DealLawyers.com Blog

Last month, I blogged about the DOJ’s decision to file a rare post-merger challenge to a deal that had cleared HSR review.  Now it’s the EU’s turn.  According to this Simpson Thacher memo, a European appellate court recently overturned the European Commission’s approval of Liberty Global’s purchase of Ziggo – a deal that closed more than 3 years ago!  Here’s the intro:

On October 26, 2017, the lower court of appeals of the European Commission (the Commission), the General Court, reversed the Commission’s approval of Liberty Global plc’s (Liberty) already-completed acquisition of Ziggo N.V. (Ziggo). The Commission’s 2014 clearance decision had been appealed by a rival cable provider which successfully persuaded the General Court to reverse on the grounds that the Commission failed to complete a proper investigation and did not properly analyze whether pay-TV sports channels could constitute a separate market from other pay-TV channels, such as film channels, and raise vertical concerns.

The Commission’s merger decisions are typically granted wide deference if challenged, particularly where the challenging party is a market competitor with a direct interest in derailing a transaction, and it is very rare for a challenge to succeed. The last successful appeal of Commission merger clearance occurred in 2006, when the European Court of First Instance (CFI) annulled the creation of a joint venture involving Sony and Bertelsmann, but the CFI’s decision was ultimately set aside by the European Court of Justice 18 months later.

The memo says that the near-term fallout from the decision is that the EC is likely to be “particularly cautious and diligent” in investigating proposed deals and more deferential to 3rd party concerns raised during the process. This is likely to result in lengthier and more burdensome merger investigations in the EU.

– John Jenkins