(by David Reader) After Melrose plc last week formalised its £7.4bn hostile takeover bid for the Armed Forces supplier GKN plc, Business Secretary Greg Clark is facing renewed pressure from the Labour Party and the UK’s largest trade union, Unite, to block any forthcoming deal on national security grounds. Moreover, in response to questions over the transaction, the Prime Minister has herself declared that ‘the government as a whole will always act in the UK national interest’ when faced with such takeovers. Yet, although there is every possibility that the resulting merger would be subjected to national security scrutiny, there is only a very remote chance that the transaction would be blocked outright. Read the rest of this entry »
(by Sebastian Peyer) The burden of costs in civil litigation is considered of great importance to the incentives to recover damages in competition law. In particular, the ‘loser-pays’ rule that dominates European legal systems is thought to create significantly greater risks for prospective collective actions, in contrast to the American rule where each party is normally responsible for paying its own costs. The UK Competition Appeal Tribunal’s (‘CAT’) recent ruling on cost in Walter Hugh Merricks v MasterCard is therefore significant in thwarting an attempt to deviate from the loser-pays rule that is prevalent in English civil litigation and striking a balance between applicants’ and respondents’ interests. Earlier this year, the CAT rejected an application for an opt-out collective proceedings order (‘CPO’) under section 47B of the Competition Act 1998 (see my comment here). The question that the CAT still had to answer was who would bear the cost of that unsuccessful CPO application and to what extent are the actual costs incurred recoverable. In its decision, the CAT stressed that the loser-pays rule applies to CPO applications, but reiterated that the parties’ expenses must be proportionate in order to be recoverable. This means that parties cannot inflate their expenses to discourage would-be claimants. Read the rest of this entry »
(by Mike Walker^) In his post last month, Steve Davies bemoaned the lack of evidence on the magnitude of harm deterred by the activities of the Competition Agencies. He presented some estimates from research in CCP on cartel deterrence, concluding most strikingly: “On the most conservative of our estimates, more than half of all potential cartel harm never occurs, because it is deterred. This is very much a lower bound, and the proportion could be as high as 90%.” Read the rest of this entry »
(by Sebastian Peyer) The Consumer Rights Act 2015 significantly expanded the jurisdiction of the Competition Appeal Tribunal (‘CAT’). The Tribunal can now adjudicate stand-alone damages claims, award permanent and interim injunctions, allow opt-out collective proceedings (see previous blog post) and deal with claims in the new Fast Track Procedure (‘FTP’). Enforcement mechanisms prior to 2015 were ineffective for small and medium sized enterprises (‘SMEs’) because of the high cost associated with bringing such actions before the High Court and the narrow jurisdiction of the Competition Appeals Tribunal (‘CAT’) for follow-on damages actions. A comparative glance at Germany showed that claimants had a strong preference for simply stopping anti-competitive behaviour through an injunction, yet even this simple tool was considered costly and complex in England. Since the introduction of the 2015 Act, a number of claimants have applied for the fast track procedure and the CAT has awarded one injunction in the FTP (Socrates Training Limited v The Law Society of England and Wales). The FTP appears to be both effective at capping costs to reasonable levels and, more importantly, at providing a credible mechanism to encourage out of court settlements. Read the rest of this entry »
(by Steve Davies) In a post last year, I argued that it was time for competition economists, both academics and practitioners, to start seriously tackling one of the big unknowns: how much harm is deterred by Competition Law and the Competition Authorities (CAs)? In this blog I pull together some results from three recently completed papers on cartel deterrence. I believe that these importantly move forward our understanding of this great unknown, and merit exposure to a non-academic audience in a non-technical way.
We have three ‘headline’ results. Read the rest of this entry »
(by Sebastian Peyer) On 21 July the Competition Appeal Tribunal (‘CAT’) rejected an application for an opt-out collective proceedings order (‘CPO’) in Walter Hugh Merricks v Mastercard Inc, thereby blocking the largest opt-out competition claim brought in the UK to date and one of the first large indirect purchaser actions. The applicant brought the claim on behalf of 46.2 million people asking Mastercard for around £14 billion in compensation. Despite the negative outcome for the applicant (and millions of consumers), the CAT’s decision has clarified a number of important points for future CPO applications. But the Tribunal’s decision may have also inadvertently raised the bar for indirect purchaser claims. Read the rest of this entry »
(by Peter Ormosi) While it is widely recognised that last year’s EU referendum caused significant uncertainty for markets, some early indications were that it had not reduced the level of business confidence. Almost a year on, our research – based on a careful study design of a treatment and control group and using data from S&P’s Capital IQ – finds that the uncertainty surrounding the referendum has in fact led to a significant drop in merger numbers and the numbers have failed to recover to earlier levels. Apart from establishing a causal relationship, the study suggests that the post-referendum policy uncertainty is helping the largest M&A transactions, while hindering the smaller ones, with possible negative consequences.