European Competition Law Newsletter ' June 2021

Publication Date02 June 2021
SubjectCorporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Corporate and Company Law, Antitrust, EU Competition , Franchising
Law FirmMcGuireWoods LLP
AuthorMr Matthew Hall

Table of Contents

  • Buyer Beware: Court Confirms Wide Scope of UK Merger Control Jurisdiction
  • UK Court: Post-Termination Restrictions in Franchise Agreement Unenforceable
  • UK Court Eases Requirements for Finding Abuse of Dominance
  • UK Subsidy Regime Begins to Take Shape

Buyer Beware: Court Confirms Wide Scope of UK Merger Control Jurisdiction

The extremely wide jurisdictional coverage of the UK merger control rules was confirmed in a recent appeal judgment by the Competition Appeal Tribunal (CAT) following a decision originally taken by the Competition and Markets Authority (CMA).

The CMA blocked Sabre's proposed acquisition of Farelogix. Among other products and services, Sabre and Farelogix supply software solutions which help airlines sell flights via travel agents, including those that operate online.

The CMA found that it had jurisdiction to consider the proposed merger under the UK merger control rules on the basis of the "share of supply" test. The CMA further found that the proposed merger may be expected to give rise to a substantial lessening of competition in two worldwide markets: the supply of merchandising solutions to airlines and the supply of distribution solutions to airlines.

The share-of-supply test is satisfied if a transaction creates or extends a share (i.e., there must be an overlap between the parties) of at least 25 percent in the UK or a substantial part of the UK in the supply or acquisition of goods or services of any description. The CMA identified the relevant services as the supply of IT solutions to UK airlines for the purpose of airlines providing travel services information to travel agents, to enable travel agents to make bookings. Sabre's share alone exceeded 25 percent of revenue from the provision of those services to UK airlines, and there was some increment from Farelogix's supply of those same services to UK airlines.

Sabre put forward various arguments as to why this analysis was incorrect, including that the CMA had relied on an increment that was both hypothetical and vanishingly small and had applied different, and inconsistent, methodologies in respect of Sabre and Farelogix and so failed to compare like with like. All of Sabre's arguments were rejected.

The CMA welcomed the judgment, saying the CAT had confirmed that the application of the share-of-supply test is a matter of judgment for the CMA and it has a broad discretion in determining the criteria used.

This is a significant victory for the CMA. Filings under UK merger...

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