Land Agreements and Competition Law: Lessons From Recent CMA Guidance

Posted in EU and Competition

Businesses should review land agreements to avoid infringing competition law.

By John D. Colahan and Anuj Ghai

Many UK businesses operate from, or handle property governed by, some form of land agreement. These land agreements can include agreements for the sale or lease of land and agreements dealing with the use of or access to land. Notably, as with other transaction agreements, land agreements must be compliant with competition law. Prior to 2011, restrictions contained in land agreements were exempt from the application of UK competition law due to the operation of the Land Agreements Exclusion Order; however, the Order was revoked in 2011 following the Competition Commission’s recommendations at the conclusion of the market investigation into the grocery retail sector. Consequently, UK competition law now applies to land agreements.

The UK Competition and Markets Authority (CMA) has not previously taken enforcement action or issued fines in relation to land agreements. However, the decision to impose a £1.6 million fine on Heathrow airport in 2018 indicates the CMA’s increased scrutiny of land agreement restrictions. The Heathrow case represents the first time that the CMA has used its competition enforcement powers to sanction a land agreement restriction. Moreover, on the same day that the CMA announced the Heathrow fine, it also published guidance entitled “Land agreements and competition: do’s and don’ts”. In addition, the CMA has recently sent letters to other airports and hotel operators warning against similar agreements. Continue Reading

Growth Of Large-Cap Consortium Bids Tests Popularity Of Proprietary Bids — But What Are the Challenges for Private Equity?

Posted in M&A and Private Equity

By Suneel Basson-Bhatoa, Alex McCarney, and Catherine Campbell

Click for larger image.

Consortium (or “club”) deals involving PE firms have become a common feature of the deal market throughout 2018, with sponsors teaming up with each other or with strategic partners to buy large-cap assets. To the start of November 2018, 20 consortium transactions worth more than US$1 billion were announced, compared to 17 transactions during 2017. Notable recent deals include a Blackstone-led consortium’s US$17 billion deal to acquire a majority stake in Thomson Reuters’ financial and risk business, and CVC and Blackstone’s US$3 billion deal to buy Paysafe. In our view, political and economic uncertainty in Europe, growing confidence in consortium deals worldwide, and the need to put significant amounts of money to work, could prompt international sponsors to target large public and private European companies previously out of reach.

Consortium deals are effective in pursuing these large transactions, however in our view, consortium deals can present challenges. Continue Reading

English High Court Confirms the Scope of Freezing Injunctions in Relation to Third-Party Assets

Posted in Dispute Resolution

Third-party assets controlled (de facto or de jure) by the respondent are ordinarily outside the scope of a freezing injunction unless exceptional circumstances can be established.

By Oliver E. Browne and George Schurr

In the recent case of FM Capital Partners Ltd v Frédéric Marino, Aurélien Bessot, Yoshiki Ohmura, and Marit Sjovaag [2018] EWHC 2889 (Comm), the English High Court held that if a company wholly owned or controlled by the respondent is a non-trading company without an active business, and the respondent deals with or disposes of that company’s assets outside the ordinary course of business, that conduct may be enjoined by the terms of a freezing injunction. These are exceptional circumstances that brought the third party’s assets within the scope of the order. In all other circumstances, the proper course of conduct is for an application to be made to join the third party as a respondent to the order itself.


A Worldwide Freezing Order (WFO) was granted in July 2018 following the High Court’s judgment against Mr Ohmura (the Respondent) for his dishonest assistance in acts of bribery and breaches of fiduciary duty by Mr Marino (the First Defendant). The terms of the WFO, as issued, prohibited the Respondent from disposing of, diminishing in value, or otherwise dealing with his assets up to a value of US$11,250,000. Continue Reading

Outsource Service Providers to the Financial Services Industry — A Growth Sector for Buyout Firms

Posted in M&A and Private Equity

By Nicola Higgs, Fiona MacLean, Brett Carr, and Catherine Campbell

Technology outsourcing by financial institutions (FIs) has increased in recent years as FIs look to the latest innovations to improve their day-to-day business processes and to reduce costs. FIs outsource key functions to a host of regulated and unregulated third-party service providers, and the sector is poised for continued growth. According to research conducted by business outsourcing provider Arvato and analyst firm NelsonHall, outsourcing agreements worth £6.74 billion were agreed in the UK last year across all industries (a 9% increase on the prior year), and financial services firms signed £3.26 billion of them. With this continued growth, the outsourcing sector is increasingly likely to be a hotbed of PE deal activity; and, as regulators place a greater focus on outsource providers, deal teams should monitor regulatory engagement and policy developments.

