‘Brexit was a big moment,’ notes Allen & Overy (A&O) London antitrust group head Mark Friend. ‘It has big ramifications for antitrust practitioners because the CMA (Competition and Markets Authority) is no longer able to enforce EU competition law but on the other hand, it is increasingly flexing its muscles. The high-level theme is that the CMA has an opportunity to compete on the international enforcement stage – freed from the shackles of the EU. We’ll see it taking an increasingly high-profile role.’
The UK’s departure from the EU has had an impact on all areas of legal practice, but perhaps none more so than antitrust and competition. Traditionally, the CMA as the UK regulator was largely subservient to the EU, meaning that all high-level work was European-facing. Though one may expect that Brexit would cause the London market to suffer, the emergence of the CMA as a global regulatory force has meant that London competition work is of greater global importance than ever before, to the extent that numerous US giants have been in hiring mode.
That is not to say the picture is all rosy; though most firms have in the short term managed to continue to advise on EU work, serious questions remain around how this will be handled going forward, and in particular how firms without a European office network will continue to compete.
Regulatory power shift
In one sense, Brexit was always going to lead to more London-based work, as Jackie Holland – a recent arrival at Cleary Gottlieb from Slaughter and May – notes: ‘There is now in some cases a need to do parallel merger notifications; parties needing approval from Brussels under the EC Merger Regulation, may also be notifying the CMA to get UK approval. The same dynamic is replicated in cartels and abuse of dominance investigations, where the business may face parallel antitrust investigations in the EC and UK. In recent months we have seen the CMA opening its own antitrust investigations into companies such as Apple and Facebook.’
‘The UK now has probably the most expensive, intrusive and burdensome merger control system in the world.’
Mark Friend, Allen & Overy
What was less foreseeable was the attitude the UK regulator would take to antitrust enforcement. In recent years, the CMA has become one of the most interventionist regulators in the world, as Crowell & Moring’s Peter Broadhurst explains: ‘It used to be the case, as recently as five years ago, that the UK was just another part of the EU, and the CMA used to be quite a sedate regulator, particularly for merger control due to the voluntary system. That’s not the case any more. The CMA is now one of the competition authorities that international dealmakers are most worried about. With regards to merger control, it has shown that it is happy block deals that have been cleared by all the other regulators.’
The market perception is reflected in the data. From 1 January 2019 to 15 September 2021, 69% of the 32 Phase 2 investigations conducted by the CMA have resulted in the collapse of the transaction, either due to the CMA blocking it outright, or abandonment by the parties. A further 13% were cleared with remedies, leaving only 19% of Phase 2 investigations that have escaped any type of intervention. This level of scrutiny has put the CMA at the forefront of the global merger control sphere.
‘The UK now has probably the most expensive, intrusive and burdensome merger control system in the world,’ remarks Friend. ‘I’m not sure if it’s a good thing. It’s an odd hybrid because in theory it’s a voluntary regime, so some acquirers will prefer to take the risk and close the deal rather than seek prior clearance from the CMA because they know it’s likely to be slow and involved, but if it gets called in after the event they’ll end up spending a lot of time and money sorting it out.’
The risk firms run in not notifying is that the deal may be called in by the CMA after closing. Forty-seven percent of recent Phase 2 investigations were called in after the transaction was completed.
American made
The development of the CMA has forced US firms’ hands. In the first half of 2021, Simpson Thacher, Weil, Cleary Gottlieb (which has a long-established London antitrust practice) and Crowell & Moring all recruited experienced competition partners in London. ‘There’s a recognition that London is now as important as Brussels, so all of the US teams have been really hiring/building out,’ comments Jenine Hulsmann, who recently moved from Clifford Chance (CC) to Weil. ‘This is going to be great for associates, looking to get high-quality work and responsibility earlier; such a broad range of choices; so much demand for service.’
Although it is clear that there are more US firms with competition law capability in London than previously, what is less certain is how far these firms will be able to make significant inroads into the market, and what this means for the current dominant players. ‘The challenge for US firms establishing London competition practices is developing out the platform,’ suggests Greg Olsen, head of CC’s London antitrust group. ‘It’s difficult without a significant UK corporate presence behind you to develop the practice and provide the team with the full breadth of competition work. They can service work coming from the US, but that’s always going to be fairly limited and mainly M&A work. Building out into a full-service antitrust practice, covering behavioural work alongside M&A and doing it at scale is difficult if you don’t have a significant UK operation.’
‘The increased presence of US firms makes this an exciting time for the London competition market.’
