Week Ahead (11 May)

W/C Monday, 11 May – Pressure on Keir Starmer to intensify following local elections political shockwave as Reform UK surges across the country

Last week’s results from the UK’s local and devolved elections have confirmed a worse than anticipated outcome for the ruling Labour Party, intensifying questions around the government’s political trajectory. The elections, covering around 5,000 seats across 136 councils in England as well as devolved contests in Scotland and Wales, were widely viewed as the first major electoral test for Starmer’s government – the scale of Labour’s losses ultimately proved to have exceeded even pessimistic internal expectations.

The principal beneficiary has been Reform UK, led by Nigel Farage, which has continued its rapid rise by making substantial gains at the expense of both Labour and the Conservatives. The election results show Reform gaining hundreds of council seats and making major advances in traditionally Labour-dominated “Red Wall” areas across northern England and the Midlands, including Wigan, Bolton, Salford and Halton. Particularly symbolic was Labour’s collapse in Wigan and Tameside, areas long regarded as core pillars of the party’s traditional industrial base.

The results suggest that Reform is increasingly succeeding in transforming itself from a protest movement into a durable electoral force capable of challenging both major parties across multiple regions of the UK. Farage described the outcome as a “historic change in British politics,” with the elections likely to rank among the most severe mid-cycle setbacks experienced by a governing party in recent decades.

At the same time, the elections also underline the continuing erosion of Britain’s traditional two-party system. Even though Labour has suffered heavily, the Conservatives are also sustaining major losses, with votes fragmenting toward Reform on the right and toward the Greens and Liberal Democrats elsewhere. In Scotland and Wales, nationalist parties also strengthened their position further, reinforcing the increasingly multi-polar nature of UK politics.

For Starmer personally, the political implications are serious. Per our preview, the Prime Minister had already been facing falling approval ratings, economic dissatisfaction and growing unease within Labour’s own base. The government has struggled to generate meaningful economic momentum amid weak growth, persistent cost-of-living pressures and the broader fallout from the Middle East energy shock, while repeated policy reversals and internal tensions have further damaged perceptions of stability and leadership.

Against this backdrop, attention is now turning to Starmer’s high-stakes speech later today, which Downing Street is presenting as an attempt to regain the political initiative following the election shockwave. The address is expected to contain a more explicitly pro-European tone ahead of Wednesday’s King’s Speech and the government’s broader legislative reset, in what is widely viewed within Westminster as a critical political moment for Starmer personally, amid growing internal frustration within Labour over the party’s direction and strategy. 

Nevertheless, the poor results are likely to intensify internal debate within Labour over the party’s future direction and leadership. Although Starmer continues to insist he will lead Labour into the next general election, speculation around alternative figures such as Greater Manchester Mayor Andy Burnham and Deputy Prime Minister Angela Rayner is expected to increase further. 

The broader government agenda expected later this week, including reforms on healthcare, water infrastructure, asylum policy, digital ID, education and closer EU cooperation, is also likely to be framed as part of a wider attempt to demonstrate momentum and strategic direction following criticism that the government has appeared reactive and overly cautious during its first two years in office. 

Beyond domestic politics, the results may also complicate the government’s planned “reset” with the EU ahead of the July EU–UK summit. A stronger-than-expected showing by Reform UK is likely to reinforce political caution within Downing Street around any moves perceived domestically as deepening alignment with Brussels, particularly on migration, regulatory cooperation and mobility arrangements.

W/C Monday, 11 May – Commission approaching merger decision on Carlyle acquisition of BASF coatings business following earlier FSR clearance

The European Commission is expected to decide in the coming days whether to clear the acquisition of BASF’s coatings business by US private equity group Carlyle, in a transaction that has already received approval earlier this year under the EU’s Foreign Subsidies Regulation (FSR). According to the official filing, the current Phase I merger review deadline falls on 18 May, although a decision could arrive earlier if discussions conclude ahead of schedule.

The transaction was originally agreed in October 2025 and involves Carlyle acquiring a majority stake in BASF’s automotive OEM coatings, automotive refinish coatings and surface treatment activities. The business is valued at approximately €7.7 billion, with BASF retaining a 40% minority interest in the carved-out entity. The transaction forms part of BASF’s broader restructuring and portfolio optimisation strategy amid persistent pressure on Europe’s industrial sector, particularly from high energy costs and weaker manufacturing demand.

In February, the Commission approved the deal under the FSR without opening an in-depth investigation, despite the involvement of the Qatar Investment Authority (QIA) alongside Carlyle. The case attracted attention because the FSR increasingly targets transactions involving state-backed non-EU capital, particularly from China and Gulf sovereign wealth funds. However, the Commission ultimately allowed the transaction to proceed at Phase I level.

Interestingly, QIA does not explicitly appear in the current merger filing published under the EU Merger Regulation (EUMR). This likely reflects the structure of the transaction and the distinction between EU merger-control and FSR review. Under the EUMR, the focus is primarily on entities exercising direct and decisive control over the target undertaking. Carlyle appears to be the controlling acquirer in this case, while QIA’s role is likely structured as a minority co-investment without sufficient veto or governance rights to qualify as a controlling notifying party for merger-control purposes.

Under the FSR framework, however, the analysis is broader. Because QIA is a sovereign wealth fund backed by a non-EU state, its financial contribution to the transaction still falls within the scope of the Commission’s foreign-subsidy assessment, even absent merger-control “control” rights in the traditional sense. This explains why the transaction previously underwent FSR scrutiny despite QIA not featuring prominently in the EUMR filing itself.

