Competitive Edge: Competition & EU law news - May 2020

By Pauline Kuipers, Morten Nissen

05-2020

Keeping you up to date on Competition & EU Law developments in Europe and beyond

Overlooked issues in merger control

As M&A operations are driven by business considerations it is understandable that merger notification considerations are not at the forefront of transactions. Unfortunately, they are sometimes taken into account at quite a late stage of the process. If a transaction is notified to a wrong authority or if notification is accidentally neglected altogether, merger notification considerations can lead to significant delays in implementing the transaction and at worst to significant fines being imposed if a notifiable transaction is put into effect prior to the approval of competent competition authorities.

If the requirement to notify is addressed mechanically by merely examining the amount of shares to be acquired or the turnover of the company or business to be acquired, there is a significant risk that an obligation to notify the transaction is overlooked and the acquirer(s) becoming exposed to a gun-jumping fine risk.

Read more > 


Coronavirus (COVID-19) In Focus Page

In these times of economic crisis it is worth mentioning that we have many team members with in-depth specialist knowledge of the EU state aid rules. Likewise, the COVID-19 crisis has impacted the staffing of competition authorities all over the world and this may impact on timing of ongoing or envisaged merger control proceedings.

Read recent briefings that help guide relevant actors in different sectors during the COVID-19 crisis: 


Bird & Bird news


Updates from our network:

EU
EU considers amending the merger rules

Australia
Review of Australia's merger laws on the horizon

Belgium
Belgian Competition Authority conducts rare second phase merger investigation

China
Decision to terminate investigation of Lenovo (Beijing) monopoly case released

Czech Republic
Czech Constitutional Court decides to repeal part of the Significant Market Power Act

Denmark
First-ever referral of merger from the Danish Competition and Consumer Authority to the Commission

Finland
Finland considering amending the merger control thresholds and the investigative powers of the competition authority

France
Merger control modernisation: the digital sector under the spotlight

Neighbouring rights: interim measures imposed on Google in the press sector

Germany
Acquisition of Vossloh Locomotives by Chinese CRRC

Hungary
Complex remedies in the revisited Digi-Invitel telco merger

Italy
ICA has fixed new thresholds for merger control in Italy

Poland
UOKiK clears cosmetics deal in Phase II

Spain
The CNMC opens a Phase II investigation into a proposed merger in the funeral services market

The Netherlands
ACM unconditionally clears acquisition in the Dutch online news market

UK
The CMA has provisionally cleared Amazon and Deliveroo merger


EU

EU considers amending the merger rules

The prohibition of the Siemens/Alstom transaction in February 2019 started an EU-wide debate on the relevance of the current merger rules and the Commission's powers of review. Currently, the European Commission is dealing with two concrete action points.

First, last December, Commission Executive Vice-President Margarethe Vestager pledged to review the 1997 market definition notice in order to adapt it to the current state of globalisation and digitalisation. In particular, France and Germany pleaded for a broader geographic view of markets to include developing competition, especially from China. The wider the market is defined, the more competitors are included and the lower the market share of merging parties often is which makes it harder to argue competitive concerns linked to a transaction.The Commission, however, is not planning on including a general rule on wider markets; each market will still need to be assessed on its own merits. The Commission is also evaluating product market definition rules. Since digital services are often provided for free in return for data of its users, traditional market definition tools based on price may no longer be adequate. A public consultation is expected to be launched in Q2 2020.

Secondly, the debate on competition law in digital markets also touched upon the so-called "killer acquisitions" or acquisitions of start-ups by large enterprises in order to discontinue the development of innovative projects and pre-empt future competition. These transactions are usually not captured by the merger thresholds, because the turnover of the target is not high enough. Last week, during the Antitrust Spring Meeting of the American Bar Association, Vestager stated that the Commission has not finished its internal reflections on whether to change the merger thresholds to capture these acquisitions. The internal evaluation of the rules should be finished by the end of the year. If the Commission decided to change its turnover thresholds, this would require a change of the EU Merger Regulation, entailing a fully-fledged legislative process. This might open up a can of worms, as certain Member States have been vocal about including more political oversight in the merger review process. Another idea the Commission is studying is a reversal of the burden of proof, whereby the acquirers would have to prove the transaction does not hurt competition in the long run.

