HANS ZENGER, European Union - Directorate General for Competition
Email: hans@onfund.org

Following AT&T/Time Warner and the recent adoption of U.S. Vertical Merger Guidelines, vertical merger policy has again become a subject of intense debate. Some commentators have argued that vertical merger enforcement is too lax and should be invigorated, in particular in the U.S. Others see a greater risk of false positives and argue that the standard for intervention should remain high in such cases. Against this background, this article discusses the economics of assessing vertical mergers with a particular emphasis on recent European case practice.

MARIA LILLÀ MONTAGNANI, Bocconi University - Department of Law, Stanford Law School, Peking University School of Transnational Law
Email: lilla.montagnani@unibocconi.it
MARIA LUCIA PASSADOR, Bocconi University - Department of Law, Harvard University - Harvard Law School, Universite du Luxembourg - Faculty of Law, Economics and Finance
Email: marialucia.passador@unibocconi.it

Far from being something remote and unfathomable, artificial intelligence (AI) should no longer be just a confined attribution to those who possess IT skills, nor be discussed only when it is feared that it could replace the functions carried out by human beings. AI is right now revealing itself as an essential tool in dealing with some of the intricacies that have emerged due to the current global health crisis. As AI’s potentialities clearly emerge, confidence in such a technology as a means not only for recovery but, more in general, for change strengthens at all levels, including that of the board of directors. The positive implications that AI can bring about in the transformations of companies can however only be exploited if the risks generated by its employment are addressed by the corporate governance systems of the companies themselves, and specifically tackled by the board of directors, directly or in one of its committees such as the tech committee.

Our study aims at clarifying whether tech committees are currently the place where potentialities and risks of AI employment are faced. In order to do this, we consider North American and EU listed companies that have adopted a tech committee in the period 2000-2019 and the companies’ documents describing tech committees’ activities. On the selected samples, we carry out both quantitative and qualitative analysis to understand the features of tech committees, of their members and, in particular, to identify the functions that such committees perform in practice. Besides the differences between the two jurisdictions considered, the (definitely surprising) outcome is that tech committees have not dealt with AI (at least in the first twenty years of their lives) as hoped (and perhaps as even expected), but that they play a rather predominantly strategic and monitoring role, often flanked by risk management functions.

CASEY WATTERS, Bond University
Email: cwatters@bond.edu.au

Singapore’s ambition to strengthen its role as a regional insolvency restructuring hub prompted the financial centre to enact several reforms to the domestic insolvency regime, adopt the UNCITRAL Model Law on Cross-Border Insolvency, and establish the Judicial Insolvency Network through which judges from 10 jurisdictions met to develop guidelines on establishing protocols for court-to-court communication in insolvency proceedings. The most significant amendments involve incorporating characteristics of US Ch.11 proceedings into domestic schemes. These include an automatic moratorium that can be extended to have a worldwide effect on parties falling within the court’s personal jurisdiction, cram-down of dissenting classes of creditors, and rescue financing.

Under the amended Companies Act, a company seeking to convene a creditors’ meeting regarding a proposed scheme may also apply for priority status for rescue financing. There are four levels of priority status permitted under s.211E(1). These include treating the rescue financing as an expense of the winding up in any subsequent winding up, giving the claim priority over unsecured and preferential claims in any subsequent winding up, granting a secured interest against the debtor’s property that is subordinate to any existing security against that property, or providing the rescue financing a secured status equal to or higher than an existing secured interest on the debtor’s property.

FORREST G. ALOGNA, Darrois Villey Maillot Brochier
Email: falogna@darroisvilley.com
HADRIEN BOURRELLIS, Darrois Villey Maillot Brochier
Email: hbourrellis@darroisvilley.com
BERTRAND CARDI, Darrois Villey Maillot Brochier
Email: bcardi@darroisvilley.com
MATTHEW T. CARPENTER, Wachtell, Lipton, Rosen & Katz
Email: mtcarpenter@wlrk.com
ADAM O. EMMERICH, Wachtell, Lipton, Rosen & Katz
Email: aoemmerich@wlrk.com
THEODORE N. MIRVIS, Wachtell, Lipton, Rosen & Katz
Email: pnmirvis@wlrk.com

The fundamental question in the law of business organizations – what is the purpose of the corporation? – contains a related question of constituencies and therefore priorities among them – whom does the corporation serve? If, for example, the purpose that justifies the existence of the corporation is the maximization of share price, then it follows that the corporation exists to serve the shareholders that are the beneficiaries of share price increases. The answers to such questions are encoded in the laws governing the decisions of a corporation’s directors and managers and regulating the transactions that allocate the benefits and the burdens of a corporation’s activity. Different societies have reached different conclusions and enshrined different priorities in their respective legal regimes. And while the modern global corporation does business – and may serve stakeholders – far beyond the borders of its jurisdiction of incorporation, these fundamental questions of purpose are generally still determined by the lawmakers in the corporation’s place of incorporation.

MIRIT EYAL-COHEN, University of Alabama - School of Law
Email: meyal-cohen@law.ua.edu

The COVID-19 pandemic brought with it a sharp economic contraction. Worldwide stay-home orders and calls for quarantine disrupt employment and commercial business activities are limited to those considered “essential.� Once closure rules are somewhat relaxed, citizens, companies, and independent business owners recalibrate and adapt to new ways of reassuring a safe way to obtain and deliver services and goods. That said, this “new normal� so far has proven more challenging for some industries and sectors than others. Much uncertainty as to life beyond the pandemic still remains. Forecasts predict the world will have to deal with Covid-related disruptions in years to come.

Business cycle theory predicts expansion under certain periods of contraction, recession, or depression. Innovation theorists point to new discoveries and knowledge as the engine of such movements of contraction and expansion. Alas, these theories focus on internal innovation mechanisms that drive such changes.

Although the current recession follows an idiosyncratic health crisis rather than new technological discoveries—a cause unrelated to innovation theory—we have already witnessed many scientific and business innovations since the onset of the COVID-19 pandemic. Could these pandemic-related novelties be a prerequisite to be able to attain the capstone of the current business cycle? Can external (rather than internal technological) dynamics be a catalyst to boost the next cycle of innovation and economic growth?

This essay hopes to provide a missing piece of the puzzle and a deeper understanding of the business cycle and innovation theories. It demonstrates via the case studies of health-related shocks that such external factors should be factored into economic recession and growth models. As a normative solution, we propose to make certain laws more flexible to allow not only endogenic innovations to drive expansion and recovery but adopt rules that stifle change to increase preparedness and handle crisis.