Webinar highlights: Economic Analysis and the Competition and Markets Authority’s New Merger Assessment Guidelines 14.07.21
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.
No Penalty for TasPorts in the ACCC’s first case under the new misuse of market power test 05.05.21
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 26.03.21
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 22.02.21
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 12.02.21
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.