UK: UK Merger Control: Electro Rent Fined For Non-Compliance

Last Updated: 13 September 2018
Article by Nigel Seay and Stephen Whitfield

 In the latest of a series of procedural breaches that have been punished by the UK and EU merger control authorities, over the summer the UK Competition and Markets Authority (CMA) fined Electro Rent £100,000 for failure to comply with the requirements of an interim enforcement order (IEO). The case serves as an important reminder of the need for transaction parties to ensure tight compliance with procedural requirements during merger control investigations. It is also a useful reminder of the complexities of closing a transaction without obtaining merger control clearance from the CMA.

What is an IEO?

Post-closing IEOs (also commonly referred to as "hold separate orders") are a particular feature of the UK merger control regime; they exist because the merger control regime in the UK is a voluntary filing regime, with no prohibition on merger parties from closing transactions ahead of obtaining clearance.

The quid pro quo for a voluntary and non-suspensory system is that the CMA has the power to examine deals on a post-closing basis if they meet the UK's jurisdictional thresholds. In such post-closing cases, the CMA will routinely impose an IEO on the merger parties – the main purpose of which will be to prevent action which might prejudice the merger control investigation or impede the taking of appropriate remedial action.

What do IEOs require?

Amongst other things, IEOs require that the merging (or acquired/acquiring) businesses be run separately until the CMA has completed its review of the transaction or otherwise relaxes the requirements of the IEO, and that sufficient resources be made available to each business to continue to operate on the basis of their respective pre-merger business plans. Parties can seek (limited) derogations from the terms of an IEO, or seek the CMA's consent to take certain actions which may otherwise be prohibited.

Why was Electro Rent fined?

Electro Rent has been fined because it failed, without reasonable excuse, to comply with the requirements of the IEO imposed by the CMA during its Phase II investigation of Electro Rent's acquisition of Microlease.

In particular, Electro Rent failed to seek the consent of the CMA before issuing a notice to terminate the lease over its only UK premises, despite being aware that the site may form part of a remedies package should the CMA ultimately find competition concerns. The IEO applied (as is routinely the case) to both the acquired Microlease business as well as Electro Rent's pre-existing UK business, hence even such actions in relation to the pre-existing Electro Rent business required consent from the CMA.

Electro Rent informed the Monitoring Trustee (MT) (who had been appointed by the CMA to monitor compliance with the IEO) that it intended to issue a notice to terminate the lease on the UK premises that day – but neither Electro Rent nor the MT informed or sought the consent of the CMA prior to the break notice being issued.

In its decision, the CMA noted that:

  • The lease related to Electro Rent's only UK premises, and there was a "clear understanding" that the lease over it formed part of a potential remedies package.
  • While Electro Rent had taken steps to remedy the breach by entering into a new lease, this was on worse commercial terms which, in the CMA's view, could "impact on the remedy by increasing the risk that the landlord may not consent to a sub-lease on the previous terms as required by the CMA's remedy".
  • The termination of the lease impeded the ability of Electro Rent to compete independently by depriving the UK business of a UK site from which to operate beyond April 2019, and resulted in the UK business not having the resources for its development on the basis of pre-merger business plans.
  • Electro Rent understood the requirement to seek prior consent from the CMA – indeed, it  had sought consent from the CMA before taking certain other actions.
  • Electro Rent also had sufficient administrative and financial resources available to it to ensure compliance with the IEO, including external legal advisers.

The wider context

The CMA's fine on Electro Rent follows a series of procedural / regulatory breaches that have resulted in the imposition of fines by EU and UK merger control authorities.


  • A €110 million fine imposed by the European Commission on Facebook in May 2017 for providing false or misleading information during the investigation of its acquisition of WhatsApp.
  • A £20,000 fine imposed by the CMA on Hungry House in November 2017 for failing to comply with statutory information requests during the investigation of its acquisition by JustEat.

Electro Rent has now lodged an appeal of the CMA's fine to the Competition Appeal Tribunal on the basis that: (a) the CMA erred in finding that Electro Rent did not have a reasonable excuse for any breach by reason of service of the break notice; and (b) the penalty imposed was excessive and should be reduced to nil or a nominal sum.

However, regardless of the ultimate outcome of Electro Rent's appeal, in light of the context above it is clear that merger control authorities are increasingly focused on behaviour they view as concerning during the course of their investigations, and will not hesitate to impose fines in appropriate circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions