UK FDI bill consultation responses will aim to narrow sector scope amid new agency capacity concerns

by PaRR

Responses to the UK government’s consultation on mandatory notification under the National Security and Investment Bill published yesterday (11 November) will seek to narrow the proposed sector definitions, lawyers told this news service.

There are also concerns that a new agency within the Department for Business, Energy and Industrial Strategy (BEIS) tasked with policing the regime will be inundated with deal cases, lawyers noted.

“It is absolutely crucial […] to further refine the list,” Samantha Mobley, competition partner at Baker McKenzie said. Given proposed “draconian penalties” for failure to file, definitions have to be “crystal clear”, she argued.

The government has identified 17 such “core sectors”: advanced materials, advanced robotics, artificial intelligence (AI), civil nuclear, communications, computing hardware, critical suppliers to government, critical suppliers to the emergency services, cryptographic authentication, data infrastructure, defence, energy, engineering biology, military and dual use, quantum technologies, satellite and space technologies and transport.

[…]
Adding new, very broad sectors such as communications, data infrastructure, energy, computing hardware and transport into the existing oversight regime under the Enterprise Act (2002) “has the potential to extend the reach [of FDI screening] considerably,” said Becket McGrath.

To read the full PaRR article: https://lnkd.in/dU3m46A

Becket McGrath quoted in GCR article: “CMA proposes regulatory reform to combat big tech”

The UK’s Competition and Markets Authority has called for a new regime to regulate the online economy, after its digital advertising study found the market power of Google and Facebook is causing substantial harm to “society as a whole”.

The enforcer today asked the UK government to create a digital markets unit and empower it to break up big tech companies and enforce a code of conduct among online platforms to resolve competition concerns in that sector. It did not specify if the new unit should function within an existing body or be created as a new standalone regulator.

The EU enforcer launched a public consultation on its proposed market investigations tool in May. EU competition commissioner Margrethe Vestager has cited the CMA’s similar power as an efficient way of tackling competition concerns in fast-moving markets.

Euclid Law partner Becket McGrath, who advised a publisher during the UK enforcer’s market study, said it is understandable why the CMA asked the government to introduce a new regulatory regime. Conduct that is not good for competition does not necessarily infringe antitrust law, but it could be addressed through careful, targeted regulation, he said.

Combating concerns related to the market power of big tech requires difficult public policy trade-offs that extend well beyond competition law, McGrath added. 

“With all these moving pieces, there has to come a point when the CMA, as an independent and unelected agency, hands over to the government,” he said.

McGrath also questioned if the UK could effectively implement some of the CMA’s proposals without aligning with reforms emerging elsewhere, particularly in the EU. “Solutions need to be closely coordinated – it’s not good for businesses if there is too much divergence,” he warned.

To read the full article on GCR website, click here.

STUDY ON THE VERTICAL INTEGRATION OF PRODUCER RESPONSIBILITY ORGANISATIONS AND THEIR EFFECT ON THE MARKET

Prepared for Expra by Oliver Bretz and Daniele Pinto – March 2020

This report aims at identifying in greater detail how the vertical integration of industry players from different levels of the packaging waste recovery cycle may have anti-competitive effects in the waste recovery market.

Commissioned and funded by EXPRA aisbl/ivzw, the alliance of 26 non-profit packaging and packaging waste recovery and recycling systems from 24 countries which are owned by package producers and importers.

The report was prepared by Euclid Law with complete independence, and its findings are based on the available evidence applied to legal and economic theory in the field of theories of harm to competition caused by vertical concentrations. It gives a general overview of the EU Extended Producer Responsibility policy and the market that it has created in Member States, applies legal and economic theory of competition to the context of vertically-integrated Producer Responsibility Organisations and also relies on concrete examples collected through a survey of waste recovery markets in the 24 countries where EXPRA’s members operate.

Finally, based on the available evidence, this report draws conclusions and makes recommendations to reduce the risk of harm to competition arising from vertical integration in EU waste recovery markets.

To read the full report, please follow the link.

Retail MFNS and Online Platforms under EU Competition Law: a Practical Primer by Sarah Long

As part of the September 2019 issue of Competition Policy International (CPI)’s Antitrust Chronicle, Sarah Long’s article explores retail MFNs in the context of online platforms and specifically the challenges faced by competition authorities in assessing the potential anti-competitive nature of such agreements.

An uncertainty exists, felt most keenly by businesses, as to the perceived absence of clear legal framework, and the lack of co-ordination between competition authorities in their approach to this issue. This article aims to provide a practical framework for the assessment of retail MFNs in the context of online platforms under EU competition law.

