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Two acquisitions by Tempcon unconditionally cleared after Phase II review

On the 14th of October the Swedish Competition Authority (SCA) cleared the refrigerated transports company Tempcon’s two acquisitions of the companies Lincargo and Erling Andersson after two separate Phase II reviews.

The SCA stated in its decisions to open in-depth reviews, that the transactions would not only make Tempcon the largest supplier of refrigerated transports in Sweden on a national level but also an important distributor of refrigerated goods in the northern parts of the country.  Moreover, according to the SCA, the merger could potentially have led to foreclosure of competitors from the northern parts of Sweden.

In its clearance decisions the SCA concluded that the transactions will not lead to the creation or strengthening of a dominant position and that the parties are not particularly close competitors. The SCA also concluded that the customers exert countervailing buyer power as they can switch supplier or set up internal transportation. The SCA found no support for the foreclosure concerns raised by customers and competitors.

Working alongside Baker McKenzie, RBB assisted Tempcon in Phase II by preparing submissions to the competition authority and by providing standalone economic reports.

The SCA decisions can be found here and here.

 

RBB contributes to ex-post competition cases study

RBB partners Benoît Durand and Daniel Gore have co-authored two chapters in a newly published book on ex-post assessments of European competition cases and remedies.  Their chapters cover the Microsoft Media Player and Browser bundling cases, and pharmaceutical parallel trade cases.  The book collates a two year research project run by the Global Competition Law Centre at the College of Europe.

Ex Post Evaluation of Competition Cases, edited by Assimakis Komninos and Nicolas Petit, is published by Kluwer Law International.

The Swedish Competition Authority clears Axfood/Bergendahl’s, subject to conditions

The Swedish Competition Authority approved Axfood’s acquisition of Bergendahl’s wholesale and a minority share of City Gross food retail after a Phase II review and voluntary committments. Axfood is Swedens second largest food wholeseller and third food retailer with brands such as Hemköp, Willys and Tempo.  The merger will create substantial scale economies and create a stronger number two in the Swedish food retail market.

The Swedish Competition Authority had concerns regarding independent retailers that are not part of any integrated supply chain and that have previously been buying from either of the parties.

The Swedish Competition Authority ultimately cleared the transaction subject to a commitment by the parties to offer equal or better terms to the independent retailers and to offer non-discriminatory terms to new innovative online retailers up until 1 Jan 2030.

RBB Economics assisted Axfood in the context of this merger investigation alongside Kastell law firm. RBB submitted both a detailed local market analysis of the retail markets and a quantitative simulation-model that assessed the joint effects of the merger to both the wholesale and retail markets.

The SCA decision can be found here.

Webinar highlights: Economic Analysis and the Competition and Markets Authority’s New Merger Assessment Guidelines

On 2 June 2021, RBB Economics held a webinar to discuss the new Merger Assessment Guidelines (MAGs) released by the UK Competition and Markets Authority (CMA). Simon Bishop held a Q&A session with Mike Walker, which was followed by a panel discussion between Adrian Majumdar, Alexander Baker and Amelia Fletcher, moderated by Ethel Fonseca. Below are the highlights of the webinar and our reactions to some of the issues discussed. The views of Walker indicate that much tougher merger enforcement in the UK is to be expected.

The full document can be downloaded here and the webinar can be watched here

No Penalty for TasPorts in the ACCC’s first case under the new misuse of market power test

TasPorts is the owner and operator of the majority of ports in Tasmania, and the sole supplier of towage and pilotage services at all major ports on the island.  In its Concise Statement to the Federal Court of Australia, the ACCC alleged that TasPorts had engaged in six types of conduct with the purpose and/or the effect, and/or that was likely to have the effect, of substantially lessening competition in the markets for towage and pilotage services in northern Tasmania.

The Court made orders by consent on 4 May 2021 dismissing all allegations that TasPorts’ conduct had the ‘purpose’ or ‘actual effect’ of substantially lessening competition.  As part of the settlement, TasPorts agreed to admit that its conduct in relation to one allegation had the ‘likely effect’ of substantially lessening competition.  No penalties will be paid by TasPorts. TasPorts has provided the ACCC with an enforceable undertaking, ensuring that Engage Marine – a new entrant in Tasmania – has access to berth space for tug boats in northern Tasmania on reasonable commercial terms, access to port communication systems, and that TasPorts’ charges for regulatory functions at Port Latta are reasonable.

George Siolis, a Partner with RBB Economics in Melbourne, prepared an expert economic  report which examined the nature and extent of any anti-competitive effects of the conduct identified in the ACCC’s Concise Statement.  George was instructed by Arnold Bloch Leibler, acting for TasPorts, and was assisted by Chris Hart and Jackson McDonough in Melbourne and Dr Iestyn Williams in London.

The EC clears EssilorLuxottica/GrandVision, subject to conditions

The European Commission has conditionally approved EssilorLuxottica’s acquisition of GrandVision, after a Phase II review. EssilorLuxottica is a global manufacturer of spectacle frames, sunglasses, and ophthalmic lenses, and it owns eyewear brands such as RayBan, Oakley, and Persol. GrandVision is a global player in optical retailing, and it operates in more than 40 countries across Europe, the Americas and Asia. The Commission had concerns that the transaction could worsen rival opticians’ access to EssilorLuxottica’s eyewear products, thereby weakening retail competition.  The Commission ultimately cleared the transaction subject to a divestment of certain retail activities in the Netherlands, Belgium, and Italy, where it maintained concerns.

