Cleary Gottlieb Discusses the UK Competition Law Implications of a No-Deal Brexit

A no-deal Brexit would have significant and immediate effects on UK competition law enforcement:

  • Parallel investigation of mergers, cartels, and dominance cases by the UK Competition and Markets Authority (“CMA”) and European Commission (“EC”);
  • Possible delay to transactions notified to the EC but not cleared by Brexit day;
  • A significant increase in the CMA’s caseload, stretching its resources;
  • New challenges for claimants bringing EU follow-on damages cases in the UK courts.

If the UK leaves the EU on 31 October 2019 without a withdrawal agreement, it will affect how UK and EU competition law applies to businesses with UK activities.… Read more

All Hale the UK Supreme Court: How Its Groundbreaking Ruling Affects Brexit

In an extraordinary judgment delivered by Lady Hale, 11 justices of the Supreme Court of the United Kingdom ruled unanimously on September 24 that the suspension – or “prorogation” – of Parliament last month was “unlawful, null and of no effect” [1]. The decision prompts at least two important questions: Does it show the politicization of the UK Supreme Court, and does it mark a turning point in Brexit?

A Brief History. The UK Supreme Court is a relatively new creation, established in 2009 to replace the judicial function of the House of Lords as the nation’s highest appellate court. … Read more

Corporate Purpose and the Dangers of Government-Mandated CSR

The debate about the purpose of corporations seems to have heated up after Larry Fink’s annual letter to the CEOs of companies in which BlackRock invests and again after the statement from the Business Roundtable. Both Fink’s letter and the Business Roundtable statement referred to global problems and how companies should embrace a greater responsibility to address them. The statement by the Business Roundtable has been perceived variously as a major shift in corporate law or as a PR exercise to prevent government regulation.

Irrespective of its motivations, while an acknowledgement that a consideration of stakeholder interests is useful, an … Read more

Cleary Gottlieb Discusses U.S. CLOUD Act’s Possible Impact on EU Data Protection

Responding to a request by the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (LIBE), the EU’s data protection supervisory bodies released an initial joint opinion on the impact of the U.S. Clarifying Lawful Overseas Use of Data Act (“CLOUD Act”) on the EU data protection framework.  The preliminary assessment by the European Data Protection Supervisor (“EDPS”) and European Data Protection Board (“EDPB”) leaves service providers facing a familiar dilemma.

Although the CLOUD Act now makes clear that U.S. disclosure orders have an extraterritorial reach, the EDPS and EDPB see very limited options for service providers to comply … Read more

Paul Weiss Discusses D.C. Circuit Decision Ordering Chinese Banks to Produce Documents

On July 30, 2019, the U.S. Court of Appeals for the District of Columbia affirmed civil contempt orders by the D.C. District Court against three Chinese banks for their failure to produce documents in response to U.S. government subpoenas relating to an investigation of North Korea’s financing of its nuclear weapons program. The 44-page opinion by D.C. Circuit Judges David S. Tatel, Patricia A. Millett and Cornelia T.L. Pillard, written for the court by Judge Tatel, was released publicly on August 6, 2019 with redactions of information that remains under seal.[1]

The Court of Appeals concluded that there was … Read more

Davis Polk Discusses UK Serious Fraud Office’s New Cooperation Guidance

On August 6, the United Kingdom’s Serious Fraud Office (“SFO”) published new guidance on the steps companies should take in order to receive cooperation credit in the SFO’s charging decisions.  The document, titled “Corporate Co-operation Guidance” (the “SFO Guidance”),[1] outlines similar steps to those set forth in the United States Department of Justice’s Corporate Enforcement Policy (“CEP”), indicating that SFO Director Lisa Osofsky, formerly of the FBI, is ushering in familiar U.S.-based standards in her new role leading the SFO.