The last word about the EU merger rules has not been said yet. Depending on the decision of the Commission in the Fincantieri/Chantiers de l'atlantique, the politicised shipbuilding merger, the debate on European champions and political veto powers might be reopened.

For more information contact José Rivas.


Australia

Review of Australia's merger laws on the horizon

In mid-2019, the Australian Competition and Consumer Commission ("ACCC") released its final report in the landmark Digital Platforms Inquiry ("Final Report"), in which it recommended, amongst other things, amendments to section 50(3) of the Competition and Consumer Act 2010 (Cth), which forms part of Australia's merger control regime (and sets out the matters that must be taken into account in determining whether an acquisition is likely to lessen competition), to include two additional merger factors:

  1. The likelihood that the acquisition would result in the removal from the market of a potential competitor; and
  2. The nature and significance of assets, including data and technology being acquired.

These proposed amendments would require the merger parties (and the ultimate decision-maker) to positively address the 'significance' of data and technology assets being acquired, and would highlight to merger parties and the courts (as well as the Australian Competition Tribunal) the importance of these factors in their merger review considerations.

In late 2019, the Australian Government published its response to the ACCC's Final Report, in which it committed to commence a consultation process on these amendments to Australia's merger laws proposed by the ACCC in its Final Report. According to the Australian Government, these reforms would deliver a regulatory framework that is 'fit for purpose' and better promotes competition in the digital age.

The Australian Government indicated that it would commence its consultations on these proposed amendments in 2020, but the outbreak of COVID-19 has delayed the Government's broader regulatory inquiry and reform agenda. Notwithstanding that, we expect that the inquiry will likely commence later this year or, failing that, in 2021.

For more information contact Thomas Jones.


Belgium

Belgian Competition Authority conducts rare second phase merger investigation

At the beginning of the year, the Belgian Competition Authority ("BCA") started a second phase investigation into the acquisition of Ceres NV by Dossche Mills, two companies active in the sector of production and sales of soft wheat flour for human consumption. The main issue concerned the geographical market definition and the market segmentation according to customer type.

The first contacts between the parties and the BCA already took place in January 2019. The transaction was finally notified on 12 November 2019, after extensive pre-notification discussions. On 15 January 2020 the Competition College of the BCA decided to refer the case back to the auditor for a second phase investigation, which is still ongoing. A second phase investigation can only last sixty working days; this term already lapsed. Therefore, it can be assumed that the parties have either proposed commitments, amended the transaction or have asked for an extension.

It is interesting to note in this case that, as part of the investigation and the market definition exercise, the BCA conducted an ex-post evaluation of the transaction between Dossche Mills and Meneba. This transaction had been approved by the Dutch Competition Authority ("ACM") in 2018.

The majority of Belgian transactions are approved in a simplified procedure; normal procedures are relatively uncommon and second phase investigations even rarer. In 2018, there were no second phase investigations and in 2017 there was only one.

*It is understood that this transaction has been abandoned by the parties and that thus no decision will be adopted by the Belgian Competition Authority in this case.

For more information contact Hein Hobbelen.


China

Decision to terminate investigation of Lenovo (Beijing) monopoly case released

On March 3 2020, the Beijing Municipal Administration for Market Regulation (“BMAMR”) released an official decision (“No.1 [2020]) not to continue the investigation of the Lenovo (Beijing) Co., Ltd. (“Lenovo Beijing”) monopoly case. Read the full text here.

This update was provided by our partner Allbright Law Offices China.


Czech Republic

Czech Constitutional Court decides to repeal part of the Significant Market Power Act

Back in 2016 and 2017, two different groups of senators proposed that the Constitutional Court repeal the Czech Act No. 395/2009 Coll., on Significant Market Power ("Act"), or at least some parts of it. In general, the Act protects food suppliers from unfair practices by big retail chains. According to the senators, the Act was discriminatory, imposing restrictions on the right to conduct business and should be, therefore, considered unconstitutional.

