On 11 June 2018, the Government made changes to the UK’s merger regime to recognise the growing importance of small British businesses in developing cutting edge technology products with national security applications. The government amended the threshold tests for businesses in the military, dual-use, computing hardware and quantum technology sectors to allow Ministers to intervene on certain grounds when the target business’s UK turnover is more than £1 million, down from £70 million threshold under the general merger clearance rules. They also removed the requirement that a merger or takeover in these sectors lead to an increase in the parties’ combined share of supply of relevant goods or services before the government is able to intervene.
The CMA has published guidance on the new rules at : https://www.gov.uk/government/publications/mergers-jurisdictional-thresholds-from-june-2018.
We are delighted that, today, The Legal 500 has recognised Vivienne Robinson as the number one lawyer in East Anglia for EU and competition law. Announcing the results of its investigations, The Legal 500 said, "At Vivienne Robinson Ltd, ‘excellent and practical’ name partner Vivienne Robinson is ‘a worthy competitor to established London practitioners’. Her niche focus on EU and UK competition law gives her ‘a keen understanding of the way competition authorities approach matters; she has a complete command of the topic and gives quick, sensible and commercial advice in a complex area of law’. Dual qualified in English and New York law, her previous experience includes stints at Stephenson Harwood and Dentons. On a large international matter involving some of the biggest names in technology and publishing she provided ‘brilliant service and business acumen’. Recent highlights include obtaining merger clearance for gaming technology group Novomatic to pursue its acquisition of Talarius. She also acted for bloodstock auctioneer Tattersalls on all competition aspects of its acquisition of a competitor."
CTFN News asked Vivienne for her view on Tesco's application to fast-track the CMA's investigation into its acquisition of Booker:
"UK competition expert Vivienne Robinson told CTFN that the CMA will decide on the fast track process within a few days. If the CMA agrees, it will save Tesco about a month's delay, Robinson expected. "The CMA is not obliged to agree to the fast track treatment. It can only do so if it believes that there is a realistic prospect that the merger will result in a substantial lessening of competition. The CMA will also only use the fast track in cases where the problems the merger raises relate to the whole of the transaction such that it looks like it may be blocked in its entirety.”
"Robinson suggested that the application for fast track treatment shows that Tesco and Booker know that the merger raises such serious issues that it might not be cleared. “The CMA will be concerned not only about the harm the merger will do in procurement markets but also in the markets for convenience retailing and for symbol group services. Tesco will be able to favor its owned stores in all local markets where it faces competition, whether from Booker symbols or third party symbols,” Robinson said.
"Robinson added that another potential harm would be that the combined company could “manipulate prices on a micro level to ensure it takes the retail margin wherever it operates.”"
Commenting on the day the surprise merger between Tesco and Booker was announced and the parties' confidence that they will obtain merger clearance from the CMA, the Grocer reports:
"Not everyone is as convinced the deal will sail through the competition process quite so smoothly. Independent competition solicitor Vivienne Robinson said the takeover will be the biggest case the CMA looks at this year.
""The CMA will examine if Booker does indeed have a decisive influence over the stores and to what degree any contractual arrangements give it control over the sites and what they stock,” she added.
""What regulators will be particularly concerned about is Tesco taking control of the supply chain to its downstream competitors in the smaller grocery store end of the market. It will ask what the implications are of Tesco being the distribution chain supplier to those stores and whether they could raise prices.”"
In competition law terms, many businesses would benefit from a UK exit from the EU:
- The EU Commission could no longer conduct dawn raids on companies in the UK.
- There would be some limited freedom to adopt clauses in contracts that are currently banned by the EU.
- There would be less risk of class action claims in the UK courts for damages becauses EU competition decisions and law would no longer bind the UK courts (provided the UK does not join the EEA).
On the other hand, some things would not change with an exit:
- UK competition law is largely based on EU competition law legislation and is unlikely to change much if the UK exits. Over time, there may be some divergence.
- UK businesses which sell goods or services in the EU will continue to be bound by EU competition law. As now, EU competition law may apply if there is cross-border trade with EU countries (i.e., the issue of membership of the EU is irrelevant).
Assuming the UK did not join the EEA afterwards, the downside of an EU exit would be:
- The UK government would no longer influence competition decisions. However, realistically, the UK only has limited influence at the moment anyway. Influence in Europe will continue to be mainly through lobbying.
- Cartels and breaches of the rules involving cross-border trade with the EU might be subject to investigation by both the EU Commission and the CMA, which might result in two fines. At the moment, if the Commission investigates, the CMA cannot.
- For very large companies with turnover that hits the EU’s (very high) merger control thresholds, their mergers would still need a clearance in the EU. However, post-exit, they might also need a separate clearance in the UK. Currently, it is one or the other but not both. This would add to transaction costs.
Vivienne is quoted in The Grocer magazine on the likelihood of J. Sainsbury plc's acquisition of Argos being cleared by the Competition and Markets Authority in its forthcoming Phase 1 investigation. The transaction does not raise major competition issues and should be cleared without any requirement for the parties to agree to exclude any Argos stores from the deal.