Understand Your Rights. Solve Your Legal Problems
NVM Private Equity has backed the management buy-out of Presteigne Broadcast Hire.
Presteigne Broadcast Hire is one of the market leaders in the broadcast equipment hire sector in the UK. The business hires a selection of specialist equipment predominantly to outside broadcast companies with a particular focus on the live sport and event sector.
Founded by industry veteran Mike Ransome, Presteigne has always been seen as a market innovator as they invest in the latest products and emerging technologies ensuring they can deliver the highest level of service to their clients. Headquartered in Crawley and with additional facilities in Warrington, each being equipped with the latest in technology and the best in engineering skills, Presteigne has supported many global sporting events. More recently these have included the supply of equipment and services in connection with the Rio 2016 Olympics and this season’s Formula 1 Grand Prix schedule.
Presteigne’s primary focus over recent years has been live sport: a sector which has enjoyed considerable growth in the last decade with consumers increasingly seeking access to live events, either at the venue or remotely. The timing of the transaction perfectly positions the company for accelerated growth as the market embraces rapid advances in radio frequency, IPTV and 4K technology.
The Presteigne management team were provided with Corporate Finance advice by Jeremy Rayment of Brebners Corporate Finance, and NVM were serviced Legal advice by Jeff Chang, Mike Freer, Hugh Jones and Rebecca Scott of Osborne Clarke. Financial due diligence was carried out by Andy Harris, Steve Holmes and Max Whitehead of BDO, whilst Commercial due diligence by Geoff Rampton and Roger Penney of RPL Advisory. Management due diligence services were provided by Steve Wycherley of Continuum, Technology due diligence by Tim Chapman of Hickman Shearer, and Insurance due diligence by John Donald and Gordon Shaw of Aon.
Interview with Jeremy Rayment of Brebners:
Please tell me about your involvement in the deal?
As a lead advisor with many years’ experience and interest in a broad range of media businesses, particularly services related to content creation and delivery to consumers, I was introduced to Presteigne’s management team who had been afforded the opportunity to progress a management buy-out from their Parent, Avesco PLC.
We helped review and establish the future plan, covering strategy and forecasts, and assisted the team approach and negotiate with financiers the requisite investment to acquire and develop the business as well as assist with the PLC negotiations.
The business operates in a market experiencing a considerable amount of technological change and dynamic consumer adoption shifts across differing content types and geographies.
Accordingly, the planning and strategic outlook needed to identify and address the dynamics of the investment and growth cycle, including potential M&A.
Why is this a good deal for all involved?
There are occasions when a set of circumstances determine a ‘win/win’ equation all round.
Presteigne’s parent wanted to concentrate on its main activities and divest of a non-core business, which had a high degree of ongoing investment required to meet its dynamic market challenges.
Presteigne’s highly experienced management needed to partner with a proven investment house to help them capitalise on their MBO opportunity, and in coming together with NVM (who are keen to be involved in partnering with dynamic businesses such as Presteigne), they have secured the finance and support they need, not just for the buy-out, but to further develop the business.
What challenges arose? How did you navigate them?
No business or transaction is identical and lead advisory is about bringing experience to bear in successfully identifying and managing inherent challenges.
In Presteigne’s case, the principal challenges lay in creating the narrative and definition of its business case.
There was a considerable amount of information to be assimilated and review to give satisfaction to investors, not only as to the business’ growth potential, but additionally due consideration of the underlying business performance, which on the face of it reflected a business in transition.
Once the business case was established, the key to concluding negotiations successfully was in keeping good balanced communication between the respective parties, always mindful of their ‘win’.
As the role of the in-house legal team continues to evolve towards being a trusted strategic adviser to business, a new report from Eversheds has found that GCs are facing significant barriers to making the most of the efficiencies and the productivity boost that technological innovation could provide. Lack of company buy-in to secure the required budget, a deficiency in specialist digital knowledge, and a digital skills gap in their team are all identified as obstacles to progression.
The Looking Glass 2016 report from Eversheds and Winmark assessed the views of more than 200 senior legal leaders from both in-house and private practice teams to find out how digital technologies are transforming the delivery of legal services.
With the top strategic priority for in-house counsel being to increase team efficiency and impact (68%), they are acutely aware of the benefits investing in digital technology could offer their team and the wider business. 87% want to use it to find better ways of storing and retrieving information, 61% want to automate work to save time so they can focus on high-level strategic work, and 60% see it as instrumental in improving work-flow management. Although this technology will be used to take on some of the day-to-day tasks of the legal team, 90% of GCs surveyed are confident that their staff numbers will either grow or remain stable, as the role of the in-house team changes.
However, despite being keen to maximise the opportunities technology can offer to help position the legal team as advisers at the very heart of a business, the report identified several major barriers in-house lawyers are facing. As well as the two thirds (64%) that have difficulty securing budget, a further three in five (59%) find it difficult to integrate new technology with existing systems, and 56% lack the time needed to truly harness technology to its full capability.
And, although many in-house lawyers have the skills needed to use the technology, when it comes to procurement decisions, more than half (51%) feel out of their depth and unable to judge the full potential of digital innovations (or unable to dedicate the time to understanding this) and how they can improve their working processes. Almost half (44%) are concerned about their team or company’s resistance to change, with one third (33%) concerned their team do not have skills required to use the technology appropriately.
Lee Ranson, managing partner at Eversheds, said: “The global financial crisis brought in-house counsel to centre stage in many organisations, and as a result we’re seeing an “Americanisation” of the GC role, with in-house teams expected to offer overall strategic advice at the right hand of the CEO.
“The core role of the in-house team – dealing with compliance, data security, etc. – is only getting more onerous. In-house teams need to free up the highly-trained individuals within their teams to focus on work of strategic value and, increasingly, to focus on providing business advice. The digital innovations offered by legal services providers can be instrumental in driving efficiencies to achieve this.
“GCs should desire to position themselves at the heart of business strategy and, this is where they should pitch investment in technology. It is not solely a legal issue. Talking to budget holders in their language – in terms of value to the business, ROI and alignment with strategy - makes it possible to reframe the conversation as one of investment in the bottom line rather than cost.”
The report also showed that two thirds (67%) of law firms said investment in technology is a strategic priority. However, the findings identified major differences between the digital resources firms provide and what clients actually need.
75% of clients required more access to online templates and examples, but only 37% of law firms currently offer this. Similarly, clients want live status tracking, with 54% wanting online access to the status of all matters, but just 40% of firms provide this service. Over half of in-house lawyers (51%) desired a dashboard of all interactions with a firm, which was only offered by 20% of firms, and 42% of clients want to be able to automatically generate tailored reports – something that is only offered by one quarter (26%) of firms surveyed.
Charlotte Walker-Osborn, head of Eversheds’ global telecommunications, media and technology sector continued: “While it’s encouraging that law firms recognise the need to invest in technology, the report showed that legal services providers need to get better at prioritising client needs when developing digital technologies. There is a significant disconnect between what many law firms think clients want and what they would actually find useful. If law firms can provide digital services that genuinely add value to in-house lawyers, not only will it help strengthen client relationships but it will also help those firms build the case for investment in their own digital technologies and training.
“This is something already ingrained in Eversheds’ business model, so we can look beyond the horizon to anticipate the key changes that will impact in-house teams.”
John Jeffcock, CEO at Winmark, said: "The gap between in house legal functions and law firms has increased. The reason for this is that the speed of evolution, which includes technologies, of in house legal functions has risen and may continue to accelerate with the surge in appointments of legal COOs. So the gap could get even wider if law firms fail to keep up.