Despite many similarities, the SFO Guidance differs from the CEP in a few significant respects.  The most noteworthy of … Read more

Cadwalader Discusses CFIUS and Foreign Investor Deals

The national security implications of corporate deals involving foreign investors continues to be a headline-grabbing topic. Last summer, President Trump signed into law the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which expanded the types of transactions subject to national security review by the Committee on Foreign Investment in the United States (“CFIUS”). As we approach the first anniversary of FIRRMA, it has – unsurprisingly – made it more critical than ever to identify and address whether a cross-border deal involving non-U.S. parties is subject to CFIUS review and approval, and if so, to … Read more

Gibson Dunn Discusses UK Enforcer’s Fifth Deferred Prosecution Agreement

On July 4, 2019 the UK Serious Fraud Office (“SFO”) secured approval for its fifth Deferred Prosecution Agreement (“DPA”) before the Crown Court sitting at Southwark. The DPA is with Serco Geografix Limited (“SGL”), a security company that contracts with the UK Ministry of Justice (“MOJ”) to electronically monitor suspects and offenders. The DPA relates to three charges of fraud and two of false accounting. The facts of the case are summarised by the SFO in its official press release, which is accompanied by a copy of the judgment of the … Read more

The Long-Term Effects of Shareholder Activism

Shareholder activism is growing in popularity across the world and appears to deliver mostly benign results for firms and stockholders. However, testing the effects of activism is problematic.  For at least 30 years, researchers have recognized the difficulty of causal inference when examining ownership and performance.  Perhaps activists systematically target firms that are poised to improve anyway or select liquid stocks to cheaply acquire blocks.  Despite a body of empirical evidence on the positive effects of activism, critics continue to warn of dangers: Activists hunt in highly-motivated and well-resourced wolf packs that exploit regulatory loopholes; they focus on short-term financial … Read more

Gibson Dunn Discusses New EU Sanctions Framework Aimed at Cyber-Attack Threats

In a previous client alert, we highlighted a recent U.S. sanctions regime aimed at deterring threats of election interference[1], which further expanded the U.S. menu of cyber-related sanctions.[2]  Across the Atlantic, as a step forward that demonstrates its voiced determination to enhance the EU’s cyber defense capabilities[3], on May 17, 2019, the EU established a sanctions framework for targeted restrictive measures to deter and respond to cyber-attacks that constitute an external threat to the EU or its Member States.[4]  The new framework is expounded in two documents, Council Decision (CFSP) 2019/797 and Council Regulation … Read more

Arnold & Porter Discusses the End of LIBOR

As alerted in our previous Advisories, LIBOR, the “world’s most important number,” is being phased out. Created almost 50 years ago on August 15, 1969—opening day of the Woodstock music festival—LIBOR began as a floating, market-determined interest rate for syndicated loans, but over time has become the benchmark interest rate for an estimated $350 trillion in outstanding financial arrangements around the world. These contracts include public and private loans and bonds; consumer financial products such as credit cards, mortgages and student loans, and some $200 trillion in interest rate derivatives.

Due in large part to concern that the determination of … Read more

Debevoise Discusses When to Disclose a European Deal

In Europe, when negotiating a transaction which may affect the market price of listed instruments of the parties, a key question arises: when to disclose it to the market? The short answer is as soon as possible unless you have a legitimate interest in delaying the announcement, the delay will not mislead the market and the confidentiality remains protected. This note details what it means in practice.

Pursuant to MAR (Market Abuse Regulation—EU Regulation No. 596/2014 of 16 April 2014), effective throughout the European Economic Area, an issuer is required to inform the public as soon as possible of inside … Read more

Will Putting Title III of Helms-Burton Into Effect Open the Litigation Floodgates?

On April 17, 2019, U.S. Secretary of State Mike Pompeo announced that President Trump would not suspend for any additional periods of time Title III of the Cuban Liberty and Democratic Solidarity Act – better known as “Helms-Burton.”[1]  Title III of Helms-Burton allows U.S. nationals whose property was expropriated by the Cuban government on or after January 1, 1959, to sue in U.S. courts anyone – regardless of nationality – who knowingly and intentionally “traffics” in that property.  But, in response to strong opposition from many of the United States’ close allies and trading partners and to concerns about … Read more

