EU’s Microsoft-Activision OK Raises Question: Fix Or Fight?

Becket McGrath provided comments on Bryan Koenig‘s article for Law360

Law360 (May 16, 2023, 5:56 PM EDT) — European Union antitrust officials’ clearance on Monday of Microsoft Corp.’s planned $68.7 billion takeover of Activision Blizzard Inc. only marginally boosted prospects for a deal still under challenge in the United States and facing a U.K. block, but it does highlight important differences among the three enforcers.


The CAT undertakes a judicial review, rather than merits assessment, and tends to defer to the CMA on substantive assessments, including whether or not to accept a remedy (absent procedural failures). At least the CAT process is relatively quick, so the parties should have an answer from the CAT in 6 months or so,” Euclid Law Ltd. partner Becket McGrath said in an email.

However, even a six-month review would blow past the merger deal’s built-in July 18 deadline. If the companies don’t extend that deadline and the deal collapses, the agreement allows Activision to walk away and hit Microsoft with an up-to $3 billion breakup fee.


Even if Microsoft manages to defeat the FTC challenge, a lasting U.K. decision against the transaction could be prohibitive.”It’s sometimes possible to carve out a jurisdiction or impose a geographically limited remedy … to avoid a total block, but I can’t see how that could be done here for what are ultimately global businesses, plus the CMA prohibition removes any possibility to negotiate such an outcome in any event,” Euclid Law’s McGrath said.

(Full article available to Law360/MLex subscribers)

–Additional reporting by Najiyya Budaly. Editing by Kristen Becker.  All Content © 2003-2023, Portfolio Media, Inc

Long-awaited UK Bill to Regulate Technology Platforms Introduced to Parliament

by Becket McGrath, Partner

On 25 April, the UK Government finally introduced its long-awaited Digital Markets, Competition and Consumers Bill (the ‘Bill’) into the House of Commons.  Although the Bill’s introduction of a brand new regulatory regime for large technology companies has attracted the most media attention, it will also implement a radical re-shaping of the UK consumer protection regime, as well as making a number of detailed amendments to UK competition law.  As far as the latter are concerned, the UK’s antitrust, merger control, market investigation and competition litigation regimes will all be affected.  As a result, hardly any aspect of the UK competition landscape will remain untouched once the Bill becomes law.

After the birth of its first modern competition regime in 2000, with the entry into force of the Competition Act 1998 (‘CA98’), the UK experienced major competition law reforms roughly every ten years, with the Enterprise Act 2002 (which modernised the merger control and markets regimes) being followed by the Enterprise and Regulatory Reform Act 2013 (which, among other things, merged the OFT and Competition Commission to create the Competition and Markets Authority (‘CMA’)).  The pace of change has increased in recent years, due primarily to the need to reshape the UK regime to reflect its decoupling from the EU’s competition law ecosystem following Brexit, which led to significant changes to the CA98 taking effect at the end of the transition period on 31 December 2020.  Running to 317 sections and 26 schedules, over 388 pages of text, with 228 pages of explanatory notes, the new Bill amounts to the largest and potentially most significant single package of reforms to the UK competition law regime to date.

While it is beyond the scope of this briefing to cover all of the measures to be implemented by the Bill, its main points are as follows:

Digital markets

The origins of the Bill’s new tech regulatory regime go back over four years, to the March 2019 report on ‘Unlocking digital competition’ produced by a Digital Competition Expert Panel.  This was appointed by the then Chancellor of the Exchequer George Osborne in 2018 to consider changes to the UK competition regime to respond to the challenge posed by digital markets.  (As this panel was headed by US economist Professor Jason Furman, it is generally referred to as the Furman Review.)  At that time, the UK was one of the first jurisdictions to undertake a detailed consideration of this topic and the work of the Panel generated significant interest on a global basis.

Despite this, and the broad consensus on the need for action to regulate ‘big tech’, the speed of implementation of the measures recommended by the Panel was glacial.  Indeed, at one point the initiative appeared at risk of abandonment altogether.  Although the Furman report was followed in 2020 by a detailed set of policy recommendations from the CMA which created the blueprint for the new regulatory regime, nothing happened until July 2021.  At this point, the Government simultaneously initiated consultations on its plans to proceed with implementing a new ‘pro-competition regime for digital markets’ and to implement a wide range of reforms to the competition and consumer regimes to ‘drive growth’ and (in the favoured phrase of then Government) ‘build back better’.  Reflecting wider turmoil in UK politics over the last two years, which played havoc with the legislative programme, as well as the length and complexity of the Bill and the political sensitivity of at least some of the proposals, it is perhaps unsurprising that it took almost two more years for those consultations finally to produce this Bill.