In its recent decision, the Constitutional Court repealed only one of the statutory requirements for a contract between the buyer with significant market power and its supplier. The Act required that such a contract must include the amount of all payments of the supplier to the buyer that may not exceed 3% of the supplier's annual net turnover for the last accounting period of 12 months for food products delivered to the buyer in the year in which the payment occurred.

These were typically payments for advertising and promotional services, logistics, or for evaluating and reporting the saleability of the supplier’s goods. The goal of the contested provision was, allegedly, to protect suppliers from unreasonable payments required by buyers with significant market power without there being an adequate valuable consideration in return.

According to the Constitutional Court, this particular provision was not a reasonable means to achieving its aim. As it practically forced the contracting parties to limit payments to a fixed maximum amount based on a percentage of turnover that was yet to be achieved, the maximum threshold could not be determined at the time of making the contract. While the Constitutional Court commented that imposing a maximum threshold on the supplier’s payments could, in general, satisfy the constitutional requirements, the contested provision was in conflict with the right to conduct business and had to be revoked.

On the other hand, the following were upheld as being constitutional:

  • The definition of the significant market power (by turnover exceeding CZK 5 billion for the last accounting period of 12 months);
  • The prohibition of abuse of significant market power under the conditions set out in the Act; and
  • Sector inquiries, where the Czech Office for the Protection of Competition is entitled to conduct investigation focused on the market situation and relations between buyers and suppliers (similar to those performed by such Office in the context of general competition law).

For more information contact Vojtech Chloupek.


Denmark

First-ever referral of merger from the Danish Competition and Consumer Authority to the Commission

The Danish Competition and Consumer Authority ("DCCA") has for the first time ever requested a referral of a merger to the European Commission under Article 22(1) of the EU Merger Regulation. The referral concerns the proposed acquisition by Mastercard/Europay U.K Limited of certain parts of the Danish payments system provider, Nets A/S.

Upon analysis of the final notification, the DCCA came to the conclusion that the merger might affect markets in other Member States. Consequently, the DCCA decided to request a referral to the European Commission. Following the request for referral from the DCCA, the competition authorities from Austria, Finland, Norway, Sweden and the UK joined the DCCA's referral request. On 6 April 2020 the European Commission announced that it had accepted the request and the parties will have to re-notify the proposed transaction there.

For more information, please refer to the press releases available from the DCCA in English here and the Commission here.

For more information contact Morten Nissen.


Finland

Finland considering amending the merger control thresholds and the investigative powers of the competition authority

According to the Permanent Secretary of the Ministry of Economic Affairs and Employment ("Ministry"), the Ministry will examine whether the turnover thresholds of Finnish merger control should be amended. Another issue to be considered is whether the Finnish Competition and Consumer Authority ("FCCA") should be given the power to examine mergers falling below the turnover thresholds that may have negative effects on competition.

These amendments have been in the wishes of the FCCA for quite some time, which it has regularly brought to the fore in public. For instance, last autumn, the FCCA's Director-General unequivocally stated that the turnover thresholds in Finland are too high and that in addition, the FCCA should have the power to 'call in' a merger and issue an injunction to notify the merger if negative effects on competition can be identified.

The granting of the latter power was already considered in the context of sector-specific competition rules for the social and healthcare sector. The working group of the Ministry had prepared a draft for Government's proposal which, however, lapsed after the social and healthcare sector reform it was linked to collapsed in 2019. According to the draft, the FCCA would have been empowered to issue an injunction to notify a merger falling below the sector-specific thresholds, if there was a specific reason for doing so. However, this power would have been limited both in terms of turnover (EUR 1 million) and time (up to 6 months after closing).

To counterbalance the uncertainty caused by this power, undertakings would have had the possibility to notify a merger voluntarily if the sector-specific turnover thresholds would not have been exceeded. It is likely that the general power to impose an injunction to notify would include similar elements that were proposed in regards to above-mentioned sector-specific power. We will keep you informed about any future developments.

