Antitrust, Regulation & Foreign Investment Q4 newsletter

Welcome to our final quarterly newsletter of 2024, where the Ashurst Antitrust, Regulatory and Trade Team recaps some of the key developments of Q4 2024.

This edition highlights:

• the UK Competition Appeal Tribunal's (CAT) decision in Le Patourel. Following an eight-week trial held in the CAT between January and March 2024 (the first of its kind under the collective action regime), the CAT concluded that BT had not abused its dominant position and dismissed the claim.
• new EU legislation regulating products linked to forced labour and packaging and packaging waste in the EU. In November 2024, the Council gave the official green light to the EU Forced Labour Products Bank Regulation which prohibits the placing and making available on, or the expert from the EU market, of products that are produced using forced labour. The EU Packaging and Packaging Waste Regulation was adopted by the Council on 16 December and sets out rules for the entire life-cycle of packaging.
• the High Court ruling in the first judicial review appealing a decision under the UK National Security and Investment Act 2021 (NSIA) which upheld the UK government's decision to require LetterOne to sell a small UK fibre broadband provider which it had acquired. The judgment confirms that the courts will afford broad discretion to the government's decision-making under the NSIA as national security is a matter for elected officials.

Class actions

1. BT escapes liability in £1.3 billion class action in UK Competition Appeal Tribunal… for now

On 19 December 2024, the CAT delivered its long-awaited judgment in Justin Le Patourel v BT Group Plc and British Telecommunications Plc [2024] CAT 76. In January 2021, former Ofcom official Justin Le Patourel brought an opt-out collective claim against BT, alleging an abuse of a dominant position by BT in charging excessive prices to approximately 2.3 million landline customers in the UK. Mr Le Patourel's claim was a standalone claim, nonetheless relying on evidence from an Ofcom report, but not following on from any final decision handed down by a regulator.

In September 2021, the CAT certified Mr Le Patourel's claim as an opt-out proceeding, making this claim one of the first standalone claims to be certified as a collective proceeding (see our October 2021 update). BT then appealed the CAT's decision to certify the claim specifically on an opt-out basis (as opposed to appealing the certification itself). This appeal was unanimously rejected in May 2022 (see our May 2022 update).

The claim eventually progressed to an eight-week trial held in the CAT between January and March 2024, the first of its kind under the collective action regime. 

In December 2024, the CAT dismissed the claim in full, finding that BT had not abused its dominant position in the relevant market, offering helpful guidance on the application of the legal test for establishing excessive pricing. See here for our overview.

Transaction control

1. 4th Annual Report on the EU FDI Screening Regulation

On 16 October 2024, the European Commission published its Fourth Annual Report on the EU Foreign Direct Investment (FDI) Screening Regulation (Regulation 2019/452/EU). The report highlights the increasing number of notifications and that more sectors are being considered as high risk for potential review.

The number of notifications to EU Member States and the European Commission within the framework of the EU cooperation mechanism has increased by 18% since the framework was put in place in 2020. A broader range of sectors is being targeted for foreign investment review. The European Commission only undertakes a detailed assessment in exceptional cases (only 8% of cases notified in 2023). See our October 2024 update. 

2. Key takeaways from the 3rd NSIA Annual Report

On 10 September 2024, the UK government published its latest annual report on the operation of the UK NSIA. The 2024 Annual Report covers the period between 1 April 2023 and 31 March 2024. 

The NSIA came into force on 4 January 2022 and significantly strengthened the UK Government's powers to investigate and potentially prohibit transactions on national security grounds by requiring mandatory notification for transactions in 17 sectors thought most likely to raise national security concerns. The Act also empowers the government to issue a call-in notice in relation to transactions that may give rise to a risk to national security.

Between 1 April 2023 and 31 March 2024, the government received 906 notifications. There was a significant decrease in call-in notices issued in the reporting period, down 36.9% compared to the previous year. Similarly, there was a significant decrease in the number of final orders imposed in the reporting period: five compared to 15 in the previous reporting period. See our November 2024 update.

3. Merger reforms passed by Australian Parliament

On 28 November 2024, Parliament passed Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024, to introduce a new merger clearance regime in Australia. The new merger clearance framework is both mandatory and suspensory for transactions which exceed specified monetary thresholds. It will commence on 1 January 2026, with a voluntary transition period commencing from 1 July 2025 (when the current merger authorisation system will be closed). 

For an overview of the key features of the new regime, see our October 2024 and November 2024 updates. 

There is significant work ahead for the government, with approximately 23 further legislative instruments required to bring the changes into full effect, and consultation on notification forms and draft guidelines is expected in Q1 2025. 

4. First UK National Security and Investment Act judicial review sets high bar to challenge

In November 2024, the High Court upheld the UK government's decision to force LetterOne, an investment company ultimately owned by a number of sanctioned Russian nationals, to sell a small UK fibre broadband provider it had acquired. The judgment offers insights into the NSIA regime and makes clear that the courts will afford the broad discretion to the government's decision making as national security is a matter for elected officials. Although much of the information relied on by the Government will be too sensitive to be shared, claimants may be able to obtain disclosure of significant detail on the decision-making process through a judicial review claim. See our December 2024 update.

Public procurement recap

1. The Procurement Act 2023: the Competitive Flexible Procedure

The Procurement Act 2023 creates a new public procurement rulebook in England, Wales and Northern Ireland. The Act is expected to enter into force on 24 February 2025 (see our September 2024 update). One of the most significant changes introduced by the Act is the introduction of a new procurement procedure: the Competitive Flexible Procedure.

