and merger

control

Inclusive A2, A4, A5,

B1, C2

Nov 2018 Competition Section annual dinner and awards: Podcast of keynote

speech on Brexit and the future of competition law (Audio)

Inclusive TBC

Dec 2018 Competition Section seminar: Update on recent pharmaceutical

competition cases

Inclusive A2, A5, B1

Jan 2019 Competition Section webinar: Competition litigation reviewing 2018’s

key developments

Inclusive A2, A4

Feb 2019 Competition Section seminar: Data issues and merger control Inclusive A2, A4, A5,

B6, B7

Mar 2019 Competition Section seminar: UK mergers update Inclusive A2

Apr 2019 Competition Section seminar: Review of the Digital Competition

Experts Panel report

Inclusive A1, A2, A4,

B1, B3

May 2019 *Competition Section annual conference: Discounted A2

May 2019 Competition Section webinar: Avoiding the antitrust perils of illegal

information exchange

Inclusive A2, A4

4

2019 Competition Section webinars – Listen again

The Law Society

The below are webinars are inclusive to Competition Section members and available to view now:

Jan 2019 – Webinar: Competition Litigation - reviewing 2018's key developments

• Speakers: Anna Morfey and Scott Campbell, Hausfeld

May 2019 – Webinar: Avoiding the antitrust perils of illegal information exchange

• Speaker: Graeme Young, partner, CMS (UK)

July 2019 – Webinar: Dawn raids - best practices and recent developments

• Speakers: Omar Shah, partner, Morgan, Lewis & Bockius LLP and Jasminder Nakhwal, parter,

Peters & Peters Solicitors LLP

Sept 2019 – Webinar and Podcast: Vertical agreements: The digital dimension and risks

• Speaker: Richard Eccles, partner, Bird & Bird, LLP

We also have a range of past/OnDemand seminar presentations where you can access the slides

or audio available from the Competition Section website under ‘Past seminar presentations’

https://tls.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=7e818f48-c2e9-4920-ae97-84e3c2e03bb3#t=1https://tls.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=ef2277f1-989f-475d-8371-6e8f0eefeaed#t=1https://tls.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=7e818f48-c2e9-4920-ae97-84e3c2e03bb3#t=1https://tls.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=ef2277f1-989f-475d-8371-6e8f0eefeaed#t=1https://tls.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=13d8c6f1-ee8c-42fe-9a95-7bdb34a2b344#t=1https://communities.lawsociety.org.uk/inclusive-competition-webinars/webinar-vertical-agreements-the-digital-dimension-and-risks-5-september/6000147.articlehttps://communities.lawsociety.org.uk/competition/events/competition-seminars

Upcoming Competition Section events 2020 – Book/Save the date

The Law Society

12 May 2020: Competition Section podcast Reverse patent settlements and the GSK case

• Speakers: Brian Sher, partner and co-head of Competition, CMS

14 May 2020: Competition Section annual conference – (cancelled)

• Keynote speaker: Sarah Cardell, general counsel, Competition & Markets Authority

9 June 2020: Competition Section seminar: Presidents update: Competition law today and

tomorrow – (postponed)

• Speaker: Professor Richard Whish

14 July 2020: Competition Section seminar: EU merger control and life after Brexit - the view

from Brussels – (tbc)

• Speaker: Balasz Horvasz, EU Commission

(AMENDED DUE TO COVID-19)

https://communities.lawsociety.org.uk/competition/events/annual-conference

UK Merger Control:

2019 in review and a forward look at 2020

Colin Raftery

Senior Director, Mergers, CMA

10 March 2020

7

Overview

8

1The CMA’s caseload in 2019/20

2Phase 1 highlights in 2019/20

4Phase 2 highlights in 2019/20

5Procedural infringements

6Developments in policy and practice

The CMA’s caseload in 2019/20

9

Overview of Phase 1 caseload

10

Phase 1 Decisions 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

Referred 17 13 10 8 7 8 9 14 8 6 11 5 9 11 12

UIL accepted 6 7 5 6 5 4 5 10 0 3 9 9 12 2 7

Unconditional

clearance118 86 78 53 43 43 62 49 42 56 36 39 37 41 33

De minimis clearance 0 0 3 4 7 4 3 4 3 7 4 3 4 0 1

Found not to qualify 69 22 15 9 10 14 21 23 12 10 2 1 0 2 2

Cancelled/abandoned - - - - - - - 0 0 0 0 1 1 1 2

Total decisions 210 128 111 80 72 73 100 100 65 82 62 57 62 56 57

Notes:

