This newsletter is a summary of the antitrust developments we think are most interesting to your business. Roxane Hicheri (counsel based in Paris) and Mark Steenson (counsel based in London) are our editors this month. They have selected:
Changes to U.S. Hart-Scott-Rodino rules and merger notification forms increase burden on filers
This month the U.S. Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) finalized much-anticipated new Hart-Scott-Rodino (HSR) rules and merger notification forms.
While the new rules have been markedly scaled back from previously proposed amendments, future filers will need to provide significant additional information with their HSR filing. The additional disclosures are intended to provide the FTC and DOJ with greater insights into potential concerns from horizontal overlaps, nascent competition, vertical relationships, and Clayton Act Section 8 interlocking directorates earlier in the HSR process.
In a notable positive development, the current ban on granting early termination of the HSR waiting period, which has been in effect since February 2021, will be lifted.
The new rules and forms will likely go into effect in the first quarter of 2025.
Our alert on the rule changes highlights the key takeaways, and details the notable differences between the current and new HSR forms as well as the proposed and final HSR rules. Our alert also delves into the immediate and long-term considerations for clients with active deals.
European Commission appoints new chief competition economist
In last month’s edition of Antitrust in focus we discussed the nomination of Teresa Ribera as the new commissioner for competition policy. In particular, we explored how her “to do” list is likely to shape up following the “mission letter” issued by European Commission (EC) president Ursula von der Leyen. Ribera’s confirmation hearing has now been set for November 12, 2024.
In the meantime, Ribera has responded to questions from EU lawmakers, setting out her intention to “further modernise competition policy”. She has committed to simplifying and speeding up processes (in particular, the approval of State aid and antitrust investigations), strengthening and better targeting enforcement (including vigorous enforcement of the Digital Markets Act and Foreign Subsidies Regulation), and ensuring “effective alignment of competition policy with the EU’s priorities”. Her aim is to “ensure that merger control gives the right weight to the EU economy’s needs” and she pledges to review the EC’s guidelines on horizontal mergers and to “look into all options” to find the best way to ensure that ‘killer acquisitions’ do not escape scrutiny.
Hot on the heels of Ribera’s nomination, the EC has appointed a new chief competition economist. Italian academic Emanuele Tarantino will hold the position for a three-year term, providing independent guidance on economic matters to the EC in its application of EU antitrust rules.
The EC had been seeking a new chief economist since spring 2023. It is significant that Tarantino will start his new position at a similar time to the new commissioner. While the pair will inherit the ongoing cases of outgoing competition commissioner Margrethe Vestager, we expect that they will put their own stamp on the direction of EU antitrust policy and enforcement. Our alert tells you more about the possible road ahead.
European Commission starts to disclose M&A notifications under the Foreign Subsidies Regulation
In a policy shift designed to improve transparency, the EC has decided to make public any deals notified to it for review under the Foreign Subsidies Regulation (FSR).
Until now, the EC only disclosed details of cases subject to an in-depth investigation. There has been just one of these so far—e&/PPF, which was approved with conditions in September 2024 (see our earlier commentary in the September 2024 edition of Antitrust in focus).
Going forward, it appears that the EC will publish a case page on its website for each transaction notified under the FSR, setting out the date of filing, provisional decision deadline and relevant economic sector (see here for an example case page).
This is in line with the EC’s approach under the EU Merger Regulation (EUMR), where a similar case page is created for all EU merger control notifications. However, it stands in stark contrast to the position under many national foreign investment control regimes. In most EU Member States, the fact that a foreign investment filing has been made, as well as the review process and the outcome of the review, is kept confidential.
It is not yet clear what other information, if any, the EC will disclose in FSR cases that are approved at phase 1. For EUMR reviews, the EC publishes a redacted version of its phase 1 clearance decision. Crucially, however, there is no formal phase 1 decision under the FSR, and parties instead receive a letter notifying them that the EC’s preliminary FSR review has closed. How the EC will publicize the closure of a phase 1 FSR review remains to be seen.
Overall, having information on how many (and which particular) deals are being notified under the FSR will give useful insights into the reach of the regime as it continues to bed down. On the flip side, the EC’s new policy could be unwelcome news for merging parties, who may well prefer to keep the fact that their transaction triggers FSR thresholds out of the public domain. We will keep an eye on how the EC develops its approach in this area.
