CMA announces reform plans for merger review process

 

The Competition and Markets Authority is consulting on changes to its mergers jurisdictional and procedural guidance (CMA2).

The main changes include:

·        Opportunities for merger parties to engage directly with the CMA early in the process.

·        An "interim report" will be published earlier in the process, replacing the provisional findings report and setting out the CMA's provisional assessment of the impact of the merger on competition.

·        Earlier without prejudice remedy discussions between the CMA and merger parties.

The issues statement will be abandoned and, instead, the CMA will invite submissions on the Phase 1 decision. greater opportunities for economic experts to engage with the CMA's experts.

There are other changes to the revised guidance to reflect developments in the CMA's practice and in case law. These mainly relate to confidentiality and disclosure.

While the reforms reflect some important streamlining of the CMA’s merger review process, the CMA has declined calls to grant merger parties full access to evidence provided by third parties.

The CMA has also published for consultation a draft of the proposed new Phase 2 Remedies Form and a revised draft Template Waiver.

A revised draft Merger Notice is also available for comment.

Interested parties should provide responses to the consultation by 8 January 2024.

https://assets.publishing.service.gov.uk/media/655788a4046ed400148b9b2f/Consultation_document_Nov23.pdf

National Security and Investment Act – Call for Evidence

 

 

On 13 November the Cabinet Office issued a call for evidence in relation to the National Security and Investment Act 2021 (NSIA) to collect views on how the national security and investment regime can be more business friendly.  It also sought views on how the provisions could be refined while protecting national security.

Specifically, the call for evidence is designed to identify views on:1) the impact of the NSI regime on businesses and investors, 2) whether the scope and requirements of the NSI regime are proportionate and effective, and 3) how stakeholders understand the NSI regime.

The NSIA replaced the Enterprise Act in January 2022.  It allows the government to scrutinise and intervene in acquisitions in 17 sensitive industries that could harm the UK’s national security.  The government has cleared around 93% of transactions it has reviewed within 30 working days, while it has remedied or prohibited 17 deals.

There are concerns that the NSI regime may be cast too widely; not least since the rules can even require companies with no UK operations to notify investments.

The call for evidence may be regarded as a natural evolution of a maturing regime. The rules require a review within three years of implementation so the timing of the  consultation is not surprising.

Responses to the call for evidence should be submitted by 15 January 2024.

 

https://www.gov.uk/government/calls-for-evidence/call-for-evidence-national-security-and-investment-act

CAT ruling in collective proceedings against Apple in battery throttling case

The Competition Appeal Tribunal has granted, subject to funding matters, a collective proceedings order (CPO) brought by Mr Justin Gutmann to start collective proceedings under section 47B of the Competition Act 1998 against Apple Inc., Apple Distribution International Limited, and Apple Retail UK Limited (together, Apple).

The application relates to alleged breaches by Apple of Article 102 TFEU prior to 31 December 2020.  The application claims that the abuse derives from Apple's lack of transparency in failing to inform consumers of issues surrounding battery health of their iPhones and the resultant impact on the performance of their iPhone, such that Apple would have been required to compensate them.

The CAT first rejected Apple's strike-out application, which submitted that Mr Gutmann had not established any abuse on the facts.

However, the CAT found that there was a reasonable prospect of Mr Gutmann showing at trial that the negative impact on the performance of affected iPhones was sufficiently material.

The CAT also found that the methodology being advanced by Mr Gutmann offered a realistic prospect of establishing loss on a class wide basis if he established relevant facts at trial. In addition, it was just and reasonable that Mr Gutmann act as the class representative in these proceedings.

However the claimants have informed the CAT they may need to alter their funding arrangements following the Supreme Court’s recent ruling in PACCAR in July, 2023.

The claimants have also stated that Apply has settled a similar class action in the US in August 2023 for approximately USD500 million.

Mr Justin Gutmann v Apple Inc and others, judgment [2023] CAT 67

Collective Competition Actions: Challenges for Case and Costs Management

It is timely to reflect on the mounting scale, complexity and scope of collective actions in competition cases. I have just had an article published in Issue 10 of TL4’s Disputes Magazine where I discuss how the ongoing Interchange Fees and Trucks Litigation cases and others will continue to pose challenges for case management in the Competition Appeal Tribunal. I also note that some funding agreements will need to be revised to reflect the Supreme Court’s recent ruling R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) [2023] UKSC 28. Navigating the future landscape will require a delicate balancing exercise between proportionality, fairness and reasonable cost.

