“whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods and services.”
“20. Section 179(4) of the Act provides that on an application to it for review of a decision of the CC the Tribunal “shall apply the same principles as would be applied by a court on an application for judicial review.”
“… the measure: (1) must be effective to achieve the legitimate aim in question (appropriate), (2) must be no more onerous than is required to achieve that aim (necessary), (3) must be the least onerous, if there is a choice of equally effective measures, and (4) in any event must not produce adverse effects which are disproportionate to the aim pursued” ( Tesco plc v Competition Commission[2009] CAT 6 at [137], drawing on the formulation by the Court of Justice inCase C-331/88 R v Ministry of Agriculture, Fisheries and Food, ex p. Fedesa[1990] ECR I-4023 , para. 13) In addressing proportionality, the following observation of the Tribunal at para. [135] of its judgment in Tesco should particularly be borne in mind: “[C]onsideration of the proportionality of a remedy cannot be divorced from the statutory context and framework under which that remedy is being imposed. The governing legislation must be the starting point. Thus the Commission will consider the proportionality of a particular remedy as part and parcel of answering the statutory questions of whether to recommend (or itself take) a measure to remedy, mitigate or prevent the AEC and its detrimental effects on customers, and if so what measure, having regard to the need to achieve as comprehensive a solution to the AEC and its effects as is reasonable and practicable.” (3) The CC, as decision-maker, must take reasonable steps to acquaint itself with the relevant information to enable it to answer each statutory question posed for it (in this case, most prominently, whether it remained proportionate to require BAA to divest itself of Stansted airport notwithstanding the MCC the CC had identified, consisting in the change in government policy which was likely to preclude the construction of additional runway capacity in the south east in the foreseeable future): see e.g. Secretary of State for Education and Science v Tameside Metropolitan Borough Council[1977] AC 1014 , 1065B per Lord Diplock; Barclays Bank plc v Competition Commission[2009] CAT 27 at [24]. The CC “must do what is necessary to put itself into a position properly to decide the statutory questions”: Tesco plc v Competition Commission[2009] CAT 6 at [139]. The extent to which it is necessary to carry out investigations to achieve this objective will require evaluative assessments to be made by the CC, as to which it has a wide margin of appreciation as it does in relation to other assessments to be made by it: compare, e.g., Tesco plc v Competition Commission at [138]-[139]. In the present context, we accept Mr Beard’s primary submission that the standard to be applied in judging the steps taken by the CC in carrying forward its investigations to put itself into a position properly to decide the statutory questions is a rationality test: see R (Khatun) v Newham London Borough Council[2004] EWCA Civ 55 ;[2005] QB 37 at [34]-[35] and the following statement by Neill LJ in R v Royal Borough of Kensington and Chelsea, ex p. Bayani(1990) 22 HLR 406 , 415, quoted with approval in Khatun : “The court should not intervene merely because it considers that further inquiries would have been desirable or sensible. It should intervene only if no reasonable [relevant public authority – in that case, it was a housing authority] could have been satisfied on the basis of the inquiries made.” (4) Similarly, it is a rationality test which is properly to be applied in judging whether the CC had a sufficient basis in light of the totality of the evidence available to it for making the assessments and in reaching the decisions it did. There must be evidence available to the CC of some probative value on the basis of which the CC could rationally reach the conclusion it did: see e.g. Ashbridge Investments Ltd v Minister of Housing and Local Government[1965] 1 WLR 1320 , 1325; Mahon v Air New Zealand[1984] AC 808 ; Office of Fair Trading v IBA Health Ltd[2004] EWCA Civ 142 ;[2004] ICR 1364 at [93]; Stagecoach v Competition Commission[2010] CAT 14 at [42]-[45]; (5) In some contexts where Convention rights are in issue and the obligation on a public authority is to act in a manner which does not involve disproportionate interference with such rights, the requirements of investigation and regarding the evidential basis for action by the public authority may be more demanding. Review by the court may not be limited to ascertaining whether the public authority exercised its discretion “reasonably, carefully and in good faith”, but will include examination “whether the reasons adduced by the national authorities to justify [the interference] are ‘relevant and sufficient’” (see, e.g., Vogt v Germany(1996) 21 EHRR 205 at para. 52(iii); also Smith and Grady v United Kingdom(1999) 29 EHRR 493 , paras. 