For more information contact Katia Duncker

France

Merger control modernisation: the digital sector under the spotlight

Since 2017, the French Competition Authority (FCA) has been working on the simplification and modernisation of merger control in France, which resulted in particular in: (i) several public consultations on new guidelines aiming at replacing the current ones in the course of 2020; (ii) a new streamlined notification process adopted in April 2019; and (iii) the launch of an electronic filing platform in October 2019 for mergers eligible for the simplified procedure.

In line with these changes, the FCA published in February 2020 a “contribution to the debate on competition policy and digital challenges”, a section of which is dedicated to the redefinition of its merger control tools in the digital economy. The paper stresses the lack of control over numerous transactions below the thresholds and the complexity of assessing mergers in the digital sector especially when they involve emerging markets.

According to the FCA, mergers' competitive analysis should focus more on non-price aspects (e.g. creation of big data pools/user communities) and behavioural commitments should be used more often. The FCA also advocates for a more frequent recourse to the referral mechanism from the Commission to the National Competition Authorities (NCAs) when a merger is likely to affect competition at national level.

Finally, the FCA suggests introducing a twofold mechanism consisting of:

  • An obligation for structuring digital platforms (i.e. big tech companies) to inform the NCAs or the Commission of all mergers they carry out. In France, a draft law introducing such a mechanism is currently being discussed before the Parliament; and
  • The possibility for NCAs to require any company to notify a transaction either ex ante or ex post (within a 12-month deadline after the transaction) if specific conditions are met and in particular a €150 million turnover threshold.

The FCA also considers the possibility for companies to voluntarily notify such mergers in order to remove any doubt about NCAs’ potential intervention.

For more information, the FCA’s press release is available here (in English) and the full paper of the FCA is available here (in English).


Neighbouring rights: interim measures imposed on Google in the press sector

On 9 April 2020, the FCA imposed interim measures on Google, ordering the big tech giant to negotiate in good faith with press publishers and news agencies the remuneration associated to the use of their content based on transparent, objective and non-discriminatory criteria.

These interim measures follow Google’s circumvention of the French law from July 2019 implementing the EU directive on copyright and neighbouring rights (the NR law). Indeed, in September 2019, Google decided it would no longer display any content from EU publishers in France (e.g. article extracts, photographs, infographics and videos) unless they grant the authorization for the US firm to use them free of charge. The FCA considered that such practice caused a serious and immediate damage to the press sector and might be regarded as an abuse of dominance on three grounds:
  • Imposition of unfair trading conditions, as Google unilaterally enforced its news display policy without any negotiation with press publishers and news agencies;
  • Circumvention of the NR law without objective justification, as Google used the possibility left open to press publishers and news agencies to grant free licenses as a general principle and refused to give them the necessary information to determine their remuneration.
  • Discriminatory practices, as Google implemented its news display policy without examining the individual situation of each publisher and the type of content according to the criteria laid down by the NR law.

In addition, Google will have to provide publishers and news agencies with the necessary information for an assessment of their compensation and complete each negotiation within three months from the request to negotiate. These interim measures will remain in force until the FCA’s decision on the merits.

For more information, the full FCA’s decision is available here (in French) and the FCA’s press release here (in English).

For more information contact Thomas Oster.


Germany

Acquisition of Vossloh Locomotives by Chinese CRRC

On 27 April 2020, the Federal Cartel Office ("FCO") approved the acquisition of Vossloh Locomotives by CRRC Zhuzhou Locomotives Co. Ltd. The decision which concerns the market for shunting locomotives is particularly noteworthy because it deals with questions surrounding the acquisition of European firms by Chinese State companies.

Against this background, the FCO had to consider if the transaction raised competition law concerns, in particular, regarding the fact that the Chinese State indirectly has a controlling interest in CRRC. In particular, state subsidies, technical and financial capabilities and strategic advantages resulting out of the state control were considered in the FCO’s assessment of the potential competitive risks. Furthermore, the FCO analysed the possibility of a predatory-pricing-strategy by CRRC enabled by direct payments, discounted loans or research and development grants. The cartel authority concluded that such a strategy by CCRC is likely given the past behaviour by CRRC in different markets as well as a general price-dumping-strategy by China.