• Phase 1 decision date (clearance, referral, UIL) recorded in year that final decision made, so year may be different to the year of the CRM and intermediate decisions

• Phase 2 outcome date recorded in year that final decision made, so year may be different to date of Phase 1 reference decision

• Data for FY 2019/2020 as of 29 February 2020

Case review meetings at Phase 1

Cases to CRM 36 30 22 29 22 21 30 32 19 24 24 28 30 25 25

Phase 1 caseload in 2019/20

11

Phase 1 cases

Referred

Ecolab/Holchem

Illumina/Pacific Biosciences

LN-Gaiety/MCD

Bauer/Lincs

Bauer/UKRD

Bauer/Celador

Scala/Wireless

Sabre/Farelogix

Prosafe/Floatel

JD/Footasylum

Bottomline/Experian

Amazon/Deliveroo

UIL accepted

Rentokil/Mitie

Liqui-Box/DS Smith

*Abellio/East Midlands Franchise

*Trenitalia/West Coast Rail Franchise

Connect Bidco/Inmarsat (PIIN)

Advent/Cobham (EIN)

Stonegate/Ei

Unconditional

clearance

RWE/E.ON

OSRAM/Ring

Global Radio/Semper Veritas

Swissport/HCH

AL-KO Kober/Bankside Patterson

ARMS/EMA Computer

ForFarmers/Bowerings

Broadview/Formica

Core Assets/Partnership in Children's

Services

Enterprise Rent-a-car/SHB

Rheinmetall/BAE

Tadano/Terex

AstenJohnson Holdings/Heimbach

Fiserv/First Data

Charter Court/One Savings

Calvin/BV

Liverpool/Aintree

*AEG/ONEX

Inspired/Novomatic

CGI/SCISYS

MUFG/DVB

Kohlberg/Bemis

Kohlberg/Nelipak

Unite Group/Liberty Living

Salesforce/Tableau

Cartamundi/Fournier (de minimis)

USCO SpA/Knockturn

OVO/SSE

NFA/Outcomes First

Roche/Spark

Platinum/Wesco

Hasbro/Entertainment One

WFS/Uvair

Google/Looker

Found not to qualifyVisa/Earthport Non-Standard Finance plc / Provident

Financial plc

Abandoned/Cancelled Send for Help/SoloProtect Iconex/Hansol Denmark and R+S Group

* Article 4(4) reference from EU Commission

Overview of Phase 2 caseload

12

Phase 2 Outcomes 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

Cleared 7 4 5 1 6 1 7 4 6 2 8 1 4 3 2

Prohibited 1 0 0 2 0 0 1 1 2 0 0 1 0 1 2

Remedies (Behavioural) 0 0 2 1 0 0 0 0 1 0 1 1 0 0 0

Remedies (Divestiture) 2 5 5 0 2 0 0 3 3 1 0 4 2 4 1

Cancelled/Abandoned 6 2 4 2 1 3 2 2 0 1 3 1 0 3 4

Total Outcomes 16 11 16 6 9 4 10 10 12 7 12 8 6 11 9

Notes:

• Phase 2 outcome date recorded in year that final decision made, so year may be different to date of Phase 1 reference decision

• Data for FY 2019/2020 as of 29 February 2020

Phase 2 caseload in 2019/20

13

Phase 2 cases

Cleared PayPal/iZettle, LN- Gaiety/MCD

Prohibited Sainsbury’s/Asda, Tobii/Smartbox

Remedies

(Behavioural)

-

Remedies

(Divestiture)

Ecolab/Holchem

Cancelled /

Abandoned

Thermo Fisher/Roper, TopCashback/Quidco, Illumina/Pacific Biosciences, Prosafe/Floatel

14

Mergers Intelligence

Notes:

• For up until and including 2018/2019, data for case initiation were based on the date that the Phase 1 investigation was launched. From 2019/2020 onwards, the data are based on when a

case was called in for investigation and therefore include cases that remained in pre-notification as of 29 February 2020

• For up until and including 2018/2019, data for the Phase 1 outcome is allocated to the year in which outcome was announced (and may differ from year in which investigation commenced).