135-138). However, exactly what standard of evidence is required so that the reasons adduced qualify as “relevant and sufficient” depends on the particular context: compare R (Daly) v Secretary of State for the Home Department[2001] UKHL 26 ;[2001] 2 AC 532 at [26]-[28] per Lord Steyn. Where social and economic judgments regarding “the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken” are called for, a wide margin of appreciation will apply, and – subject to any significant countervailing factors, which are not a feature of the present case – the standard of review to be applied will be to ask whether the judgment in question is “manifestly without reasonable foundation”: James v United Kingdom(1986) 8 EHRR 123 , para. 46 (see also para. 51). Where, as here, a divestment order is made so as to further the public interest in securing effective competition in a relevant market, a judgment turning on the evaluative assessments by an expert body of the character of the CC whether a relevant AEC exists and regarding the measures required to provide an effective remedy, it is the “manifestly without reasonable foundation” standard which applies. One may compare, in this regard, the similar standard of review of assessments of expert bodies in proportionality analysis under EU law, where a court will only check to see that an act taken by such a body “is not vitiated by a manifest error or a misuse of powers and that it did not clearly exceed the bounds of its discretion”:Case C-120/97 Upjohn Ltd v Licensing Authority[1999] ECR I-223 ;[1999] 1 WLR 927 , paras. 33-37. Accordingly, in the present context, the standard of review appropriate under Article 1P1 and section 6(1) of the HRA is essentially equivalent to that given by the ordinary domestic standard of rationality. However, we also accept Mr Beard’s submission that even if the standards required of the CC by application of Article 1P1 regarding its investigations and the evidential basis for its decisions were more stringent than under the usual test of rationality, the CC would plainly have met those more stringent standards as well; (6) It is well-established that, despite the specialist composition of the Tribunal, it must act in accordance with the ordinary principles of judicial review: see IBA Health v Office of Fair Trading[2004] EWCA Civ 142 per Carnwarth LJ at [88]–[101]; British Sky Broadcasting Group plc v Competition Commission[2008] CAT 25 , [56]; Barclays Bank plc v Competition Commission[2009] CAT 27 , [27]. Accordingly, the Tribunal, like any court exercising judicial review functions, should show particular restraint in “second guessing” the educated predictions for the future that have been made by an expert and experienced decision-maker such as the CC: compare R v Director General of Telecommunications, ex p. Cellcom Ltd [1999] ECC 314; [1999] COD 105, at [26]. (No doubt, the degree of restraint will itself vary with the extent to which competitive harm is normally to be anticipated in a particular context, in line with the proportionality approach set out by the ECJ inCase C-12/03 P Commission v Tetra Laval[2005] ECR I-987 at para. 39, but that is not something which is materially at issue in this case). This is of particular significance in the present case where the CC had to assess the extent and impact of the AEC constituted by BAA’s common ownership of Heathrow, Gatwick and Stansted (and latterly, in its judgment, Heathrow and Stansted) and the benefits likely to accrue to the public from requiring BAA to end that common ownership. The absence of a clearly operating and effective competitive market for airport services around London so long as those situations of common ownership persisted meant that the CC had to base its judgments to a considerable degree on its expertise in economic theory and its practical experience of airport services markets and other markets and derived from other contexts; (7) In applying both the ordinary domestic rationality test and the relevant proportionality test under Article 1P1, where the CC has taken such a seriously intrusive step as to order a company to divest itself of a major business asset like Stansted airport, the Tribunal will naturally expect the CC to have exercised particular care in its analysis of the problem affecting the public interest and of the remedy it assesses is required. The ordinary rationality test is flexible and falls to be adjusted to a degree to take account of this factor (cf R v Ministry of Defence, ex p. Smith[1996] QB 517 , 537-538), as does the proportionality test (see Tesco plc v Competition Commission at [139]). But the adjustment required is not as far-reaching as suggested by Mr Green at some points in his submissions. It is a factor which is to be taken into account alongside and weighed against other very powerful factors referred to above which underwrite the width of the margin of appreciation or degree of evaluative discretion to be accorded to the CC, and which modifies such width to some limited extent. It is not a factor which wholly transforms the proper approach to review of the CC’s decision which the Tribunal should adopt; (8) Where the CC gives reasons for its decisions, it will be required to do so in accordance with the familiar standards set out by Lord Brown in South Buckinghamshire District Council v Porter (No. 2)[2004] UKHL 33 ;[2004] 1 WLR 1953 (a case concerned with planning decisions) at [36]: “The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the “principal important controversial issues”, disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision-maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. They should enable disappointed developers to assess their prospects of obtaining some alternative development permission, or, as the case may be, their unsuccessful opponents to understand how the policy or approach underlying the grant of permission may impact upon future such applications. Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision.”
“10. […] Probability is not enough. The defendant would have to show that the decision would inevitably have been the same and the court must not unconsciously stray from its proper province of reviewing the propriety of the decision-making process into the forbidden territory of evaluating the substantial merits of the decision.”