As originally proposed by the Furman Review and by the CMA in its advice to Government, the Bill creates a new regulatory regime under which the CMA’s new Digital Markets Unit will be able to designate a large technology company as having significant market status (or ‘SMS’) with respect to a specified digital activity if: (i) it has “substantial and entrenched market power” that is likely to persist for at least five years; (ii) it holds a position of “strategic market significance”; (iii) the specified activity has a sufficient link to the UK; and (iv) the undertaking has annual global revenues of more than £25 billion or UK revenues of more than £1 billion.  In order to designate a company as having SMS, the CMA must undertake a investigation and consult on its findings. 

Once a company has been designated as having SMS, the designation lasts for five years.  The CMA will have broad regulatory powers to impose ‘conduct requirements’ on designated undertakings to promote ‘fair dealing’, ‘open choices’ and ‘trust and transparency’ with respect to their relevant digital activities.  The CMA will also have powers to make more targeted pro-competition interventions to remedy specific adverse effects on competition arising from the behaviour of an SDS company, in a process modelled on the current market investigation regime.  The CMA will have powers to fine a designated undertaking up to 10% of its global revenues for non-compliance, with decisions being reviewable by the Competition Appeals Tribunal (‘CAT’) on judicial review grounds.  In addition, third parties will have the right to bring proceedings before the general courts or CAT for damages of other relief for breach of duty by a designated undertaking. In a departure from the standard UK voluntary filing regime for mergers, designated companies will also be obliged to notify acquisitions and minority investments with a value of more than £25 million to give the CMA the opportunity to call in the transaction for an in-depth review. 

Competition regime changes

While the wider competition regime changes are very wide-ranging and lack a specific focus, overall they enhance the CMA’s powers in a number of respects.  In particular, the CMA will acquire more powers to require production of documents and punish those who frustrate investigations.  The Bill will also streamline aspects of the market investigation and merger control regimes.  As well as updating the merger control jurisdictional threshold based on the target’s UK revenues from £70m to £100m, the Bill introduces a completely new merger control threshold, under which a transaction will be reviewable by the CMA if the acquirer has a UK share of supply of at least 33% and UK turnover of at least £350m, provided that the target has a minimum nexus with the UK.  Although the separate, and much criticised, 25% share of supply test will remain, it will become subject to a new de minimis safe harbour, under which a transaction will be reviewable on the basis of share of supply only if the target has UK turnover of more than £10m.   While feedback on the Government’s proposal to add further complexity to what is already a challenging set of jurisdictional thresholds was not positive, introduction of the new threshold may at least reduce the incentive for the CMA to find ever more creative ways of applying the share of supply threshold.

The Bill also remedies various shortcomings of the current competition regime, including those revealed by recent appeals.  As well as expanding the CMA’s antitrust jurisdiction beyond anticompetitive agreements implemented in the UK to include agreements implemented outside the UK that are likely to have an immediate, substantial and foreseeable effect on UK trade; the Bill will also remove the CMA’s obligation to reach certain market investigation decisions within six months of its initial market study notice (which tripped it up in the mobile ecosystems case) and will give the CMA the power to require the production of documents and information from undertakings located outside of the UK, provided that they have a sufficient UK connection (thereby addressing the issue that arose in the recent BMW appeal).   The Bill will also expand the powers of the CAT, by enabling it to give declaratory relief as well as damages, while limiting its ability to award exemplary damages. 

Consumer regime changes

Last but by no means least, the Bill will introduce a new consumer protection regime for the UK.  Indeed, the consumer measures account for over half of the Bill’s length and may prove more far-reaching in practice than other aspects.  As expected, the main change in this area is to give the CMA direct powers to enforce consumer protection law, rather than having to bring court proceedings to combat breaches as is currently the case.  Consistent with this objective, the CMA is set to be given wide-ranging powers to launch enforcement investigations for suspected breaches of consumer protection law and impose penalties of up to £300,000, or 10% of a company’s global turnover if higher.  Although it will be possible to appeal against a CMA decision to the CAT, the permitted grounds for appeal set out in the Bill (error of fact or law, unreasonableness, that the decision was ‘wrong’) suggest a standard that will be closer to a judicial review than a full merits review.  In addition, the CMA and local trading standards authorities will retain the ability to seek enforcement orders from the courts to require compliance with consumer law.  Certain unfair commercial practices will amount to criminal offences, punishable by up to two years in prison.