For 2019/2020, data for the Phase 1 outcome is a sub-set of the cases called in for investigation (i.e., the cases were both called in and had a Phase 1 outcome in 2019/2020)

• Data for FY 2019/2020 as of 29 February 2020

2016/2017 2017/2018 2018/2019 2019/2020

Transactions reviewed >650 >650 >600 >700

Phase 1 investigations launched / Cases

called in for an investigation13 13 14 14

Which went to CRM 7 7 5 6

Which resulted in an SLC 3 4 3 4

Which resulted in a de minimis

exception1 1 0 0

Which were found not to qualify 0 0 2 0

Which resulted in a Phase 2 referral 2 2 3 3

15

2015/16 2016/17 2017/18 2018/19 2019/20

IEOs imposed in completed cases 20 25 18 24 16

IEOs imposed in anticipated cases 1 5 2 5 3

Number of derogations granted 47 103 51 73 70

Interim Enforcement Orders

● More use of IEOs pre-closing, where necessary to guard against pre-emptive action; restrictions on

completion remain rare

● Two penalty notices imposed for breaches of interim measures in 2019/20

● First unwinding order issued in pre-notification in Bottomline/Experian on 2 August 2019

● New guidance on interim measures in merger investigations published in June 2019

16

2015/16 2016/17 2017/18 2018/19 2019/20

Average length of pre-notification 34 days 33 days 28 days 33 days 37 days

Average length of Phase 1 investigation 34 days 35 days 34 days 36 days 37 days

Cases cleared in

11

2016/17 2017/18 2018/19 2019/20EU

(2019)

US

(2019)

Average duration of “significant” merger investigation

(announcement to either final report or UIL acceptance combined)7.6 10.5 9.6 9.1 15.6 11.9

Average total duration of cases that proceed to Phase 2

(announcement to final report)11.9 12.5 11.7 11.5 - -

Average duration of Phase 1 remedies cases (announcement to

final UIL acceptance)5.1 5.6 6.3 4.9 - -

Average duration of Phase 2 investigation (reference to final

report)5.3 6.6 5.3 5.5 - -

Duration of significant merger investigations

Notes:

• Data for 2019/20 as of 29 February 2020

• Data for US and EU from Dechert LLP, DAMITT 2019 Year in Review. A “significant” US investigation “[includes] Hart-Scott-Rodino (HSR) Act reportable transactions for which the result of the

investigation by the Federal Trade Commission (FTC) or the Antitrust Division of the Department of Justice (DOJ) is a consent order, a complaint challenging the transaction, an official closing

statement by the reviewing antitrust agency, or the abandonment of the transaction with the antitrust agency issuing a press release.” DAMITT defines “significant” EU merger investigations to

include transactions subject to the EU Merger Regulation and resulting in either a Phase I remedy or the initiation of a Phase II investigation

Phase 1 highlights in 2019/20

18

Iconex/Hansol (ME/6798/19)

Pre-Brexit investigation in close cooperation with European Commission

● Parties both active in manufacture and supply of lightweight thermal paper rolls and labels (e.g., till and

ATM receipt rolls and labels)

● Merger investigated in parallel by CMA and Commission (following Article 22 request made by Germany

and joined by France)

● Extensive co-operation with Commission throughout investigation, including joint questionnaires to competitors and customers

● Commission cleared at Phase 1 (on 13 May 2019), but noted that competitive landscape in the UK appeared to be different to that in continental Europe

● CMA’s Phase 1 investigation found (on 10 June 2019) competition concerns in relation to supply of receipt rolls within the UK, because of more limited constraint from suppliers outside the UK (because of

increased transportation costs, customer preferences for UK suppliers, and currency risks)

● Merger subsequently abandoned on 18 June 2019

19

Rentokil/MPCL (ME/6784/18)

Substance rather than form of agreements determinative for relevant merger situation

● Parties both active in supply of pest control services in the UK to commercial customers

