Douglas Lahnborg

Partner

Brussels


Read full biography at www.orrick.com
Douglas Lahnborg's practice focuses on EU and UK Antitrust and Competition Law.

Douglas has represented clients before the European Commission and the Competition and Markets Authority for more than 20 years in all areas of competition law. He provides multinational clients with innovative solutions on high-profile complex matters including merger control, abuse of dominance, private damages actions and cartel investigations, often involving multiple jurisdictions. He founded our Brussels office. 

Douglas has acted for clients in a broad range of industries, including software, technology, telecommunications, manufacturing, consumer goods, energy, healthcare, defence and national security.

Douglas features in both the Chambers UK and Chambers Europe editions where he is recognised as a leading antitrust and competition practitioner. He is known for being "skilled, easy to work with and very service-minded" Douglas is also ranked as a leading competition lawyer in Legal 500.

Posts by: Douglas Lahnborg

Another Reminder That the UK Merger Control Regime Is More Than Just Voluntary

On 6 August 2019, the UK’s Competition and Markets Authority (the “CMA”) imposed an ‘Unwinding Order’ on a U.S. company, Bottomline Technologies (de), Inc (“Bottomline”), active in the business payment automation technology space, and its UK subsidiary (“Bottomline UK”), in connection with its investigation into Bottomline’s completed acquisition of Experian Limited’s Experian Payments Gateway business (the “EPG Business”). The acquisition was completed on 6 March 2019.

An ‘Initial Enforcement Order’ or ‘IEO’, preventing further integration, had already been imposed on Bottomline and Bottomline UK on 22 May 2019.

The Unwinding Order imposes obligations in relation to the handling of information:

  • Bottomline must not use “EPG Confidential Information” (i.e. commercially sensitive information regarding the EPG business) to “solicit” any existing EPG customers in relation to any product or service that competes with the EPG business;
  • Bottomline and Bottomline UK must “segregate” all EPG Confidential Information (including existing physical and electronic materials) and ensure that such information cannot be accessed by any Bottomline and Bottomline UK representatives or employees other than certain EPG staff, except where necessary to comply with regulatory and/or accounting obligations or with the prior written consent of the CMA;
  • Bottomline and Bottomline UK must procure that EPG staff destroy or delete any “Bottomline Confidential Information” (i.e. any commercially sensitive information regarding the Bottomline business in respect of any products or services that compete with the EPG business) that they hold; and
  • Bottomline and Bottomline UK must procure that no EPG staff have access to Bottomline Confidential Information, except with the prior written consent of the CMA.

The Unwinding Order remains in force until it is varied or revoked.

This matter reminds us of the risks inherent in proceeding to complete a transaction without having obtained CMA clearance, i.e. the risks of the CMA investigating a transaction (that has been legally completed) and imposing disruptive measures pending the outcome of its investigation. At a more general level, the difficulties of reversal are relative to the scale of implementation and would be far more difficult for instance if employee’ contracts have been terminated, or supply/customer contracts novated or terminated. A careful assessment of whether to voluntarily notify the CMA of a transaction prior to completion should therefore be conducted in respect of transactions involving overlapping businesses in the UK.

CMA Orders Parties to Unwind Integration During Ongoing Investigation

For  the first time, the UK Competition and Markets Authority (CMA) has flexed its regulatory muscles by ordering the unwinding – during the course of its ongoing investigation – of a completed acquisition. In a demonstration of its willingness to use all of the tools at its disposal – regardless of deal size or complexity – the CMA ordered Tobii AB (Tobii) to reverse any integration that had taken place as a result of its completed acquisition of Smartbox Assistive Technology Limited and Sensory International Ltd (Smartbox).

 

Background

Tobii announced its acquisition of Smartbox for £11 million in cash through a debt-financed deal in August 2018. Both are relatively small tech companies that provide specialist “augmentative and assistive communication” (AAC) for those with speech disabilities through hardware and software solutions, including eye-gaze cameras.