“The better law firms are keeping pace and some are even supporting in-house functions on their journey. However, many are being held back by their governance and financial structures. To succeed, a modern law firm needs to run faster and invest more. This in reality may mean less or faster partner consultations and reduced profitability as money is redirected from partners to clients and to investments in future competitiveness."
Suzanne van Montfoort, research manager at Winmark, said: “Future GCs will need to be more well-rounded than their predecessors. Expert legal advice increasingly needs to be complemented by business acumen, as well as by an understanding of how technologies can be integrated into new ways of working that deliver advantage to the organisation. This requirement for a broader GC skill set will translate into consequences for legal team structure, recruitment, and training.”
(Source: Eversheds LLP)
Georges Haour, Professor of Technology and Innovation Management at IMD business school:
China has the world’s largest market for digital shopping, mobile payments, and Internet-enabled financial services. Close to 400 million people in China do most of their payments using their smartphones. China’s overall business in information technology is a market of well above $300 billion, and it is estimated that more than 700 million Chinese have access to Internet. So any law impacting the online space—cybersecurity included—will make ripples in the way China does business.
That’s why its new cybersecurity law—due to take effect in June of next year—is particularly alarming. It is part of an ongoing government program to reinforce China’s cybersecurity, and arguably targets non-Chinese hackers. But it comes amidst continuous tensions between the US and China, not just in terms of cybersecurity (each country has accused the other of hacking), but with trade, the economy, and, of course, the US election, which will inevitably change how business is done between the two nations. The law appears to be counterproductive in several ways.
First, as the law sets forward, important network equipment and software will have to receive government certifications. This means that specific pieces of intellectual property or technical features will have to be divulged, which could easily be passed on to Chinese companies by the regulators behind cybersecurity. It shouldn’t be forgotten that the state in China has tremendous power and plays a critical role in economic plans. Government interference is much more prevalent than in Western nations. And under the veil of cybersecurity, regulators will have access to proprietary information that could benefit Chinese firms at the expense of foreign business.
The type of businesses most at risk will be those with special hardware and systems for network management. But it could even include data from and for ATMs. New generation ATMs have a much higher level of connectivity with mobile integration and face recognition. This makes them more vulnerable to hacking and means confidential devices and information will have to be used for protection. And under this law, that creates a big entry place for government snooping.
This law is also counterproductive because companies gathering data in so-called “critical areas” will have to store that data inside China. At this stage, the definition of “critical” is worryingly broad. Complying with this requirement will force international firms to make expensive investments to build duplicate facilities within China. This is in total contradiction with the free flow of data, expected to swell in 2020 after the introduction of 5G.
International companies will have to weigh this risk against the opportunity to do business in China. China has had a long reputation for ‘copying’ without getting insider access, and this law could only open the ease to which China’s business sector can review competition. For international companies there is no easy way forward as the choice is black or white. Either foreign companies will comply, knowing China has a way to peek into what previously was private, or they will chose to stand by principles of privacy at the risk of being excluded from the Chinese market. Despite the challenging dilemma, companies are likely to comply and give in to China’s demands. The market is too huge and far too ripe for future growth, especially when compared to more stagnant outlooks in Europe and the US.
In addition to creating barriers for international business in China, this kind of legislative move goes completely against innovation. It could well be considered to be part of what is called “indigenous innovation” in China. This consists in favoring Chinese firms by establishing non-tariff barriers, such as specific standards or regulations on products, in order to prevent non-Chinese firms the access to China’s large and dynamic market. And the impact would be wide-ranging, from consumer electronics to products such as equipment to produce renewable energy, including windmills and solar panels.
Innovation involves a complex process, but it requires a society to be as open as possible and to allow vibrant exchanges between people. While cybersecurity is important, this law will wrap around the free market as it grips security. Within China, entrepreneurs are, by and large, not bothered by their government’s management of the Internet, called the “great firewall”. However, this new law is a new step to tighten the government’s grip on the Internet. Furthermore, far from favoring China’s champions in this very dynamic area, such as Huawei, Lenovo, or Tencent, this law will handicap them in the long term. Maybe the hope is that these companies themselves will fight to alter the law and mitigate the negative implications for China’s Internet landscape.
US companies have already began to strongly lobby against the law, as well as China’s position that the Internet must be managed by authorities. But despite the efforts of any company, Chinese or other, the cybersecurity law is just a piece in a larger ongoing political puzzle that companies will have to deal with. Trump’s stance on trade and is equally, if not more, alarming for business. In the end, agility will be key for companies to succeed in the tense political environment.
(Source: IMD)
Bing Maisog, Partner at law firm Hunton & Williams in China:
China’s new cybersecurity law appears extreme in comparison to legislation we normally see in the US because the problem of cybersecurity is approached from an entirely different angle. Cybersecurity in the US is of the people, by the people, and for the people. In contrast, the drafters of the Chinese cybersecurity law see it as a state-led and state-directed effort in which the government and its regulatory staff know best.
There is more than one particular aspect of this law that make it controversial, but the one that would concern me most is the data localization provision. This means that operators of certain key information have to undergo a security review before transmitting data overseas. It is not clear what will be examined during this review, or what will have to be revealed or proven. That uncertainty is the engine that generates much controversy.
Another controversial provision is the law’s requirement that network operators must provide technical support and assistance to public or national security agencies when they conduct investigations of crimes. This raises the similarly unsettling question of what exactly these enterprises will have to do, or reveal, in the course of supporting or assisting such investigations, and suggests agencies and bodies, rather than elements of civil society, will have the leading role in conducting investigations.
One main long-term cost is that multinational businesses may have to restructure their businesses in China. But ultimately the greatest overall cost may be borne by China itself. By making it more risky to do business there, China may wind up discouraging further investment in it.
(Source: Hunton & Williams)
Fears of an economic slowdown and the future of Europe are the main issues keeping global compliance professionals awake at night. These are the findings of new research from The Risk Advisory Group, which surveyed more than 150 compliance professionals across a range of global businesses to uncover their main concerns and priorities for the year ahead.
Half of the respondents in this year’s Compliance Horizon survey, now in its second year, cited the threat of a recession as the biggest risk facing their business in the year ahead (53%), with Brexit their second biggest concern. More than half of respondents (55%) are still unsure about what it will mean for their business, but believe that a change in regulations or new regulations are the most likely implications for them. Worryingly 1 in 10 (13%) fear that leaving Europe may adversely affect their ability to recruit the right talent.
The US election also featured highly in compliance professionals’ responses, with a quarter (27%) seeing it as one of the biggest threats facing their business in the year ahead, and a far greater number are concerned about the implications a Trump victory might have on the profession. When asked their views on the two Presidential frontrunners at the time, 4 out of 5 respondents (80.5%) identified Donald Trump as the candidate who poses the greater threat to the compliance profession.
Many articulated reasons for their view, with common themes including his express intention to deregulate the business sector and a lack of understanding of both international trading relationships and the rule of law.
Against this backdrop of unprecedented change and uncertainty, one of the challenges compliance professionals say they continue to face is lack of resource. 73% of the compliance professionals we spoke to think that their budgets will either be cut or stay the same in 2017. 48% said it would take an internal investigation to drive any increase. There is clearly a strong emphasis on doing more with the same or less in the next 12 months, which could explain why respondents said that their key priorities will be driving efficiencies in processes (cited by 51%) and ensuring company-wide engagement and training (a priority for 49%).
Commenting on the findings, Bill Waite, Group CEO of The Risk Advisory Group, said: “The UK’s decision to leave Europe and the US election result are clearly dominating compliance professionals’ thoughts right now. No one knows for sure what Brexit will mean or what impact Donald Trump’s policies will have.