Cleary Gottlieb on France’s New Framework for Approving ICOs

On April 11, 2019, the French parliament adopted a law (the “Loi Pacte”or “Law”)[1] that establishes a new regulatory framework for initial coin offerings (“ICOs”) of blockchain based tokens by entities established or registered in France.  At the heart of the Law’s ICO provisions is an innovative framework that will allow issuers to request an optional visa from the French Financial Markets Authority (the “AMF”) prior to undertaking an ICO.  ICOs of tokens that are not financial instruments will still be permitted without a visa, but the expectation is that issuers obtaining the visa for an offering … Read more

Davis Polk Discusses France’s New Legal Framework for Digital Assets

After becoming one of the first countries to authorize the registration and transfer of unlisted securities using blockchain technology, France has adopted an innovative legal framework governing initial coin offerings (“ICOs”) and digital assets services providers (“DASPs”) with the aim of being at the forefront of the blockchain revolution in Europe.

After allowing the representation and transmission of unlisted securities through the use of blockchain technology in 2017, the draft “PACTE”[1] bill (the “PACTE Act”) was adopted by the French Parliament on April 11, 2019[2], constituting a new step in France’s economic transformation.

This PACTE … Read more

Protecting Against Protectionism in EU M&A

In a recent paper, we explore EU law covering EU cross-border mergers. These are typically more difficult and costlier than purely national mergers. Additionally, political hurdles can exist. In a time of global political and institutional transformations away from open markets and towards protectionism, the opposition to takeovers and mergers based on public interest considerations, such as national security, sees a revival.

This trend towards protectionism, together with a focus on industrial policy, has different facets. For example, recently France and Germany seemed to defend the idea of European champions, corporations that can compete on the global financial and … Read more

Land of the Falling Poison Pill: Understanding Defensive Measures in Japan

The advent of the “shareholder rights plan,” more popularly known as the “poison pill,” fundamentally altered the trajectory of American corporate governance. Intended to defend vulnerable boards from corporate raiders, the poison pill was embraced by U.S. managers in the 1980s as a lifeline in a sea of hostile takeovers. When pundits predicted an imminent wave of hostile takeovers in Japan in the mid-2000s, Japanese boards appeared to embrace the poison pill with equal enthusiasm.

Japan’s experience might have been evidence that corporate governance around the world was destined to converge on the American model – but for two inconvenient … Read more

Cleary Gottlieb Discusses CFIUS and the Unwinding of Kunlun’s Acquisition of Grindr

On March 27, 2019, journalists affiliated with Reuters reported that the Kunlun Group (“Kunlun”), a China-based tech firm, was preparing to sell its wholly owned subsidiary, Grindr, after the Committee on Foreign Investment in the United States (“CFIUS”) informed the group that Kunlun’s continued ownership of Grindr constituted a national security risk.  This forced divestiture of Grindr is a pointed reminder that CFIUS remains focused on protecting the sensitive personal data of U.S. citizens, has the power to upend closed deals that have not been cleared by the committee, and is dedicating increased resources to the review of transactions that … Read more

The Future of Data Driven Finance: Financial Regulation, Data Regulation, and RegTech

Fifty years ago, banking was a relationship business. Bank managers collected information about depositors and borrowers from all sorts of sources, formal and informal. In recent decades, credit decisions have become far more data-driven, with companies like Amazon and the Alibaba-affiliate, Ant Financial, taking the lead in the U.S. and China. This paradigm shift in finance, however, is only just beginning. We are entering a period in which the leaders in finance will have to focus intensely on data and its analysis. Banks and traditional financial institutions around the world are in the process of building ever-more sophisticated IT systems … Read more

Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis

Investment expenditure in Europe collapsed in the aftermath of the 2008 global financial crisis. This collapse followed a boom during which the corporate sector borrowed heavily (Gopinath, Kalemli-Ozcan, Karabarbounis, Villegas-Sanchez, 2017). Figures 1 and 2 illustrate the extent of the increase in leverage and the collapse of investment  in Europe as compared with the United States. These developments were particularly pronounced in peripheral European economies.

In a new paper (Kalemli-Özcan, Laeven, Moreno, 2018), we investigate whether the corporate debt accumulated during the boom years held back investment by non-financial corporations after the crisis. Specifically, we consider whether high levels of … Read more