While the Bill introduces new provisions governing specific commercial practices, including the operation of savings schemes and ‘inertia selling’, the substantive aspects of the new regime are largely unchanged from the EU consumer protection regime, on which the existing UK regime is based.  This is welcome, given the potential of a move away from the EU regime to lead to a dilution in consumer rights.

Next steps

The Bill will now proceed through the standard legislative stages.  Although the date for second Commons reading had not been confirmed at the time of writing, a relatively smooth passage can be expected.  This is largely due to the fact that (unlike much recent legislation put forward by the Government) the Bill is a thoughtful, non-ideological and well-crafted piece of legislation.   The length and technical complexity of the Bill’s provisions also make it less likely that opposition in the Commons or Lords will crystalise around a contested issue.  In the unlikely event that resistance is encountered, the Government’s substantial parliamentary majority will ultimately ensure a smooth passage.  Given this context, the Government will be hoping to push through the legislation before the end of the current session of Parliament, which is due to last until the Autumn.

While the process for designating an undertaking as having SMS is similar to that specified under the EU’s Digital Markets Act for defining a gatekeeper, the UK tests are more subjective in a number of respects and are specifically designed to capture only the very largest global technology companies (expected to be Apple, Google, Meta, Amazon and Microsoft).  Crucially, the UK regime will also enable the CMA to tailor codes of conduct for each designated undertaking, reflecting its particular market position and business model, rather than imposing a rigid ‘one size fits all’ list of prohibited practices, as the DMA does.  In this respect, the Bill is set to implement a regulatory regime for tech platforms that is materially better than the one introduced across the EU.  The fact that the EU’s regime entered into force earlier this month, and will cover 27 countries, whereas the new UK regime is still some way off being in place and of necessity only applies in one country, may well limit those benefits in practice.

CMA information request appeal will impact future probes, new digital powers, say lawyers

by Aicha Marhfour in London – PaRR – 09 March 2023 | 13:00 GMT

  • Ruling will impact DMU’s powers over overseas tech companies
  • Law amendment is an option if CMA loses appeal
  • CMA-EC cooperation hampered by lack of formal agreement

The UK agency’s enforcement powers beyond national borders, particularly in the tech domain, will be impacted by an appealed ruling upholding German automakers’ refusal to disclose documents, lawyers have told this news service.
In December the agency fined BMW AG GBP 30,000 (with a GBP 15,000 daily penalty) for failing to provide documents in response to an information request, sent under the CMA’s s. 26 Competition Act powers, in the context of the agency’s probe into automotive recycling.


“This seriously limits the CMA’s ability to bring global cases,” said Becket McGrath, partner at Euclid Law, referring to the ruling.

In its judgment, the court indicated that the CMA will be granted permission to appeal, with the agency announcing soon after the ruling that it will challenge the decision further. In a reasoned order, dated 8 March, the CAT granted the CMA permission to appeal, as regards BMW.


McGrath noted the wider political tension which has held up such agreements. “The tricky question is: what level of cooperation can they put in place, absent deeper cooperation? It’s never going to get to the level we had as a Member State of the EU,” he said.

Full article here – for PaRR subscribers.

Euclid Law continues to strengthen its practice with hire of Partner Andrea Zulli to head the Brussels office

Andrea joins from US law firm Covington. He was previously a Partner at Norton Rose Fulbright in Milan.

Being qualified in the UK, Belgium and Italy, Andrea advises clients on all aspects of EU and UK competition law, with a strong focus on merger control, behavioural antitrust, compliance, and foreign direct investment. Andrea’s experience and innovative thinking covers a variety of sectors, including private equity, financial services, basic industries, consumer & luxury goods, technology and life science. He is also instructed by Italian law firms on Brussels matters.

Oliver Bretz, Founding Partner of Euclid Law, commented: “I have known Andrea for over 20 years – in addition to being an outstanding lawyer, his reputation in Brussels, London and Italy and his broad and profound experience across all areas of competition law will be of great value to the firm and to our clients.  I look forward to working with Andrea to expand our Brussels footprint.”