“But in the face of great uncertainty, there is a sense that compliance professionals are holding their nerve, looking at how to ensure they are in the best position to adapt to new or changing regulations. For 25 % of the people we surveyed this means improving efficiencies – bolstering their internal defences so that they are prepared for the future, whatever it holds.”
The Risk Advisory Group has developed LUMA in response to the ever-increasing effort required by businesses to comply with regulations. LUMA creates a single point of control for third parties, allowing companies to collect information directly from them securely, streamline compliance processes and centralise data.
(Source: The Risk Advisory Group)
A landmark court judgment in favour of a firm of solicitors in a case of professional negligence, could have significant implications for future commercial property disputes.
Simon Hough, partner of solicitors Rosling King LLP said: "Although this is a first instance decision, it could influence settlement techniques and tactics in many commercial disputes in future."
According to legal principles, a contract is binding when an offer is accepted. However, if a party’s acceptance of an offer contains any variation of the terms of the original offer, it is considered to be a counter offer and, as such, extinguishes the previous offer.
The dispute between DB Mortgages and Jacobs Solicitors centred around Part 36 of the Civil Procedure Rules (CPR), a procedural code which governs special types of offers. Although there is some crossover with common law contractual principles, Part 36 is a separate set of rules and an offer made under Part 36 remains open until it is withdrawn and will not be extinguished by a counter offer. It must comply with the formalities of Part 36 and be made available for acceptance for a period of not less than 21 days.
The recent case of DB Mortgages v Jacobs Solicitors involved an allegation of negligence made against Jacobs on the basis that they failed to report to DB Mortgages that their borrower was buying a new build property by way of sub-sale. In August 2015, Jacobs made an offer to settle the claim, which was construed in accordance with common law contractual principles because it did not comply with Part 36. This offer was re-stated in March 2016 and again in early May 2016. In the same month, DB issued a Part 36 offer which was not accepted by Jacobs.
DB Mortgages subsequently wrote to Jacobs accepting their offer from August 2015. However, Jacobs disputed this and argued that the claim had not been settled on the grounds that their August 2015 offer had been extinguished by DB Mortgages' Part 36 offer made in May 2016.
The issue for the court to decide was whether the Part 36 nature of DB Mortgages' offer in May 2016 would displace the normal rule that a counter offer extinguished a prior offer.
The Court ruled that the Part 36 offer made by DB Mortgages operated as a rejection of the offer made by Jacobs Solicitors and that, as the 2015 offer was not available for acceptance when DB tried to accept it; the claim had not been settled. The judge held that the common law rules of contract had not been displaced.
However, the Court did affirm that, had Jacobs Solicitors’ offer been a Part 36 offer, the self-contained code would have applied and the normal rules of contract law would have been displaced, leaving the original offer open for acceptance.
The DB Mortgages v Jacobs Solicitors case is now subject to potential appeal, which could take place in summer 2017. Simon Hough commented: "Whether or not the first instance decision is overturned remains to be seen. What is clear, however, is that parties must think carefully about whether an offer they have made remains available months or even years after it has been made and when to use CPR Part 36 to settle their differences.”
(Source: Rosling King)
Introducing this month’s special focus on Competition & Antitrust law is Robert Russell, National Chair of the Competition and Foreign Investment Review Group at Borden Ladner Gervais. Here Robert discusses the latest legislative developments in the Canadian M&A landscape, including Competition Bureau procedures, the introduction of Administrative Monetary Penalties (AMPs), and changes to the Canadian Competition Act.
Robert also talks Lawyer Monthly through his low-key but outstanding thought leadership in the Canadian competition litigation sphere, touching on the works of the firm and the successes each client has witnessed, both in terms of the objective, and timely and cost effective service.
How does Canadian competition law compare to that of its neighbours, such as the US?
The Canadian Competition Act was amended in 2009 to align our cartel provision with that of most major jurisdictions. Prior to the amendments, a cartel agreement under Canadian law was subject to an effects test similar to merger analysis. As a result of the amendments, from 2010 onwards Canadian cartel law became ‘per se’. I often tell clients it is ‘per se per se’, because it is not subject to rule of reason analysis like in the US. As a fully codified area of law, cartel agreements are only subject to the ancillary restraints defence.
The second major change from the amendments was with respect to merger review. Canada introduced a new process whereby the Competition Bureau can make supplementary information requests, which have the effect of stopping the clock on the statutory requirements imposed upon the Bureau with respect to completion of merger reviews. Needless to say, this change concerned Canadian business leaders and lawyers because of its potential use to regularly delay the merger review process.
The third major change was the introduction of Administrative Monetary Penalties (AMPs) for certain civil offences under the Competition Act, particularly abuse of dominance. The Bureau has set its course to use the abuse provisions to litigate matters. This has resulted in increased activity regarding abuse matters before the Competition Tribunal (a specialized competition law tribunal or court).
How do you think Canadian M&A markets and businesses are faring following the global recession, and how are things changing in today’s markets landscape?
Canada didn’t suffer the impacts of most western countries in the Great Recession. That meant M&A activity stayed strong and even increased in some sectors as Canadian companies remained strong notwithstanding some downward pressures on exports.
More recently, the downward pressure on oil prices has heavily impacted the resource sector of the Canadian economy. This initially led to lower M&A activity in resources, but some bargain hunting is now starting to occur. Other sectors, such as manufacturing, have expanded due to increased export opportunities supported by a lower Canadian dollar.
What upcoming or newly established legislative developments should Canadian and foreign businesses be aware of?
Canada and Europe have just signed a wide-ranging free trade agreement. This will create the opportunity to diversify Canada’s trading relationships away from an overreliance on US trade. While Canada will continue to be the United States’ biggest trading partner, including its biggest foreign supplier of oil, Canada is taking steps to diversify its trading relationships to reduce its vulnerability to the ebbs and flows of the US economy.
Has antitrust & competition litigation increased in Canada in recent years? To what do you attribute this?
Antitrust litigation has increased dramatically since Canada adopted its immunity program for the criminal provisions of the Competition Act (cartels and bid rigging). There was a 3000% increase in activity in the cartel area for the period between 2000 and 2010, compared to 1990 to 2000.
As noted above there has also been a dramatic increase in abuse of dominance cases; these are very involved and expensive proceedings for clients.
Private competition litigation, particularly class action litigation, has also become an area of growing importance in Canada. Historically, Canadian class actions in the competition law area were commonly of a "follow-on" nature, and were initiated in response to an announcement of an investigation by a competition authority in Canada or elsewhere. In recent years, as the courts have diluted the standards for class certification in Canada, there has been a trend away from deferred follow-on class actions. Plaintiffs' lawyers frequently bring and aggressively pursue competition law class proceedings in the absence of convictions or even an investigation.
What challenges exist when litigation comes hand in hand with antitrust matters? How do you help your clients achieve the best outcome?
We have handled over 30 cartel matters over the last decade. Most of these cases also had follow-on class action proceedings. They are costly and involved proceedings often with very high potential damages. As noted below we have taken steps to dramatically control costs for clients in terms of e-discovery resources and the econometric analysis that is required to defend these cases.
We have also represented clients in two of the largest abuse cases to emerge over the past 4 years. Again here, significant e-discovery resources and econometric analysis are required to defend these cases.
We represent clients in both follow-on class actions arising cartel investigations and in a wide variety of other antitrust class actions, such as those alleging false or misleading representations. We are counsel in a vast majority of the competition class action proceedings in Canada.
As noted below, we have invested heavily in e-discovery and forensic capabilities. This also assists in merger cases where there is a secondary information request. Recently, we completed the merger review in the largest retail merger in Canadian history; a secondary information request, which was predicted by the Bureau to require 3 to 4 months, was completed by our group in 6 weeks thanks to our in-house resources and capabilities.