The most likely outcome continues to be an unconditional Phase I clearance in the coming days, particularly given the absence so far of publicly visible competition concerns and the relatively complementary nature of the transaction. The coatings business operates in specialised industrial segments where Carlyle itself has limited direct overlaps. In addition, the earlier FSR approval has already removed one important layer of regulatory uncertainty surrounding the deal.

Tuesday, 12 May – CJEU to rule on Meta's appeal against the Italian Communications Regulatory Authority over copyright case

Tomorrow, the European Court of Justice (CJEU), the EU’s highest court, is set to deliver its judgement on Meta’s legal challenge against Italy’s Communications Regulatory Authority (AGCOM). The case, Meta Platforms Ireland Limited v. Autorità per le Garanzie nelle Comunicazioni (Case C-797/23), revolves around a dispute concerning the compatibility of Italian legislation with EU law, specifically in relation to copyright and compensation for the online use of press publications. 

The dispute arose after AGCOM issued Resolution No. 3/23/CONS, which established criteria for determining "fair compensation" for the online use of press publications by digital platforms like Meta. This resolution was based on Article 43-bis of the Italian Law on Copyright, which implements Article 15 of the EU Copyright Directive (Directive 790/2019). Article 15, often referred to as the "press publishers' right," grants publishers the right to seek compensation from digital platforms for the use of their content.

In December 2023, Meta decided to challenge the resolution, arguing that the Italian legislation and AGCOM’s criteria for compensation are inconsistent with EU law. The company contends that the measures imposed by Italy are disproportionate and infringe on its fundamental rights, including the freedom to conduct business under Article 16 of the Charter of Fundamental Rights of the EU. In March 2024, Lazio’s Regional Administrative Court referred the case to the CJEU for a preliminary ruling. This means the CJEU will interpret the relevant EU laws, and the Italian court will then apply that interpretation to the case.

The central question is whether Article 43-bis of the Italian Law on Copyright and AGCOM's Resolution No. 3/23/CONS are compatible with Article 15 of the EU Copyright Directive and other relevant EU laws. In other words, the key issues to be examined are: 

• whether Italian legislation and the resolution align with the EU's framework for compensating press publishers for the online use of their content

• Whether the criteria for determining "fair compensation" under Italian law are consistent with EU law, particularly in terms of proportionality and the protection of fundamental rights.

This case is part of a broader trend of European regulators seeking to hold big tech firms accountable for their use of copyrighted content. It follows similar disputes in other EU countries, including Poland, where Meta has also been under investigation since October 2024 for restricting the visibility of media links on Facebook. This means that the outcome of this case could set a precedent for future legal battles between digital platforms and content creators across the EU.

Tuesday, 12 May – CJEU to hear ByteDance appeal against TikTok’s DMA designation

Also on Tuesday, the CJEU is set to hear ByteDance’s appeal against the EU General Court ruling that upheld TikTok’s designation as a “gatekeeper” under the Digital Markets Act (DMA).

The hearing follows the General Court’s July 2024 judgement in Case T-1077/23, which dismissed ByteDance’s challenge against the European Commission’s decision to include TikTok among the first group of companies designated as gatekeepers under the DMA. 

Companies with an annual turnover exceeding €7.5 billion, a market capitalisation of over €75 billion, and active monthly users in the EU totalling 45 million fall under these rules. After its inclusion in the Commission’s initial list, the Chinese online video platform challenged its designation at the General Court claiming that TikTok’s inclusion on the list could undermine the ‘’DMA's own stated goal by protecting actual gatekeepers from newer competitors like TikTok’’ and applied for interim measures. The original list adopted by the Commission included Alphabet, Amazon, Apple, Meta, Microsoft and ByteDance.

ByteDance had argued that TikTok did not meet the substantive conditions for gatekeeper status despite exceeding the DMA’s numerical thresholds. In particular, the company claimed that TikTok remained a challenger platform rather than an entrenched market actor, warning that its designation risked undermining the DMA’s stated objective by shielding incumbent platforms from newer competitors.

However, the General Court sided largely with the Commission, concluding that Brussels “was fully entitled to consider that ByteDance was a gatekeeper.” The Court pointed in particular to ByteDance’s strong financial position, rapid growth trajectory and TikTok’s very large EU user base, which it considered sufficient indicators of the company’s ability to function as an important gateway between businesses and consumers. Although the Court acknowledged certain errors in the Commission’s assessment, it concluded that these did not affect the overall legality of the designation decision.

ByteDance formally escalated the dispute to the CJEU in September 2024. In its appeal (Case C-627/24P), the company argues that the General Court misinterpreted key provisions of the DMA, particularly Articles 3(1) and 3(5), by effectively treating the regulation’s quantitative thresholds as ‘’de facto’’ irrebuttable presumptions. ByteDance also disputes the assessment that TikTok constitutes an “important gateway” for business users in the sense intended by the regulation.

The ByteDance appeal also forms part of a broader wave of litigation surrounding the DMA’s implementation. Apple and Meta are separately challenging aspects of their own gatekeeper designations and obligations before the EU courts, including the designation of Apple’s App Store, Safari and iOS ecosystem services, as well as Meta’s Marketplace and Messenger services.