The FCO, nevertheless, concluded that the transaction does not raise competition concerns since it was not able to predict, with the required certainty that the acquisition would lead to market dominant position by CRRC. The FCO’s decision was, particularly, based on the finding that Vossloh’s competitiveness was considerably decreasing due to the fact that new competitors have been entering the markets with innovative technologies whereas CRRC has only played a small role in the European market for shunt locomotives so far.

For more information please see the FCO’s press release here (available in English and German) or case report here (only German).

For more information contact Jörg Witting.


Hungary

Complex remedies in the revisited Digi-Invitel telco merger

The Hungarian Competition Authority (GVH) finally approved the acquisition of Invitel by DIGI, both significant players on the Hungarian telecoms market. However, with with a complex remedies package as published on 18 March 2020 (Vj/42/2018). As we already reported, the approval of the merger was revoked and the case reopened because the parties submitted false and misleading data in the notification and approval procedure (Vj/31/2018).

At the beginning of the reopened investigation upon the request of DIGI, the GVH lifted the implementation ban with behavioural conditions with respect to the towns where horizontal overlaps were identified and with the (re)appointment of a supervisor reporting to the GVH on a monthly basis regarding the keeping of the conditions. The commitments approved by the GVH include the following main obligations:

Divestment:

  • Sell the overlapping telco network infrastructure to the buyer approved by the GVH, TM IT Services Kft. (TM-IT) and close the divestment within three months;
  • The DIGI group cannot reacquire the divested assets within 10 years and cannot provide wholesale services to TM-IT in the frame of which DIGI might receive sensitive market information;
  • DIGI must sustain the independency and business of the divested assets and refrain from soliciting costumers up until the closing of the divestment, which obligation will be controlled by a supervisor appointed pursuant to the terms determined by the GVH.

Behavioural remedies concerning i-TV Zrt., being a DIGI subsidiary and the competitor of Invitel in the problematic towns:

  • Before 31 December 2023, DIGI may not terminate its broadcasting agreements with i-TV and i-TV must elongate and may not terminate its cooperation agreements with the respective owners of telco network infrastructure in the problematic towns;
  • Constraints on raising prices in the affected towns until 31 December 2023;
  • Neither DIGI nor Invitel may solicit customers of i-TV until 31 December 2023.

The GVH’s approval decision is available here (in Hungarian).

For more information contact László Zlatarov.


Italy

ICA has fixed new thresholds for merger control in Italy

By decision of 23 March 2020, the Italian Competition Authority (ICA) has updated the turnover thresholds that make prior notification of a concentration mandatory, pursuant to Article 16, par. 1, of Law No. 287 of 1990 ("Law").

According to Article 16, par. 1 of the Law, as amended, a concentration shall be notified in advance to the ICA if the combined aggregate national turnover of all the undertakings concerned exceeds € 504 million, and if the aggregate domestic turnover of each of at least two of the undertakings concerned exceeds € 31 million. The above mentioned thresholds are cumulative.

The criteria to calculate, and geographically allocate the turnover of the undertakings concerned by the merger are also equivalent to those set out in the Council Regulation 139/04 and in the Commission Consolidated Jurisdictional Notice adopted under the EU Merger Regulation (i.e. gross value – minus VAT and other direct taxed – of sale of product or services towards thirds parties, therefore excluding intra-group sales and other income).

The increase in the value of the thresholds corresponds, as provided for by Article 16 of the Law, to the increase in the gross domestic product price deflator index. The updated thresholds will be published by the Authority once the index is announced officially.

Although there are no sector-specific thresholds, the Law provides special rules for the method of calculation of turnover for banks and insurance companies. For banks and financial institutions, turnover is equal to the value of one-tenth of their total assets (memorandum accounts excluded), while for insurance companies turnover is equal to the value of premiums collected (Article 16, par.2, of the Law).

The press release in Italian is available here.

For more information contact Federico Marini Balestra.


Poland

UOKiK clears cosmetics deal in Phase II

In March 2020, the Polish Competition Authority ("UOKiK") announced that in late February 2020 it cleared Sarantis' takeover of assets belonging to PZ Cussons International and PZ Cussons Polska ("Cussons").