Since you joined the firm, how have you helped push the boundaries of the firm’s competition team?
Competition/Antitrust law in Canada is built on a litigation model much like the US. Whether it is merger analysis, abuse proceedings or cartel agreements, there are potential litigation outcomes that must be dealt with right from the start. I started our competition group in 1986 based on the principle that the best way to ensure good outcomes for the client is to be prepared for litigation from the outset and negotiate with the Competition Bureau on the basis that we all, including the Bureau, must be able to prove our view of the matter in either a court of law or before the Competition Tribunal. Unsupported opinions have no place in Canadian competition law. The evidence, whether factual or econometric, matters from day one. That is a position I have maintained both in acting for private sector clients, as well as a number of retainers on behalf of the Competition Bureau.
As a result we have built a team of lawyers that is just as capable in cartel defence work or in merger review work. While the work streams are different, the econometric analysis and document management aspects are very similar, whether it is a cartel investigation or a contested merger with a secondary information request from the Bureau. For this reason we have invested in our professional expertise, not only in terms of the legal aspects of competition law, but also the econometric analysis that is required.
We have also supported secondments of our lawyers with the Competition Bureau as well as taking on significant retainers to prosecute both merger cases and cartel cases on behalf of the Bureau.
Finally we have invested in our own team of forensic paralegals that are involved in investigative work as well as e-discovery and forensic recovery of documents.
You also write and speak publically on the matter of competition law; how do you believe this contributes towards your thought leadership in this legal segment?
Antitrust/Competition law is an area of law that is constantly expanding. As Canada’s modern competition law regime only came into effect in 1986, the law is not fully developed. This requires antitrust professionals to think outside of the box, without the guidance of a large body of case law to guide them. For that reason, writing and continuing education play an important role in shaping our thinking and advice to our clients.
Do you have a mantra or motto you live by when it comes to helping your clients?
“It begins with service” – Service has both a dimension of timeliness and results. I often tell young lawyers that you need to think of yourself like a plumber. We are service providers; we not only need to fix the pipe, we need to do it in a timely and cost effective manner.
What do you feel you couldn’t live without?
My family.
What motivates you most about your role?
I believe competition law is the most interesting and rewarding area of law. I am extremely fortunate to have established my career in this area.
Acting for Loblaw Companies Limited, Canada`s largest grocery retailer, in respect of all competition matters related to its CAD $12.4 billion acquisition of Shoppers Drug Mart. This was, and continues to be, the largest retail merger in Canadian history. Due to the significant cross-country presence of these major retailers and their overlap in terms of store locations (1,200 overlapping stores in 800 markets), and a good number of products, the transaction was strongly opposed both in the media and in submissions to the Competition Bureau. BLG secured clearance of the deal with only 18 store divestitures.
Acting for Loblaw Companies Limited, including its Shoppers Drug Mart subsidiary, in responding to an investigation launched by the Canadian Competition Bureau under the abuse of dominance provision of the Competition Act regarding certain Loblaw’s supplier practices and policies.
Acting for Reliance Comfort Limited Partnership in defence of an abuse of dominance proceeding before the Competition Tribunal brought by the Commissioner of Competition regarding certain of Reliance’s practices in its water heater rental business.
Having seen the success of the ATP World Tour this month, Lawyer monthly reached out to Tom Bullock, Head of Legal Affairs at ATP Media, the broadcasting arm of the global sports tournament group.
Here Tom gives an idea of the kind of legal risks, priorities, and considerations he has to work around on a daily basis. He explains what the firm’s remit is, a little about the experiences and roles that brought him to where he is today, and touches on some of the goals and challenges ahead, both for him and ATP Media.
What is the biggest challenge you face being the Head of Legal Affairs at ATP Media, and what is the biggest reward you get from your role?
The biggest reward is simple – seeing live sports broadcasts being shown all across the world for over a billion people to enjoy and knowing that I was a part of the team that helped deliver that. We are lucky to be in an age where tennis is thriving and the top players are household names, so to be at the cutting edge of ensuring that it is delivered to fans in a market leading manner is a real reward.
The biggest challenge is ensuring that there is no overlap in the granting of our rights to our broadcast partners. We sell rights to the 22 ATP World Tour Masters 1000 and 500 events and the Barclays ATP World Tour Finals in over 195 territories worldwide, often with multiple broadcasters in these territories. Rights are increasingly carved up between traditional linear television and the increased requirement for non-linear/digital content, and so I have to ensure we are not granting rights to partners that may cut across any existing deals we have done. Our broadcast partners are the lifeblood of the business and so protecting their rights is of paramount importance.
What are the recurring legal issues when broadcasters purchase rights from ATP Media and how do you deal with it?
As I alluded to above, the biggest legal issue is that of ensuring that the rights we are granting are unencumbered. We are very progressive in the way that we carve up our rights and sell them to our broadcast partners, and so keeping on top of that is crucial.
Aside from that, many of our broadcast partners are long term partners who have supported the growth of the sport for a long time. As such, we have an excellent working relationship with them and so ‘issues’ are thankfully relatively rare.
I would not class this as an issue, but the one area where we are seeing increased correspondence and negotiation with broadcast partners is in relation to digital exploitation of rights and the increased importance to consumers of OTT (direct to consumer) delivery.
How do you maintain ATP and ATP Media’s voice of brand, whilst adhering to legal requirements?
Being the official broadcast arm, we work incredibly closely with the ATP World Tour to ensure that ATP Media’s and the ATP World Tour’s brand messaging is totally aligned. We have also engaged Threepipe as our PR advisors, to ensure consistency of our messaging. There are no legal hurdles that we have been presented with thus far.
What is the working relationship and interplay like with the ATP World Tour and the various tournaments?
The working relationship between ATP Media, the ATP, and the tournaments is fantastic. ATP Media is actually owned equally by the ATP World Tour and the nine ATP World Tour Masters 1000 events and, therefore, our interests are almost always aligned. We work incredibly closely with the ATP in particular, collaborating on all aspects of what we are trying to achieve with the business. Of course, without the close support of all the tournaments, we simply wouldn’t be able to deliver what we do. I have an excellent relationship with the General Counsel of the ATP based in Florida as we enter into many cross border contractual relationships together.
If you were to choose one, what do you claim as the most vital legal issue that ATP Media faces?
Good question. We believe that ATP Media sets the benchmark for global sports broadcast coverage and continues to try to evolve the viewing experience through technological innovations. Because of this, some of the ‘Intellectual Property’ elements of contracts become vitally important.
However, there is a bigger legal problem that possibly looms large on the horizon – the ‘Digital Single Market’. The EU Commission's Digital Single Market Strategy is a wide-ranging and ambitious proposal to reform the digital market place within the EU. One of its key effects could well be a restriction on geo-blocking, and thus a severe impact could be placed on the ability of rights holders, such as ATP Media, to be able to sell its rights on a territorial basis.
I attend meetings of the Sports Rights Owners Coalition, a forum of over 50 international and national sports bodies and competition organisers with a particular focus on rights issues, in order to closely monitor and discuss the proposed reforms with the EU Commission to ensure full visibility on the impact the proposed legislative changes could have on not only the sale of sports rights, but the negative impact that they could have on sport as a whole. Remember, money generated from media rights sales is reinvested back into sports, and tennis is no different.
How do you navigate your legal team to ensure all affairs are seen to in the best possible way?
