Before 2006, the Takeover Panel had no statutory authority at all, but nevertheless it was extremely feared and people for the most part did what they were told by it, even if they thought the decision which had gone against them was very unfair. Because the Takeover Panel had the ultimate sanction at its disposal – the “cold shoulder”.
The cold-shoulder order was very infrequently used indeed, because people were so terrified of it. It simply involved publishing a notice that a particular person or firm was to be cold-shouldered. And the understanding was that if you worked with or for someone subject to the cold-shoulder, you would be cold-shouldered yourself. Because everyone knew that the big and important banks which formed the backbone of the Panel would always respect the cold-shoulder, it had a sort of viral property; nobody who relied on being able to work with Barclays would touch anyone who was cold-shouldered, so nobody who relied on being able to work with one of those firms would dare to, and so on; basically, anyone who got cold-shouldered would be completely shut out of the financial industry.
As I noted above, this was put on statutory ground in 2006, and now it’s just an FCA regulation that licensed professionals have to respect the cold shoulder. But this wasn’t because the viral version wasn’t working, far from it. The legislation was just made necessary by a European Directive, which was passed because other financial centres hadn’t been able to make similar arrangements work.
From the article: