What is a merger situation? – High Court rules

In an important case for the business community, the scope of the Competition and Markets Authority’s power to intervene in corporate mergers came under the High Court spotlight after the demise of a cross-channel ferry company and the inheritance of its fleet and many of its staff by a workers’ co-operative.

More than 1,000 of the company’s employees were made redundant after it hit rough financial water and was ultimately placed in liquidation. Its three vessels were mothballed and acquired by another company. The co-operative later contracted to make use of them on their former route and to re-employ many of the company’s staff.

The Competition and Markets Authority (CMA) took the view that a merger situation had arisen and that, notwithstanding the company’s liquidation, its regulatory powers extended to the acquisition of its assets. The CMA’s decision was subsequently upheld by the Competition Appeal Tribunal.

In dismissing the co-operative’s appeal, the Court noted that the ‘enterprise’ carried on by a company extends beyond its bare assets and embraces its goodwill, human resources and intellectual property. The CMA’s ‘inevitable’ conclusion that the co-operative had acquired the company’s business was neither irrational nor wrong in law.

Contact: Robert Goddard