LexisNexis GLP Index: competition law

Will demand for competition law expertise grow, decline or simply stay the same in 2023?

The LexisNexis GLP Index pulls together the latest datapoints to provide some powerful predictions on the future of competition law.

Demand for competition law expertise is predicted to increase rapidly between now and at least Q1 2024.

That's according to the latest GLP Index, which pulls from hundreds of datapoints to predict demand for legal expertise across multiple practice areas.

The index shows demand for competition law expertise is rising over time. However, sharp spikes in demand have become commonplace, which could be easily linked to a number of recent events.

The UK exit dates from the EU, which had a profound impact on legislation and regulation relating to competition law, is perhaps the most obvious of examples. Demand increased after the referendum on 23 June 2016, and again after the original EU exit date (29 March 2019) and around the same time as the extended date (31 October 2019). When the UK finally left the EU on 31 January 2020, demand slowly increased afterwards as the country introduced new legislative changes.

The same theory could also be applied to the pandemic, which brought about a huge surge of competition work - most notably, increased consumer demands for a response to climate change and the reshaping of workforces. The pandemic caused the country to go into lockdown towards the end of Q1 2020 until the end of Q2 2020 and demand for competition law rose rapidly soon afterwards.

Regardless of the exact drivers, the index shows demand for competition law is consistently growing. And going forward, these numbers are predicted to stay high and eventually reach greater heights than seen in previous years.

When looking at year-on-year growth, the practice area experienced negative growth in 2020 overall during the height of the pandemic when compared against 2019. In 2021 competition law work went up by a whopping 83% when compared against 2020. The index predicts competition law to grow by 17% throughout 2022 when compared against 2021, and by 32% in 2023 when compared against 2022.

Scroll down for in-depth research and analysis on the key trends driving growth across competition law.

The UK's departure from the EU has generated a noticeable increase in competition law work

Antitrust enforcement has fast-become a subject of mainstream interest in recent years, with policymakers, academics and the media all expressing concerns that anti-competitive conduct has been on the rise.

In a 2022 Freshfields Bruckhaus Deringer report, London-based antitrust partner, Deirdre Trapp, said:

"The increased attention being given to competition policy globally is driving more frequent cooperation and exchange among key competition regulators seeking to enforce their laws vigorously. It will be increasingly important for businesses to match that coordination and to deliver clear and consistent narratives across all jurisdictions."

2021 saw the Competition and Markets Authority (CMA) assume significant extra responsibilities on mergers and antitrust as a result of the UK’s departure from the EU.

In the CMA's Annual Plan 2022 to 2023, its Chair, Jonathan Scott, says since the end of the Transition Period, they have opened new merger and antitrust investigations in cases that would have previously fallen within the European Commission’s jurisdiction.

"We committed the necessary resources to ensure that we had the people, skills and infrastructure in place to deal with these complex and resource intensive merger, antitrust and cartel investigations."

While the number of CMA cases opened in 2021 fell from 87 to 64 when compared to 2020, the authority has made headlines with a number of high profile cases and fines. And in April 2022, the Government made it clear that the authority will be given additional investigative and enforcement powers.

Scott continued: "Although we are doing all that we can within our existing powers and will continue to do so, we believe that legislative reform is necessary to bring about stronger, swifter and more flexible competition and consumer protection regimes, in order to safeguard the interests of consumers and to help improve public confidence in markets."

The number of cases opened by the CMA will undoubtedly increase in the near future as the authority takes on a greater role

The number of staff employed by the CMA has risen in recent years to meet heightened workloads

The number of notified cases by the European Commission was still high in 2021

Last year approximately four-fifths of new cases taken up by the CMA were related to mergers - a total of 53 new cases altogether.

And the CMA is not afraid to make a name for itself. In the past year, it has imposed three record fines for breaches of initial enforcement orders in relation to the Facebook (now Meta Platforms)/Giphy and JD Sports/Footasylum acquisitions. Read the LexisNexis Market Tracker for more info on these cases.

Contributing to the LexisNexis Market Tracker report, Nicole Kar, Partner and Global Practice, Head Antitrust and Foreign, Investment Group at Linklaters, said:

“The CMA has been super-charged by these reforms, both in merger control and other areas of competition and consumer law. This follows a trajectory of increasing interventionism by the CMA, which has been compounded by the addition of EU-sized cases to its docket following Brexit."

However, Kar expressed concerns that the CMA's reforms may make the regime "too hot to handle".

The increased status of the CMA has added an extra layer of complexity to international mergers and acquisitions, says Alastair Chapman, antitrust partner at Freshfields Bruckhaus Deringer, who contributed to the aforementioned report.

"Our experience of complex cross-border transactions from 2021, particularly now that we are dealing with parallel US, EU and CMA reviews, has illustrated that a strategy to manage the timing of reviews has become key. Navigating both the practical difficulties of parallel proceedings as well as effectively dealing with substantive concerns in large cross-border deals means merging parties need to think across jurisdictions. Merging parties should take any opportunities to use this more global approach to antitrust as a way to support rather than hinder their overall strategy."

The UK merger regime is voluntary, meaning if a transaction falls within the scope of the UK merger rules, it is up to the merging parties to decide whether or not to notify the CMA. But if a transaction is not notified, there is a risk that the CMA may still investigate and, potentially, order the disposal of the acquired business (or other businesses or assets). Find out more by reading LexisNexis' UK Merger Control legal guidance.

