Table of Contents
- New Draft EU Merger Guidelines
- UK Court Judgment on Object Infringements in Distribution Agreements
- Top EU Court Rules on No-Poach Agreements
- UK Court Rules Prepayment Company Abused Dominance but Awards Limited Damages
New Draft EU Merger Guidelines
On 30 April 2026, the European Commission published for consultation new draft EU merger guidelines. This is an important document for companies and advisers considering transactions that impact the EU.
The document provides guidance on the EC’s practice when assessing the substantive impact of M&A and joint venture transactions subject to review and approval under the EU Merger Regulation. The guidelines will also be relevant for transactions that are reviewed at a national level within the EU and elsewhere.
The current guidelines, published in 2004 and 2008, are considered out of date due to changes in the economy including digitalisation, globalisation and decarbonisation. The intention of the update is to reflect current EC enforcement practice and modernise its approach. In practice, they are already being used.
In the draft, the assessment of potential harm from a merger is centred on market power. The guidelines explicitly recognize nonprice parameters of competition, such as innovation, sustainability, resilience, privacy and diversity.
Responding to pressure from a range of sources, not least the 2024 Draghi report on EU competitiveness, the draft significantly expands on the EC’s guidance on merger efficiencies. It now explicitly covers benefits to innovation, investment, resilience and sustainability.
Efficiencies can be used to counterbalance or outweigh a “theory of harm” identified by the EC following its review of market power resulting from a transaction. When relevant, efficiencies must be proved, and the EC introduces a new concept to reflect this: The “theory of benefit” sets out how specific merger efficiencies occur and maintain or enhance effective competition to the benefit of consumers.
This concept will be the basis for obtaining approval of a range of transactions seen as generally benefitting public welfare in the EU. The new guidelines recognise the need for certain transactions, including by stating, “The growth and scaling-up of firms in the internal market so as to reach the necessary size to compete in global markets can be procompetitive and have a positive impact on the EU economy and its competitiveness, including on innovation and investment.”
The evidential burden to prove a theory of benefit is high, and parties must now consider efficiencies at the outset of a contemplated transaction alongside arguments as to why anti-competitive effects do not arise. They can and should be raised at the beginning of discussions with the EC.
UK Court Judgment on Object Infringements in Distribution Agreements
The UK Court of Appeal (CA) provided on 8 May 2026 an important ruling on the analysis under UK competition law of restrictions in a distribution agreement.
The case was an appeal by Deckers UK against a judgment of the Competition Appeal Tribunal (CAT), which found that Deckers infringed the ban on anti-competitive agreements.
Deckers operates a selective distribution system in the UK for its HOKA-branded running shoes whereby it selects who will distribute its shoes. HOKA products are also sold directly to consumers online and through stores in the UK.
The CAT found that Deckers’ refusal to permit its distributor Up and Running to sell its shoes on a discount-only website amounted to resale price maintenance (RPM), which is an object (or automatic) infringement of competition law. The block exemption that automatically applies to certain vertical agreements from competition law did not apply.
The CAT ruling that RPM amounted to an object infringement in this context was based on its finding that Deckers’ actions had no legitimate purpose outside of protecting the integrity of its selective distribution system.
The CA ruled that the CAT was incorrect in finding that any intention by a company to limit price competition gives rise to RPM or an object infringement. Analysing the arrangement solely on the basis of its subjective purpose without carrying out an assessment of the economic context was incorrect. The CA also deemed it necessary to examine, in accordance with previous case law, the arrangement’s content and scope, the legal context, and the economic context (including market structure and market shares).
Given the narrow scope of the restriction, the strength of inter-brand competition and the parties’ relatively small market shares in the market, the CA ruled that the CAT should not have decided that the arrangements had the object of restricting competition.
The CA concluded that the arrangements were not infringements by object and would in any event have benefited from the block exemption. The block exemption applied because the arrangement contained no hardcore restrictions (that automatically disapply a block exemption) and both parties’ market share was well below the relevant 30% threshold.
The case provides useful reminders on how to analyse clauses in a distribution agreement and, in particular, that all the elements of the “by object” analysis are relevant.
Top EU Court Rules on No-Poach Agreements
On 30 April 2026, the EU’s highest court, European Court of Justice (ECJ), ruled on the treatment of employee no-poach agreements under EU competition law, arising out of an agreement among Portuguese professional football clubs during the COVID-19 pandemic. The Portuguese authorities had announced measures intended to contain the risk of spread of the pandemic, and the Portuguese Professional Football League (LPFP) subsequently ordered the suspension of all sporting competitions. In April 2020, the LPFP and the clubs participating in the First and Second Divisions announced publicly that they committed not to recruit their respective players who unilaterally terminated their contracts due to the pandemic.