All parties involved produce and distribute personal care products. In fact, the combined value-based market share of both parties in the Polish market for soap bars amounts to 30-40%. This figure mainly results from the market share of the assets to be acquired (approx. 20-30%).

The Sarantis Group sells products under 80 brands, including, STR8, Kolastyna and Jan Niezbędny. In Poland, the Group offers primarily soap bars, shower gels, deodorants, perfumes, detergents and various household necessities. Cussons, in turn, is well-known on the Polish market thanks to such brands as Luksja, Carex and Morning Fresh. Sarantis plans to purchase Cussons’s assets that are related to marketing and selling Luksja products.

The transaction was first notified to UOKiK at the end of August 2019.

In October 2019, UOKiK opened Phase II of its merger control proceedings and conducted a survey of the Polish soap bar market among competitors and business partners of the entities participating in the transaction (wholesalers and retailers).

The survey indicated that the Polish soap bar market is characterised by low barriers to entry and by relatively significant buying power of wholesalers and retailers, who may purchase soap bars from other entities, increase the sales of own-brand soap bars, or start marketing own-brand soap bars (if they have not yet done so). Furthermore, UOKiK also found that the transaction will not lead to a restriction of competition even in case of the narrow segmentation of the market based on the criterion of price or distribution channel.

UOKiK approved the transaction. The full text of UOKiK decision No. DKK-58/2020 can be accessed (in Polish) here.

For more information contact Piotr Dynowski.


Spain

The CNMC opens a Phase II investigation into a proposed merger in the funeral services market

At the end of last year, a major Spanish insurance group -Santa Lucía- notified to the Spanish Competition authority (the "CNMC") a proposed merger whereby it would acquire the funeral businesses of Funespaña (a subsidiary of Mapfre, a direct competitor of Santa Lucía).

This acquisition will be carried out though the integration of the funeral businesses of Funespaña and Albia's (a subsidiary of Santa Lucia) into a newly set-up company exclusively controlled by Santa Lucia.

The transaction creates the largest company in the funeral sector in Spain with direct or indirect presence throughout the national territory. Furthermore, the company will be one of the leading companies on the European market, providing more than 70,000 funeral services per year.

The CNMC considers that, as a consequence of the transaction, anticompetitive effects could arise -both at a horizontal and a vertical level- in the wholesale and retail markets for the provision of funeral services as well as in the funeral insurance market:

  • There is horizontal overlap in the funeral services sector between the activities of Albia, Funespaña and a group of five funeral services companies, which would also be controlled by Santa Lucia;
  • Santa Lucía group is leader of the Spanish market for funeral insurances sector and the main applicant for services in the funeral sector and the transaction would strengthen its vertical integration;
  • The relationship between Mapfre and the newly created entity must be examined in detail (it will own up to 25% of it).

Given the risks to competition identified, on March 2, 2020, the CNMC announced the need to open a phase II investigation in order to conduct an in-depth analysis of the transaction. However, as a consequence of the current situation created by COVID-19, the investigation remains temporarily suspended until further notice.

Interestingly, the CNMC is currently carrying out an investigation into prices applied by several funeral businesses in the context of the COVID-19, which may result from anticompetitive agreements between competitors.

For more information, please find the official press release here.

For more information contact Patricia Liñán.


The Netherlands

ACM unconditionally clears acquisition in the Dutch online news market

On 10 April 2020, the Netherlands Authority for Consumers & Markets (“ACM”) unconditionally cleared the acquisition of publishing company Sanoma Media Netherlands (“Sanoma”) by DPG Media (“DPG”) and concluded that no in-depth phase 2 merger control investigation was required as sufficient competition will remain on both the Dutch market for free online news and the online-advertising market.

For the purpose of its investigation ACM defined several relevant markets and investigated the effects of this transaction on competition. Notably the ACM concluded among others that this transaction will have no significant negative effects on competition in the Dutch purchase market for freelance journalistic work as the new combination of companies would only seek the services of a limited number of freelance journalists compared to the total number of freelance journalists in The Netherlands. Another interesting part of the ACM investigation concerned the horizontal overlap of DPG and Sanoma on the market for free online news where the new combination would have a market share of approximately 30-40%. The horizontal overlap on the online-advertising market was much smaller with a combined market share of 0-10%.