Following completion of the transaction, Tobii took various steps to integrate the Smartbox business, including entering into an agreement (Reseller Agreement) whereby Smartbox would act as reseller of Tobii products in the UK and Ireland, the discontinuation of certain Smartbox R&D projects, and the withdrawal of certain Smartbox products from the market.

CMA Investigation

In September 2018, the CMA opened an investigation into the completed transaction and subsequently found that it would lead to less choice, higher prices and reduced innovation for customers. The CMA gave the parties one week to submit undertakings to address these concerns, or the CMA would proceed to an in-depth, Phase 2 investigation.

Despite the parties offering various undertakings designed to alleviate the CMA’s concerns, these were not deemed sufficient and, on February 8, 2019, the CMA referred the transaction for Phase 2 investigation, simultaneously imposing an interim order preventing preemptive action.

Unwinding Order

Following further investigation during the Phase 2 process, the CMA issued – for the first time – an unwinding order. The order requires the parties to reverse integration and restore the parties to the positions in which they would have been had the integration not taken place. The parties are required to fulfil any open orders pursuant to the Reseller Agreement, but terminate it once these are fulfilled. Moreover, the unwinding order requires Smartbox to supply certain products which had been discontinued. Smartbox is also required to reinstate all R&D projects, including investment and staff allocations, which were discontinued due to the acquisition.

In imposing the unwinding order, the CMA concluded that the integration actions taken by the parties might prejudice the Phase 2 reference or impede the taking of any action by the CMA to rectify competitive harm caused by the transaction.

The CMA is scheduled to make its final decision on the transaction by July 25, 2019.

Practical Implications

The imposition of an order to unwind integration in a small tech deal could be seen as the CMA wielding a sledgehammer to crack a nut, but the Tobii/Smartbox case reflects several of the CMA’s priorities for 2019, including an increased focus on tech deals and the protection of vulnerable consumers.

The willingness of the CMA to use the full range of merger control tools at its disposal impacts not only tech deals, but deals in all industry sectors, regardless of size and complexity. Parties in completed transactions, which might affect competition in the UK, but which are not notified to the CMA, should consider carefully what steps to take in terms of integration, and whether and how those steps could be reversed if required to do so by a CMA unwinding order.

The CMA’s approach in this case also highlights the perils of not notifying transactions prior to completion. While the UK merger control regime is voluntary in theory, the consequences of not notifying are such that, in practice, the regime requires parties to carry out a careful pre-transaction assessment of the impact on competition in the UK and the risk of the CMA’s launching an investigation, instead of simply concluding that filing is not required because the UK regime is voluntary.

For more information, contact Douglas Lahnborg ([email protected]) or Matthew Rose ([email protected]).

 

UK’s Proposed Investment Scrutiny Powers Are Far-Reaching

Douglas Lahnborg and Matthew Rose present a comparative discussion on the recently issued National Security and Investment White Paper, which proposes a significant expansion of the UK government’s powers to scrutinize foreign investment beyond those available in other leading economies. The white paper introduces powers to intervene in a broad range of transactions in any sector, regardless of deal value, the transaction parties’ market shares, or their revenues. If the proposals are brought into force in their current form, the UK regime would be one of the most stringent in the world, with wide-ranging implications for foreign and domestic companies and projects in sensitive sectors, including technology, energy, infrastructure, telecommunications, real estate and financial services. Read more here.

European Crackdown on Violations of Merger Control Procedural Rules Continues

Last year on this Blog we wrote about the uptick in enforcement action by European competition authorities against violations of merger control procedure (see here).

Yesterday, the UK Competition and Markets Authority (“CMA”) indicated that this trend is set to continue, issuing a fine of £100,000 for a breach of an Interim Order imposed on Electro Rent in its acquisition of Microlease. This is the first time the CMA has fined a company for such a procedural breach.