I am actually the sole in-house counsel at ATP Media, though I do have a very helpful and able assistant. To that extent, to ensure all affairs are seen to in the best possible way involves a lot of hard work, time management and reliance on key external advisors to assist in certain areas. As an in-house lawyer, I think it is an important skill to know your limitations – you simply can’t be a master of all trades, and there are only so many hours in a day. So I always ensure that where specialist advice may be needed, we take such advice to ensure the business is appropriately protected.
How different is the role at ATP Media in comparison to your previous roles at Allen & Overy and Onside Law? How did you find the transition?
The role at ATP Media is very different to both my role as a corporate associate in a huge Magic Circle firm and then as a commercial lawyer at a comparatively small boutique sports practice. But it’s different in a very good way! Obviously as the sole in house counsel, I am involved with absolutely every legal and contractual matter concerning the business – from the main rights sales contracts, to employment matters, to tax, to any litigation (dare I say it)!
That in itself is a big change from being a private practice lawyer where you often tend to focus on one specific area. The other main difference, and probably the area I am enjoying the most, is the ability to work alongside the CEO and COO on a day to day basis, and be involved in some of the commercial decision making. The CEO and COO at ATP Media are particularly encouraging of that (within reason!) and keep me involved with all matters that have a legal element. It really gives you a full understanding of the business, and I feel gives me the ability to be a much better lawyer because I can understand the real commercial issues that they are facing, rather than advising from a conservative legal standpoint, which isn’t always helpful to them.
In terms of the transition, I had been fortunate enough to have worked in house on multiple secondments over my career -notably at UBS, the LTA and Ladbrokes - so I had a very good understanding of the role of an in house lawyer.
Equally, Onside Law is a relatively small firm (in terms of number of people) and so the general office environment of being in a smaller organisation (ATP Media only has 24 permanent employees despite being a billion dollar business) was well known to me. All of the above, coupled with my relatively extensive tennis experience and the fact that every single person at ATP Media (bar none) was incredibly welcoming and extremely good at their job, actually made the transition quite easy.
To what extent do you have contact with and what is the biggest challenge when working with high profile tennis players?
All matters to do with player participation on the ATP World Tour are handled by the ATP and so to that extent I don’t actually have a great deal of contact with the players themselves.
However, with the increasing value to the players of analytics for coaching purposes of both footage and data (both of which ATP Media own and control by virtue of our broadcast and graphics) we are increasingly working with the players and their teams to provide them with the content that they require and are delighted to be able to do so.
We are also working closely with the ATP on this front to look at what and how we can deliver useful content to players. From my relatively short time at ATP Media I haven’t come across one ‘challenge’ of working with the players – they are always very appreciative of what we do.
With Turkish and Greek Cypriot leaders undergoing peace settlements, Cyprus is currently undergoing a lot of change, economically and legislatively. Here Lawyer Monthly speaks to the Senior Partner, Antonis Paschalides, and the Head of Corporate Department, Melita Theodorides Georgiou, at Antonis Paschalides & Co LLC, both of whom give wonderful insight into Cyprus’ economic market and shifting legal landscape.
Antonis picks up on how Cyprus has developed economically, the relations the country has made, and what their firm currently does and aims to do in order to keep innovation at its heart.
Melita’s provides an outlook on the changes in the Cypriot M&A sphere, the challenges the country faces, and the legislative prohibitions in acquisition financing.
By Antonis Paschalides, Senior Partner
What considerations would you say companies need to be aware of in regards to regulation when looking to Cyprus as a place to invest? How can you assist in this regard?
Cyprus has seemed to overcome the negative consequences of the economic crisis. We expect serious improvement of foreign investments in Cyprus and more registrations of international companies. Fields such as oil and gas, shipping and construction, are indicative of high expectations. Hence, I envision this evolving more optimising and encouraging, as many critical issues in European Union have been cleared and the regulatory authorities have now given us strong directions on the steps needed to be carried out. Moreover, recent developments, such as Brexit, may encourage some financial institutions and/or supporting companies in this field to move their headquarters in Cyprus.
Having considered the economic situation in Greece and in particular, the very high taxation on businesses, as well as complicated and lengthy procedures for the establishment and operation of businesses there, Greek institutions and businesses are seriously considering the transfer of their headquarters and some of their operations in Cyprus.
Developments in the Middle East region and the improvement of the relationship of Cyprus and Israel make Cyprus a very popular destination for new businesses. This is particularly due to recent positive gas drillings in the region and the expected developments in the energy field in general.
On a regular basis, lawyers of our office attend international conferences and co-organise such conferences, where they share views with other experts in the realm of corporate law.
Additionally, we attend specialised seminars and of course, we are all learning from existing clients by applying theory to real action at specific projects.
Do you have a mantra or motto you live by when it comes to helping your clients?
Efficiency in our services to clients in a practical and result oriented approach; this is our motto we live by, when it comes to helping our clients. In our firm, we try to give quick straight answers in a tailor made – if possible – manner, as the cornerstone of our philosophy lies in taking into account and understanding each client’s legal and business goals. In order to achieve them as efficiently, skilfully and effectively as possible, with the highest degree of professionalism and ethics, we concentrate on the substance, taking in mind the needs and circumstances of each client. Maybe we should change our motto to: “Deeper understanding leads to better solutions.”
What top 3 qualities make a thought leader?
The term ‘thought leader’ at its core refers to people who turn ideas into reality and are, therefore, respected in a particular field. It also implies the capacity of thinking ahead of the market or industry and is strongly connected to innovation and change. I always thought that such leaders are driven from the passion about their work and the purpose to succeed, regardless what the market suggests. Such leaders have the ability to easily convey their ideas to others and, thus, are great team players. They are committed to their goals and are determined to pursue and achieve them. They possess in depth knowledge of their field of expertise, whilst they remain curious and strive to find solutions to problems. All the aforesaid describe the qualities that make a thought leader but as I conclude, I would like to rephrase a quote by Arthur Schopenhauer and say: “A good leader hits a target no one else can hit. A thought leader hits a target no one else can see.”
What do you want to achieve in 2017?
In today’s rapidly changing era, we need to spend time working out how to mitigate the risks and the impact the new technologies might have to our clients, in order to support the growth and development of technology that will benefit all the participants.
////
By Melita Theodorides Georgiou, Head of Corporate Department
An Impacting Legislative Change in The Mergers and Acquisitions Regime in Cyprus
Following the country’s accession to the European Market, the Cyprus Mergers and Acquisitions regime has been primarily broadened by the implementation in 2007 into the Cyprus Companies Law, Cap.113 of the EU Cross-Border Mergers Directive (2005/56/EEC).
Up to such implementation, the Cyprus Companies Law only included provisions in respect of mergers of two or more companies incorporated in Cyprus. The implementation of the provisions of the EU Directive in the Cyprus legislative regime facilitates the merger of one (or more) Cypriot companies with respective entities incorporated in any other EU member state.
The straightforward and effective features of the cross-border merger procedure, especially where the simplified formalities statutorily set are applicable*, coupled with the country’s favourable tax regime**, has led to its wide use over the past decade by group companies seeking a unified/ more beneficial tax regime and a reduction of their administrative expenses.
*Simplified formalities are provided in cases where the absorbed company is wholly owned by the absorbing company.
** Exemptions under a reorganisation have been incorporated in the country’s legislative tax regime, by the incorporation of the respective provisions of EU Merger Directive (90/434/EEC)).
Legal Challenges and Important Considerations in Mergers & Acquisitions
Merger Control Issue – Legal Challenge
A legal challenge - though not common - in respect of companies merging with another in Cyprus, would be merger control issues regulated by the Control of Concentrations between Undertakings Law of 2014.