● Two (separate and not legally-interdependent) agreements entered into:

- 29 September 2018: Parties enter into “Preferred Supplier Agreement” (PSA), effectively stepping into shoes of MPCL in “IFM” contracts

- 30 September 2018: Parties enter into sale and purchase agreement (SPA) for MPCL business for “stand-alone” contracts

● CMA assessment based on substance of arrangements rather than strict legal form, including that:

- Staff and assets associated with MPCL business served both types of contract- Discussions on PSA and SPA inter-related and proceeded in parallel- Rentokil internal documents suggested that PSA and SPA were seen as achieving one aim (i.e., the

transfer of the MPCL Pest Control Business as a whole)

- Transaction valuation during negotiations and consideration ultimately paid assessed on “holistic” basis, including both types of contract

20

Google/Looker (ME/6839/19)

Investigation of Google’s strength in wider digital ecosystem to foreclose BI software market

● Google acquired target active in the business intelligence (BI) tool market – a dynamic and highly

competitive market

● Limited horizontal overlap in the supply of BI tools in the UK – competitive assessment considered impact of

merger on innovation and product development: ultimately, no concerns found on this basis

● Vertical theory of harm concerning wider Google ecosystem:

- Investigated not only whether BI tool providers rely on direct access to cloud data warehouse

solutions, but also importance of access to data generated by wider suite of Google products in web

analytics and online advertising space (Google-generated data), in which Google enjoys substantial

market power

- Evidence suggested Google-generated data was important for BI software providers, so could provide

Google with the ability to engage in partial foreclosure

- But Google ultimately unlikely to have an incentive to foreclose competing BI tools (given rationale for

deal and potential benefits and likely costs of such a strategy)

21

Roche/Spark (ME/6831/19)

Competitive interaction between late-stage pipeline and marketed products

● Parties both supply prophylactic treatments for congenital Haemophilia A in the UK: Roche manufactures and supplies Helimbra; Spark currently developing two Haemophilia A gene therapy (GT) products

● CMA concluded share of supply test was met:

- Spark should be considered to be active in the supply of Hem A products in the UK (given commercial realities of sector at issue)

- Reasonable to base analysis on more advanced treatments only, as measured by UK employees (explicitly cited in Enterprise Act as example of criterion for share of supply test)

● Competition concerns did not arise because:

- Spark would be likely to commercialise its GT products in the absence of the Merger, but other GT treatments were at similar (or more advanced) stage of development

- Spark not considered to hold any particular clinical or commercial advantages over those being developed by other suppliers

- Several novel non-GT products (likely to compete particularly closely with Helimbra) also under development

22

Aintree/Liverpool Hospital Trusts (ME/6815/19)

Reduced role of competition in the provision of healthcare services

• CMA required to assess mergers between NHS Foundation Trusts under Health and Social Care Act 2012

• Both Parties were active in the provision of NHS elective services, NHS specialised and community services, NHS non-elective services and private patient services in Liverpool and north Mersey area

• CMA’s assessment reflects changes to public policy choices about role of competition within NHS:

- Several national policies promoting collaboration and diminishing role of competition - Local factors (such as the use of block contracts) had also substantially reduced the effectiveness of

competition as a means of organising the provision of NHS services in the Liverpool area

● In light of reduced role of competition, CMA found that overlaps between the Parties (in elective and non-elective services) did not raise competition concerns

● No material overlap in areas where competition is liable to be a significant driver (e.g., private patient services)

23

Phase 2 highlights in 2019/20

24

Sainsbury’s/Asda (ME/6752/18)

Merger of the second and third largest grocery retailers in the UK

● Sainsbury’s: 1,428 grocery stores, 314 petrol stations, online groceries delivery business, Argos and Habitat

● Asda: 641 grocery stores, 33 Asda Living stores, 321 petrol stations and online groceries business

● CMA assessed likely effects of Merger in: (1) in-store groceries; (2) online delivered groceries; (3) general merchandise; (4) fuel; and (5) buyer power

● Extensive, evidence-led investigation:

- Three surveys, which involved interviewing close to 60,000 customers across 100 locations;- Large volumes of submissions, internal documents (around 140,000 in total), analysis and

commercial data from the merging parties and their advisors;