The ACM considered that there was no clear European Commission or ACM precedent available in which the provision of general online news was defined as a separate relevant market, but the ACM referred to a recent merger control decision in 2018 by the UK Competition & Markets Authority (“CMA”) in which this market was identified as a separate market. On the basis of a factual assessment of the Dutch online news market, ACM ultimately also identified a separate market for the provision of online news, but left it undecided whether this market should be subdivided into a market for paid and free online news. According to the ACM, this was not required for its assessment as sufficient direct competitors remained on the Dutch market for free online news and aggregators of news such as Google and Facebook will also continue to exercise indirect competitive pressures on this market.

Please find the ACM press release (in English) here and the merger control decision (in Dutch) here

For more information contact Pauline Kuipers.       


UK

The CMA has provisionally cleared Amazon and Deliveroo merger

The CMA has provisionally cleared Amazon and Deliveroo merger 

On 17 April 2020, the Competition and Markets Authority ("CMA") provisionally cleared the anticipated acquisition by Amazon of certain rights and a minority shareholding in Deliveroo.

The CMA's initial analysis of the merger

Amazon's UK business offers a wide range of products available for fast deliveries to Amazon members. Deliveroo is a UK-based online food delivery company and has expanded to also offer online convenience store deliveries. 

The CMA found from its Phase 1 investigations, that without this investment, Amazon would have to attempt to re-enter the online restaurant delivery market, which is a highly concreted market with high barriers of entry. The CMA also found that potential re-entry by a supplier such as Amazon would significantly increase competition in online restaurant food delivery in the UK.

The CMA therefore referred the transaction onto Phase 2 on 27 December 2019.

Phase two investigations

During a Phase 2 investigation, the CMA must assess the impact of a merger against the most likely scenario that would have occurred absent the merger. One possible situation is the ‘exiting firm scenario’, where the CMA needs to consider whether one of the businesses may have left the market absent the merger, and the impact of this on competition.

The CMA provisionally found in its Phase 2 investigations, that the merger would not be expected to result in a substantial lessening of competition in the supply of online food platforms in the UK and the supply of online convenience groceries in the UK. Resulting from the impacts of COVID-19, Deliveroo would likely exit the market unless it received Amazon's additional funding and Amazon is the only likely company available to offer this. The CMA found that the loss of Deliveroo in the market would be more detrimental to competition and to consumers than permitting the transaction to proceed.

What happens now? 

There is now a 3-week consultation period on the provisional findings, during which anyone can make submissions to the CMA. The deadline for the CMA's final report on the Phase 2 investigation is 11 June 2020.

For more information contact Peter Willis


Find out more about Federico Marini Balestra's practice here.  


Private Competition Enforcement Review

Our competition partners Thomas Oster and Peter Willis have contributed to the France and England and Wales Chapters of the Private Competition Enforcement Review (13th edition) published by The Law Review.

Read the full publication online here


Exploring data protection requirements in anti-trust leniency applications 

Webinar recording now available!

On 22 April, Competition partner Anne Federle and Data Protection & IP/IT Partner Benoit Van Asbroeck from our Brussels office jointly held a webinar exploring data protection requirements in connection with antitrust leniency applications.

Our Bird & Bird experts took the participants through the different stages of an internal cartel investigation and the process for a leniency application and discussed how to reconcile, at each stage, the competing demands of an antitrust investigation (requiring in particular speed and strict confidentiality) and of data protection law, and how to limit the resulting risks for companies. This also included questions regarding the involvement of external forensic IT service providers for the electronic document review and the transfer of documents to the US.

You can find the recording and the key takeaways of the webinar here.


Upcoming speaking engagements at Competition & EU law events

Competition partners Peter Willis and Hein Hobbelen will speak at the 22nd Annual EU Competition law summer school organized by Informa. The event, which gathers professionals with extensive knowledge and experience in the field, will be held in Cambridge from 3 to 7 August 2020 (subject to COVID-19 restrictions).