Key Proposals for the UK’s Vertical Block Exemption Successor

Posted in EU and Competition

The proposals include certain notable changes, while also mirroring the current UK framework and the European Commission’s planned approach in many respects.

By David Little, Alexandra Luchian, and James Mathieson

The UK Competition and Markets Authority (CMA) has proposed replacing the retained Vertical Agreements Block Exemption Regulation (Retained VABER), which has applied in the UK following the country’s departure from the EU and will expire on 31 May 2022, with a UK Vertical Agreements Block Exemption Order (UK VABEO). The CMA’s proposals include a number of changes intended to reflect evolving market conditions and enforcement practice, and to widen the CMA’s existing powers.

Concurrently, the European Commission is consulting on the draft revised Vertical Block Exemption Regulation (VBER) and Vertical Guidelines, planned to enter into force in the EU at the same time as UK VABEO.

This blog post provides an overview of the key similarities and differences between (i) Retained VABER and the proposed UK VABEO, and (ii) the proposed UK VABEO and the draft EU VBER. Continue Reading

FCA Proposes Enhanced Disclosures on Diversity and Inclusion for Listed Companies

Posted in Finance and Capital Markets

Proposals reflect growing investor focus on the ESG performance of listed companies.

By Chris Horton, James Inness, Rob Moulton, Anna Ngo, and Johannes Poon

The UK Financial Conduct Authority (FCA) has launched a consultation setting out proposed changes to its Listing Rules (LRs) and Disclosure Guidance and Transparency Rules (DTRs). The proposals seek to: (i) increase transparency for investors on the diversity of listed company boards and executive management; and (ii) improve considerations of broader diversity aspects within diversity policies and related disclosures by listed companies.

The consultation opened on 28 July 2021 and will close on 20 October 2021. Subject to consultation feedback and FCA Board approval, the FCA will seek to finalise the relevant rules by late 2021. Continue Reading

UK Government Publishes Draft Online Safety Bill to Tackle Illegal and Harmful Content Online

Posted in Data Protection

The proposals includes fines for non-compliance of up to the greater of £18 million or 10% of a provider’s annual global revenue.

By Gail Crawford, Rachael Astin, Alain Traill, Katie Henshall, and Amy Smyth

On 12 May 2021, the UK government published the Online Safety Bill (the Bill), which aims to establish a new regulatory regime to address illegal and harmful content online, including fines and other sanctions in the event of non-compliance. While further developments and guidance are expected, the proposed regime seemingly will have significant implications for in-scope user-to-user services and search engines.

The Bill follows the publication of the Online Harms White Paper by the Home Office and the Department for Digital, Culture, Media & Sport in April 2019. An initial government response to the consultation was published in February 2020, and a full government response in December 2020. (For more information, see Latham’s blog posts on the White Paper launch; government interim response; and government full response). Continue Reading

Europe Set for Increased SPAC Activity

Posted in M&A and Private Equity

As interest in European SPACs heats up amid an increasingly receptive regulatory environment, dealmakers must navigate market differences.

By Tom Evans, Chris Horton, James Inness, Mike Turner, David Walker, Tom Channing, and Catherine Campbell

While US special purpose acquisition company (SPAC) IPOs and related M&A activity grabbed the limelight in 2020 and early 2021, European SPACs look set to increase in number in the second half of 2021, with large European SPACs already emerging. In May 2021, British fund manager Hedosophia raised €400 million after listing a blank cheque company in Amsterdam — one of the largest European SPACs to date.

Interest in Europe is heating up amid an increasingly receptive regulatory environment and the ability of a European SPAC to operate in a less-crowded market compared with the US. At the same time, US SPAC activity has slowed down, in part due to uncertainty around the accounting treatment of warrants following an SEC statement in April 2021. Continue Reading

NFTs — A Digital Opportunity for PE Sponsors

Posted in M&A and Private Equity

Beyond creative works and consumer products, NFTs open up new avenues for IP monetisation in the technology, life sciences, and pharmaceutical industries.

By Stuart Davis, Tom Evans, Christian McDermott, David Walker, Gabriel Lakeman, Catherine Campbell, and Amy Smyth

Non-fungible tokens (NFTs), one-of-a-kind cryptoassets stored on blockchain technology, have soared in popularity as artists, gaming companies, retailers, and others seek new monetisation streams.