Obstruction of antitrust investigations triggers enforcement around the globe
The ability to make unannounced inspections, backed up with penalties for non-compliance, is an important part of antitrust authorities’ enforcement armoury. Many authorities will not hesitate to sanction attempts to obstruct investigations.
Penalties can be significant. In France, the antitrust authority (FCA) has recently fined the Loste group EUR900,000 for providing inaccurate or incomplete information during the preliminary phase of dawn raids carried out last year in the ham and cold meat sector.
According to the FCA, a legal director indicated that the head of the Loste group was not at the group’s Paris premises, despite previously seeing and informing him of the officers’ presence. The head of the Loste group—who is also vice-president of the French Federation of Charcuterie Meat Producers, Delicatessens and Meat Processors—also inaccurately told FCA officers who were inspecting the federation’s premises that he was on business in the U.K.
In imposing the fine, the FCA stressed that the preliminary phase of an inspection is particularly important as “it determines the success of the dawn raids and the rest of the investigation as a whole”. The authority also took into account that the obstruction was the result of conduct by the head of the Loste group and its “long-serving” legal director.
Obstructing a dawn raid can also lead to sanctions for individuals.
In late August, the Hong Kong Competition Commission (HKCC) sought its first-ever criminal prosecution of an individual for failing to comply with its investigation powers. The individual allegedly attempted to delete documents and information from computers during inspections of the offices of cleaning service companies suspected of a price-fixing cartel.
Under Hong Kong’s Competition Ordinance, any person who destroys, falsifies or conceals a document that they have been required to produce is liable to a fine of up to HKD1 million (approx. USD130,000) and to imprisonment for up to two years.
Our alert tells you more about the case and highlights the HKCC’s commitment to take a firm stance against any other contraventions identified.
These are not the only dawn raid obstruction cases we have seen recently. The Greek antitrust authority has fined Motor Oil Hellas EUR9.2 million and an individual EUR50,000 for impeding, delaying and hindering a dawn raid conducted in the context of an investigation into the wider petroleum product market, including by failing to ensure the integrity and availability of corporate files. In Bulgaria, two construction machinery retailers were fined a total of BGN104,000 (approx. USD58,000) for failing to cooperate with an inspection relating to the suspected manipulation of public tenders. Finally, and unusually, the Slovak Antimonopoly Office fined a hosting and domain services firm over EUR60,000 for refusing to hand over emails that had been deleted by a firm whose premises were inspected by the authority in relation to a suspected cartel in the hazardous waste sector.
Similarly, penalties for procedural breaches during later stages of antitrust investigations can be significant. This month, for example, the Polish antitrust authority fined Dell PLN6 million (approx. USD1.5 million) for providing false and misleading information during its investigation into the company’s sales practices (which ultimately ended in commitments).
In the context of a sustained uptick in dawn raids across the globe, these cases serve as a warning to companies to have dawn raid and investigation procedures in place and staff appropriately briefed so that business interests can be protected while ensuring compliance with the law.
Procedural merger control enforcement continues to build worldwide
In our September edition of this publication, we reported that the U.S. DOJ was seeking a gun-jumping penalty in relation to Legends Hospitality’s acquisition of ASM. While such enforcement is relatively rare in the U.S., it is a regular occurrence in other jurisdictions.
In China, for example, there are signs that the State Administration for Market Regulation (SAMR) is once again ramping up procedural enforcement (or, at least, the procedural enforcement that it makes public).
Following a CNY1.75 million (approx. USD250,000) gun-jumping fine announced last month in relation to a construction deal, SAMR has now fined two Chinese energy companies CNY700,000 (approx. USD100,000) each for failing to notify the establishment of a joint venture in summer 2023. The companies voluntarily submitted relevant documents to SAMR a couple of months later.
In Brazil, we saw how voluntarily filing a deal can result in a significant penalty reduction. The BRL375,000 (approx. USD69,000) fine imposed on Boehringer Ingelheim Animal Health do Brasil and Biogénesis Bagó Saúde Animal for prematurely closing Biogénesis’ acquisition of rights and sales authorizations relating to a Boehringer drug included a 50% discount for voluntary notification and a further 10% reduction for settling with the authority.