Outsourcing Companies Evolve

IT and business process outsourcing are converging, meaning outsourcing deals are now different to the traditional, bespoke, dedicated service arrangements firms have entered into in the past. Modern-day outsource providers who have grown exclusively as tech companies are looking to meet the demand for processing and administration solutions for financial products and services in a heavily regulated environment. Notably, the Financial Conduct Authority’s (FCA’s) recent Investment Platforms Market Study identified that most investment platforms purchase their technology from third-party providers, and more than half of the platforms the study considered are in the process of re-platforming to a new provider. Less than a third of firms in the study rely on proprietary technology. Areas such as cybersecurity and data analytics have also become increasingly important for the sector, driving demand for specialist third-party providers with robust processes. Continue Reading

Big Deals Boost Spanish M&A

Posted in EU and Competition, M&A and Private Equity

Shifting environment presents the chance to unearth value and should pave the way to boost the number of mid-market deals.

By Manuel Deó

The Spanish M&A market in 2018 has been characterised by a series of large-cap transactions, helped by an abundance of cheap financing for the right deals. The total deal value on large-cap transactions in 2018, including ACS and Atlantia’s €32.1 billion takeover of Abertis, has already surpassed 2017 totals.

In the year to October, 772 transactions closed in Spain, compared to 791 in the same period last year. Yet, deal values totalled US$98.6 billion this year to October, dwarfing the US$36.7 billion total in the same period last year. IFM’s €2.16 billion acquisition of OHL Group’s concession business, which closed in April, was just one of several significant buyouts in a country known for mid-market M&A.

Buyers scouring the market for consolidation opportunities in 2018 have been particularly active in real estate, energy, healthcare, and infrastructure sectors. While Spain has enjoyed a host of deals above the €1 billion mark, the mid-cap market remains healthy with abundant opportunities likely to appear over the next 12 months. Sellers want to transact quickly, and there is strong competition for each asset. Continue Reading

English Appellate Court Restricts Scope of Litigation Privilege

Posted in Dispute Resolution

A recent ruling in West Ham v E20 has clarified the scope of litigation privilege and the circumstances in which courts will inspect documents over which privilege has been claimed.

By Daniel Smith and Clare Nida

In a significant decision, the English Court of Appeal has restricted the scope of litigation privilege in relation to purely commercial communications (even if connected to the litigation), and has clarified the grounds upon which a judge might be prepared to inspect disputed documents.

In light of West Ham United v E20 Stadium (No. 2) [2018] EWCA Civ 2652, companies should exercise caution when disseminating documents, information, and communications amongst non-lawyers even in litigious matters. They should seek English law advice if any matters may involve litigation in the English court, as the court may not find that they attract litigation privilege. Continue Reading

Spanish PE and Infrastructure Set For Large-Cap Deals

Posted in EU and Competition, M&A and Private Equity

Pressure to put dry powder to work will likely lead to bigger and bolder PE transactions in the year to come.

By Manuel Deó

Spanish private equity (PE) houses are sitting on large piles of dry powder as they scour the Spanish market for investment opportunities, as is the case in much of Europe. According to Pitchbook, total deal value has decreased by 15.3% compared to the same period in 2017.

This dry powder will not simply disappear. The pressure to put that money to work will likely lead to bigger and bolder PE transactions in the year to come, as PE firms take on more ambitious targets across the country. PE firms will need to source more off-market deals and corporate carve-outs in 2019. These transactions will likely be more common in the next few months as PE firms continue to operate in a competitive sellers’ market.