Satyen Dhana, Simmons & Simmons
It is clear that many US firms are looking to establish a sizeable presence on the UK market and, given the success they have found across many other practice areas in recent years, it would be difficult to bet against them. ‘We want to grow,’ confirms Simpson Thacher’s Antonio Bavasso, who himself arrived from A&O in February. ‘Both in London and in Brussels. The Brussels office has just opened this month, and we have already recruited seven associates across two offices. We view it as a single team across the two offices, and we will be looking to continue to develop both.’
The same is true at Weil. Hulsmann, who moved from CC in May, says ‘a big part of the reason for the move was the opportunity to take a leadership role in the growth of Weil’s corporate practice in Europe. Weil has one of the pre-eminent teams in the US to work with but the new corporate team, lead by David Avery-Gee and Murray Cox, is also generating a lot of our own work already.’
Overall it is unlikely that the dominance of large UK practices will be threatened, at least in the short term. Merger control work will continue to be the key area for US firms for some time to come, as they leverage their global corporate strength and increased presence in the London M&A market. What remains to be seen is how far the market will turn to these firms for other types of mandate, and whether there is enough appetite to drive the growth of these practices.
Indeed, many in the market view the renewed arrival of the US players as beneficial to London lawyers, rather than a threat to be guarded against. Satyen Dhana, head of competition, antitrust and trade at Simmons & Simmons, argues that ‘the increased presence of US firms makes this an exciting time for the London competition market. It shows that there is a lot of good work going on in the UK and pivoting through the market. It’s also a vindication of the esteem with which the global competition market sees London competition lawyers, as overseas firms have chosen to hire UK competition practitioners rather than bring in lawyers from overseas. In other jurisdictions we have seen international firms send over members of their existing teams to relocate and set up practices, so the fact they have chosen not to do that and focus instead on hiring London lawyers, shows the respect they have for the work that is being done here. This isn’t limited to partners and is the same for the UK’s talented associate pool.’
National security issues
Aside from traditional antitrust work, foreign direct investment (FDI) screening is an area that is increasingly asking questions of UK and US firms alike. The National Security and Investment Act 2021, which will come into force on 4 January 2022, introduces mandatory notification of FDI transactions that meet certain criteria. Due to similarities in procedure, this work has in most firms been absorbed by competition practices, as Broadhurst notes: ‘At the moment FDI work in the UK is falling to competition lawyers because its processes and the multi-jurisdictional analysis involved are broadly similar to merger control. At the moment, we don’t know how much of this work there is going to be, but if there continues to be a high level of activity then we may start to see lawyers specialising in FDI work specifically.’
‘If a firm is solely run out of London and doesn’t have a physical presence in the EU, it’s going to be hard to maintain a full load of EU-level work in London over the long term.’
James Marshall, Covington
Bavasso agrees. ‘At the moment, the new approach to FDI is at an embryonic stage, and so firms have done the sensible thing and incorporated this within their competition departments as the issues raised are similar. It adds another element to the lawyer’s diet, but it’s very much off the same menu.’
The key question going forward will be how far FDI adds to a department’s workload, and whether that stimulates the expansion of competition departments, or even the development of specialist FDI practices. ‘At the moment, we don’t know how much of this work there is going to be,’ observes Broadhurst, ‘but if there continues to be a high-level of activity then we may start to see lawyers specialising in FDI work specifically. When things hit the ground on 4 January, it’ll be interesting to see how many formal mandatory notifications there are, and how many call-ins by the government.’
Covington antitrust partner James Marshall is of a similar view, and points out that the level of FDI activity will vary between law firms: ‘FDI is driving growth in competition teams and will continue to do so. It depends to an extent on the sort of deals a firm is doing. If a firm is doing deals that raise either complex FDI issues or complex antitrust issues, it can be difficult to absorb both within smaller team, which means obviously you need to grow in one or both areas.’
Brexit proofing
Though it is clear that Brexit has led to a variety of new types of work, the outlook for EU-level work in the City is cloudier. English-qualified lawyers no longer hold rights of audience before the EU courts, nor is their advice privileged, which has posed practical challenges to London teams.
In the short term, most firms have been able to navigate these issues by utilising their EU office network, but it seems inevitable that over time this type of work will move out of London. This being so, the future for UK national practices looks worrying. ‘If a firm is solely run out of London and doesn’t have a physical presence in Ireland or a Brussels office, it’s going to be hard to maintain a full load of EU-level work in London over the long term,’ observes Marshall. ‘Work will transition towards Brussels and the bigger firms more and more. Although London won’t lose all of its EU work, it will ebb away to an extent.’