This article was first published with ThoughtLeaders4 Disputes Magazine.

Collective Competition Actions

CMA gives green light to reworked Microsoft-Activision Blizzard merger

 

The Competition and Markets Authority (CMA) has approved Microsoft Corporation’s acquisition of the major part of Activision Blizzard, Inc (Activision), excluding Activision’s cloud streaming rights outside of the EEA.

In April 2023, the CMA prohibited Microsoft’s proposed acquisition of the entirety of Activision. The CMA opened a new Phase 1 investigation in August 2023.

The reworked transaction involves Activision's global cloud streaming rights (outside the EEA) for all current and future Activision PC and console games released during the next 15 years (the Activision Streaming Rights), being divested to Ubisoft Entertainment SA, pursuant to a divestment agreement between Activision and Ubisoft, immediately before Microsoft acquires Activision.

The CMA is satisfied that the new deal will stop Microsoft from “locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers.”   

This has been a high-profile transaction, attracting the criticism of commentators who challenged whether the UK’s merger control regime was suited to handle large tech mergers in a dynamic environment.  It was then subject to a stayed appeal before the UK’s Competition Appeal Tribunal and where Microsoft has made the case for the CMA to depart from its original order. The case culminated in a new Phase I probe to assess Microsoft’s restructured proposal.

Whether we will see a similar saga play out in the future remains to be seen. It may be conjectured whether the restructured deal proposal might have been offered earlier to avert the costs, delay and uncertainty that has prevailed in the interim.

But it is not all over (yet).  The transaction has yet to be approved by the Australian Competition and Consumer Commission.

https://www.gov.uk/government/news/microsoft-concession-a-gamechanger-that-will-promote-competition

 

 

CMA investigation into freelance and employed labour in the production of TV content

 

The Competition and Markets Authority (CMA) is investigating suspected violations of competition law in relation to the purchase of services from freelance providers, and the employment of staff, who support the production, creation and/or broadcasting of television content in the UK. The probe, announced on 12 October, excludes sport content.

The CMA has announced that it suspects infringements of the Chapter I prohibition of the Competition Act 1998 by a number of organisations.  These include at least, the British Broadcasting Corporation, Hartswood Films Limited, Hat Trick Productions Limited, ITV PLC, Red Planet Pictures Limited, Sister Pictures Limited and Tiger Aspect Productions Limited.

The investigation is at a preliminary stage and the CMA  expects to complete its information gathering by March 2024. 

The CMA is separately investigating suspected breaches of the Chapter I prohibition in relation to the purchase of freelance services and the employment of staff supporting the production and broadcasting of sports content in the UK. This other investigation was opened in July 2022.

The CMA has not set out its exact theory of harm.  However, last year The Financial Times and Daily Telegraph reported that the sports content investigation is examining whether broadcasters colluded over how much they paid freelance sports production staff.

https://www.gov.uk/cma-cases/suspected-anti-competitive-behaviour-relating-to-freelance-and-employed-labour-in-the-production-creation-and-slash-or-broadcasting-of-television-content-excluding-sport

Competition and Markets Authority investigation into cloud services

 Competition and Markets Authority investigation into cloud services

This morning I was interviewed on BBC’s World Business Report about Ofcom’s probe into practices and features that could limit competition in cloud infrastructure services. The regulator was expected to refer the market to the Competition and Markets Authority to examine the strength of competition and any features that could limit innovation and growth. Shortly after the broadcast was aired, the CMA launched its investigation as expected.

The referral comes on the back of a market study where Ofcom found that there are two leading providers of cloud infrastructure services in the UK: Amazon Web Services (AWS) and Microsoft who have a combined share of 60-70% and where Google is their closest competitor with a share of 5-10%.

Further details can be found on the CMA's case page here: https://www.gov.uk/government/news/cma-launches-market-investigation-into-cloud-services