- Large volumes of submissions, internal documents, analysis and commercial data from a range of industry participants, including 74 suppliers, 31 general merchandise retailers, 63 grocery retailers,

and 10 fuel retailers

- Several meetings and hearings with merging parties; also, 13 hearings with suppliers and grocery retailers

25

Sainsbury’s/Asda (ME/6752/18)

Supermarkets: national assessment

● Demand-side primarily local but both Parties large-scale, national operators under national brands, with sophisticated integrated operations and centralised buying teams

● Important elements of offering, such as pricing, quality and overall brand positioning, decided centrally and applied uniformly across national estates

● “Top down” assessment (consistent with how Parties monitor and set competitive offering)

● Based on wide variety of evidence, including: shares of supply; internal documents; customer switching patterns; views from other grocery retailers; CMA’s store exit survey; evidence on in-store offering of

Parties and rivals; and national weighted-average GUPPI

● CMA found that Parties were two of a small number of significant national players in in-store groceries with considerable overlap across their national stores (across c. 80% of their estates)

● Post-Merger combined share of 29%, so would be largest grocery retailer (overtaking Tesco, with c. 27%) and nearly three times the size of the next largest grocery retailer (Morrisons, at c. 10%)

● Important competitive interaction between “Big 4” and constraint from other retailers generally less important (evidenced by Parties’ internal documents, Kantar switching data, third party submissions,

material differences in in-store offerings, national weighted average GUPPI calculations) 26

Sainsbury’s/Asda (ME/6752/18)

Supermarkets: local assessment

● Separate assessment of incentive to degrade parameters that are flexed locally (e.g., range)

● Parties overlapped in c. 1,000 local areas so not possible to conduct area-by-area assessments

● Closeness of competition assessed by weighted share of shops (WSS) methodology, producing a GUPPI-based decision rule

● Relative weight attached to each store reflected: (1) "brand"; (2) size; and (3) distance

● In contrast to Parties’ submissions, no set 5% GUPPI threshold in precedent of UK authorities; previous decisions have used a range of values and consistently highlighted the fact-specific nature of assessment

● Based on circumstances in this case, threshold for concern set at 2.75%, reflecting:

- Efficiencies of 1.25% (for £500 million of rivalry-enhancing efficiencies in groceries and GM) - The need for the lessening of competition to be “substantial” (given that groceries are non-

discretionary expenditure that accounts for a significant share of household spend); and

- An allowance for uncertainty in the CMA’s analysis (to reduce the risk of “false positives”)● Application of decision rule results in SLCs in 537 local areas

27

Sainsbury’s/Asda (ME/6752/18)

Process and Timing: chronology of a 12-month investigation

28

2018 2019

April May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr

Pre-notification

23 May

First

submission by

Parties

19

September

(W1)

Phase 2

investigation

begins

23 August

Phase 1

investigation

begins (Fast-

track)

16

October

(W5)

Issues

Statement

published

20 February

(W23)

PFs

published

25 April

(W32)

Publication

of final

report

Core Phase 2 fact-finding Reaching final conclusionsPhase 1

investigation

14

December

(W13)

CAT

hearing

Late September – October – early

November

Surveys carried out

30/31

October

(W7)

Site visits

Early / Mid-

November

Third party

hearings

11 February

(W22)

Extension of

the deadline

27

November

(W11)

AIS issued

(along with

final WPs)

19

December

(W14)

Main party

hearing

30 April

Parties

announce

merger

PayPal/iZettle (ME/6766/18)

29

More competitive counterfactual

● Parties both supply on-store/offline payment services through mobile point of sale (mPOS) devices, with iZettle also entering to compete with PayPal in “omni-channel” payment services

● PayPal would have been a stronger competitor than it currently was absent the merger, stemming the decline in PayPal Here’s competitive position:

- PayPal’s internal documents showed a commitment to developing a strong omni-channel offering - PayPal had considered several investment, acquisition and partnering options- PayPal would have had the resources to pursue these options- But, limitations in what PayPal could achieve in the shorter term to enhance PayPal Here’s

competitive position

● Notwithstanding a more competitive PayPal, case cleared on basis of constraints from traditional “POS” suppliers (principally Worldpay and Barclaycard) – as evidenced in CMA’s Phase 2 survey

Assessment of potential competition – omni-channel services to smaller merchants

• 2nd Limb: The CMA found

30

PayPal/iZettle (ME/6766/18)

Would iZettle be likely to enter into omni-

channel services absent the merger?

