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.
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.
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.
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.
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.
BWG Connect, Vorys eControl & Euclid Law invite you to participate in an interactive discussion on Feb 24, 2022, 12:00pm – 1:pm EST / 5pm – 6pm GMT
In this webinar, Sarah Long, Partner at Euclid Law, Daren Garcia, Partner at Vorys eControl and Jessica Cunning, Partner at Vorys eControl will discuss the similarities and differences between a U.S. and European online sales control program to achieve successful eCommerce growth.
- The critical need for online sales control across geographies
- Key distribution and sales control elements needed to address growing challenges
- Differences in seller enforcement & monitoring tools when in the U.S. vs. Europe
- Online sales control as a function of empowering sales growth and protecting brand value
by Charley Connor / 4Feb 22 / the Global Competition Review (GCR)
The UK’s Competition and Markets Authority has fined Meta £1.5 million for failing to alert the agency about the departures of three key US staff during an in-depth review into its Giphy acquisition, which Meta claims could interfere with its employees’ rights under US labour law.
The CMA today issued its second penalty to Facebook’s parent company for breaching the initial enforcement order imposed on it as the authority reviewed – and ultimately blocked – its already-completed acquisition of Giphy.
The order in part required Meta to inform the authority in advance of any “material changes” to its business. That included resignations of key staff named on a list drawn up by the CMA and seeking the agency’s prior consent before rehiring or redistributing responsibilities.
But Meta failed to comply with each of these requirements after three “key employees” resigned and the company reallocated their roles, the enforcer said today.
It added that Meta had also failed to properly inform it of staff changes “multiple times” in 2021.
Sarah Long was quoted, saying “the CMA’s initial enforcement orders can come down like a sledgehammer on a business under investigation. The scope of any such order can be “draconian” and is not limited to those parts of the business that cause a competition issue. Importantly, any derogation from an initial enforcement order must be negotiated with the CMA on an individual basis, which can take time and require significant interactions with the purchaser’s counsel. Companies therefore have no option other than to take an IEO seriously. Otherwise, as we have seen, the financial penalties for breaching an IEO can be severe.”
Link to the full article for GCR subscribers.
Without throttling investment that will be tricky
On January 4h a new investment-screening law came into effect, heralded by the government as “the biggest shake-up of the uk’s national-security regime for 20 years”. That is no exaggeration. It marks a shift away from economic openness towards suspicion and intervention. Kwasi Kwarteng, the business secretary, said it would show members of the public that “their security remains our number one priority”. What could go wrong?
The government is seeking to stop assets vital to national security falling into hostile hands. A report in 2017 warned that “ownership or control of critical businesses or infrastructure could provide opportunities to undertake espionage, sabotage or exert inappropriate leverage”. The context is concern about Chinese investment, and pressure to fall into line with allied countries such as America, Australia and Germany that have already tightened up.
Becket McGrath had the pleasure of discussing the UK’s new National Security and Investment Act with The Economist. “Just over a week in to the scheme, it’s a relief to see that the Government’s notification platform is working and the Investment Screening Unit is doing a good job at processing filings quickly […]. The really interesting thing now will be to see which deals get called in for more detailed review”.
Clicl here to read the article (subscribers only).
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.
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.
CMA left reliant on courts to fulfil role despite government promises to give it more powers two years ago
“The CMA’s main gripe is that it has never had the fining powers and the ability to run a [consumer protection] case through to a final decision with penalties,” said Becket McGrath, competition partner at Euclid Law. “The CMA wants to have the equivalent set of [consumer] powers as its competition powers that it can use to effectively take enforcement action against consumer law practices which evolve at a [fast] rate.”
Follow the link to read the full Financial Times article.