“Where one is satisfied that although a reason relied on by a statutory body may not be properly described as insubstantial, nevertheless even without it the statutory body would have been bound to come to precisely the same conclusion on valid grounds, then it would be wrong for this court to exercise its discretion to strike down, in one way or another, that body’s conclusion”
“ICE told us that new agreements related to negotiations between ICE and Trayport which commenced in the first half (H1) of 2015. […] Negotiations resumed post ICE/Trayport merger and were conducted between respective commercial teams and ICE emphasised that the terms were arm’s length. […] We asked ICE to provide us with contemporaneous documents to corroborate this.”
“Discussions started when Gordon Bennett joined ICE from Marex Spectron in Jan/Feb 2015. [28] He had a good relationship with Trayport and they soon started negotiations. […] The first meeting was held on4 April 2015 . […] […] Proposal sent to Gordon Bennett on 7 May with most of the technical and commercial issues in covered: […] ICE responded that Trayport would not get lucrative oil markets – just the core power and gas markets. Parties close to an agreement before the BGC non-disclosure agreement stopped discussions until the acquisition was complete.” (Emphasis added.)
“a summary of our dialogue to date on how a future relationship between ICE (including ICE Endex) and Trayport might work (subject to agreement) and the terms on which such a deal would be based.”
“Covered Products: The interface(s) will work with the following Spot and Futures instruments, […][ " ].”
“[182] There have been a number of cases where divestiture remedies have been considered by the Tribunal. In British Sky Broadcasting Group plc v. (1) Competition Commission (2) Secretary of State for Business, Enterprise and Regulatory Reform[2008] CAT 25 (“ BSkyB ”), the CC had found that the acquisition by BSkyB of 17.9% of the shares in ITV plc had resulted in an SLC, and recommended partial divestiture of shares down to a 7.5% holding. The Secretary of State issued a decision following the recommendation contained in the CC’s report. The Tribunal rejected Sky’s contention that the recommended remedy was disproportionate and irrational. Whilst BSkyB was concerned with section 47 as opposed to section 35, the principles as to remedy considered in that case are, at least in broad terms, applicable here. The Tribunal in BSkyB considered the margin of assessment available to the CC in connection with its selection of remedy at paragraphs 284 to 287 of the judgment as follows: “284. It is not in dispute that the Commission and the Secretary of State have a margin of assessment with regard to appropriate action for remedying the SLC created by a merger (see, to that effect, Somerfield (above) at paragraph [88]). 285. In deciding what remedy to recommend to the Secretary of State the Commission is required by subsection 47(9) of the Act in particular to have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the SLC and consequent adverse effects on the public interest. 286. The CC Guidelines state that the Commission’s starting point will normally be to choose the remedial action that will restore the competition that has been, or is expected to be, substantially lessened as a result of an RMS (paragraph 4.23). The CC Guidelines further state that remedies that aim to restore all or part of the market structure prior to a merger are likely to be a direct way of addressing the adverse effects (ibid). 287 In Somerfield, in the context of the selection of a remedy for SLC under subsections 35(3) and 35(4) of the Act (which are expressed in very similar terms to subsections 47(7), (8) and (9)), the Tribunal said: “… in our view, it is not unreasonable for the CC to consider, as a starting point, that “restoring the status quo ante” would normally involve reversing the completed acquisition unless the contrary were shown. After all, it is the acquisition that has given rise to the SLC, so to reverse the acquisition would seem to us to be a simple, direct and easily understandable approach to remedying the SLC in question.” (paragraphs [98]-[99]).” [183] The Tribunal recognised that the CC has to exercise its judgment in deciding whether partial divestiture was the appropriate remedy (at [293] and [302]): “293. These arguments fall to be considered in the light of the Commission’s statutory obligation to have regard to the need to achieve “as comprehensive a solution as is reasonable and practicable” to remedy the SLC and its adverse effects on the public interest. The Tribunal considers that in the light of this obligation the Commission was clearly entitled to consider whether and if so at what level a partial divestiture would ensure that there would be no realistic prospect of Sky being able to exercise material influence over ITV’s strategy. We agree with the Commission that this is not simply a matter of calculation, but includes a significant element of judgment on the part of the Commission. … 302. Whether a remedy, structural or behavioural, will provide as comprehensive a solution as is reasonable and practicable to address the SLC together with any adverse effects resulting from it, must be examined by the Commission on a case-by-case basis in the light of the available evidence and using the experience and knowledge of the members. The fact