The Competitive Flexible Procedure is a new competitive tendering procedure which affords contracting authorities a broad discretion to structure tender processes. It will replace the existing multi-stage public procurement procedures. Contracting authorities can continue to model their procurement procedures closely on existing procedures, but they may also design their own bespoke procedures. See our October 2024 update.

2. Procurement Act 2023: Debarment Regime

The Procurement Act 2023 establishes a new debarment list which will be published by the Cabinet Office. A Minister of the Crown can put a supplier on the centrally-published debarment list if the Minister is satisfied that a supplier is an "excluded" (because of a mandatory exclusion ground) or an "excludable" (because of a discretionary exclusion ground) supplier. 

If a supplier is included on the debarment list for a mandatory exclusion ground, contracting authorities must not allow the supplier to bid for or to be awarded public contracts. Where the supplier is included on the debarment list for a discretionary exclusion ground, the supplier may be permitted to bid for, and be awarded, a public contract only if the contracting authority has good reasons for doing so. See our December 2024 update for an overview of the debarment regime.

Consumer law recap

1. DMCC Act: CMA consultation on direct consumer enforcement guidance

Following the Royal Assent of the Digital Markets, Competition and Consumers Act (DMCC Act) on 24 May 2024, the CMA published draft guidance on the new direct consumer protection enforcement regime set out in the DMCC Act (Draft CMA200). The Draft CMA200 guidance sets out the CMA's general approach to the exercise of its direct enforcement powers under the DMCC Act, including the investigation and enforcement process, remedies and penalties. The guidance also outlines the CMA's approach to penalties in direct enforcement cases. The CMA proposes to use a stepped approach to assess the appropriate amount of any penalty, including administrative penalties. This is a departure from its approach to administrative penalties under other CMA functions, such as the Competition Act or the mergers and markets regime (see our July 2024 update).

Final guidance is expected to be published in early 2025, before the new enforcement regime enters into force in April 2025. See our November 2024 update.

2. Australian government moves to ban unfair trading practices

Following the Australian government's announcement that it intends to prohibit "unfair trading practices", the Treasury has released a consultation paper on the design of the prohibitions. The consultation paper proposes both general and specific prohibitions be introduced. The general prohibition would cover a business's conduct where it unreasonably distorts or manipulates (or is likely to unreasonably distort or manipulate) the economic decision-making or behaviour of a consumer, and causes or is likely to cause detriment. This prohibition is intended to provide a "safety net" that can capture emerging and evolving practices, including "dark patterns". In addition, specific prohibitions are proposed in relation to subscription-related practices, drip pricing, dynamic pricing, online account requirements and barriers to accessing customer support. See our November 2024 update for an overview of the proposals. 

3. Online Christmas shopping unwrapped: competition and consumer law scrutiny

In our December 2024 update, we recap three recent developments relevant to online sales and distribution from a competition and consumer law perspective in the UK and EU: 

• the UK CAT judgment finding an infringement of the prohibition against anticompetitive agreements in Chapter I of the Competition Act 1998 in relation to vertical price fixing and online sales restrictions for running shoes. Branded suppliers must ensure that their distribution systems are carefully designed and implemented in compliance with competition law, and that any vertical restraints imposed on resellers are linked to a discernible business strategy pursuing a legitimate aim.
• the European Commission imposing a fine on Pierre Cardin for restricting cross-border sales. Online retailers must generally be free to: (i) set their own sales prices; (ii) make effective use of the internet for sales and marketing; and (iii) in exclusive distribution systems, accept online orders (passive sales) from outside of their allocated territories or customer groups.
• the UK CMA's action against Emma Sleep in relation to urgency claims. Online retailers must also ensure they do not make misleading claims about the duration, availability or level of discounts.

Trade recap

1. The EU Regulation on Deforestation-Free Products (EUDR) remains in limbo: update and prospects

The EUDR, which entered into force on 29 June 2023 (see our December 2023 update), sets out rules for certain commodities and derived products associated with deforestation and forest degradation. Operators and traders of certain commodities and products will be required to establish a due diligence system to ensure that these products and their derivatives have not been produced on deforested land or on forest subject to forest degradation – otherwise the commodities and products cannot be placed or made available on or exported from the Union market.

On 17 December 2024, the European Parliament in plenary session confirmed the agreement reached with the Council on the European Commission's proposal to postpone the application timeline of the EUDR by one year to 30 December 2025. This brings an end to the uncertainty that followed the November vote, when EU lawmakers voted not only in favour of the postponement but also added some substantial changes on key provisions of the regulation. See our December 2024 update.

2. EU ban on products linked to forced labour

On 19 November 2024, the Council finally gave the official green light to the EU Forced Labour Products Ban Regulation, which was published in the EU Official Journal on 14 December 2024. The law will take effect in December 2027. 

The new rules prohibit the placing and making available on, or the export from the EU market, of products that are produced using forced labour. This aims to create a level playing field within the EU by removing potential internal market distortions caused by differences in national legislation. The regulation complements the European framework on supply chain monitoring and will have an impact on business operators engaged in trading of products to or from the EU. See here for further details. 

3. Final green light for European reform of the packaging and packaging waste framework

On 16 December 2024, the Council of the EU officially adopted new rules to reduce, reuse and recycle packaging, concluding the final step of the legislative process. The Packaging and Packaging Waste Regulation (PPWR) will enter into force on the twentieth day following its publication in the EU Official Journal.

The PPWR establishes rules for the entire life-cycle of packaging, from design to waste, with measures on reuse and recycle. The main goal is to tackle growing waste and boost the circular economy, whilst at the same time harmonising national rules on packaging and packaging waste to the benefit of the internal single market. See our December 2024 update.