Concentrations for the purposes of the relevant law include mergers of previously independent undertakings, as well as acquisitions of one or more other undertakings by persons currently controlling one or more other undertakings.
The ambit of the relevant legal concentrations of major importance are deemed as such, if all of the following apply:
Concentrations that fall within the scope of the law are subject to investigation and hence to pre-merger notifications to the Commission for the Protection of Competition, which is the authority in Cyprus with the overall responsibility for its implementation.
Following the pre-merger notification, the Commission should inform the notifying undertakings of its decision, either to grant a clearance or, in case there are doubts as to the concentration’s compatibility to conduct a full investigation.
When a full investigation is required, participating undertakings will be given the opportunity to make changes to the proposed concentration, or commitments to alleviate doubts regarding the compatibility of the proposed concentration with the demands of the competitive market.
Further, before the Commission makes its final decision, it may carry out negotiations, hearings or discussions with any interested or other parties, with an aim to reach negotiation remedies.
It should be noted that the implementation (either in full or in part) of a concentration prior to clearance, or prior to the implementation of negotiated remedies, entails the risk of strict administrative sanctions, including administrative fines of up to 10% of the aggregate turnover achieved by the notifying undertaking during the immediate preceding financial year.
Moreover, the Commission may order the dissolution (either in full or in part) of the concentration that has been implemented prior to clearance.
Financial Assistance - A Legislative Prohibition to be Considered in Acquisition Financing
A more common legal challenge in reorganisations and acquisition transactions, and which may stand as an obstacle from a financing perspective, is the statutory prohibition contained in the Cyprus Companies Law, Cap.113 in respect of a company providing financial assistance for a purchase or subscription made, or to be made, by a person of or for any of its shares, or those of its holding company.
Though the provision of the law is significantly wide, making unlawful any financial assistance given, “whether directly or indirectly, and whether by means of loan, guarantee, the provision of security, or otherwise for the purpose of or in connection with the purchase of or subscription to its shares”, (or those of its holding company), there are certain statutory exceptions. In the case where lending is part of the ordinary course of business of the relevant company, or it is provided in accordance with an employee benefit scheme, or by means of a loan to employees for purchase of company shares, the statutory prohibition is disapplied.
More importantly, in 2009 the relevant provision was significantly relaxed by an amendment providing a ‘whitewash’ procedure in respect of private companies, where such a company is not a subsidiary of a public company, by the approval of the relevant action at any time with a resolution of its members (shareholders) passed by a majority at general meeting exceeding ninety per cent of all issued shares of the company.
Finally, with respect to public companies, financial assistance is permissible in the ambit of buy backs, which are only permissible subject to statutory limitations.
Buyback and Cross Holdings- Legislative Prohibitions to be Considered in Corporate (Re)structuring
Other important considerations in the field of Reorganisations and Acquisitions are the long-standing prohibitions contained in the Cyprus Companies Law, Cap. 113 regarding a buyback of own shares and holding of shares in holding companies. Though buybacks and cross holdings have been relaxed to a certain extent with harmonising amendments to Cyprus legislation, mostly in respect of public companies, the relevant provisions in respect of private companies remain largely unaltered.
The Cyprus Companies Law, Cap.113 provides that a body corporate may not - subject to certain legislative exceptions - be a member of a company which is its holding company and that any transfer or issue of such thereto shall be void.
Private companies may “buyback” their shares in the context of redeeming issued redeemable preference shares (which by recent amendments to the Cyprus Companies Law, Cap.113 may be issued on terms that allow their redemption both at the option of the company and at the option of their holder), or a reduction of share capital.
Do you have a mantra or motto you live by when it comes to helping your clients?
Before advising a client on available legal mechanisms, it is of paramount importance, apart from understanding what exactly is desired to be achieved, to also identify all the important facts.
This presupposes repeated communications led by the correct questions. Important facts may consist issues that are not deemed so by the client himself.
When considering options, legislation and precedent (even well practiced upon) should always be revisited, as applicable provisions differ from case to case.
Finally, when advising, any alternatives should be clearly stated for advantages and disadvantages (even those not directly pointed out) to be easily identifiable by the client. It is often the client who is in a better position to estimate the impact in his particular case, as well as practical difficulties.
One should always be open to hear, even identify concerns, which very often can be resolved and dealt with by a side additional arrangement. Sometimes one has to deviate from a preliminary agreed procedure to achieve the most beneficial arrangement, which commonly is determined along with negotiations - even at a very advanced stage.
Accordingly, when it comes to helping clients, our motto is listen-ask-understand-clarify and always be open to last minute rearrangements.
Notable Cases:
Approaching this special focus on litigation, in particular surrounding the Latin American region, our next thought leader believes keeping abreast with the latest legal developments, communication with foreign lawyers and clients, and effective translation of domestic legislation are key to secure and comfortable firm operations.
Here, Leonardo Alonso, Managing Partner of Alonso Lopes Groch Advogados, a Brazilian commercial litigation firm, discusses how his team is following these points, making it a mission to deliver leading services for their clients.
What would you say has been the biggest legislative development to affect your work in litigation over the last few years in Brazil?
First of all, there is a significant change in the way authorities have been acting due to corruption and corporate crimes prosecution. We are currently seeing a clear tendency in Brazil, where foreign theories are being imported, such as the Control Theory (Control over the fact), created by German scholars, among them and most importantly Claus Roxin, and implemented by the Brazilian Supreme Court in the Mensalão Case. Originally, this theory aimed at identifying principals and accessories to the crimes, as required by German Criminal Law. In Brazil on the other hand, they have been put into use to justify the prosecution and condemnation of those not acting with the required actus reus and mens rea, but that due to their position in companies or governments, should be understood as equally responsible. We can also refer to the use of wilful blindness theory and the criminalization of omission. This misinterpretation and misuse by Prosecutors and Judges is leading to greater risks of criminal accountability to corporation’s directors.
As for the legislative development, the acceptance of plea-bargaining is hugely affecting the work of criminal litigators in Brazil.
Other legislative development relates to the expansion of the predicate offenses in the money laundering legislation. Until July 2012 Brazilian legislation considered just drug trafficking, terrorism, illegal trade of weapons, kidnapping, corruption, financial crimes and criminal organizations as predicate offenses for the crime of money laundering. The list was then expanded to include any criminal offense, meaning that any crime can give rise to the crime of money laundering, whereas until 2012, only a restricted number of conducts was acknowledged as such. Besides that, Brazilian legislation on money laundering has the peculiarity of treating not only the “cleansing” of illegal money a crime, but also the concealment of such values, regardless of their re-inclusion in the financial system. As a matter of fact, Brazil has a very broad concept of money laundering, which gives enforcement authorities too much discretion on how the indictments are filed.
Are there any upcoming changes in the Brazilian litigation landscape your potential clients should be aware of?
In January 2014 the 12.846/2013 Act (also known as Anticorruption Act or Clear Company Act) came into force, establishing the way corporations can be punished in cases of corruption and bidding frauds. That is a very sensible landscape as the act establishes strict liability to the corporations. An effective compliance programme, for instance, does not exempt the company from accountability.
The act refers to civil and administrative accountability. This legal regime is very similar to criminal liability, which is very questionable in terms of constitutionality, as the Brazilian Constitution predicts criminal liability for legal entities only in cases of environmental crimes.
Although in force, this act has seen little to none enforcement, as much of the attention and enforcement attention is currently directed towards the Petrobras Oil scandal (Operação Lava Jato), the facts pertaining to which predate this act and are not applicable.
There is no doubt that the coming years will give rise to an increased number of prosecutions following the predications in this act.
What kind of clients and litigation matters do you most commonly deal with at the firm?