that behavioural remedies typically require ongoing monitoring and enforcement, and the associated risks, are relevant considerations for the Commission. Despite the general concerns about such remedies outlined in the CC Guidelines, the Commission did not dismiss the voting trust or undertaking not to vote out of hand but rather assessed them in the light of the facts of this case.” [184] Sky argued that the proposed remedy was disproportionate and the CC should have accepted its proposed remedies. The Tribunal rejected these arguments in the following terms (at [306] to [308]): “306. The main thrust of Sky’s challenge to the Commission’s reasoning on this issue concerned the view (expressed at paragraph 6.69 of the Report) that the costs which Sky would incur if required to dispose part of its shareholding in ITV were irrelevant. At the hearing Sky referred to Interbrew (above) in which Moses J. said: “… in the instant case, I do not think that a question of balance arose. There will be cases where it is necessary to consider whether a remedy is disproportionate in the sense that the advantages to be gained are outweighed by the detriment to the one against whom the measure is directed. But in this case no such issue required consideration. This was not a case where the Commission took the view that the divestment of Whitbread with Stella Artois would be an effective remedy but that the divestment of Bass Brewers would be more effective. Rather, the majority of the Commission took the view that the divestment of Whitbread with Stella Artois would not be an effective remedy for the reasons it gave at 2.214. In those circumstances it availed Intrebrew nothing to contend that the remedy was disproportionate. No question of weighing the advantage of divestment of Whitbread with Stella Artois against the detriment to Interbrew of the divestment of Bass arose.” 307. This authority provides no support for Sky’s argument which in our view is misconceived. The Commission expressed its conclusions on proportionality at paragraphs 6.67 to 6.71 of the Report. It stated that when choosing between remedies which the Commission considers would be equally effective it would choose the remedy that imposed the least cost or that is least restrictive. In the present case the Commission took the view that the full or partial divestiture of Sky’s shareholding in ITV would be an effective remedy. As between those remedies the Commission concluded that partial divestiture was the more proportionate because it was less intrusive in that it required Sky to divest a smaller proportion of its shareholding. 308. Having already concluded that neither of Sky’s proposed remedies would be an effective remedy there was no need for the Commission to examine the proportionality of those remedies vis-à-vis the divestiture remedies or at all. In those circumstances it does not assist Sky to contend that the partial divestiture remedy was disproportionate when compared with its own proposals. As in Interbrew , no question arises of weighing the merits of either of the behavioural remedies against the cost to Sky of the partial divestiture or its shareholding in ITV. In any event, the Commission noted that Sky’s proposals would themselves be likely to be far from cost-free in view of the monitoring and enforcement requirements and other implications set out in the Report.” [185] We agree with the approach of the Tribunal in BSkyB . The CC has a wide margin of appreciation in the selection of the remedy which it considers would be effective in remedying the SLC found. In general it is not obliged on proportionality grounds to select a remedy which is not effective to remedy the SLC. Proportionality is most relevant when looking at remedies which would be effective. Whilst significant costs may be incurred as a result of divestiture, these may have to be borne if behavioural or other structural remedies would not be effective. [186] The parties agreed that the four-fold approach to proportionality in Tesco is applicable in the present case. In that case, the Tribunal summarised the principles as follows: “136. A useful summary of the proportionality principles is contained in the following passage from the judgment of the ECJ in Case C-331-88 R. v. Ministry of Agriculture, Fisheries and Food and Secretary of State for Health, ex parte Fedesa[1990] ECR I-4023 , paragraph [13], to which we were referred by the Commission: “By virtue of that principle, the lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures are appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued.” 137. That passage identifies the main aspects of the principles. These are that the measure: (1) must be effective to achieve the legitimate aim in question (appropriate), (2) must be no more onerous than is required to achieve that aim (necessary), (3) must be the least onerous, if there is a choice of equally effective measures, and (4) in any event must not produce adverse effects which are disproportionate to the aim pursued.” [187] In BAA , the CC had issued a market investigation report on the supply of airport services by BAA in the UK. It found an adverse effect on competition and required that BAA divest itself of certain airports. We have already quoted at paragraph 47 above paragraph 20 of the judgment of this Tribunal which sets out the relevant principles on proportionality. We adopt and follow that analysis.”
