You wonder why my last Christmas story did not make it a movie (yet)? I do too. Last year, readers of our blog got to know Lotte, the smart and successful competition lawyer, who moved to the charming small town of Uppervalley to take over her grandfather’s little law firm. As you might recall, Lotte successfully ensured that the merger between Gold Star Trains and Jubilant Toys was only approved with remedies, allowing kids to use Gold Star Trains also on Funny Playthings tracks. However, the story is not over yet.
The appeal
As already indicated at the end of last year’s story, Jubilant Toys assembled an army of lawyers to challenge the merger control authority’s decision to approve the merger only subject to strict remedies. Lotte, representing Funny Playthings, was also heard in the proceeding as a third-party. She dragged along Oliver as her star witness – because who better to spice up a legal proceeding than a toy train enthusiast? Oliver passionately explained to the judges that Gold Star Trains was the “holy grail of toy trains” and that any railroad system incompatible to Gold Star Trains would soon be forced out of the market. The judges, a diverse mix of ages and genders, couldn’t help but reminisce about their own childhoods and Jubilant Toys lost the appeal. Another dazzling victory for Lotte and her team, now featuring two new associates.
A surprising turn of events
Jubilant Toys, which had initially planned to use Gold Star Trains to monopolize the market and send competitors packing, suddenly got bored of their grand evil plan. Meanwhile, Willy, the heir owner of Gold Star Trains, plagued by a guilty conscience over selling his grandmother’s Lebenswerk (life’s work) faster than a Black Friday deal, made Jubilant Toys an offer to buy back Gold Star Trains. Given the matching interests of the parties, the deal was done in record time – mostly because Willy’s assets consisted of a couple of luxury cars and a suspiciously large collection of watches (without any turnover), so no merger control approvals were needed.
However, Willy’s guilt didn’t last long. A lifelong gambler, Willy soon found himself back at the poker table, using company funds to cover his losing streak of the century. This put Gold Star Trains in significant financial troubles. Funny Playthings caught wind of Willy’s mismanagement and swooped in. The CEO offered to buy Gold Star Trains, and Willy – probably tired of dodging creditors – happily accepted (this time without hell or high-water clause). Under Willy’s tenure, Gold Star Trains had become a shadow of its former self, with plummeting sales and shrinking market shares. Due to this, the merger was not notifiable in any jurisdiction (what was confirmed by Lotte who had been engaged by Funny Playthings to review potential filing requirements and other regulatory queries).
The grass is always greener on the other side
It came as it had to come: Jubilant Toys, having happily ditched Gold Star Trains, now regretted it. With Christmas around the corner, they decided to hit Funny Playthings where it hurt: regulatory hurdles. Jubilant Toys filed a complaint with the International Competition Authority (ICA), claiming Funny Playthings was secretly plotting to upgrade Gold Star Trains with world-dominating AI technology and thus drive other train suppliers out of the market.
The ICA, however, brushed it off politely declined its jurisdiction, saying neither it nor any national authority had jurisdiction over the deal. Jubilant Toys, ever the sore loser, wasn’t about to let a little thing like rules stop them. Their lawyers hatched a diabolical scheme: Dusting off a long-forgotten referral clause and twisting its interpretation so that national authorities could refer cases they were not even qualified to review. The ICA, thrilled by the prospect of being able to review nearly any merger in the future thanks to this interpretation, eagerly accepted the case.
This created a major problem for Funny Playthings. Without approval, the deal could not go through, and the much-needed investments for the Christmas season would be stalled. Once again, countless children risked a Christmas without Gold Star Trains under their tree. It was up to Lotte to save their Christmas – again.
The world needs good antitrust lawyers
Lotte faced a challenge: The International Court, who was the competent court to review ICA decisions, had a well-known tendency to avoid overruling the ICA’s decisions, leaving her chances looking slim. This time, she needed judges who not only understood the fundamentals of the regulations, their history, and original intent but also recognized the potential impact such legal uncertainty could have on businesses.
But once again, Oliver came to the rescue. The mother of one of his school friends, who happened to be in charge of commercial law at the International Court, was looking to transfer to a new chamber. She applied for an opening in the chamber handling antitrust cases and – a true Christmas miracle – she got the job.
Naturally, Lotte could not discuss the case with her privately. However, during a playdate with his friend, Oliver managed to casually slip in the key points of Lotte’s arguments over Christmas cookies and children’s punch (of course without Lotte prompting him to do so). Slowly but surely, these ideas settled over the weekend with the newly appointed judge. By the time the decisive hearing rolled around – a mere week before Christmas – the groundwork had been laid.
And as is often the case in movies (and also in German criminal justice), the trial and the verdict coincided on the same day: The court held that the current interpretation of the referral rule “undermines the effectiveness, predictability and legal certainty that must be guaranteed to the parties to a concentration”. The ICA’s decision was therefore overruled. Another stunning victory for Funny Playthings, Lotte and her friends.
All’s well that ends well?
The deal was finalized, and with the financial backing of Funny Playthings, the most spectacular Gold Star Trains made their way to children across the globe. Thanks to a gentle(wo)men’s agreement between Lotte and the CEO, the trains were compatible with all rail systems and sold at a fair price for years to come – ensuring smiles under Christmas trees everywhere.
However, the ICA was less than pleased with how things turned out. Behind closed doors, whispers of new strategies to review mergers outside the usual thresholds had already begun. Will Lotte once again find herself saving Christmas next year? Stay tuned!
In the meanwhile, we wish all our readers a Merry Christmas and a Happy New Year. The blog will pause over the holiday season, and we will be back with full steam next year!
Please note that similarities with real cases are coincidental and not intended.
Photo by Peter Bryan on Unsplash
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