In other jurisdictions, we have seen much higher sanctions for gun-jumping or failure or file. The Indonesian antitrust authority fined fertility clinic Morula INR10 billion (approx. USD655,000) for a 54-working day delay in the notification of a hospital acquisition. Morula is a subsidiary of the Bundamedik health group, which was fined INR5bn (approx. USD325,000) in September 2024 for the late notification of another regional hospital.
Elsewhere, penalties were imposed for gun-jumping in Italy—a total of EUR16,356 on Cristoforetti and CPL Concordia Società Cooperativa for submitting a notification after joint control had already been acquired.
Providing inaccurate or incomplete information during a merger review process can also prove costly. This month, the U.K. Competition and Markets Authority (CMA) fined Tereos for failing to fully comply with a requirement to produce information in relation to the T&L Sugars/Tereos merger inquiry.
As part of the CMA’s phase 2 investigation, Tereos was sent a formal notice requiring the production of certain minutes and internal documents in relation to its board and corporate governance. While the company provided some documents, after being prompted by the CMA, it produced a further 76 documents responsive to the notice, over seven weeks after the original deadline.
The CMA concluded that the company’s interpretation of the scope of the notice was “unjustifiably narrow and untenable when viewed in the context of the object of the merger inquiry”, and that the failure was capable of having an adverse impact on the CMA’s investigation.
The fine imposed on Tereos was only GBP25,000 (just shy of the current maximum fixed penalty of GBP30,000). However, the CMA will gain much stronger fining powers—up to 1% of global group turnover—once amendments introduced by the Digital Markets, Competition and Consumers Act 2024 come into force in December 2024 or January 2025. With this, we expect to see a corresponding increase in the level of the CMA’s enforcement fines.
We will continue to bring you the latest news on procedural merger control enforcement.
Australia takes next step towards a mandatory merger control regime and refines filing thresholds
Australia is on the cusp of shifting to a mandatory and suspensory merger control regime. In a significant step, a bill has now been introduced before the Australian Parliament (the Bill) that will implement the new rules into law.
The Bill sets out the core elements of the new regime. This includes the types of notifiable transactions, the control test, review timelines, procedural rules, a revised substantive test and a new public benefits process.
It also empowers the Minister to designate notification thresholds. These will be formally introduced via subordinate legislation, but the Treasurer gave a preview of how they will operate when announcing the Bill. Notification will be required where:
- The combined Australian turnover of the merger parties (including the acquirer group) is at least AUD200 million (USD135m), and either (i) the Australian turnover is at least AUD50m (USD33m) for each of at least two of the merger parties, or (ii) the global transaction value is at least AUD250m (USD167m); or
- The acquirer group’s Australian turnover is at least AUD500m (USD335m), and either (i) the Australian turnover is at least AUD10m (USD6.5m) for each of at least two of the merger parties, or (ii) the global transaction value is at least AUD50m (USD33m).
To address serial acquisitions, a three-year cumulative consideration of all acquisitions in relation to the same or substitutable goods or services will apply to both notification thresholds and the substantive consideration of competitive effects.
In addition, the Minister can determine that certain mergers must be notified even if these monetary thresholds are not met. We expect these powers will initially be used to require notification of all transactions in the supermarket sector (and potentially certain acquisitions in the fuel, liquor and oncology radiology sectors), as well as purchases of an interest above 20% in an unlisted or private company if one of the companies has a turnover of more than AUD200m (USD135m). Ministerial determinations will also sunset after a maximum of five years.
In terms of timing, the Bill proposes that the new regime will take effect on January 1, 2026, with transitional provisions kicking in from July 1, 2025.
We will continue to keep you updated as the reforms progress.
EU foreign investment screening annual report shows steady intervention rates and a targeted approach by the EC
The EC has published its fourth annual report on foreign direct investment (FDI) screening in the EU. It describes the evolving FDI landscape in the region during 2023.