“42. A prospective analysis of the kind necessary in merger control must be carried out with great care since it does not entail the examination of past events — for which often many items of evidence are available which make it possible to understand the causes — or of current events, but rather a prediction of events which are more or less likely to occur in future if a decision prohibiting the planned concentration or laying down the conditions for it is not adopted. 43. Thus, the prospective analysis consists of an examination of how a concentration might alter the factors determining the state of competition on a given market in order to establish whether it would give rise to a serious impediment to effective competition. Such an analysis makes it necessary to envisage various chains of cause and effect with a view to ascertaining which of them are the most likely. 44. The analysis of a ‘conglomerate-type’ concentration is a prospective analysis in which, first, the consideration of a lengthy period of time in the future and, secondly, the leveraging necessary to give rise to a significant impediment to effective competition mean that the chains of cause and effect are dimly discernible, uncertain and difficult to establish. That being so, the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a decision declaring the concentration incompatible with the common market is particularly important , since that evidence must support the Commission’s conclusion that, if such a decision were not adopted, the economic development envisaged by it would be plausible.” (Emphasis added.)
“To help make this judgement on the likely future situation in the absence of the merger, the [CMA] may examine several possible scenarios, one of which may be the continuation of the pre-merger situation; but, ultimately, only the most likely scenario will be selected as the counterfactual .”
“The [CMA] will typically incorporate into the counterfactual only those aspects of scenarios that appear likely on the basis of the facts available to it and the extent of its ability to foresee future developments.”
“[…] I think the critical point was not the acquisition by ICE. […] The critical point was their acceptance of our business model, which had taken place in 2015. They were our oldest exchange client. We have known them for years, and years and years. They had always refused to pay. When they came to us and said, ‘Actually, we will pay for the connectivity’, that was a ‘on the road to Damascus moment’ […] [t]hey were saying, ‘Okay, we will join your ecosystem in the way so that you do not have to explain to the other people in our business why effectively we get a free ride and they do not’. That discussion was contemporaneous with Gordon Bennett who was a person we know very well, from one of our broker clients moving over to ICE and saying, ‘There is something to be gained by having a healthy and mutually beneficial relationship with Trayport on these sorts of commercial terms’.”
“The CMA […] acted unfairly in making a finding [that it was not sufficiently certain that the New Agreement would have been concluded absent the Transaction] without having put the point to the Parties for them to provide rebuttal evidence, having led them to believe that it accepted their case.”
“[…] We are provisionally of the view that while it is possible that ICE and Trayport would have successfully entered into the New Agreement absent the Merger this is not sufficiently likely for the purposes of the counterfactual, particularly in the light of their previous reluctance to cooperate and on the basis of evidence in the Parties’ internal documents which clearly demonstrate strategic reasons for their lack of cooperation […].”
“[…] We are of the view that while it is possible that ICE and Trayport would have successfully entered into the New Agreement absent the Merger this is not sufficiently certain in order to be included in the most likely counterfactual, particularly, in light of there being no draft agreement, including no final agreement on the scope ICE products to be listed on Trayport , and the parties’ previous reluctance to cooperate (the evidence available in the Parties’ internal documents demonstrates strategic reasons for their lack of cooperation […])”
“131. The extent of the duty to disclose as part of the duties to consult and procedural fairness has been considered in some detail by the Tribunal in BMI Healthcare Ltd v. Competition Commission[2013] CAT 24 (“ BMI ”) and Eurotunnel . It is not necessary to set out in this judgment the various dicta in the numerous cases on the subject in other contexts. Nevertheless, the six general principles as to the requirements for a fair hearing of Lord Mustill in R. v. Home Secretary, ex parte Doody[1994] 1 AC 531 at 560 are a useful starting point: “What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer.” 132. BMI considered the CC’s market investigation jurisdiction, which like section 104 (merger investigations) contains at section 169 a duty to consult in respect of such investigations. We agree with the approach set out in paragraph 39 of that judgment, which set out a number of clear propositions as to the correct approach. That paragraph set out seven propositions as follows (we have added the references to section 104): “39. We consider the following propositions to be clear: (1) The starting point in considering the Commission’s duty to consult must be the Act, which deals expressly with the Commission’s responsibilities in this regard, and which also makes provision for the protection of confidential information. ... Sections 169(2) and (3) [104(2) and (3)] of the Act require the Commission to consult before making a decision, and to give reasons for that decision before it is made, but in neither case is this obligation absolute. It is qualified (“so far as practicable”), in particular by the Commission’s duties in relation to specified information …. (2) However, as is clear from section 241, the protection of specified information can give way “for the purpose of facilitating the exercise by the authority of any function it has under or by virtue of this Act”, and one of the functions of the Commission is the Commission’s duty to consult under