In April 2022, the Portuguese Competition Authority found that those commitments constituted an agreement having as its object the restriction of the competition on the market for recruiting players eligible to play in those two divisions. This was therefore an automatic infringement of competition law, and there was no need to find any actual effect on competition. That decision was appealed, and the court referred questions on interpretation of EU competition law to the ECJ.
The ECJ held that, in accordance with previous case law, to determine whether an agreement has an anti-competitive object, it is necessary to examine (1) the content of the agreement; (2) the economic and legal context of which it forms a part; and (3) its objectives.
The ECJ stated that it is for the Portuguese court to make this determination, however, the no-poach was a “manifest restriction of a competitive parameter which plays an essential role in high-level sport.” In addition, it may have an indirect potential impact on the purchase price of players, who are the clubs’ human resources.
The COVID-19 pandemic was clearly a relevant context as it had “a fundamental impact on the functioning of the professional football sector.” The pandemic was not on its own enough to make an exception to the prohibition of anti-competitive conduct, but the Portuguese court should take account of those circumstances.
The ECJ also considered that the objective of the arrangement could be favourable to competition, ensuring stability of player rosters playing in the First and Second Divisions in the event of resumption of the sporting season.
A legitimate justification for the agreement could be made on the basis that it was in the public interest, which would bring the arrangement outside competition law. The aim of ensuring the regularity of sporting competitions could be such a justification, for instance, if the no-poach was suitable, necessary and proportionate to ensure that aim.
This question would also be one for the Portuguese court to decide. However, the court could only apply this principle if it did not find that the provision amounted to an object infringement of competition law (and was therefore instead examining whether the arrangement had actual anti-competitive effects, which would also be an infringement of EU competition law).
UK Court Rules Prepayment Company Abused Dominance but Awards Limited Damages
The CAT ruled on 7 May 2026 that PayPoint was dominant in the market for the supply of customer over-the-counter (OTC) prepayment services to energy suppliers in Great Britain and abused that dominance in breach of UK competition law. The court awarded damages to an affected competitor, but at a reduced amount due to the commercial limitations of the competitor’s alternative service.
GLOBAL-365 sought to enter the OTC and non-OTC smart prepay markets through its product SMARTprepay. To deliver its OTC service, GLOBAL-365 entered a partnership with epay, a provider of other OTC payment services that had an existing retailer network. GLOBAL-365 sought to enter the OTC and non-OTC markets from early 2018 until late 2021, which coincided with the rollout of smart meters in the UK.
GLOBAL-365 argued that PayPoint was dominant from 2009 until 2018 in the OTC market, prior to the merger of the Post Office and Payzone (PO/PZ). Further, GLOBAL-365 argued it was prevented from entering the market at scale by exclusivity clauses and related provisions in PayPoint’s contracts. PayPoint implemented an exclusionary strategy that foreclosed new entry into the OTC and non-OTC energy prepayment markets.
Further, GLOBAL-365 claimed, absent the exclusionary provisions, it would have had a chance of winning business from various energy suppliers. It therefore lost profits and business value.
The CAT agreed that in the relevant market (the supply of OTC prepayment services to energy suppliers in GB) PayPoint was dominant during 2009-2018, prior to the PO/PZ merger. This was a two-sided market that required consideration of the impact of the exclusivity provisions on the energy supplier and agent retailer sides. PayPoint’s exclusive contracts with energy suppliers and retailers did impede the growth of competition at the margins of the market and foreclosed its competitors from the relevant market.
However, GLOBAL-365 argued that it was only in a position to roll out its service to energy suppliers on any material commercial basis at the beginning of 2019 (not 2018 as contended by GLOBAL-365). The company had not established that its service was sufficiently attractive to energy suppliers, and there was no evidence that it was either reliable or robust, which would have been a requirement of the larger energy suppliers. Absent PayPoint’s conduct, GLOBAL-365 would have had a 20% chance of winning additional business only from the smaller, tier three, energy suppliers.
GLOBAL-365 claimed over £200 million in damages. Based on this analysis of the market situation, the CAT assessed GLOBAL-365’s losses for the period to be only £169,334, to which it added simple interest.
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