Limited partners will put more pressure on PE firms to generate returns, inevitably leading to more headline-grabbing buyout attempts. The greater capital needs of larger deal sizes likely will fuel a revival of consortium deals, in which two or more sponsors pool their resources as co-investors. An uptick in consortium-led deals can be positive for corporate boards and senior management, because such deals widen the range of possible investor structures, and deepen the pool of accessible capital and expertise to enhance shareholder value. Continue Reading

UK Scores Highly on Anti-Money Laundering Review

Posted in Finance and Capital Markets

FATF has published its highly anticipated report on the effectiveness of the UK’s anti-money laundering and counter-terrorist financing measures.

By Jon Holland, Rob Moulton, and Jonathan Ritson-Candler

On 7 December 2018, the Financial Action Task Force (FATF) published its highly anticipated mutual evaluation report of the UK. The report sets out the UK’s global standing in combatting money laundering and terrorist financing. The report is generally positive, ranking the UK as either highly or substantially effective in its fight against money laundering and terrorist financing in the majority of areas. The report does, however, highlight some concerns about the UK’s approach, particularly in relation to the Suspicious Activity Reporting (SAR) regime, the utilisation of financial intelligence, and the FCA’s role in the supervision of firms’ compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) rules.

The UK’s last FATF evaluation took place in 2007 and in light of recently heightened sensitivities around money laundering, the government was motivated to ensure that the UK maintained its status as a global financial centre with robust tools to combat financial crime. The report summarises the FATF’s analysis, based on its on-site visit in March 2018, of the UK’s compliance with the FATF 40 Recommendations and the effectiveness of the UK’s AML and CTF regimes. It also provides recommendations as to how those systems can be strengthened.

Key Findings

The report is largely positive and states that the UK:

  • Has a robust understanding of the money laundering and terrorist financing risks to which it is subject.
  • Proactively investigates, prosecutes, and convicts a range of money laundering and terrorist financing activity, securing approximately 1,400 convictions a year for money laundering offences.
  • Has improved its legal framework since the 2007 evaluation by implementing the People with Significant Control (PSC) Register to aid enforcement agencies, regulators and businesses in identifying the ultimate beneficial owners of UK-incorporated companies.
  • Ensures that all entities within the FATF definition of “financial institution” (e.g., banks and regulated investment firms) and “Designated Non-Financial Business Professionals” (e.g., lawyers and accountants) are subject to appropriate AML and CTF rules and are supervised for compliance with those rules.

Continue Reading

FCA Proposes Permanent Product Intervention Measures for Retail CFDs and Binary Options

Posted in Finance and Capital Markets

The rules will echo ESMA’s temporary measures, however the FCA will extend the CFD restriction to capture closely substitutable products (such as turbo certificates). 

By Rob Moulton, David Berman, Charlotte Collins, and Gabriel Lakeman

The FCA has launched two consultations on:

  • Banning the sale, marketing, and distribution of binary options to retail consumers (CP18/37)
  • Restricting the sale, marketing, and distribution of contracts for difference (CFDs) and similar products to retail customers (CP18/38 and Annex)

These measures are largely the same as ESMA’s temporary product intervention measures in relation to CFDs and binary options, which were first announced in March 2018 (see Latham’s related blog post for more detail). The ESMA measures, which apply for a maximum of three months at a time, but can be extended by ESMA, have already been renewed twice. At the time ESMA’s measures were first announced, the FCA stated that it expected to consult on whether to apply them in the UK on a permanent basis.

Given that the ESMA measures will fall away due to Brexit (although the timing will depend on whether or not a transitional period is agreed), it makes sense for the FCA to act now to ensure that the measures will continue to apply if the UK leaves the EU without a deal. Continue Reading

Latham Launches 5th Annual Private M&A Market Study

Posted in M&A and Private Equity

Latham & Watkins’ 2018 survey of European private M&A transactions analyses the acquisition and equity documentation for more than 210 European deals signing or closing between July 2016 and June 2018. Key highlights include:

  • The use of the locked box on UK deals has reduced slightly, although it continues to be the norm on deals with PE Sellers.
  • Warranty & Indemnity (W&I) Insurance continues to increase in popularity, particularly in deals involving PE Sellers, and increasingly tax indemnities have been given backed by W&I Insurance.
  • Warranty limitation periods continue to decrease (both for fundamental and commercial warranties).
  • Debt financing conditionality in equity commitment letters is now relatively unusual.

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