RBB Economics assisted EssilorLuxottica in the context of this merger investigation, alongside BonelliErede and Latham&Watkins. RBB Economics also advised EssilorLuxottica on the merger’s filing in other jurisdictions.

Siemens Healthineers’ acquisition of Varian Medical Systems cleared in Phase I subject to conditions

On 19 February, the European Commission (“EC”) approved Siemens Healthineers’ acquisition of Varian Medical Systems following a Phase I investigation subject to conditions.

Varian is one of the leading suppliers of radiation therapy solutions used to plan and deliver radiation therapy treatment. Siemens Healthineers is one of the leading suppliers of diagnostic imaging equipment, which, amongst other, is used to support the planning and delivery of radiation therapy. Given the complementary nature of the parties’ products, the EC’s investigation focussed on potential adverse conglomerate effects on competition resulting from the proposed transaction.

RBB assisted Siemens Healthineers throughout the proceedings and pre-notification phase, including providing a standalone economic report that assessed the merged firm’s ability and incentives to engage in anti-competitive commercial or technical bundling or tying and such practices’ likely effect on competition. The EC accepted the arguments put forward in the RBB report regarding commercial tying and bundling, but raised concerns regarding the inter-operability between the parties’ and competitors’ products voiced by market participants during the EC’s market investigation. Following the parties’ commitment to continue adhering to the DICOM standard and providing the relevant information and technical assistance to ensure inter-operability, the transaction was cleared in phase I.

The EC press release can be found here.

RBB worked alongside law firms Latham & Watkins, Slaughter & May, and Wachtell, Lipton, Rosen & Katz.

Covestro’s acquisition of DSM’s resin business cleared unconditionally in Phase I

On 5 February, the European Commission (“EC”) approved Covestro’s acquisition of Koninklijke DSM’s Resins Functional Materials business following a Phase I investigation.

Both parties are active in the production and sale of coating resins components (e.g. liquid resins and crosslinkers) resulting in horizontal overlaps in a number of markets; due to Covestro’s activities in the production and sale of inputs for coating resin components the transaction also had a vertical component. In line with the EC’s approach in previous cases, the market for resin components was segmented by the chemical component of the end product (e.g. liquid resin or crosslinker), by delivery technology (e.g. water-borne or solvent-borne), by resin chemistry (e.g. acrylics or polyurethanes) and for some the products by industrial application (e.g. automotive or industrial wood), resulting in a myriad of relevant markets, in which the parties’ positions had to be assessed.

RBB Economics supported the parties amongst others in the calculation of market shares for these markets and in developing economic arguments around the absence of foreclosure risks with regard to vertically affected markets. Following a Phase I investigation, the EC cleared the transaction unconditionally because in each of the markets under consideration, the combined market shares of the parties or the market share increments brought by the transaction are limited and several other well-established players are present.

The press release can be found here.

RBB worked alongside law firms Linklaters and Allen & Overy.

How Merger Control Rolls: A Response to Caffarra, Crawford and Valletti

In a recent paper, How tech rolls: Potential competition and ‘reverse’ killer acquisitions, Cristina Caffarra, Gregory Crawford and Tommaso Valletti make the case that merger control should introduce presumptions of anticompetitive harm when large tech companies seek to “buy” rather than “build”. Simon Bishop and Stephen Lewis evaluate these arguments. They conclude that the arguments of Caffarra, Crawford and Valletti are weak and unsubstantiated. We should therefore be extremely wary of deviating from the established practice of detailed case-by-case assessments by introducing presumptions into merger control.

The full document can be downloaded here

Seriti / South32 coal merger – approved subject to conditions

On 23 December 2020, the South African Competition Tribunal approved the proposed acquisition of South32’s South African coal operations by a subsidiary of Seriti Resources, subject to conditions.

The merger creates the largest single supplier of coal to Eskom.  Following its investigation, the Competition Commission recommended the conditional approval of the merger on the basis that, despite the structural change brought about by the merger, the merger was unlikely to materially impact on bargaining dynamics between Seriti and Eskom.  This was because of the individualised nature of negotiations around long-term coal supply contracts and the limited (and unchanged) outside options that would be available to each party in those negotiations post-transaction.

During the hearing of the matter before the Competition Tribunal, the Tribunal raised concerns regarding the increased coal prices paid by Eskom over the past several years, as well as concerns regarding the security of supply of coal to Eskom and the potential for the exclusion of junior miners, in particular from export coal markets.  The Tribunal utilised its inquisitorial powers to summons Eskom representatives to give evidence on these matters, and also engaged extensively during the oral evidence presented by the Competition Commission, and the merging parties, among others.

Working alongside Nortons Inc and ENSafrica, RBB assisted the merging parties in making submissions during the Commission’s investigation of the merger.  During the hearing before the Tribunal, RBB economists Jacob Muller and Patrick Smith each provided oral evidence on the nature of competition, the likely competitive effects of the merger and the assessment of the proposed conditions.