Supreme Court of United Kingdom– Allowing the appeal by the Competition and Markets Authority wherein the issue was whether Groupe Eurotunnel SE (GET) acquired an “enterprise” or the bare assets of a defunct enterprise, the Court held that the merger control provisions of the Enterprise Act 2002 are not limited to the acquisition of a business that is a “going concern” and the possession of “activities” is a descriptive characteristic of an enterprise under the Act. An enterprise is subject to merger control if the capacity to perform those activities as part of the same business subsists.
In the instant case, SeaFrance SA, operated a ferry service until it ceased operations. It was formally liquidated on 9 January 2012, and most of its employees were dismissed. GET, the parent company of the Group operating the Channel Tunnel, and Société Coopérative De Production SeaFrance SA (“SCOP”), a workers’ co-operative incorporated by a number of former SeaFrance employees to secure the continuance of the ferry service, acquired substantially all of SeaFrance’s assets including three of the four SeaFrance vessels, trademarks, IT systems, goodwill and customer lists. GET and SCOP resumed ferry services. The acquisition was referred to the Competition Commission, the regulator at the time. The Authority considered that what GET acquired was an enterprise and that accordingly a merger situation existed which was expected to result in a substantial lessening of competition in the cross-Channel market. Hence the present appeal.
The Court by a majority observed that the determining test is one of economic continuity. Lord Sumption, giving the majority judgment stated that an acquirer acquiring assets acquires an “enterprise” where (i) those assets give the acquirer more than might have otherwise been acquired by going into the market and buying factors of production and (ii) the extra is attributable to the fact that the assets were previously employed in combination in the “activities” of the target enterprise. [Société Coopérative de Production SeaFrance SA v The Competition and Markets Authority, decided on 16.12.2015]
Source: Legal news India