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.

Britain’s government is trying to protect national security

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).

The UK’s National Security & Investment Act Regime: Emerging Themes in Practice

For a law which does not fully come into force until 4 January 2022, its approaching footsteps have been making plenty of noise before it walks through the door. The Euclid Law team has been advising many clients on whether their transactions are caught, assessing substantive risk, liaising with the Department for Business, Energy & Industrial Strategy (BEIS) and submitting filings. Some themes are already emerging from our experience which we are sharing here. We welcome views and reactions from others.

The Christmas rush

As well as the mad dash to buy a turkey before supply chains crash, some deal-makers have been rushing to complete transactions before 4 January 2022. This makes a lot of sense when all other aspects of the deal point to simultaneous exchange and completion. Complete on or after 4 January 2022, by contrast, and this deal timetable is out of the question if the target business happens to fall into one of the 17 mandatory filing sectors. And where the deal obviously raises no substantive national security concerns, the extra time and cost of a mere technical filing is best avoided. So, if it’s not too late, it’s worth completing certain transactions during the first days of the New Year.

To learn more about the 2022 changes, click here.

Countdown running for entry into force of new UK national security investment screening regime

The UK’s new national security investment screening regime will enter fully into force on 4 January 2022.  From that date, the National Security and Investment Act 2021 (the ‘NSI Act’) will give the Government the power to review a wide range of investments in businesses that are active in the UK or acquisitions of related assets.  While the new regime has the ultimate objective of preventing transactions that could harm the UK’s national security, it will impact a much wider range of deals. 

Under the new regime, investments in entities that are active in the UK in 17 specific sectors will have to be notified to the Government and cleared before completion.  The notification obligation applies regardless of whether the investor is foreign or UK-based and severe civil and criminal penalties will apply if notifiable transactions are not notified.  The underlying transaction will also be void as a matter of English law. 

Although 4 January may feel like a long way off, it is now less than three months away.  The new NSI regime will have a potentially significant impact on timetables and deal certainty for transactions where closing is due to take place after that date.  As a result, it may well be relevant to transactions that are currently being negotiated.  It is also notable that, once the regime is in force, the Government will have the power retrospectively to review and call in any transaction that completed on or after 12 November 2020 (the date on which the bill was originally introduced to Parliament).

Filings will be mandatory where the target is active in any of the following sensitive sectors:

Advanced materialsCritical suppliers to governmentMilitary and dual-use
Advanced roboticsCritical suppliers to the emergency servicesQuantum technologies
Artificial intelligenceCryptographic authenticationSatellite and space technologies
Civil nuclearData infrastructureSynthetic biology
CommunicationsDefenceTransport
Computing hardwareEnergy 

The assessment of whether a qualifying entity is involved in a specified sector will involve careful analysis of the target’s business alongside the relevant statutory definitions. These are extremely detailed and prescriptive, with some running to several pages. 

To download and read the full paper, click here.

Widening the net

by Becket McGrath

As the National Security and Investment Bill (NSI Bill) nears the end of its passage through Parliament, further details of the regime are becoming clearer. Nevertheless, fundamental questions over how the regime will operate in practice remain. Consideration of the long prehistory of the Bill, and examination of how other new investment screening regimes are bedding in, may shed some light.

Click on the below links to read the full articles from the Competition Law Insight Volume 20, Issues 2 and 3.

Part 1 explores the UK’s new NSI regime as it takes shape and how the NSI Act implements a wholly new regime that will enable the UK Government to review a wide range of transactions for potential national security issues. Transactions involving the acquisition of control over, or of non-controlling investments in, entities active in certain specified sectors will be subject to mandatory notification and government approval before completion

Part 2 dives deeper into the intricacies of the NSI Act upon receiving Royal Assent on 29 April 2021. Although we now know the final form of the Act, significant uncertainties remain over its purpose, operation and impact. More positively, the government has taken some sensible steps to narrow the Act’s scope during its parliamentary passage.

These articles were originally published in Competition Law Insight, Volume 20 Issue 2 and 3, Cover Date 2021 © Informa UK Ltd 2021. For more information visit www.competitionlawinsight.com

UK Competition and Markets Authority Confirms Direction of Travel for Post-Brexit Approach to Vertical Agreements

by Becket McGrath

On 17 June, the UK Competition and Markets Authority (‘CMA’) published a keenly awaited consultation document setting out its proposed recommendations to Government for the UK’s new competition law regime for vertical agreements.  Essentially, the CMA is proposing to adopt an approach that remains closely aligned with the EU verticals regime, which is itself about to undergo a refresh to take account of market and legal developments since its last update in 2010.  This is a welcome development, as it should reduce the potential for material divergence between the two regimes, which would reduce legal certainty and increase costs for businesses trading in both the EU and UK.