section 169 [104] of the Act. (3) The Act thus establishes both the duty to consult and the duty to protect confidential (specifically, “specified”) information. Section 244 … then describes three conditions to which the Commission should – “so far as practicable” – have regard “before disclosing any specified information”. (4) The Act thus contains a fairly comprehensive code dealing with the duty to consult and the duty to protect confidential information. There is nothing in the Act which obliges the Commission to withhold material that ought to be disclosed pursuant to the Commission’s section 169 [104] duty to consult, simply because that would involve the disclosure of specified information. But, conversely, the Commission is not obliged to disclose each and every piece of specified information as part of its duty to consult. We consider that the Act contains a perfectly clear and workable code. Although we have had in mind the statement in Lloyd v. McMahon[1987] 1 AC 702 -703 that “it is well-established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness”, we do not consider it necessary to imply into the Act anything by way of additional safeguard. The provisions of the Act are, in themselves, quite sufficient for this purpose. (5) The Commission’s guidance in relation to confidential information as set out in the CC7 Guidance is entitled to great weight. None of the Applicants criticised this guidance, and it appears to set out a rational and helpful approach to dealing with specified information. (6) Moreover, whilst what is a fair process in the context of the Act is one for the Tribunal as a matter of law, the Commission’s approach in any given case is entitled to great weight. The consideration of the potentially competing interests of due process and the protection of confidential information is a nuanced one, to be undertaken in light of all the circumstances. It is the Commission, and not the Tribunal, that stands in the front line when assessing such matters, and the Tribunal should be slow to second-guess decisions of the Commission, in particular as to how confidential certain material is, and how best to protect the confidentiality in that material. We have well in mind the statement of Lloyd LJ in R. v. Panel on Take-Overs and Mergers, ex parte Guinness plc[1990] 1 QB 146 at 184: “Mr Buckley argued that the correct test is Wednesbury unreasonableness, because there could, he said, be no criticism of the way in which the panel reached its decision on 25 August. It is the substance of that decision, viz., the decision not to adjourn the hearing fixed for 2 September, which is in issue. I cannot accept that argument. It confuses substance and procedure. If a tribunal adopts a procedure which is unfair, then the court may, in the exercise of its discretion, seldom withheld, quash the resulting decision by applying the rules of natural justice. The test cannot be different, just because the tribunal decides to adopt a procedure which is unfair. Of course the court will give great weight to the tribunal’s own view of what is fair, and will not lightly decide that a tribunal has adopted a procedure which is unfair, especially so distinguished and experienced a tribunal as the panel. But in the last resort the court is the arbiter of what is fair. I would therefore agree with Mr. Oliver that the decision to hold the hearing on 2 September is not to be tested by whether it was one which no reasonable tribunal could have reached.”
“The CMA asked itself the wrong question in focusing on whether the New Agreement would have been signed “in its current form” absent the Transaction, and as a result took account of an irrelevant consideration and failed to take account of a relevant one. The relevant question was whether ICE would or would not become one of Trayport’s normal “venue customers” and not whether, absent the Transaction, the New Agreement would have been reached on precisely the terms the Parties ultimately signed, since the CMA’s assessment of the competitive effects of the Transaction depended on whether or not ICE and Trayport were in a normal “venue customer” relationship and not on the precise commercial terms that would have been agreed.”
“6.30 Importantly, we note that the New Agreement was concluded post-Merger, with Trayport already forming part of the ICE Group. As such, it is unclear that the negotiations would have been successfully concluded in circumstances where funds were not being transferred intra-group and/or if Trayport were under alternative ownership, in the absence of the Merger. We note that even if these discussions had been successfully concluded, absent the Merger, it is uncertain whether the final terms would have been materially equivalent to the terms negotiated in the New Agreement. 6.31 Given that we did not consider it sufficiently certain that the New Agreement, in its current form , would have been entered into absent the Merger, we have decided not to include the New Agreement as forming part of the counterfactual.” (Emphasis added.)
“In their joint response to our Remedies Notice, the Parties argued that our Provisional Findings adopted a counterfactual where the New Agreement was treated as being Merger-specific, and therefore the ‘efficiencies and benefits’ to customers of the New Agreement should be treated as a customer benefit that would be lost under a Divestiture remedy. We considered that ICE had mischaracterised the counterfactual. However, even if we were to treat the New Agreement in its current form as Merger-specific, we did not consider that the cited benefits of the New Agreement would necessarily be lost under our Divestiture remedy.”
“The CMA’s treatment of the New Agreement in the counterfactual and in considering relevant customer benefits was inconsistent and, therefore, irrational. The CMA simultaneously found both that the New Agreement was not part of the counterfactual and that it was not merger-specific (i.e. a consequence of the Transaction). Logically, however, the New Agreement is either part of the scenario in which the merger does not occur (the counterfactual), or it is a consequence of the merger occurring (merger-specific). It cannot exist “in the ether”, without forming part of either scenario.”