The report highlights that 24 Member States now have national FDI screening mechanisms in place (although the regimes in Ireland and Bulgaria are not yet operational). The remaining three Member States (Cyprus, Croatia and Greece) have draft rules either in the pipeline or going through the legislative process.
During 2023, Member States handled a total of 1,808 requests for authorization and ex-officio FDI cases (a significant 25% increase from 2022). 56% of these were formally screened. Of the cases decided:
- The vast majority—85%—were cleared unconditionally.
- Conditions or mitigating measures were imposed in 10% of decided cases, up slightly from 9% in 2022, but still a substantial drop from 23% in 2021.
- Only 1% of cases were ultimately blocked (and 4% were withdrawn before a final decision was made)—this is in line with 2022.
The EC notes that the data shows an “interesting stability”, confirming that the EU remains open to foreign investment and that Member States block only those cases that pose very serious threats to security and public order.
The report goes on to analyze action taken under the EU FDI Screening Regulation. This regulation establishes a cooperation framework requiring Member States to inform other Member States and the EC when they receive a filing under their national FDI regime. The final decision on whether to approve an investment lies with the Member State(s) in which the investment is notified, but national authorities must consider any comments received from other Member States and any opinion issued by the EC following its assessment.
There are six key takeaways from 2023 activity under the cooperation mechanism:
- 488 notifications were made under the cooperation mechanism in 2023, up from 421 in 2022 (and an 18% increase since 2021).
- The main jurisdictions of origin of ultimate investors were the U.S. (32%), the U.K. (11%), UAE (7%), China (including Hong Kong) (6%), Canada (5%) and Japan (4%).
- The EC closed 92% of cases following a preliminary phase 1 assessment, i.e., within 15 working days. This is up from 87% in 2022 and is positive news for transacting parties who are less likely to see their FDI review periods delayed as a result of scrutiny by the EC.
- Only 8% of cases were subject to a detailed phase 2 security risk assessment by the EC, with the EC issuing an opinion in less than 2%. The EC says that it is continuing to use the cooperation mechanism as a “limited and targeted tool for exceptional cases where an FDI is likely to negatively affect security or public order”.
- Almost 40% of cases subject to a phase 2 assessment by the EC were in the manufacturing sector (which includes the manufacturing of defence equipment and pharmaceuticals) and a quarter related to information and communication technologies.
- In just over a third of notifications, the transaction was screened in several Member States—up from 29% in 2022 and demonstrating a steady increase in multi-jurisdictional deals subject to FDI review.
The EU FDI Screening Regulation is now at an inflection point. Earlier this year, the EC put forward proposals for reform. These include obliging all Member States to introduce a screening regime and adhere to certain minimum standards. There are also plans to strengthen cooperation and information exchange between Member States.
The timing of any amendments is as yet unclear. Progress was delayed by the EU elections in June but work on the reforms has reportedly resumed. We should know more in the coming months.
CFIUS 2023 annual report reveals fewer filings but increased enforcement
The latest annual Committee on Foreign Investment in the United States (CFIUS) report highlights how it is continuing to play an increasingly active role in reviewing and assessing inbound investment transactions for U.S. national security risks. While there were fewer filings in 2023 compared to 2022, CFIUS imposed more mitigation measures and continued to focus on non-notified transactions.
In another recent development, the Treasury Department has updated the CFIUS website to provide more information on monetary penalties imposed and when it might instead issue Determination of Noncompliance Transmittal (DONT) Letters.
Our alert provides key takeaways from the 2023 annual report and an overview of CFIUS enforcement actions.
European Commission sees appeal rejected in long-running Intel rebates case
Hot off the press, the EC has suffered a significant defeat before the European Court of Justice (ECJ) in the Intel rebates case, which has been ongoing for over 15 years.
In 2009, the EC imposed a record EUR1.06 billion fine on Intel for abusing its dominant position in the market for x86 CPUs by granting anti-competitive loyalty rebates to computer manufacturers, as well as paying manufacturers to halt or delay the launch of products containing rivals’ x86 CPUs and limiting the sales channels available to those products. Following appeals by Intel, in 2022 the General Court annulled the rebates part of the EC’s decision and overturned the fine.