Mergers occupy the majority of new cases opened by the CMA

Read our UK Merger Control guidance in partnership with Eversheds Sutherland

Adding yet another piece of legislation to the already overflowing desks of competition lawyers is the UK’s National Security and Investment (NSI) Act, which introduces new requirements for merger controls.

The act gives Government the power to review and intervene in a wide range of investments in businesses that are active in the UK or acquisitions of related assets, with the ultimate objective of preventing transactions that could harm the UK’s national security.

While the CMA has the power to review transactions relating to competition, the NSI Act 2021 operates separately from the general merger control rules, and replaces the existing public interest merger regime for transactions that raise national security concerns.

This is part of a global trend says Brussels-based Thomas Janssens, the Global Head, Antitrust, Competition and Trade Group at Freshfields Bruckhaus Deringer.

"Governments are strengthening their powers to scrutinize investments on national security grounds amid the ongoing power struggle among nations. 2022 saw a new regime come into force in the UK, while across the world, governments are paying greater attention to investments in dual-use and emerging technologies deemed critical to both military and economic strength."

This new law is particularly relevant to foreign direct investments (FDI), which is applicable to a range of business sectors but especially those in the tech space.

In a recent article, Senior Associate at Pinsent Masons, Paul Williams, commented: "The UK government considers that the NSI Act is going to result in far more regulatory scrutiny of transactions from an FDI standpoint."

In practicality, this means businesses need to discuss competition and the NSI Act at the early stages of a deal, says Tom Brassington, partner at Hogan Lovells, as part of LexisNexis' Market Tracker trend report.

"With the NSI regime now live, and the CMA toughening up on enforcement, bidders in particular need to drill down (and targets need to engage) on NSI, competition and broader regulatory analysis as soon in the deal timetable as possible."

This is causing some degree of scepticism from foreign investors, says Brassington. "Some overseas bidders remain concerned as to whether their deals face an unacceptably high risk of hitting roadblocks, although in practice the ride can be smoother with the right steer."

"Focussed tailoring of related offer conditionality, and updating the Panel (and market) on progress where relevant, remains important. That said, it’s only a matter of time before we see a bidder attempt to invoke a key regulatory condition, and in turn test the Panel’s latest thinking in this area."

UK investments in intellectual property products currently sits at just under £79 bn

Read guidance on the NSI Act 2021 in partnership with Becket McGrath of Euclid Law Limited

Last year we saw the debate around antitrust and Net Zero escalate - with the COP26, which took place in Edinburgh in October to November 2021, acting as a catalyst for much-needed movement.

In the build up to the conference, the CMA acknowledged reduced carbon emissions can be considered a relevant customer benefit in merger assessments as a part of its Merger and Assessment Guidelines.

It also published guidance detailing how collaboration can help achieve sustainability goals. The guidance admits collaboration between businesses to achieve sustainability goals, such as joint research and development, is unlikely to raise any competition law issues "provided the sustainability agreements are not used as a cover for a business cartel or other illegal anti-competitive behaviour".

And when competition law issues do arise and cooperation significantly restricts competition, it says "an agreement must be assessed in its economic context and, in some cases, sustainability agreements may deliver benefits that outweigh the potential consequence of restricting competition."

In March 2022, after inviting views on how competition policy can support Net Zero objectives, the CMA published advice to the government where it made clear that it did not believe that the current competition and consumer law frameworks would act as an obstacle to sustainability initiatives. It did, however, place particular attention on the efficient allocation of resources, as was the role competition plays in driving innovation regarding sustainability.

In a recent article, Richard Snape, senior associate at Pinsent Masons, wrote:

“The CMA has indicated that it is not minded to seek the introduction of a specific sustainability block exemption. Instead, the CMA has stated that sustainability agreements can be individually exempt on a case-by-case basis."

The Government also introduced the new UK subsidy control regime (which came into effect in April 2022). This regime will increase subsidy spend to environmental causes to hopefully help deliver on the UK government’s 2050 Net Zero goal.

Up until recently, sustainability initiatives have largely been driven by businesses, who in turn are under a huge amount of pressure from their customers to make meaningful change. However, this may soon change as premium listed companies are now required to make climate-related disclosures aligned with the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD). Next year we will see these requirements extended to standard listed companies and similar reporting requirements applied to AIM companies, large private companies and LLPs.

Recent events could inspire a wave of sustainability-related investments, says Deloitte's ESG M&A lead, James Hilburn.

"Companies looking to take advantage of the ESG shift may choose to dispose of assets at risk of becoming stranded, or acquire new assets, skills or technologies to place them ahead of the competition in a market that actively rewards ESG."

Mary Wilks, a London-based antitrust counsel at Freshfields Bruckhaus Deringer, says businesses should take sustainability into consideration at the beginning of the transaction process.

"For businesses considering ‘green’ transactions that carry traditional merger control risks, building up evidence of sustainability-related efficiencies, including how these will be passed on to consumers, should form part of early transaction planning."

Going forward, the CMA said it plans to engage with stakeholders in developing further guidance under the UK’s mergers and markets regimes relating to environmental sustainability initiatives.

Here's all you need to know about the new UK subsidy control system