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Let's talk antitrust: Discussing recent cases and emerging competition issues
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Global | Publication | March 2017
HM Treasury have published a discussion paper asking for comments on possible changes to the tax treatment of sales of late life assets in order to improve the availability of tax relief for decommissioning expenditure to buyers of such assets. The paper focuses on three main issues
Tax relief is available for the cost of decommissioning. Such costs can be used against
The difficulty arises where a late-life asset is sold and the buyer may not or may not be confident that it will be able to generate sufficient profits to offset the entire decommissioning cost. In the context of sales of mature producing assets in the UK North Sea the lack of tax capacity to fully utilise tax reliefs on decommissioning expenditure may well render transactions uneconomic for certain buyers, restricting M&A activity and potentially having an adverse impact on the goal of Maximising Economic Recovery.
The Treasury paper considers the possibility of allowing part of the seller’s tax history to be transferred to the buyer. This would enable the buyer to use the seller’s profits which have been subject to RFCT and SC against any decommissioning costs. The paper asks for comments on
Where a seller of a PRT field retains an obligation to pay for decommissioning costs but is no longer on the licence at the time these costs are incurred (and so is not a participator), neither the buyer nor the seller is entitled to claim the costs as deductible for PRT.
The paper considers whether an appropriate solution would be to
Where a company is sold which contains oil and gas assets and there is a major change in the nature or conduct of a trade within three years (five years from April 1, 2017), losses can be extinguished. This is a particular concern where decommissioning occurs – whilst the company will continue to have a trade in oil and gas extraction, changes often occur in the management and business process. There is currently a lack of clarity as to when such changes will result in the forfeiture of tax losses. The paper asks for suggestions of measures that will increase certainty whilst still preventing tax avoidance.
The discussion paper indicates the Government’s desire to support activities in the North Sea and to attract investment to extend the operational life of late-life assets. It is clear from the paper that the Government has not yet decided what changes to make and whether such changes will apply only to new transactions or to both new and historic transactions. All comments on the paper should be submitted by June 30, 2017. The oil industry is working on developing its own proposals to address this issue which will be presented to HMRC as part of the consultation process. It is expected that any proposed changes will be announced in the Autumn Budget 2017.
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Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Publication
After a lacklustre finish to 2022 when compared to the vintage year for M&A that was 2021, dealmakers expected 2023 to see the market continue to cool in most sectors, in response to the economic headwinds of rising inflation (with its corresponding impact on financing costs), declining market valuations, tightening regulatory scrutiny and increasing geopolitical tensions.
Publication
On 18 September 2023, the CMA published its Initial Report (Initial Report) on AI Foundation Models (FM), supplemented in April 2024 with the publication of its “Update Paper” focused on potential antitrust risks associated with FMs and a “Technical Update Report” providing more detail on the development on FMs (collectively the “Reports”). Below, we consider these CMA publications.
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