The EC appealed that 2022 ruling, challenging the General Court’s review of how the EC assessed Intel’s conduct under the “as-efficient-competitor test”. Now, the ECJ has sided with the General Court, confirming that the lower court is entitled to examine any argument that is intended to call into question the EC’s assessments and that is capable of invalidating the conclusions reached by the EC and upholding the annulment of the rebates part of the EC’s decision.
Watch out for our upcoming commentary on the ECJ’s latest ruling. We will discuss what the judgment means for the assessment of rebates in the EU and how it ties in with the EC’s draft guidelines on exclusionary abuses of dominance (currently under consultation).
Top EU Court finds FIFA’s player transfer rules are anticompetitive and breach free movement
The ECJ has held that certain aspects of FIFA’s transfer rules are incompatible with EU laws on antitrust and free movement of workers.
The ruling stems from a dispute between FIFA and professional football player Lassana Diarra before the Belgian courts. Diarra challenged the parts of FIFA’s rules that kick in when a player is considered to have terminated their contract without “just cause”. Under these rules, the player and the new club are jointly and severally liable for any compensation due to the former club. In certain circumstances, the new club can be deemed to have induced the breach of contract and as a result be liable to sporting sanctions. Finally, the rules provide that the national association of the former club will not issue the international transfer certificate required for a player to register with a new national association.
The ECJ confirmed that the rules “by their very nature” cause a high degree of harm to competition in respect of the recruitment of players, and amount to a “by object” infringement of EU antitrust law.
The court emphasized that it may be legitimate to prohibit the unilateral termination of contracts during a season, to ensure the stability of squads within competitions. However, that legitimate objective cannot justify rules that restrict or prevent competition for players under contract in a “generalized, drastic and permanent” manner. In this regard, the ECJ found that the consequences (for both player and new club) of breaching the rules are so severe that clubs are almost certain to retain players under contract.
According to the ECJ, in effectively preventing a new club from recruiting a player that is under contract, the rules are akin to an unlawful “no-poach” agreement. The reference to no-poach agreements by the court is significant. It comes at a time when antitrust authorities across the globe are stepping up their scrutiny of conduct and arrangements that may adversely impact competition in labor markets.
The ECJ also held that FIFA’s rules breach EU rules on free movement by creating legal, financial and sporting risks for football clubs. Clubs are deterred from making firm and unconditional offers, meaning that players are deprived of employment opportunities. While, again, there might be legitimate reasons to restrict free movement of players (e.g., ensuring the regularity of competitions by maintaining stability in the player rosters of clubs), the ECJ said that FIFA’s rules go beyond what is necessary and proportionate to achieve these objectives.
The case now reverts to the relevant Belgian national court, which will decide the dispute in accordance with the ECJ’s ruling. In the meantime, FIFA has announced that it will open a “global dialogue” with key stakeholders, inviting proposals on what changes to the rules “are most appropriate and suitable”.
More broadly, the ECJ’s judgment marks another defeat for FIFA, whose rules and practices have faced various challenges at both EU and national level in recent years.
In December 2023, for example, the ECJ found that regulations enabling FIFA and UEFA to refuse to recognize a new football competition (the European Super League), and to threaten clubs or players participating in that competition with expulsion from FIFA/UEFA tournaments, were in breach of EU antitrust rules (see our commentary in the January 2024 edition of Antitrust in focus).
The ruling is also further evidence of a rising trend in the use of antitrust arguments in sports disputes—both in the EU and around the globe. For instance, in the U.S. this month we have seen developments in a case involving allegations that the governing body for international and Olympic aquatic sports engaged in a group boycott against a competing swimming league. Read our Need-to-Know report to find out more.
Need-to-Know: updates on U.S. antitrust litigation
Our Need-to-Know Litigation Weekly publication analyzes notable U.S. litigation decisions, orders, and developments. From an antitrust perspective, we have featured the following cases over the past month:
- Plaintiffs alleging per se boycott win reversal in Ninth Circuit
- New Jersey District Court dismisses algorithmic room-rate-fixing case alleging use of room pricing software by Atlantic City casino-hotels violates antitrust law
- SDNY judge refuses to transfer DOJ case against concert promoter, finding attempt to unwind a merger by consent decree does not necessarily “modify” the decree
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