To learn more about retail MFNs in the context of online platforms, the application of the Vertical Block Exemption Regulation (“VBER”) to retail MFNs and assessing retail MFNs under Article 101 TFEU and Article 102 TFEU, please follow the link to download the article.

E-commerce, brand equity and managing the Amazon marketplace: a response to the EC’s VBER consultation

The EC’s consultation on the Vertical Block Exemption Regulation (VBER) and Vertical Guidelines (VGL) closed for comments on 27 May 2019. Euclid Law responded to the consultation, calling for greater clarity around restrictions on online marketplace sales in order to preserve brand equity. To support the response, Euclid Law also submitted an expert report entitled ‘Amazon and the growth in online marketplace sales’ by James Thomson, formally the business head of Amazon services, and now a partner at BuyBox Experts, a managed services agency supporting brands selling online. A full copy of our response is available here and the expert report is available here.

Sarah Long’s short LinkedIn opinion on the consultation is available here.

Syndicated Loans – Some Personal Observations

Deborah Drury (Europe Economics) and Oliver Bretz (Euclid Law)

A lot has been written already about the European Commission study into Syndicated Loans, which Europe Economics and Euclid Law were commissioned to undertake by DG Competition. We thought it appropriate to share some short personal observations on the study and its impact on compliance policies with financial institutions. These views are intensely personal and are not attributable to anyone other than ourselves.

The most striking point was the absence of any available precedent to apply competition law to syndicated lending. Yes, there had been the case in Spain but that was effectively a straight case of unlawful horizontal coordination behind the back of the borrower. So there was no precedent at all anywhere in the EU that could provide any guidance. As a result, we had to go back to first principles and develop a legal framework with risk assessments but without taking a view whether something could nor could not infringe Art 101(1) or indeed be subject to exemption under 101(3). Those questions are very fact-specific and we were never going to conduct an actual investigation as part of the Study.

So where did we start? Ultimately the process was one of fact-finding using the basic legal framework that we had developed. This fact-finding was not based on any formal powers and we are very grateful for the cooperation we received on a voluntary basis from a large number of financial services organisations. We also adopted a phased approach to the different stages of origination and syndication in order to identify the relevant risk factors. Again, it should be stressed that we relied on voluntary cooperation in identifying those risks.

The picture that emerged was that markets are generally functioning well for borrowers and that compliance procedures are generally robust. This was particularly the case in the LBO sector where large financial institutions with sophisticated compliance approaches predominate. That market was also characterised by fragmentation, which is usually a sign of an absence of market power, although we did not have the ability to obtain hard data to assess market shares.

In relation to Project Finance and Infrastructure the conclusions on competition risks were less obvious. We identified that there was more of a risk that banks could have a degree of market power in relation to specific types projects. For example a wind-farm project in Eastern Europe might not attract a wealth of offers from international banks. That may be down to a lack of experience, appetite or indeed pricing, which we did not seek to opine on as part of the Study. However, it is striking that the market participants in Project Finance and Infrastructure are quite different from those in LBOs. Market power in itself is not a problem, of course, as long as no borrower-adverse actions are taken on the back of that market power. And in the absence of market power, some actions such as the bundling of ancillary services (without having a single agreed price), may be a regulatory issue, but it is hard to conceive that there could be an actual competition problem. This is clearly an area where the Commission and national financial regulators would wish to remain vigilant. Another area where market power could potentially exist is in relation to a refinancing situation, either just before or after an event of default. Although it is difficult to conceive of an abuse of dominance case in relation to a single borrower in a period of short-term distress, this should remain an area of concern to the Commission and national regulators – and banks should proceed with great caution. A clear benefit of the Study is the development of a usable compliance framework (in the absence of EU precedents), which will enable institutions of all sizes to identify risk factors in deals and take appropriate compliance action. Financial institutions are likely to review compliance procedures, as scrutiny of the sector will continue over the coming months and years.

A copy of the study can be found HERE

Euclid Law and Europe Economics advise European Commission on Syndicated Loans

Euclid Law is proud to have cooperated with Europe Economics in advising the European Commission in the EU loan syndication and its impact on competition in credit markets. This study report brought great insight and perspective on its efficiency as a source of finance. Euclid Law was selected to co-author this research in light of its expertise in this area: both Oliver Bretz and Marie Leppard have many years of experience advising banks and other financial institutions on the potential competition law risks which can arise out of a loan (or bond) syndication.

The full report can be found here.