On the face of it, the fine seems harsh given that the relevant action – serving notice of termination of a lease without the CMA’s prior consent – was discussed with the appointed Monitoring Trustee prior to coming into effect.[1] Indeed, the European Court of Justice (“ECJ”) recently confirmed that parties may take certain actions without violating the standstill obligation imposed under the EU Merger Regulation – including terminating agreements – where such actions do not contribute to the implementation of a transaction.[2] In doing so, the ECJ’s ruling confirmed the commonly held view that merging parties are permitted to take certain steps allowing them to prepare for implementation of a transaction without violating merger control procedural rules.

Given the developing case law on standstill obligations, companies involved in M&A will need to revisit pre-completion protocols, noting that the EU approach seems to be diverging from the CMA’s somewhat more rigid approach to merger control. READ MORE

CMA Launches Consultation Concerning Changes to its Jurisdiction over M&A in the Tech Sector

The UK government considers that transactions in the following sectors can raise national security concerns:

1. quantum technology;
2. computing hardware; and
3. the development or production of items for military or military and civilian use.

In order to allow the UK’s Secretary of State to intervene in transactions in these sectors, the UK government has proposed amendments to the Enterprise Act 2002 that would expand the Competition & Markets Authority’s (“CMA”) jurisdiction to review transactions in these sectors from a competition perspective. READ MORE

The Chips Are Down: Intel’s Victory in the European Court of Justice Has Implications on How Anticompetitive Conduct Is Analysed in EU Antitrust Cases

 

On 6 September 2017, the Court of Justice of the European Union (“CJEU”) handed down its long-awaited ruling in Intel v Commission (the “Ruling”).[1] The Ruling, which sets aside the appealed judgment of the EU General Court and orders the case to be re-examined for failing to consider the effects of anticompetitive conduct on competition, has potentially broad implications for how the European Commission (“Commission”) conducts its analysis and reasons its decisions in ongoing and future EU antitrust investigations.

Key Takeaways

  • The Ruling signals a return of “effects-based” analysis in EU antitrust cases and a move away from a “form-based” approach where certain conduct is deemed per se illegal.
  • The Ruling not only clarifies how the General Court should assess appeals of Commission decisions, but is likely to have implications for how the Commission approaches its analysis and reasons its decisions in EU antitrust cases going forward. In particular, the burden of proving that specific conduct or practices have anticompetitive effects is placed firmly with the Commission.
  • Intel’s victory may embolden other entities facing similar allegations to defend their corners more aggressively.
  • This is not the end of the road. It cannot be ruled out that the General Court, when it re-examines the case and applies the appropriate analysis, comes to the same ultimate conclusions and upholds the Commission’s original fine.

READ MORE

CMA Obtains Director Disqualification for Breach of Competition Law

The Competition and Markets Authority (“CMA”) has today announced that it has secured the first disqualification of a director of a company which has infringed competition law. Under the Company Directors Disqualification Act 1986 (as amended by the Enterprise Act 2002), the CMA can apply to the court for a disqualification order to be made against a director in cases where a company has breached competition law and the director’s conduct makes him or her “unfit to be concerned in the management of a company[1]. This is the first time that the CMA has utilised this power.

In this case, poster supplier Trod breached competition law by agreeing with a competitor that they would not undercut each other’s prices for posters and frames sold online, with the agreement between the competitors being implemented using automated re-pricing software. The company received a fine of £163,371 for this behaviour.

READ MORE

English High Court Allows LCD Damages Action to Proceed

On 29 July 2016, the High Court of England and Wales delivered its judgment dismissing the applications of two defendants to strike out a follow-on damages case in which the claimant, iiyama, asserts that it suffered losses as a result of the defendants’ alleged participation in the LCD cartel. Iiyama v Samsung [2016] EWHC 1980 (Ch).

The claim follows on from the European Commission’s decision of 8 December 2010, which found that six LCD panel producers had entered into a world-wide price fixing cartel and had implemented that cartel within the EU.  The Commission had been satisfied that the agreement related to direct and indirect sales of LCD panels to companies in the EU.  It also found that the participants in the cartel had sought to implement the cartel within the EU, even if price negotiations took place outside the EU.