Andrea Zulli commented: “I am delighted to be joining Euclid Law, a truly innovative and diverse boutique firm entirely focused on providing expert competition law and FDI advice to the highest possible standard, both in Brussels and London.  I am looking forward to being able to provide a unique offering and insight to clients both here and in Italy.”

Andrea holds an LL.M. in EU and Competition Law from the University of Stockholm and a J.D. from L.U.I.S.S. University in Rome. He is an Italian avvocato, admitted to the Rome Bar, a Solicitor of the Senior Courts of England and Wales, and registered in the A-list at the Balie Brussel.

European Commission confirms final texts for new EU rules for vertical agreements

On 10 May, the European Commission (the ‘Commission’) published final texts of the new Vertical Agreements Block Exemption Regulation (‘VBER’) and the accompanying Guidelines on Vertical Restraints (‘Guidelines’).  These two documents set out the full legal framework for the assessment of vertical agreements under EU competition law that will apply from 1 June. 

Although the process leading up to this moment started back in 2018, this means that businesses and their advisers have been given only three weeks to digest the final texts before they come into force.  While the main changes that will come into force on 1 June are largely as previewed in the draft texts that were published for consultation back in July last year, there are some surprises.

To discover and be surprised, download a copy of our briefing.

The CMA’s draft VABEO Guidance Consultation

Response of Euclid Law Ltd. to the Consultation on the CMA’s Draft Guidance on the Vertical Agreements Block Exemption Order 2022 (CMA154)

We welcome publication of the CMA’s draft guidance on the Vertical Agreements Block Exemption Order 2022 (‘VABEO’) (the ‘Draft Guidance’) and the opportunity to comment on it.

Given the shared heritage of the VABEO and the EU Vertical Agreements Block Exemption Regulation (‘VBER’), as well as the extensive precedent in which the VBER and related principles of EU law have been applied in a UK context, we agree with the CMA’s decision to “broadly reflect” the EU’s Vertical Guidelines (the ‘EU Guidelines’) in the Draft Guidance.

While there are some instances where the application of principles developed with the EU’s single market in mind to a UK-specific context can come across as somewhat strained, we agree that prioritising consistency is the right approach at this time.

To read and download the full Response, click here.

Response to the additional Public Consultation on Proposed Guidance relating to Information Exchange in the context of Dual Distribution

As part of the ongoing review of the Vertical Block Exemption Regulation and Guidelines, on 4 February 2022, DG COMP launched a two-week consultation regarding proposed guidance on information exchanges in dual distribution.  The proposed new section provides much needed clarity and valuable additional guidance on the circumstances in which information exchange in a dual distribution context will not raise concerns.  The Commission also appears to have dropped the proposed 10% market share threshold, which is very welcome as this will materially reduce complexity and uncertainty.   

Euclid Law’s response is available here

Intel Wins Historic Court Fight Over EU Antitrust Fine

by Stephanie Bodoni (26 January 2022)

  • Court topples $1.2 billion penalty levied by EU in 2009
  • Critics of EU procedures question time taken for ruling

Oliver Bretz quoted in Bloomberg and the Luxembourg Times on the Competition law aspect of the Intel case.

Intel Corp. won a historic victory in its court fight over a record 1.06 billion-euro ($1.2 billion) competition fine, in a landmark ruling that upends one of the European Union’s most important antitrust cases.

The EU General Court ruled on Wednesday that regulators made key errors in a landmark 2009 decision over allegedly illegal rebates that the U.S. chip giant gave to PC makers to squeeze out rival Advanced Micro Devices Inc.

While the surprise ruling can be appealed one more time, it’s a stinging defeat for the European Commission, which hasn’t lost a big antitrust case in court for more than 20 years. 

The Luxembourg-based EU court said the commission provided an “incomplete” analysis when it fined Intel, criticizing it for failing to provide sufficient evidence to back up its findings of anti-competitive risks. 

Margrethe Vestager, the EU’s antitrust commissioner, said her team would “study in detail what it can learn” from the judgment on the case, which was pushed through by her predecessor Joaquin Almunia.

Intel “always believed that our actions regarding rebates were lawful and did not harm competition,” it said in an email. “The semiconductor industry has never been more competitive than it is today and we look forward to continuing to invest and grow in Europe.” 