Background

The need for this consultation has arisen now, as the post-Brexit transitional arrangements for vertical agreements (such as selective and exclusive distribution agreements) are about to expire.  To summarise the legal position, while the UK was an EU Member State the analysis of vertical agreements in UK competition law was largely determined by the EU Vertical Agreements Block Exemption Regulation (‘VBER’).  This sets out the circumstances in which a vertical agreement is protected from challenge under Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’).  Importantly, the VBER also defines certain ‘hardcore’ restrictions that render an agreement presumptively unlawful.   Together with the accompanying European Commission Guidelines, the VBER effectively serves as a complete code for the treatment of vertical agreements in EU competition law.

[…]

Since the direct application of EU competition law in the UK ceased at the end of the Brexit transition period on 31 December 2020, new arrangements were needed urgently to determine the status of vertical agreements in UK competition law from that point.  The immediate solution adopted by the UK Government was essentially to continue the pre-Brexit approach, by incorporating the current EU VBER in UK domestic law, as a ‘retained block exemption’, at least until the VBER’s expiry on 31 May 2022.  Since that date is now approaching, the Government needs to decide what to do.  At the same time, the Commission is part way through its own review of the VBER and Guidelines, as it needs to decide the extent to which the EU regime should be updated after 1 June 2022.

While it may be tempting to continue with the UK’s current approach of aligning completely with EU law in this area (which broadly works), unlike the last time the VBER was reviewed in 2010 UK Government and CMA officials no longer have any input on the text of the EU VBER and Guidelines.  As a result, a decision simply to follow the (revised) EU regime from June 2022, whatever its form, would hardly be a ringing endorsement of the UK’s new found freedom to diverge from EU rules.  On the other hand, the Government and the CMA need to bear in mind that diverging from EU law in this area for its own sake would introduce complexity for the large number of businesses that trade in the UK and EU.  To introduce further complexity, many of the core principles of EU law competition law as applied to vertical agreements rest on EU-specific policy priorities arising from the need to create a single European market.  It was unclear how far these priorities should continue to determine the shape of UK competition law, post-Brexit, especially since the UK is no longer part of the Single Market.  Given this uncertainty, the UK CMA consultation document is an important step forward.

To read about key recommendations and next steps, download the full briefing here.

Competition Boutique Continues London Buildout With Macfarlanes Hire

by Hannah Roberts

Euclid Law has boosted its London ranks with another partner hire nearly a year after it brought on board a heavyweight partner from Cooley.

Competition lawyers are poised for a deluge of trade-related work since the U.K.’s exit from the European Union at the start of the year, with many firms bolstering their benches as a result.

Michael advises clients on a broad range of UK, EU and global antitrust matters, including cartels, abuse of dominance, merger control, state aid, competition litigation and general EU law across a wide number of industries. His experience spans sectors including TMT, energy, manufacturing, retail, leisure and transport.

Oliver Bretz: “I am delighted that someone of Michael’s quality and experience is joining Euclid. We are the pre-eminent competition boutique and our recent additions of Becket McGrath from Cooley and internal promotion of Natalie Greenwood are a testament to our market growth and positioning. We are delighted to welcome Michael to this fantastic team”. 

Michael Reiss: “I’m excited to be joining Euclid because of the top quality work and the calibre of the firm’s clients. Over the past twelve years I’ve worked on some complex merger control, investigations and litigation matters, and I’m looking forward to contributing to the growth of the practice. Moreover, on a personal level, they are a great team of colleagues to have.”

Read the full Law.com UK|Legal Week article here.

Sarah Long quoted in GCR article: “UK launches Digital Markets Unit”

On 7 April 2021, the CMA launched its much anticipated Digital Markets Unit (DMU) in shadow form, pending legislation.  The new regulator will sit within the Competition and Markets Authority, with the potential to enforce a code of conduct and impose ‘pro-competition interventions’ in digital markets.

Euclid Law partner Sarah Long commented that the clear intention is for the DMU for have teeth.  However, what remains to be seen is the role of the DMU in mergers.  While it is clear that the DMU is expected to work closely with the CMA enforcement teams to scrutinise digital mergers, the extent of its involvement in either identifying and/or reviewing digital mergers, and the division of labour between the DMU and the CMA’s merger case teams remains unclear. 

Long emphasised that “This will be of importance from a practical perspective as the CMA is already expecting a significant increase in its merger control caseload following the end of the Brexit transition period.”