The European Commission recently adopted and published the revised Research and Development Block Exemption Regulation and Specialisation Block Exemption Regulation, together referred to as the Horizontal Block Exemption Regulations (HBERs), accompanied by the revised Horizontal Guidelines (HGLs). The adoption of the new HBERs and HGLs comes after the conduct of a similar review process and the adoption of the Vertical Block Exemption Regulation and Vertical Guidelines in May 2022. This revised horizontal package seeks to provide businesses with up-to-date guidance to help them self-assess the compatibility of their horizontal cooperation agreements with EU competition law.
The European Commission recently adopted and published a package to simplify the procedures for reviewing concentrations under the EU Merger Regulation. The goal of the package is to simplify merger review procedures, with a targeted 25% reduction on reporting requirements.
On April 20, 2023, the EU Commission (Commission) adopted and published a package to simplify the procedures for reviewing concentrations under Regulation (EC) 139/2004 of January 20, 2004 (European Union Merger Regulation – EUMR). This package includes a set of three materials comprising (i) a revised Merger Implementing Regulation (Implementing Regulation), (ii) a Notice on Simplified Procedure (Notice), and (iii) a Communication on the Transmission of Documents to the Commission (Communication). The new notification forms (Form CO, Short Form CO, Form RS and Form RM) are also provided as Annexes to the Implementing Regulation.
The core objective of the package is to simplify merger review procedures, with a targeted 25% reduction on reporting requirements. This evolution is more than welcome, especially in light of the very recent Regulation on foreign subsidies distorting the internal market (FSR) which recently entered into force, imposing additional burdens on M&A transactions. We discuss this recent entry into force of the new FSR in our last article, available here.
This new package intends to bring significant benefits for businesses and advisers in terms of easing preparatory work and related costs. Relieving this administrative burden lying on the parties to a concentration should hopefully speed up the approval process by the Commission. The new package will apply from September 1, 2023.
This Review provides legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy. Topics covered include:
• DOJ Sees First Merger Win After String of Losses • FTC Brings Suit Against Microsoft/Activision • Updated Merger Guidelines Expected Soon • Merger Fees Changing • The EC Launches a Consultation on Its Draft Revised Market Definition Notice • UK Orders a Chinese Firm to Divest Its 83% Controlling Stake in a Welsh Semiconductor Wafer Factory Based on National Security Concerns
On December 23, 2022, Regulation (EU) 2022/2560 of December 14, 2022 on foreign subsidies distorting the internal market (FSR) was published in the Official Journal of the European Union. The FSR introduces a new regulatory hurdle for M&A transactions in the European Union (EU), in addition to merger control and foreign direct investment screening. The FSR’s impact cannot be overstated as it introduces two mandatory pre-closing filing regimes and it gives the Commission wide-reaching ex officio investigative and intervention powers. Soon, the Commission will also launch a public consultation on a draft implementing regulation that should further detail and clarify a number of concepts and requirements of the FSR.
The bulk of the FSR will apply as of July 12, 2023. Importantly, the notification requirements for M&A transactions and public procurement procedures will apply as of October 12, 2023.
We highlight the key principles of the FSR below and provide guidance to start preparing for the application of the FSR. We refer to our On The Subject article ‘EU Foreign Subsidies Regulation to Impact EU and Cross-Border M&A Antitrust Review Starting in 2023’ of August 2, 2022 for a more detailed discussion of the then draft FSR. We also refer to our December 8, 2022 webinar on the FSR. Given the importance of the FSR, we will continue to report any future developments.
In the United States, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) lost four merger challenges (Illumina/GRAIL, UnitedHealth/Change Healthcare, U.S. Sugar/Imperial Sugar and Booz Allen/EverWatch) in September. The losses demonstrate that parties willing to litigate can have success in court. The absence of “smoking gun” documents and lack of a presumption of anticompetitive effects (based on market shares and concentration) made these cases very difficult for the government. The judges in these cases tended to credit structural and behavioral remedies that the government felt were insufficient and were persuaded by real-world testimony from executives and third parties contradicting the government’s theories of changed economic incentives from the transactions.
In July 2022, the European Parliament published the final text of the European Union’s upcoming instrument to address distortive foreign subsidies, following a provisional political agreement reached between the EU lawmakers in June (Foreign Subsidies Regulation). The Foreign Subsidies Regulation introduces a new mandatory screening mechanism including notification obligations and the European Commission’s right of ex officio investigations, which will have a considerable impact on M&A transactions and procurement procedures.
The Foreign Subsidies Regulation will enter into force once it is formally adopted by EU lawmakers and published in the Official Journal. It will become directly applicable across the European Union six months after entry into force. The notification obligations will start to apply nine months after entry into force. The Commission also is currently drafting procedural rules on how to notify transactions, how to calculate time limits, and the process for preliminary reviews and in-depth probes when there is a suspicion of distortive foreign subsidies.
In the United States, parties continue to be cautious in litigating challenged transactions. Since January 2021, the US Federal Trade Commission (FTC) and Department of Justice (DOJ) filed lawsuits (or threatened to sue) to block 16 transactions. Of those transactions, 12 were abandoned and six are in various stages of litigation. The data suggest that the FTC’s and DOJ’s aggressive merger enforcement policy is raising the stakes for parties to potential mergers and acquisitions, including an increased willingness by the agencies to litigate potentially problematic transactions.
Between May 6 and June 3, 2022, the European Commission (Commission) held a public consultation to seek views on the draft revised Merger Implementing Regulation (Implementing Regulation) and the Notice on Simplified Procedure. This consultation was launched in the context of the Commission’s review process of the procedural and jurisdictional aspects of EU merger control.
On April 20, 2022, the UK government proposed new measures to boost consumer protection rights and competition rules. In particular, the UK government’s reforms aim to strengthen the Competition & Markets Authority’s (CMA) powers and alleviate burdens on smaller companies.
In line with the evolution of the economy and the ongoing growth of online business and global trade, we’re seeing a corresponding increase in competition regulation and a rise in enforcement across all authorities. In our latest International News, we take a deep dive into the issues at play.
The growth of the online economy has triggered the US Federal Trade Commission’s (FTC) update of its 20 year old .com Disclosures: How to Make Effective Disclosures in Digital Advertising guide, and the development of an analytical framework for all digital distribution across the European Union. In just one seismic shift under the new EU Vertical Block Exemption Regulation 2022/720, dual-pricing, i.e., setting different wholesale prices for online/offline sales by the same distributor, is no longer considered a hardcore restriction unless its purpose is to prevent the effective use of the internet to sell the goods or services.
In the United States, there is an increased focus on anticompetitive mergers and acquisitions (M&A). The Biden Administration, the Department of Justice Antitrust Division, and the FTC have all stated that the regulatory landscape needs to be reshaped to better reflect dynamic markets, and their priority is the aggressive pursuit of litigation against offending parties rather than the granting of consent decrees. The tendency to “sin first and beg forgiveness later” will emphatically no longer work, as a recent French gun-jumping case demonstrates.
Both the United States and the European Union have also turned their attention to investigating wage fixing and no-poach labour market violations that are not connected with M&A or business collaborations. It’s clear that competition/antitrust authorities are determined to expand their remit.
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