“12.71 As set out in our assessment of the counterfactual in Section 6, we concluded that it was not sufficiently certain that the New Agreement would have been entered into by ICE and Trayport on the same terms absent the Merger. Accordingly, it follows that it is unclear whether under alternative ownership the same agreement would have been signed. 12.72 Given this uncertainty, we concluded that it would be appropriate for any new owner of Trayport to decide whether to accept or reject the terms of the New Agreement entered into whilst Trayport was under ICE ownership. 12.73 In order to provide the eventual purchaser of Trayport under this remedy with sufficient flexibility to make this decision, we considered that the New Agreement should be fully unwound thereby giving the new owner of Trayport the choice as to whether to negotiate (or not) an agreement with ICE either as part of the divestiture process, or in the future. 12.74 For the avoidance of doubt, following the termination of the New Agreement, ICE would be under no obligation under this remedy to enter into negotiations with the new owner of Trayport in relation to this agreement.”
“The CMA erred in law in requiring the New Agreement to be unwound as it had no statutory power to make such an order. The CMA’s statutory power is to take action to remedy, mitigate or prevent the substantial lessening of competition or any resulting adverse effects. The CMA has required ICE to unwind the New Agreement because it is “…appropriate for any new owner of Trayport to decide whether to accept or reject the terms…”
“(2) The CMA shall take such action under section 82 or 84 as it considers to be reasonable and practicable –– (a) to remedy, mitigate or prevent the substantial lessening of competition concerned; and (b) to remedy, mitigate or prevent any adverse effects which have resulted from, or may be expected to result from, the substantial lessening of competition. […] (4) In making a decision under subsection (2), the CMA shall, in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.”
“67. The CMA concluded that, in order to make the divestiture remedy effective (thereby addressing the SLC caused by the Transaction in as comprehensive a way as possible), it was necessary to allow the new purchaser of Trayport to decide whether to enter into an agreement with ICE, and on what terms. […]”
“68. Since the CMA did not know whether the New Agreement was on arm’s length commercial terms, an order requiring the divestment of Trayport but allowing the continued existence of the New Agreement might have encumbered Trayport’s new owner with an agreement that a truly independent Trayport would never have signed up to (either at all or on materially similar terms). In that case, an order for divestment alone would not remedy the SLC, or the adverse effects resulting from it, and certainly would not provide as comprehensive a solution as was reasonable and practicable. […] 69. […] The CMA’s requirement that the New Agreement should be terminated was […] a step taken in order to ensure that the new owner of Trayport was not lumbered with an agreement that might not be commercially fair to it.”
“12.24 To ensure that a Divestiture remedy would achieve its intended effects, we considered [the three topics noted above]. 12.25 As part of this assessment, we also considered how the New Agreement should be treated under the Divestiture remedy.”
“In the long-term, we considered that it is likely to result in liquidity remaining with ICE in asset classes where it already has a strong position and that it may ultimately result in liquidity shifting away from ICE’s rivals in asset classes where it is currently weak and/or has no position.”
“8.118 [O]ur view is that these benefits of foreclosure are likely to be substantial. Moreover, some of these benefits , in particular expanding its presence in existing products and protecting itself from the challenge of rivals, are likely to emerge relatively quickly . Other benefits, such as those relating to new markets or segments, may take some time to emerge, but are likely to accumulate for many years into the future” (Emphasis added.)
“In light of this long time assessment horizon, and the specific features of this industry, our view is that a quantitative assessment – particularly if it seeks to be highly detailed – will not be particularly informative of the Parties’ foreclosure incentives. We reached this view on the basis of a number of factors: (a) The mechanisms of foreclosure identified above primarily relate to Trayport’s strategy around what initiatives to promote, as well as the listing of rivals’ new products and prioritisation of software developments that may only emerge in future. Therefore, we necessarily could not identify the specific changes that Trayport would make and quantify how this would affect the competitiveness of each of ICE’s rivals. (b) In addition, while a loss of competitiveness may result in a reduction in the volumes hosted by ICE’s rivals in the longer term, as discussed below, the precise impact on specific products is unavoidably harder to predict in this industry than most because liquidity is sticky and tends to gather on a certain venue for a particular asset class. As discussed in Section 7, the importance of liquidity and open interest gives rise to strong network effects. The implication of this is that in response to a loss of competitiveness a rival may suffer only a very limited loss of volumes in some products, but a very dramatic loss in others, with it being difficult to identify in advance exactly where these large shifts in volumes will take place. This difficulty is exacerbated by the need to base this forward-looking long-term analysis on historical data, which may not reflect prevailing circumstances in the market as and when these foreclosure mechanisms are gradually introduced in the future.”
