The Court of Appeal has allowed an appeal by Société
Coopérative de Production SeaFrance SA (SCOP) against a ruling of the
Competition Appeal Tribunal (CAT) that affirmed the CMA’s ban of the takeover
by Eurotunnel of the MyFerryLink Dover ferry service.
The case concerns Eurotunnel’s acquisition of three of
MyFerryLink’s ferries in 2012 from SeaFrance when the ferry operator was in
liquidation. The appeal centred on the question of whether the purchase
of assets from a liquidated company constituted an enterprise for the purposes
of UK merger control.
The majority of the Court of Appeal found that the CMA’s
finding that the relevant employees had transferred to the new owner was
flawed. Without this finding there could no case of an “enterprise”
ceasing to be distinct for the purposes of UK merger control.
The majority seem to emphasise the need for there to be an
acquisition of a "going concern" for there to be an acquisition of an
"enterprise". However, it is not clear what the impact of the
judgment will be for future cases involving the acquisition of assets from a
liquidated company since they also recognise that each case will turn on its
facts. They also recognise that it is not necessary for the business to
be trading at the moment of the acquisition. Key to the judgment of the
majority was the irrationality in the CMA’s finding that there was a transfer
of employees from SeaFrance rather than re-employment of employees by the
SCOP. It seems that the perspective of the ordinary reasonable bystander
will be instructive, as reflected in the words of Sir Collin Rimmer speaking
for the majority that:
" If one were to explain
the facts to the ubiquitous reasonable man and ask him whether the employees
either transferred, or 'effectively' transferred, from SeaFrance to the SCOP,
or so transferred 'in effect' or as a matter of reality, I would expect him to
respond testily with a robust negative. He would make the obvious point that
they could not have so transferred because they had been dismissed from
SeaFrance before GET was relevantly on the scene. He would say that the simple
reason for their re-employment by the SCOP was referable to the combination of
GET's successful bid and the various incentives provided by PSE3 for the
re-employment of SeaFrance's ex-employees. He would be right. He might wonder
why he was being asked such a peculiar question."
Société Coopérative De Production Seafrance SA v Competition
and Markets Authority [2015] EWCA Civ 487, judgment of 15 May 2015
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