At our firm we mostly deal with firms or individuals in any way connected to corporate activities. The corporate crimes landscape in Brazil ranges from the most complex financial matters, passing through to environmental cases, and to labour accidents.
Our practice consists of strategic litigation (criminal proceedings in which our client is the victim or is the subject of an investigation), legal counselling (compliance, prevention and management of criminal risks), and fraud and other internal corporate investigations.
Our firm represents clients in a wide range of activities, such as big and medium financial corporations, industries, service providers, big farmers, and famous luxury brands.
What are the legal challenges involved in these scenarios?
Arguably, the main challenge is in considering the way enforcement authorities have been acting these days, to protect directors and members of the board from employees and third parties’ illegal actions, creating preventive mechanisms or defensive litigation strategies, diminishing, therefore, the risk of criminal prosecutions.
Another aspect that we can point to as a challenge is the change of understanding in our Supreme Court regarding when a convicted person must start serving their sentences. Until recently, only an unappealable decision could start the serving sentence period. Now, according to the majority of our Supreme Court, it can start right after a conviction sentence submitted to two levels of jurisdiction. Along these lies a feeling that serving a criminal sentence will no longer be a taboo in corporate criminal cases.
What particular challenges do these clients bring to your work, and what about cross-border litigation cases?
Even in corporate crime matters in the end you always deal with individuals, their fears and vulnerabilities, which make every case a psychological effort. In our area of practice, more than anything else, it is mandatory to take good care of the client.
Having our focus not only in procedural matters but also, and mainly, in substantive law, we can affirm that our practice is multidisciplinary. Due to the exploration of affirmative defenses in corporate crime, it is important not to be restricting in criminal law theory, and do in-depth research into the subsidiary areas of law (tax, competition, environmental law, etc.) involved. Thus it is safe to assume that every case is totally different from the other.
How would you say your education, experience, strengths and initiative contribute towards the thought leadership you boast in the Brazilian litigation landscape today?
Blending our practical experience in solving diverse criminal issues with a comprehensive theoretical knowledge of the law is a real asset; as is the capacity to adapt to ever-changing circumstances and provide full commitment to our clients.
We truly believe that staying tuned with developments in other countries and other areas of practice is a matter of survival in this market. We also pay full attention to how we make our cases and present them in front of judges. It is important to do it differently, but not in a caricatured or a fabricated way.
To finish, just as Justice Scalia used to say, showing affection is not a sign of lack of combativeness.
Is there anything else you would like to add?
First of all, thank you for having me. That being said, it is important for your audience to know that Brazil is passing through a very peculiar moment right now, and the pendulum is kind of overhanging, which is good in terms of attracting fully committed investors. It is truly important as a matter of evolution to be in contact with foreign clients and lawyers. On the other hand, it is also part of our job to translate and communicate the way our legal system works to clients and other lawyers abroad. This efficiency in communication generates a sense of security and comfort, and is our mission.
Do you have a mantra or motto you live by when it comes to helping your clients?
Do it simple and be effective. Know the business of your client and use him as a partner to solve the case.
What do you feel you couldn’t live without?
Music and literature; they just give you the capacity of abstraction and finding non-obvious solutions.
What motivates you most about your role?
Always being in contact with different kind of cases and helping our clients solve their issues.
Having recently joined 6 Pump Court Chambers in London, this month’s guest barrister is eager to expand his boundaries in the legal sector, and make efforts to raise the bar, both in terms of standards of service, and in the relationships 6 Pump Court and its team cultivates with its clients.
Over the next few pages Lawyer Monthly hears from Gordon Wignall on the current competition law landscape in the UK and throughout the EU, what the potential implications of a Brexit are set to look like, the drive case law has in the sector, and the overall ramifications of the Chamber’s work in this field. Gordon also details his path into the legal world, the personal rewards of being a barrister to such a complex and ever-evolving law book, and the day to day challenges therein.
Why have you chosen to more recently specialise in competition law? What inspired you from the get-go?
Competition is an obvious addition to 6 Pump Court’s, and indeed my own, regulatory practice. Personally, I also have a background in class actions, including their funding, and the impetus in private enforcement caused by the Damages Directive has made competition an area which demanded following up.
I came to competition indirectly via environmental and financial services law. My environmental work focuses on waste/recycling issues and on pollution, and my financial services work has involved UK citizens who have been affected by property promotions in various parts of Europe.
I came to realise that I had to understand relevant EU principles for my wider case load rather than having to get up to speed from time to time as necessary. I enrolled on a detailed practitioner programme run by King’s College London, which looked mainly at the four freedoms. When it became clear that this was only half the story, I embarked on the same programme given over to EU competition law.
My first EU competition case came during this programme, when I was asked by an Australian swimwear manufacturer to assist in setting up a distribution network in Europe. I could achieve this with the help of a lawyer contact in Germany and was hooked.
I was not able to leave study alone. I have just completed a taught Masters with KCL on state interference with private competition, i.e. Art.106 in conjunction with Art.102 and Inno v. ATAB in conjunction with Art.101. This arose from my curiosity about the principles behind C-553/12 P Commission v. DEI, the Greek Lignite case and their possible application for regulated network industries.
It is fair to say that studying through King’s has been a great pleasure and that the connections it has enabled, both in Brussels and elsewhere, have been invaluable.
For many years I have had an acknowledged interest in costs and funding. I was on the editorial panel of the main procedural guide to the law of England and Wales, the White Book. I was also an editor of the Law Society’s guide to litigation funding agreement (CFAs and ATE insurance funding).
I have run or been involved in UK class litigation for many years, including claims involving hundreds of thousands of litigants (mining worker claims). As well as much smaller group litigation claims, in particular pollution claims, I was also involved in product liability and financial services actions.
It was inevitable, especially after the government made claimant funding much more difficult in domestic cases (by revoking the ability to recover the premium of ‘after the event’ insurance policy which would protect clients from the risk of having to pay a successful opponent’s costs), that I would become interested in private enforcement claims.
Answering your question, I have been interested in competition law because of the satisfaction which comes from finding a way through relevant regulatory challenges in the area.
I have found that there is a surprising amount of scope for the art of persuasion in competition cases. This applies both in judicial review or in damages actions, and it is inevitably of interest for an advocate.
I also find the management and progress of class actions compelling. Third party funding developments make cases viable in the competition arena that are no longer practically possible in traditional domestic group litigation. I have recently enjoyed working on the instruction of various litigation funders, which have been devising innovative products for use in competition claims.
Having recently trained in Competition Law, what have you found to be the most challenging considerations of this legal segment?
I am currently reading Adi Ayal’s Fairness in Antitrust: Protecting the Strong from the Weak (Bloomsbury 2016). The current trend has been to look at competition cases on the basis that they are concerned with economic issues. Whilst there has been a debate as to whether the aims of competition should be particular versions of welfare and efficiency, a much more interesting question is the moral and political starting-points for these ostensibly economic issues.
The most challenging consideration for me is how to go about persuading a tribunal that it should adopt the assumptions which are most advantageous to a client’s economic case. This is a particularly complex question since it is not practicably possible to introduce lengthy evidence to support an underlying theoretical position. Clients want to make their case with the minimum of necessary expense, and careful planning is needed to bring this about.
What it the most interesting work you have done so far throughout 2016 in the realm of EU competition law?
I have been advising and representing a regulator in a network industry as to its defence of a claim for injunctive relief and damages. The case is an extension of the normal use of private litigation. The primary allegation is that in suspending a participant from an accreditation scheme the regulator is in breach of its dominant position (on the basis of a refusal to supply). The case could have real consequences for accreditation bodies, especially in the case of network industries.