READ MORE

Price Signalling Can Put Companies in Hot Water in the EU

The long list of practices violating EU competition law just got longer: in Container Shipping, the European Commission confirmed that the unilateral publishing of pricing information, in public media, can violate Article 101 TFEU.[1]

In this case, the Commission expressed concern that the practice of fourteen container liner shipping companies (“Carriers”) to publish intentions to increase prices may harm competition. The Carriers regularly announced intended increases of freight prices on their websites, via the press, or in other ways. The announcements were made several times a year and included the level of increase and the date of implementation. The Carriers were not bound by the announced increases and some of them postponed or modified the price increases after announcement.

READ MORE

Observations on “Brexit” and the EU/UK Competition Law Regime

Rightly considered to be a “once in a generation decision,” the UK electorate will on 23 June 2016 have a chance to vote on whether the UK should remain a member of the European Union (“EU”).

This upcoming referendum has resulted in emotional rhetoric and heated discussions in the media (and no doubt around dining tables throughout the UK and elsewhere) on which way to vote, and why. However, what is striking to us is the relative lack of focus on the legal implications of so-called “Brexit,” including on EU and UK competition law.

READ MORE

Now in force: Major amendments to the antitrust damages regime in the UK

The Consumer Rights Act 2015 (“CRA”) comes into force today, 1 October 2015.1 It introduces major reforms to the antitrust damages actions regime in the UK.2 In particular, the CRA broadens the type of cases that can be heard by the UK’s specialist antitrust court, the Competition Appeal Tribunal (the “CAT”), to include opt-out class actions, and makes other procedural amendments aimed at facilitating and streamlining private damages actions in the UK.

READ MORE

EU’s Highest Court Confirms that Seeking an Injunction for SEPs May Constitute an Abuse of a Dominant Position

On July 16, 2015, the EU’s highest court, the Court of Justice, rendered its long-awaited ruling on whether seeking an injunction for a standard-essential patent (“SEP“) against an alleged patent infringer constitutes an abuse of a dominant position pursuant to Article 102 TFEU.  The judgment was in response to a request for a preliminary ruling from the Landgericht Düsseldorf (Regional Court of Düsseldorf, Germany)[1] in the course of a dispute between Huawei Technologies Co. Ltd (“Huawei“) and ZTE Corp. together with its German subsidiary ZTE Deutschland GmbH (together, “ZTE“).

READ MORE

A Comparison of 10 Key Issues in Civil Price-Fixing Cases Under the EU’s New Antitrust Damages Law and U.S. Antitrust Law

In April 2014, the European Parliament approved legislation governing antitrust damages actions brought in the national courts of European Union Member States. The Parliament’s approval followed several years of debate, and was the last significant hurdle for developing a private damages law for the EU. The Directive requires the approval of the European Council, which will be a formality, at which point it will be formally adopted. EU Member States then have two years to implement it into their national laws. The Directive aims to make it easier for companies and consumers to bring damages actions against companies involved in EU antitrust infringements. The text of the Directive is available here.

There has been a great deal of commentary concerning the extent to which EU private damages law will become like that of the United States—with all of its benefits for those harmed by anticompetitive conduct and all of its burdens for those accused of engaging in the conduct. Now that the Parliament has approved the Directive and the scope and contours of the forthcoming EU law have become clearer, this article compares some of the key features of the new law with U.S. law in price-fixing cases. For simplicity, the article focuses on U.S. federal law, with references to state law only where important. Our discussion of the new EU law similarly omits reference to national laws. Although brevity is the soul of wit, it also can be a source of potentially incomplete short-cuts that can lead to debatable, or even misleading, conclusions. Accordingly, while this article provides a general overview and comparison of some important issues under U.S. and EU law, it is not meant to substitute for independent legal research and analysis. READ MORE

UK Supreme Court Issues First Antitrust Ruling

In October 2012, the UK Supreme Court issued its first antitrust judgment, ruling that the UK statutory limitation period for bringing “follow-on” damages actions—i.e., claims based on antitrust infringement decisions—was sufficiently clear that, under the facts of the case, it did not deprive the claimants of effective redress. This ruling is significant as it is the first time the UK’s highest appeal court has examined antitrust damages claims and shows, alongside several high-profile UK Court of Appeal judgments handed down earlier this year, that the UK courts are gaining experience and confidence in dealing with complex antitrust matters. This increased competence will continue to benefit both claimants and defendants in the form of increased legal certainty in what remains a growing and developing area of EU and UK law.

