Court of Appeal unanimously allows Easynet’s appeal against the refusal to authorise its proposed cross-border merger

18/01/18

The Court of Appeal has today unanimously allowed Easynet’s appeal in In Re Easynet Global Services Ltd.

The case concerned a cross-border merger involving 22 companies belonging to the Easynet group. Only one of these companies was a non-UK entity; this was a Dutch company which was dormant, had never traded, had no appreciable assets and no relevant liabilities, employees or other obligations. At first instance ([2016] EWHC 2681 (Ch)), Birss J held that, although the proposed merger satisfied the strict conditions to be met in order to qualify as a cross-border merger within the meaning of the Cross-Border Mergers Directive 2005/56/EC (since consolidated into Directive (EU) 2017/1132) and the UK Regulations implementing it, authorisation for the merger should nonetheless be refused, on the basis that it was in reality a domestic company law transaction and that the inclusion of the Dutch company was a mere ‘device’.

On appeal, the Court of Appeal requested that detailed written and oral submissions be made by the appellant and by the Secretary of State for Business, Energy and Industrial Strategy, intervening, on the EU law principles arising, in particular the principle of abuse of law.

Following a review of the relevant EU jurisprudence, Sales LJ held that the proposed merger fell within the scope of the EU establishment rules and the 2005 Directive. He held that the proposed merger involved no abuse of law on the part of the participating companies. Davis and David Richards LJJ delivered concurring judgments.   

The judgment appears here.