ABA 2010 Antitrust Year in Review: UK Section

Legislative Developments

In one of the few legislative developments in UK competition law in 2009, the Enterprise Act 2002 (Merger Fees) (Amendment) Order 2009, which doubles the currently applicable merger fees, came into force on October 1, 2009.1 The fees are payable to the Office of Fair Trading (the "OFT") on filing to recover the costs of the regulatory consideration of mergers. The merger fees will increase from £15,000 to £30,000 for mergers where the business acquired generates a UK turnover of less than £20 million (approximately US$32 million), from £30,000 to £60,000 where the UK turnover is between £20 million and £70 million (approximately US$32 million and US$112 million) and from £45,000 to £90,000 where the UK turnover exceeds £70 million2 (approximately US$112 million). The new fee levels will apply to all mergers where the parties involved in the merger cease to be distinct enterprises after October 1, 2009.

Mergers

In June 2009, the OFT published the final version of its new jurisdictional and procedural guidance on mergers, replacing existing OFT guidance.3 According to the OFT, the guidance has been updated to reflect its practices since the Enterprise Act 2002 came into force. The guidance deals with a number of important issues, such as the types of transactions and levels of control that can give rise to jurisdiction for the OFT to review a merger, the circumstances in which merging parties may wish to (voluntarily) notify a transaction to the OFT and how the OFT deals with and assesses possible first-phase remedies.

On October 1, 2009, the OFT launched a consultation on revised guidance concerning exceptions to its duty to refer certain mergers to the Competition Commission (the "CC").4 The most common exception, and one which the OFT has used on several occasions recently, is the de minimis exception, which provides that in limited circumstances (essentially where the relevant market is smaller than £10 million and no significant competition issues arise), the OFT can use its discretion and not refer a merger to the CC as the merger affects a market of insufficient importance to justify a reference. The OFT is currently considering comments made by interested parties on the revised guidance, and intends to publish the final version guidance shortly.

On June 16, 2009, feeding into the UK Government's Digital Britain review,5 the OFT published its report on the local and regional media merger regime in the UK. The OFT report, which particularly focuses on whether the local and regional newspaper merger regime is fit for purpose, recognized that this industry is facing long-term structural changes. Advertising revenues are steadily declining as advertisers who would traditionally use the local and regional press increasingly migrate to the online space.

However, the OFT review concluded that the current media merger regime, which is broadly the same for newspapers as it is for other industries, is well placed to take into account developments, such as competition from the Internet, because it is evidence-based and capable of reflecting market realities. The regime is also flexible in that it can take account of valid "failing firm" arguments, as well as efficiencies and any other benefits to customers brought about through a merger. The OFT has therefore recommended that no legislative changes to the media merger regime are currently needed.

Cartels and other Anticompetitive Practices

After a long inquiry into the most complex single case investigated by the OFT to date, on September 30, 2009 the OFT fined 103 construction companies a total of £129.5 million (approximately US$207 million) for rigging bids for building work between 2000 and 2006.6 The OFT found that the construction firms involved in the cartel had manipulated approximately 200 tender processes for building projects worth more than £200 million...