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Vietnam: Competition Law Fact Sheet
Overview of the main provisions of the Competition Law, and discussion of the enforcement regime and recent enforcement trends.
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Australia | Publication | March 2021
As major financial institutions work through the backlog of divestments of their “non-core” assets following the fall-out from the banking Royal Commission, APRA’s latest guidance on M&A indemnities has raised significant questions on the risk allocation between buyers and sellers for historic conduct and customer remediation liabilities – with impacts on both live and completed deals.
APRA has come out this week to say:
“While indemnities are not a new feature of merger and acquisition activity, their scope and nature appears to be shifting in focus, particularly as entities manage matters of conduct and customer redress. Without appropriate controls, these indemnities can expose ADIs [Authorised Deposit Taking Institutions] to potentially significant liabilities.”
Whilst significant deals in this space all have bespoke structuring around the allocation of the risk that the business (be it insurance, superannuation, wealth management, underperforming or sub scale loan portfolios) will need to compensate consumers in the future for historic conduct, compliance or regulatory breaches, a common theme is that the seller provides a robust (often uncapped) indemnity to the buyer to cover those liabilities.
In some cases, the conduct and remediation liabilities are transferred out of the sale vehicle and back to the seller as part of a pre-completion restructure (and the seller provides an uncapped restructure indemnity to the buyer), and in other cases the seller provides a classic specific indemnity to cover the buyer for these liabilities (over and above any existing balance sheet provisioning). Such specific indemnities have, in a number of recent transactions, been uncapped as to quantum but they are usually limited by time, extending only to issues that are discovered by the buyer in the several years after completion of the transaction occurs.
Warranty and indemnity (W&I) insurance has a role to play in limiting the exposure of participants to these transactions, but there are some limitations. W&I insurers are approaching financial institutions deals with caution, conscious of the potential quantum of claims linked to remediation and conduct liabilities. In addition to standard limitations in W&I policies (such as for any known issues), W&I insurers are adopting a conservative approach to such issues, so its’ utility in smoothing risk allocation debates between buyers and sellers is limited to very specific circumstances only.
The practical implications of APRA’s guidance for M&A deals are:
These practical implications have financial institutions’ M&A teams scrambling to assess the value impact of their exposure to having to hold additional regulatory capital, and looking closely at the scope of indemnities on deals signed off months ago. The APRA guidance will also have a value impact for both live and completed deals that will need to be carefully assessed.
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Overview of the main provisions of the Competition Law, and discussion of the enforcement regime and recent enforcement trends.
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The European Court of Human Rights (ECtHR or the Court) recently ruled in Verein KlimaSeniorinnen Schweiz & Ors v. Switzerland (Application No. 53600/20) that Switzerland had breached the European Convention of Human Rights (the Convention) by not taking sufficient action against climate change. In particular, it found a breach of the right to respect for private and family life contained in Article 8 of the Convention, based on Switzerland’s failure to mitigate the impact of climate change on the lives, health, well-being and quality of life of its citizens. It also ruled that Switzerland had breached the right to a fair trial in terms of Article 6, in that the domestic courts failed to examine the merits of the applicants’ complaints, including the scientific evidence. In this article we consider the key features of this landmark judgment, which has wide ramifications for Member States of the Convention.
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