Would such entry lead to greater competition?

▪ iZettle would likely have focussed on developing

existing lines of business, rather than omni-

channel offering

▪ Overall, available evidence suggested that any

expansion into online payments would have

proceeded at a slow rate

▪ Competition in omni-channel solutions for

smaller merchants is in early phases

▪ Existence of significant competitors and

likelihood of future entry meant that small-scale

of iZettle expansion would not have led to

greater competition

Illumina/PacBio (ME/6795/18)

31

Forward-looking assessment in next generation sequencing systems

● Parties active in supply of DNA sequencing systems (Illumina active in “short read” sequencing, PacBio active in “long read” sequencing)

● Highly concentrated market because of Illumina’s very strong market presence (90% share in UK)

● CMA placed particular weight on internal documents in assessing how the merging parties saw competition in the future, both in terms of their own strategic plans, which showed (in particular) that:

- Illumina saw threat that instrument purchases or workflow would be lost to PacBio- Illumina had taken action, or had considered taking action, in response to the competitive threat

from PacBio

- Competition between the merging parties was increasing (and would likely continue to increase) because of technical improvements to PacBio’s technology

● Innovation is key aspect of competition in market and Parties considered each other to be important strategic rivals in this regard, so would eliminate a factor that currently drives R&D and innovation

● Other rivals would not be sufficient to sufficiently constrain the Merged Entity

Cooperation with other authorities

32

Illumina/PacBio (ME/6795/18)

The merger was reviewed in parallel by US Federal Trade Commission, who issued their second request shortly before the case was notified to the CMA

Co-operation was made possible by the merging parties signing waivers for the sharing of information between authorities (standard practice in mergers subject to reviews by multiple competition authorities)

FTC sued to block the transaction in December 2019, on broadly the same basis as the concerns outlined in CMA’s provisional findings.

Parties ultimately abandoned the transaction in early January 2020

Thermo Fisher/Roper (ME/6773/18)

33

Provisional prohibition in light of vertical competition concerns

● Thermo Fisher, a manufacturer of high-tech electron microscopes used for scientific research (TEMs), sought to acquire Roper (Gatan), a supplier of “peripherals”, such as filters and cameras, used in the

operation of microscopes

● Input foreclosure theory of harm based on Gatan’s position in various upstream peripherals markets gave rise to SLC in provisional findings

● Separate vertical SLC based on information-sharing – i.e., that Thermo Fisher would obtain access to commercially sensitive information (e.g., sales and bids and/or technical product specification and product

innovation plans) about the activities of its rivals in the supply of TEMs through Gatan

● Long-term supply agreements entered into with two main rivals in supply of TEMS, to come into effect on completion of the Merger, were not sufficient to address foreclosure or information-sharing concerns

(given difficulties in monitoring and enforcement in particular)

● Also horizontal competition concerns in supply of DD cameras (the Parties were the two largest suppliers) and filters (potential competition)

Procedural infringements

34

Breaches of interim measures

Two penalties imposed for breaches of interim measures

● £146,000 penalty imposed on Nicholls in June 2019, for three breaches:

- Relocation of target staff to acquirer premises (before CMA consent given) - Use of acquirer-owned and branded fleet to make target deliveries- Late submission of compliance statements

● £250,000 penalty imposed on PayPal in September 2019:

- CMA had granted a derogation from the IEO to allow parties to engage in international integration activities involving cross-selling campaigns

- In support of its derogation request, PayPal submitted that any integration activities would be confined to non-UK potential customers and would not impact on the UK

- Contrary to the derogation, PayPal contacted 76 potential UK customers as part of cross-selling campaigns to German and French target customers

35

Incomplete responses to information requests

Three penalties imposed for incomplete responses to statutory information requests

● £15,000 penalty imposed on AL-KO in May 2019:

- Over 500 documents, relating to CEO of acquiring business and of matters of central importance to CMA’s investigation, produced over four months late

