Introduction

 On 25 July 2018, Advocate General (AG) Kokott issued a non-binding Opinion in case C-265/17 P, Commission v United Parcel Service, advising the Court of Justice of the EU (CJEU) to dismiss the Commission’s appeal against the judgement of the General Court (GC) that annulled the Commission’s decision to block the proposed acquisition of TNT by UPS.

UPS notified the proposed acquisition of TNT for approximately EUR 5 billion on 15 June 2012. More than six months later, on 30 January 2013 the Commission blocked the proposed merger based on concerns that it would lead to a significant impediment of effective competition (SIEC) on the market for international intra-EEA express deliveries for small packages in 15 Member States.

On 7 March 2017 the GC issued a favourable judgement for UPS (case T-194/13, United Parcel Service v Commission). The Court found that the Commission breached UPS’s rights of defence by relying on the latest version of an economic analysis which was not shared with the merging parties before the merger was blocked. The Commission appealed the GC’s judgement on 16 May 2017.

In the meantime, TNT was acquired by FedEx for EUR 4 billion, in January 2016, in a deal that received unconditional approval by the Commission. While UPS may have lost the chance to consolidate its express deliveries business with TNT, AG Kokott’s favourable Opinion will arguably boosts UPS’s chances to win an action for damages for EUR 1.7 billion against the Commission filed by UPS in February 2018 (case T-834/17, United Parcel Service v Commission).

AG Kokott’s Opinion, which is largely in line with the GC’s judgment, provides an important reminder – especially to the Commission – that the rights of defence should be upheld without excuses, including in merger control proceedings.

The Heart of the Debate: The Rights of Defence in Merger Control Proceedings

In her Opinion, AG Kokott notes that at the heart of the dispute between UPS and the Commission lies the question of whether the Commission was allowed to make material changes to its economic analysis (a so-called ‘price concentration model’) during the on-going administrative merger review procedure without informing UPS. More broadly, AG Kokott tries to clarify the scope of protection of the merging parties’ rights of defence in merger control proceedings.

To answer these fundamental questions, AG Kokott addresses the following issues:

  1. Do the rights of defence apply to econometric models in merger control proceedings?; if so
  2. What are the requirements that arise from the rights of defence; and lastly
  3. What are the effects of an infringement of the rights of defence?

Continue Reading AG Kokott on UPS/TNT: A ‘Textbook Example’ of How to Breach the Rights of Defence in Merger Control Proceedings

Following an inquiry in July 2017, the House of Lords’ European Union Committee published on February 2, 2018, a report titled – ‘Brexit: competition and State aid’ – on the future of the UK’s competition law regime after Brexit.

The House of Lords report provides a detailed account of the most pressing issues that the UK’s competition law regime is facing ahead of Brexit. It also shows the high levels of uncertainty that businesses operating between the EU and the UK face.

This uncertainty suggests that businesses should – at least for now – adopt a cautious approach, for example, when formulating their distribution and acquisition strategies in the UK.

Whatever the statutory changes to the UK’s competition law regime after Brexit are, EU law will still remain an important factor to consider when taking business decisions, especially because of the geographical proximity and close trading relationships between the UK and the EU. This means that going forward businesses need to have guidance.

Steptoe has years of experience in successfully advising businesses on their strategic decisions in the EU and the UK. Our experienced lawyers can help your business to successfully navigate the demands and potential opportunities of Brexit.  Continue Reading House of Lords Report on Brexit and Competition: What Does it Mean for Businesses?

Recent mergers have prompted regulators and courts to consider how best to analyze the potential competitive effects arising from increased buyer power created by a merger.  Agencies, judges, and antitrust commentators have taken different approaches to buyer power issues in this quickly-developing landscape.  Steptoe partner Jonathan Sallet explores these perspectives in his article “Buyer Power in Recent Merger Reviews.”  Sallet frames the discussion by highlighting tension between the analyses of recent mergers before the FTC and DOJ.

The article also raises key antitrust questions for companies that may potentially augment their buying power through combination:  Continue Reading Jon Sallet Publishes “Buyer Power in Recent Merger Reviews”

Find more interesting content in our Antitrust News & Briefs on the Steptoe website, where we provide you with more in-depth analyses on current antitrust & competition developments in the EU and the US. See below for some of our most recent publications.


Intel: ‘A Whole New World’

The European Court of Justice just came back to business with a bang. On September 6, 2017, it finally unveiled its long-awaited judgment in the Intel exclusivity rebates case. Click here to read more.


AG Wahl Delivers Opinion in the Coty Case

On July 26, AG Wahl delivered his opinion in the Coty case, addressing the legality of contractual third party platforms bans. Click here to read more.


Online Distribution: Are You Ready?

Following the conclusion of the e-commerce sector inquiry in May 2017, the European Commission has aggressively opened probes into online restrictions imposed by suppliers of branded goods and services. Click here to read more.

Do you need to notify a change from sole to joint control over an existing undertaking when the newly created joint venture is not full-function?

This question has been the subject of much debate with the European Commission’s case teams and has poisoned the life of companies and merger control practitioners for over a decade. In a much awaited judgement (September 7, 2017, Austria AsphaltC-248/16), the EU Court of Justice finally answered the question, stating that non full-function joint ventures are not subject to EU merger control.

This is a very welcome clarification of the rules for companies and their advisers, which will bring much needed legal certainty to some of their transactions. To read the full article click here.