In October 2020, the US$69 million sale of a work from the digital artist Beeple at Christie’s set the tone for a surge in NFT activity. According to the market tracker Non-Fungible, NFT sales surpassed US$274 million in May 2021 alone, underlining the strength of this nascent market. As consumers and businesses become more comfortable operating digitally, NFTs will unlock new revenue opportunities for organisations across sectors, and offer a range of opportunities for PE sponsors. Continue Reading

Working Out Worker Rights — What Recent Developments Mean for PE

Posted in M&A and Private Equity

Worker classification, employee rights, and equal pay are among the issues that require careful consideration in light of recent and forthcoming changes.

By Tom Evans, Sarah Gadd, David Walker, Terry Charalambous, Adam Ray, and Catherine Campbell

The COVID-19 pandemic, and the growing emphasis on ESG metrics (particularly the “s”), has heightened the focus on worker rights and employee-employer relationships. Legislative changes, planned reforms, and high-profile court decisions in the UK, Europe, and beyond demonstrate a changing approach to worker rights, and underscore the need for careful consideration of these issues. This is an area that will continue to see significant developments, requiring dealmakers to remain alert to the impact of further changes. Continue Reading

Tackling “Long COVID” in PE Acquisitions — 4 Symptoms for Dealmakers to Examine and Treat

Posted in M&A and Private Equity

From potential cartel behaviour to repaying government loans, deal teams should remain alert to lingering issues rooted in a company’s response to the pandemic.

By Alexander Crosthwaite, Tom Evans, Sebastian Pauls, David Walker, Maarten Overmars, and Catherine Campbell

The recovery of the European PE market since the early days of the pandemic has been impressive — from US$114.8 billion in value and 794 deal volume in H1 2020 to US$226.8 billion in value and 951 deal volume in H1 2021. Allowing for suggestions of market bifurcation and varying treatment of COVID-19 winners and losers, deal processes for resilient assets (and even for less obviously attractive assets) are often extremely competitive, and valuation multiples continue to rise. But what of the longer-term changes that COVID-19 brought to PE acquisitions? As dealmakers return to the office and in-person negotiations, we consider four “long COVID” changes for PE dealmakers, and reflect on how these changes have manifested in recent deals. Continue Reading

English Court Finds Litigation Privilege In Documents Obtained By Deception

Posted in Dispute Resolution

The ruling clarifies that a litigant can withhold disclosure of communications even if the other person was unaware that the communication was for a privileged purpose.

By Daniel Smith and Mair Williams

In recent years, the English court has examined litigation privilege carefully. However, no aspect has been the subject of more scrutiny than the requirement that documents that a litigant seeks to withhold must have been prepared for the “dominant purpose” of preparing for litigation.

In Ahuja Investments Limited v. Victorygame Limited and Surjit Singh Pandher,[1] the court considered a situation in which one party to an exchange of correspondence withheld from the other their underlying dominant purpose, which was to prepare for litigation with a third party. The court permitted the assertion of litigation privilege, distinguishing previous authority that deception destroyed a claim to privilege. However, the decision raises some difficult questions about precisely whose intention matters if the document in question is correspondence involving multiple authors. Continue Reading

High Court Clarifies Appeal Procedures Following Remote Hand Downs of Judgments

Posted in Dispute Resolution

Mr Justice Hacon finds that procedures for applying for permission to appeal are not altered by the COVID-19 Protocol.

 By Oliver E. Browne

In Claydon v. Mzuri,[1] Mr Justice Hacon of the High Court has found that the COVID-19 Protocol does not alter the procedure for appeal applications if a decision is handed down remotely and the parties do not attend. Notably, the Judge clarified that the remote nature of the relevant hearings and the handing down of the trial judgment had no bearing on the proper approach to be followed in the context of seeking permission to appeal.

Continue Reading

FCA Issues New Rules on Insurance Pricing Practices

Posted in EU and Competition

The new rules follow coordinated regulatory and antitrust scrutiny of overcharging loyal customers.

By David Little, Victoria Sander, Gregory Bonné, and Anuj Ghai

On 28 May 2021, the FCA published a policy statement setting out new pricing practices rules for insurers and insurance distributors. The new rules follow a September 2020 consultation paper and final report. The FCA’s objective is to improve the way general insurance markets function, in particular by preventing firms from “price walking” customers (a pricing behaviour that the FCA considers anti-competitive) and ensuring that firms deliver fair value. The new rules also aim to increase transparency for customers who are renewing their insurance products.

Notably, the new rules:

  • Prescribe the information that firms must give to customers whose insurance products automatically renew
  • Include criteria that firms must take into account when determining whether a product offers value for money
  • Attempt to prohibit price walking

The FCA believes that price walking distorts competition and leads to higher overall prices for customers and that regular switching can help to bring prices down. Continue Reading