Olsen agrees that the advantage lies with the multinational firms, noting: ‘Firms that have a European network are going to always be able to service EU-level work. It doesn’t really matter, whether we’re sitting in London or we’re sitting elsewhere in Europe. What is important is that we have EU-qualified lawyers directly involved in giving relevant advice so that we can maintain privilege. I don’t think we will see a reduction in EU work, but it may be the case that in time that work is handled from different offices. It will be the firms that only have a London office that will struggle.’
Recent London competition hires
2021
- September Mark Jephcott joins Simmons & Simmons from Herbert Smith Freehills
- July Jenine Hulsmann joins Weil from Clifford Chance
- May Peter Broadhurst joins Crowell & Moring from Simmons & Simmons
- March Jackie Holland joins Cleary Gottlieb from Slaughter and May
- February Antonio Bavasso joins Simpson Thacher from Allen & Overy
2020
- June Becket McGrath joins Euclid Law from Cooley
- May Ross Mackenzie joins Reed Smith from Ashurst
- April James Marshall joins Covington from Bryan Cave Leighton Paisner
Legal 500 London EU & competition rankings – a five-year view
| Ranking | Firm | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|
| The market leaders | Freshfields Bruckhaus Deringer | 1 | 1 | 1 | 1 | 1 |
| Linklaters | 1 | 1 | 1 | 1 | 1 | |
| Slaughter and May | 1 | 1 | 1 | 1 | 1 | |
| The chasing pack | Allen & Overy | 2 | 2 | 2 | 2 | 2 |
| Clifford Chance | 1 | 2 | 2 | 2 | 2 | |
| Herbert Smith Freehills | 2 | 2 | 2 | 2 | 2 | |
| Ashurst | 2 | 2 | 2 | 2 | 3 | |
| Baker McKenzie | 3 | 2 | 2 | 3 | 3 | |
| Hogan Lovells | 2 | 2 | 3 | 3 | 3 | |
| Latham & Watkins | 4 | 4 | 4 | 4 | 3 | |
| Macfarlanes | 3 | 3 | 3 | 3 | 3 | |
| Norton Rose Fulbright | 3 | 3 | 3 | 3 | 3 | |
| Pinsent Masons | 3 | 3 | 3 | 3 | 3 | |
| The highest climbers | Euclid Law | 7 | 6 | 4 | 4 | 4 |
| Gibson Dunn | 7 | 7 | 6 | 5 | 4 | |
| Fried Frank | 7 | 6 | 5 | 5 | 5 | |
| White & Case | 6 | 6 | 5 | 5 | 4 |
Competition in London: the firms with most ranked L500 lawyers
| Firm | Name | Ranking |
|---|---|---|
| Linklaters: 6 | Nicole Kar | Hall of Fame |
| Simon Pritchard | Hall of Fame | |
| Christian Ahlborn | Leading individual | |
| Natura Gracia | Leading individual | |
| Anna Mitchell | Next generation partner | |
| Verity Egerton-Doyle | Rising stars | |
| Freshfields Bruckhaus Deringer: 5 | Alex Potter | Hall of Fame |
| Deirdre Trapp | Hall of Fame | |
| Rod Carlton | Hall of Fame | |
| Simon Priddis | Hall of Fame | |
| Michele Davis | Next generation partner | |
| Slaughter and May: 4 | Bertrand Louveaux | Hall of Fame |
| Claire Jeffs | Hall of Fame | |
| Isabel Taylor | Hall of Fame | |
| Philippe Chappatte | Hall of Fame | |
| Allen & Overy: 4 | Mark Friend | Hall of Fame |
| Philip Mansfield | Hall of Fame | |
| Dominic Long | Next generation partner | |
| Thomas Masterman | Rising stars | |
| Cleary Gottlieb: 4 | Maurits Dolmans | Hall of Fame |
| Jackie Holland | Leading individual | |
| Nicholas Levy | Leading individual | |
| Paul Gilbert | Rising stars | |
| Herbert Smith Freehills: 4 | Susan Black | Hall of Fame |
| Kim Dietzel | Leading individual | |
| Stephen Wisking | Leading individual | |
| Suzy Campbell | Rising stars | |
| Kirkland & Ellis: 4 | Paula Riedel | Leading individual |
| Sarah Jordan | Leading individual | |
| Annie Herdman | Next generation partner | |
| Sally Evans | Next generation partner |