“The CMA recognised [at para 8.104 of the Report] that it could not forecast whether liquidity (i.e. trading) would switch as a result of implementation of the four partial foreclosure strategies, and it was therefore illogical and irrational to find that there would be “substantial” switching.”
“is likely to result in liquidity remaining with ICE in asset classes where it already has a strong position and that it may ultimately result in liquidity shifting away from ICE’s rivals in asset classes where it is currently weak and/or has no position. It would also increase the likelihood that ICE would take a leading position in new product markets or where innovation shifted the balance of power”
“where there is a range of ways in which competition in a market might be lessened substantially, the Commission is not required in respect of each potential transaction identified by the Commission to establish that it is more likely than not to occur”
“80 So, in the context of an assessment as to whether there is likely to be an SLC in the future, the Commission must give full and proper consideration to the evidence which it has gathered, and apply the “probabilistic test” at the end-point. In other words, it must ultimately ask itself whether it is satisfied on the balance of probabilities that there will be an SLC caused by the RMS, but the Commission is not under an obligation to make findings of fact (whether on a balance of probabilities or otherwise) in respect of each item of evidence. Nor is it obliged to find that any particular potential investment is more likely than not to occur before it can take it into account in its overall assessment of the probability of SLC.”
“ Nor is the CMA obliged to find that any particular foreclosure mechanism is more likely than not to occur before it can take it into account in its overall assessment of the probability of SLC. ”
“There was no, or no sufficient, evidence of probative value on which the CMA could rationally conclude that the implementation by ICE of the four partial foreclosure mechanisms (or any of them) would be effective to cause traders to switch their trading venue and to make ICE (as opposed to some other venue) the beneficiary of any such switch in respect of “substantial” (or any) trading volumes.”
“Despite differences in detail between cases, the Authorities will typically frame their analysis of non-horizontal mergers by reference to the following three questions: (a) Ability : Would the merged firm have the ability to harm rivals, for example through raising prices or refusing to supply them? (b) Incentive : Would it find it profitable to do so? (c) Effect : Would the effect of any action by the merged firm be sufficient to reduce competition in the affected market to the extent that, in the context of the market in question, it gives rise to an SLC? In practice, the analysis of these questions may overlap and many of the factors may affect more than one question. Therefore, the Authorities’ analysis of ability, incentive and effect may not be in distinct chronological stages but rather as overlapping analyses. So as to reach an SLC finding, all three questions must be answered in the affirmative.” (Emphasis added.)
“The CMA’s quantitative work on this topic (on which the CMA emphasises that it placed limited weight) reveals that, in making its (crucial) qualitative finding that “substantial” trading volumes would switch to ICE, the CMA unreasonably acted without an adequate evidence base.”
“The CMA erred in law in that it wrongly failed to consider whether, on its findings, Trayport would be under a duty not to abuse a dominant position and whether such a duty, if it exists, would deter ICE from pursuing a partial foreclosure strategy.”
“Before ICE owned Trayport it was owned by a broker, GFI, which did not use its ownership of Trayport strategically against its rivals, even though it would have benefited had it been able successfully to pursue a partial foreclosure strategy. ICE contended that, if one vertically integrated venue operator (GFI) did not pursue a partial foreclosure strategy, then it was unlikely that another vertically integrated venue operator (ICE) would have an incentive to do so. The CMA found that there were differences between ownership by ICE and by GFI that meant that the CMA could not draw conclusions from GFI’s previous ownership about ICE’s incentives to pursue a partial foreclosure strategy. The CMA was irrational in reaching this conclusion in that each of the points of difference identified by the CMA was inconsistent with other findings made by the CMA.”
“In assessing the Parties’ remedy proposal the CMA erred in law in: (a) focusing on whether the Separation element would provide Trayport with “full independence” and “true autonomy” when it should legally have asked whether the Parties’ remedy proposal would be effective to prevent ICE pursuing the partial foreclosure strategies that formed the basis of the substantial lessening of competition finding; and (b) misdirecting itself in law as to duties of the proposed independent directors of Trayport under ICE’s Remedies proposal.”
“In addition, under section 172 of the of theCompanies Act 2006 , Directors must act in a way they consider most likely to promote the success of the company for its members (ie shareholders) as a whole and in doing so must have regard to a number of matters. As such, the Directors would be required to consider ICE’s interests.”
“(1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to— […] (c) the need to foster the company’s business relationships with suppliers, customers and others, […] (e) the desirability of the company maintaining a reputation for high standards of business conduct […]”