- Negligent errors – and third material failure to respond during investigation● £27,000 penalty imposed on Rentokil Initial in September 2019:

- Pattern of errors in responding to statutory information requests, often failing to provide more than half the responsive documents

- Evidence was highly relevant to CMA’s assessment of transaction (including scope of relevant merger situation); evidence Rentokil failed to provide was inconsistent with its written and oral

submission

- Flagrant errors with senior management involvement● £20,000 penalty imposed on Sabre in September 2019:

- Late provision of documents that had been systemically over-redacted for legal privilege (444 documents in total incorrectly withheld or redacted)

36

Developments in policy and practice

37

Brexit: next steps

CMA approach in Transition Period

● "Transition Period" since 31 January 2020 – due to last until 31 December 2020 (and Government has indicated that will not be extended)

● During Transition Period:

- "One-stop-shop" remains in place; division of jurisdiction remains the same as pre-Brexit- Mechanisms for case referrals remain in place

● Towards end of Transition Period:

- Commission retains jurisdiction over cases formally notified or referred before 31 December 2020 (in practice 23 December 2020) – so "start date" rather than "end date" is the key cut-off

- Merging Parties encourage to promptly engage with CMA where merger might not be formally notified to Commission before end of Transition Period

- Increased mergers monitoring of cases that my fall under UK jurisdiction at end of Transition Period● After the end of the Transition Period: one-stop-shop no longer applies; UK turnover no longer relevant

to EU thresholds; Commission and CMA may conduct parallel investigations

38

39

Merger control in dynamic markets

• Challenge of considering uncertain future market outcomes in dynamic markets where products, processes and/or business models evolve rapidly

• Evidence-led approach (e.g., learning from previous mergers and considering what could have been done differently)

Analytical approach

• Engagement with learnings from market study on online platforms and digital advertising, DaTA team, cooperation with international authorities on individual mergers and merger policy

• Particular focus on: internal documents of merging parties and third parties (on commercial strategies and plans for the future); deal valuation materials; third party forecasts and analyst reports; “deposition” interviews with key business people

Sources of evidence

• Regime largely fit-for-purpose but continue to consider case for legislative change to jurisdictional and/or substantive tests as review continues

• Exploring case for introducing a parallel regime for acquisitions by companies designated as having “strategic market status” (building on regulatory regime envisaged by Furman Report)

Changes to jurisdictional or

substantive tests?

• Fruitful “call for information” on digital mergers intended to feed into forthcoming changes to Merger Assessment Guidelines

• Currently expect to release a revised draft of the guidelines for external consultation in the second half of this year

Review of the Merger Assessment

Guidelines

40

Other developments in policy and practice

Continued "tidying-up" of existing guidance

• Ongoing consolidation and “refresh” to reflect current practice

• Already published: interim measures; exceptions to duty to refer; remedies

• Forthcoming: Jurisdictional and procedural guidance

Changes to Phase 2 process

• Changes to facilitate greater degree of international cooperation post-Brexit

• Reduce unnecessary duplication in evidence-gathering (while preserving independence of Phase 2 decision makers)

Chairman’s reform programme

• In particular, “hybrid” merger control system, with mandatory notification of larger “international” mergers

The Law Society

Closing remarks

Chair: Matt Evans, chair, Competition Section Advisory Committee, and

partner, Jones Day

Speaker:

• Colin Raftery, senior director of Mergers, Competition and

Markets Authority

Tuesday 10 March 2020

Upcoming Competition Section events 2020 – Book/Save the date

The Law Society

12 May 2020: Competition Section podcast Reverse patent settlements and the GSK case

• Speakers: Brian Sher, partner and co-head of Competition, CMS

14 May 2020: Competition Section annual conference – (cancelled)

• Keynote speaker: Sarah Cardell, general counsel, Competition & Markets Authority

9 June 2020: Competition Section seminar: Presidents update: Competition law today and

tomorrow – (postponed)

• Speaker: Professor Richard Whish

14 July 2020: Competition Section seminar: EU merger control and life after Brexit - the view

from Brussels – (tbc)

• Speaker: Balasz Horvasz, EU Commission

(AMENDED DUE TO COVID-19)

https://communities.lawsociety.org.uk/competition/events/annual-conference