It is true that claims in respect of accreditation and assurance have been made before, notably against private car manufacturers who have found reasons not to supply certificates of conformity for approved car types (see 26/75 General Motors v. Commission and 226/84 British Leyland v. Commission). More recently, claims have been made against professional regulators, including the regulator of chartered accountants in Spain (C-1/12 OTOC v. AdC) and the Law Society in the CAT (Socrates Training Limited v. The Law Society of England and Wales). These are both claims in which the respondent body competes on the same market as private training providers.
The claim in which I am involved suggests that a training provider has a claim against a regulator in the context of disciplinary proceedings simply where the accreditation has been suspended. It is possible that similar claims might be made in future against other regulators in the competition arena, whereas formerly claimants might have been expected to make their claims in the Administrative Court or in an ordinary civil court. Whatever the outcome of this case, regulators will feel themselves under increasing pressure from regulated entities.
What developments do you see have been the most recent changes to competition law in the UK and EU?
Current procedural developments are at least as significant as substantive legal and legislative decisions, both in the EU and in the UK.
In the EU, the Commission’s leniency programme has seen increasing use. Statistics about 20 years of leniency compiled by Wouter Wils were presented in his personal capacity at a seminar in Brussels on the 20th September 2016 (a seminar organised by KCL). He showed that between 2011 and 2015 immunity was granted to the first undertaking cooperating in an investigation in some 91% of Commission Decisions, as opposed to 10% in the period 1996-2000. On the other hand, there has been a more recent reduction in the number of cartels ongoing at the time of a first leniency application. There are concerns that the benefits of leniency give rise to negative effects, such as recidivist behaviour on the part of undertakings, especially those with large turnovers.
In the UK, the CAT is exercising its case management functions robustly. It is doing so in such a way as to make access to the Tribunal easier and fairer.
This year the CAT has made use of its powers under the Consumer Rights Act 2015 to apply its fast track procedure on a number of occasions (see for instance Latif & Waheed v. Tesco and also Socrates v. The Law Society).
The fast track procedure is set out in r.58 of the CAT Rules and ensures that a hearing is fixed so that it takes place within six months. Parties are expected to proceed expeditiously.
It also results in a cost capping order, so that in Socrates Training Limited Roth J. applied the procedure of the High Court and asked: ‘What is the lowest amount which a party could reasonably be expected to spend in order to have its case conducted and presented expeditiously?’ The CAT capped the claimant’s costs at £200,000 and the defendant’s at £350,000, down from budgets of £220,000 and £637,000 respectively.
There is a further reasoned order in the same case made on the 5th October 2016 (i.e. without the expense of a hearing) in which Roth J. dismissed the Defendant’s application to adduce late expert evidence, since this would be prejudicial to the Claimant.
The CAT appears to be making real efforts by its case management decisions to make the Tribunal available to SMEs.
In other claims too, the Tribunal is applying case management powers with vigour and in accordance with High Court practice aimed at keeping costs down.
See for instance the Costs Management decision (III) dated 21st October 2016 in Agents’ Mutual Ltd v. Gascoigne Halman Ltd. The CAT applied a new test of proportionality which requires there to be a “reasonable relationship” between the costs sought to be recovered and various prescribed factors including the sums claimed, complexity and the conduct of the other party. This new approach acts as a global check, so that even where costs have been reasonably or necessarily incurred they may be disproportionate.
Civil litigation in England and Wales has generally been heading towards a system of restricted costs recovery and this process is being applied in the CAT. Early costs management has the great advantage of telling the parties what its maximum exposure is to the other side’s costs, and this encourages access to the courts.
What difference is Brexit about to make in the EU’s competition landscape?
It has been said by some Brexiteers that they want to regain “control” of their national powers. Let us hope that they understand what they expect from this.
The UK has not been subject to the same scrutiny as other states for its promotion, in breach of competition rules, either of state monopolies or of the private sector. Once the UK is no longer subject to Commission decisions or judgments of the ECJ, there is the risk that the state may at some point become more powerful and less attractive to international investors. Those in favour of leaving the EU may not have anticipated this.
At the same time, the UK Courts have gradually been losing sight of the principle that the question of form and constitution is irrelevant in assessing whether an entity is an undertaking for the purposes of competition law (see C-343/95 Cali & Figli v. SEPG ). Privatisation has rendered institutions which are typically those of the state subject to competition, and this principle has become marked in the health and other regulated sectors. The Courts themselves may become more interventionist and more active after Brexit.
Whilst composing the answers to the questions put by Lawyer Monthly, I received a copy of the Brexit Competition Law Working Group (BCLWG) Issues Paper (October 2016). This has been compiled by a series of competition luminaries including Sir John Vickers, Ali Nikpay and Richard Whish QC (Hons and emeritus professor at KCL). It suggests areas in which some positive proposals need to be supplied quickly to the Government’s stated intention to employ Art.50 by the end of March 2017 (even post the High Court’s decision in Miller).
A Great Repeal Bill, assuming it brings the application of EU to an end, would have some dramatic effects in both ex ante and ex post controls, although the extent of those effects is at the least uncertain.
In the world of antitrust, Regulation 1/2008 and Block Exemption Regulations would come to an end. On the other hand, s.60, Competition Act 1998 provides that “so far as is possible,” questions arising in relation to UK competition are to be dealt with in a manner consistent with corresponding questions considered according to Community law.
In private litigation, UK practitioners will be worried that issues of jurisdiction, forum and the enforcement of judgments will make international claims much more complicated than they are at present.
Recent years have thrown up a thriving competitive market between European member states in accommodating investor disputes within the EU and elsewhere following Morrison in the US. Holland in particular has set up attractive group litigation procedures. Without new legislative measures to keep as much as possible of the status quo in place, the UK may fall behind in the international market for dispute resolution.
The BCLWG paper can be downloaded from the www.bclwg website. The authors invite comments to be submitted on any of the topics raised.
What do you like about your new Chambers at 6 Pump Court which might raise the bar in standards of competition law?
Compared with my previous very large Chambers, 6 Pump Court is a modestly sized set. It is a very pleasant place in which to work. It still retains a somewhat scholarly atmosphere to it, which is perhaps surprising given its recent accolades.
6 Pump Court is forward-thinking. It is only one of two Chambers which has multi-party entity status with our regulator. This means that we can act as a corporate entity with clients when appropriate without having to refer them on to other lawyers. It is authorised to conduct litigation, although we prefer the self-employed model.
Our understanding of different regulators and of the need to keep costs down, especially through careful case management, should make us a useful additional option in the legal services market. Our regulatory experience means that we are able to spot patterns in the way in which legislation is drafted and applied.
Recent developments of interest to us are the high levels of fines, not just in competition cases, but also for breaches of waste and other domestic regulations. The assessment of harm is common in both, and we find the underlying reasoning difficult to justify. So too the principle of piercing the corporate veil and the relevance of associated companies within one group has been the subject of recent inter-disciplinary discussion within Chambers.
6 Pump Court has some very experienced senior clerks, a great asset to both clients and barristers. Chambers can still offer close relationships with either barristers or clerks as clients prefer, a system which I suspect that many Chambers are finding difficult to replicate. Our Clerks represent a useful first point of contact. They tend to know the interests and experience of both barristers and of long-term clients.
Clients are welcome to contact us direct as a first port of call either for the purposes of litigation or in helping to find ways to introduce products via the regulators into the UK market.
All of these factors I am convinced will help us to raise the bar with clients, professional or industrial. Cost is a significant factor, and our understanding of regulators and of the practicalities of case and costs management, should make our services attractive to anyone interested in instructing us.