BCL v. BASF centered on the compatibility of the UK limitation rules for follow-on damages actions with the European Union legal principles of effectiveness and legal certainty. The claimants, BCL Old Co. Limited and others (BCL), brought an action, in 2004, for damages against members of the vitamins cartel other than BASF, following a decision issued by the European Commission in November 2001. BCL did not sue BASF until more than six years after the decision, in March 2008, bringing its action in the UK specialist Competition Appeal Tribunal (CAT). Pursuant to the CAT’s rules, a claimant wishing to bring such an action must do so within two years from the date on which the decision of the relevant competition authority becomes final, suspended by any appeal brought against the decision. BASF had appealed the Commission’s decision, but only on the level of the fine. BCL argued that it was not clear from the limitation rules that an appeal of the fine alone did not invoke the suspension of the limitation period and that, in any event, it had not been clear at the time the appeal was brought what BASF was appealing against.

In May 2009, the UK Court of Appeal found that BCL’s claim was time-barred and could proceed, if at all, only with an extension to the limitation period granted by the CAT itself. Later that year, the CAT assumed that it did have the power to extend but declined to do so. On appeal of this decision, the Court of Appeal, however, held that the CAT had no such power to extend the statutory deadline for bringing an action before the CAT and that European Union law did not require the CAT to hold such a power.

The UK Supreme Court was asked to consider whether the statutory limitation period and its application violated the claimant’s rights under European Union law principles by rendering it “excessively difficult” for BCL to bring a claim against BASF. The Supreme Court considered that the statutory language was “plain and ordinary” and the legal position was “clear.” It found that the risks to BCL of not bringing a claim against BASF in January 2004 were or should have been evident and the Supreme Court found no evidence that the reason BCL had not brought its claim earlier was actually due to any legal uncertainty. In any event, the Supreme Court held, even if the legal position had not been clear, the only remedy for BCL would have been to bring an action against the UK government. Any uncertainty would not have permitted an action for damages to be brought against BASF at this stage.

The ruling clarifies the CAT limitation period:  An appeal of a Commission decision limited to the level of fine does not suspend the two-year period. By contrast, an appeal on the substance of the infringement, by any addressee of the decision—even if not a defendant in the damages claim—does suspend the limitation period.

The UK Supreme Court and recent Court of Appeal judgments have a number of practical implications for both claimants and defendants in UK private damages actions. First, a claimant will need to review the details of all appeals of any relevant infringement decision to determine whether it is the infringement itself that is the subject of the appeal or merely the level of fine. An appeal of the level of fine will not suspend the CAT limitation period. For potential defendants who did not appeal the Commission’s decision, for example because they were one of the immunity or leniency applicants, this may mean a number of years of uncertainty where they have no influence over the outcome of any appeal. Conversely, a claimant will not be able to proceed with an action before the CAT until the outcome of any appeal brought on the substance of the infringement by one of the decision addressees, even if the claimant did not intend to sue that particular defendant. This may significantly delay any recovery by the claimant through an action brought before the CAT. Instead, a claimant may decide to bring a damages action before the UK High Court, which also has jurisdiction to hear follow-on damages actions, and where a claim is more likely to proceed pending appeals of the underlying infringement decision.

As outlined in previous editions of this Newsletter, the UK regime is currently undergoing significant reform with the planned merger of the Office of Fair Trading and the Competition Commission due to take place as early as spring 2014. The procedure for bringing antitrust damages actions is also currently under review by the UK government with a proposal to expand the CAT’s jurisdiction to hear damages claims that do not arise from a decision by a competition authority (also known as “standalone” claims). The full text of the Supreme Court’s judgment is available here.