The judgment follows a 2017 ruling from the bloc’s top court, which criticized the General Court — the EU’s second-highest tribunal — for not properly checking all factual and economic evidence when it previously weighed Intel’s appeal. 

The EU commission in 2009 hit Intel with what was then the bloc’s biggest antitrust fine. It represented about 4% of Intel’s $37.6 billion in sales in 2008. Since then, Santa Clara, California-based Intel has been locked in a non-stop legal dispute with the EU’s antitrust arm. 

Wednesday’s victory may now offer encouragement for other companies to go to court. Many companies under investigation for monopoly abuse have opted not to fight hard since the chances of overturning the EU at court were viewed as low.

But European consumer group BEUC said the duration of the court fight reveals a major flaw in the EU justice system.

Twenty Years

“The ruling is disappointing, as we believe Intel engaged in anti-competitive behaviour which limited consumer choice,” said Agustin Reyna, BEUC’s director for legal and economic affairs.

“But it is even more striking that it has taken over twenty years for a decision on this antitrust case,” Reyna said. “What we need is an urgent, speeding up of antitrust procedures. It cannot take so long for the conclusion of a case in which there are such serious competition concerns raised.”

Following its investigation, the commission said it found evidence that Intel hindered competition by giving rebates to computer makers from 2002 until 2005 — if they bought at least 95% of PC chips from Intel. It said Intel imposed “restrictive conditions” for the remaining 5%, supplied by AMD, which struggled to overcome Intel’s hold on the market for processors that run the devices.

The court on Wednesday said the commission had failed to show “to the requisite legal standard” that the contested rebates posed an anti-competitive risk. 

“There is finally a degree of common sense creeping in,” said Oliver Bretz, a lawyer at Euclid Law in London. In the Intel case that means “to require that rebates have to be capable or likely to have anti-competitive effects, based on the evidence.”

The case is: T-286/09 RENV – Intel Corporation v. Commission.

The articles were posted in Bloomberg and in the Luxembourg Times.

Taking Security and Options Seriously: the UK and German Investment Screening Regimes

Arrangements involving current and potential future events, such as taking security and agreeing options, require careful scrutiny under investment screening regimes. It is not safe to assume that a trigger will operate in the same way as under another more developed regulatory regime, such as merger control. Moreover, taking a security or agreeing an option needs to be considered upfront and not just when the security is about to be enforced or the option exercised.

In this piece we consider the position under the UK’s forthcoming National Security & Investment Act (NSI Act) regime and briefly compare this to the position under the recently reformed German regime. We assume that the other requirements for triggering are satisfied and focus on whether a security or an option could in itself take the transaction over the jurisdictional threshold.

Taking security

When a security is actually enforced, then this may well trigger an investment screening regime, as enforcement will typically involve the lender gaining control over the relevant target or its assets which are the subject of the security. The more difficult question, which will likely arise many years earlier at the initial transaction stage, is whether merely taking the security is sufficient.

To download and read the full paper, click here.

European Commission Evaluation of the Vertical Agreements Block Exemption Regulation (VBER)

Response to the Public Consultation on the draft revised Regulation and Guidelines

Euclid Law Ltd.

1. Euclid Law Ltd. (Euclid Law) is a boutique competition law firm, with offices in London and

Brussels. We advise on all aspects of EU and UK competition law. Euclid Law is also a

founding coalition member of eControl GlobalTM, through which we work closely with US law

firm Vorys, Sater, Seymour and Pease. Our European eControl practice has a particular focus

on advising brands on the roll-out of selective distribution systems.

2. Our lawyers advise on the compatibility of distribution agreements with EU competition law

on a daily basis. We also have experience of representing clients in investigations of their

distribution arrangements by the European Commission (Commission) and National

Competition Authorities (NCAs). As well as advising a wide range of brands, from globally

established companies to start-ups, we have advised online retailers, marketplace operators,

brick and mortar retailers, software companies, sporting rights companies, financial services

companies, insurance companies, gaming companies and pharmaceutical companies on their

distribution arrangements.

3. We are submitting this paper from the position of practitioners who see merit in having a

rational, predictable and up to date competition law regime for vertical agreements. The views

stated are our own and do not necessarily represent the views of any client of our firm.

Download and read the full memo here.