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A Fresh Look at the EU Merger Regulation? The European Commission’s White Paper “Towards More Effective EU Merger Control”

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Abstract

On 9 July 2014 the European Commission published the White Paper “Towards more effective EU merger control”. The White Paper takes stock of the working of the EU Merger Regulation 10 years after the last reform in 2004. It evaluates what degree of coherence and convergence has been achieved in the application of merger control rules and practices at the EU and at Member State level. The White Paper supports recent suggestions to move towards a “European Merger Area”, in which the Commission and national competition authorities (NCAs) apply the same rules to mergers and acquisitions, but does not make concrete proposals in that respect. However, the White Paper proposes amendments to the Merger Regulation in two main areas. First, in order to address an enforcement gap in EU competition law with respect to acquisitions of non-controlling minority shareholdings, the Commission should have the possibility to review certain minority stake transactions creating a “competitively significant link” between the acquirer and the target, without however making all acquisitions of minority shareholdings subject to the prior notification obligation. Second, the system for referring merger cases between the Commission and NCAs should be streamlined in order to reduce the administrative burden on companies and better ensure that cases are being dealt with by the best placed competition authority. Additional proposals made by the White Paper relate to removing joint ventures established outside the European Economic Area (EEA) and with no effect on EEA markets from the scope of the Merger Regulation and alleviating notification obligations for certain categories of unproblematic mergers.

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Notes

  1. Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ L 395, 30 December 1989, p. 1).

  2. Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ L 180, 9 July 1997, p. 1).

  3. Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29 January 2004, p. 1).

  4. European Commission, White Paper (2014). Before adopting the White Paper, the Commission had launched a public consultation in 2013 based on a staff working document outlining the problems and possible solutions (European Commission, Consultation Paper 2013). Some 70 stakeholders (business organisations, companies, law firms and others) submitted comments, which have been published on the website of the Commission’s Directorate-General for Competition. The White Paper itself is accompanied by a staff working document analysing the issues and proposals in greater detail (European Commission, SWD 2014) as well as by an Impact Assessment and its executive summary. Following the publication of the White Paper, the Commission also received comments from more than 90 stakeholders, which are also published on the Commission’s website, together with a summary. See http://www.ec.europa.eu/competition/consultations/2013_merger_control/index_en/html and http://www.ec.europa.eu/competition/consultations/2014_merger_control/index_en/html.

  5. European Commission, White Paper (2014), para 23.

  6. Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the treaty (OJ L 1, 4 January 2003, p. 1) as amended.

  7. Currently all EU Member States with the exception of Luxembourg have a system for vetting mergers in place.

  8. Articles 1 and 21 of the Merger Regulation.

  9. Articles 4(4), 4(5), 9 and 22 of the Merger Regulation.

  10. Articles 4(1) and 7 of the Merger Regulation.

  11. Article 10 of the Merger Regulation.

  12. Articles 6 and 8(1)–8(3) of the Merger Regulation.

  13. See statistical overview available at http://ec.europa.eu/competition/mergers/statistics.pdf.

  14. See Article 263 TFEU and Protocol No 3 to the TFEU on the Statute of the Court of Justice of the European Union.

  15. European Commission, White Paper (2014), paras 4–15, and European Commission, SWD (2014), paras 5–31.

  16. See European Commission, White Paper (2014), paras 16–22, and European Commission, SWD (2014), paras 32–42.

  17. With the notable exceptions of France, Germany and the United Kingdom, which all had a system of merger control already in place when the Merger Regulation was adopted in 1989 and have maintained important features differing from the EU system to this day.

  18. For example, NCAs have agreed to inform each other of cases that potentially have to be notified in several Member States and they meet regularly with the Commission in the "Merger Working Group" established in 2010 to discuss cases and questions of policy.

  19. For example, in the Eurotunnel case, where the acquisition of certain assets (ships) of the liquidated ferry company SeaFrance (a subsidiary of French national railway operator SNCF running a ferry service crossing the English Channel) by Eurotunnel (the company operating the Channel Tunnel) was cleared by the French Competition Authority subject to behavioural commitments but blocked by the UK Competition Commission. For details see Briggs and Oakes (2014).

  20. Monti (2010) and Zivy (2013). Such a system would be similar to the one created by Regulation 1/2003 for the application of Articles 101 and 102 TFEU, under which the application of the antitrust rules is shared between the Commission and NCAs and the latter are required to always apply Articles 101 and 102 TFEU (in parallel to national competition law) to cases with potential cross-border effects (see Article 3 of Regulation 1/2003). However, significant differences between national competition law enforcement systems remain in terms of procedure and institutional settings, see Communication from the Commission to the European Parliament and the Council "10 Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives", COM (2014) 453 final, 9 July 2014.

  21. European Commission, White Paper (2014), para 22.

  22. European Commission, White Paper (2014), paras 24–41; European Commission, SWD (2014), paras 43–65.

  23. Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ C 31, 5 February 2004, p. 5) and Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ C 265, 18 October 2008, p. 6).

  24. European Commission, White Paper (2014), paras 28-38; European Commission, SWD (2014), paras 48–60; European Commission, Consultation Paper (2013), Part 2.

  25. European Commission, Consultation Paper (2013), Part 3, paras 43–90; Burnside (2013).

  26. Case COMP/M.4439 – Ryanair/Aer Lingus I, Commission decision of 27 June 2007, confirmed by the General Court in Case T-342/07 Ryanair v Commission [2010] ECR II-3457; case COMP/M.6663 – Ryanair/Aer Lingus II, Commission decision of 27 February 2013, appeal pending.

  27. Case T-411/07 Aer Lingus v Commission [2010] ECR II-3691.

  28. Competition Commission, Final Report, 28 August 2013.

  29. Case No 1196/4/8/12 Ryanair v Competition Commission [2012] CAT 21; Ryanair v Competition and Markets Authority [2015] EWCA Civ 83.

  30. See Ruubel (2014).

  31. Levy (2013), p. 21. In fact, Levy bases his analysis on a misleading representation of the Competition Commission’s findings, reducing them to only the dissuasive effect of Ryanair’s stake on Aer Lingus’ ability to cooperate or merge with other airlines.

  32. European Commission, White Paper (2014), paras 31–37; European Commission, SWD, (2014), paras 53–60; European Commission, Consultation Paper (2013), Part 3, paras 11–42.

  33. Case COMP/M.3653—Siemens/VA Tech, Commission decision of 13 July 2005.

  34. Case COMP/M.1673—VEBA/VIAG, Commission decision of 13 June 2000.

  35. Case COMP/M.5406—IPIC/MAN Ferrostaal, Commission decision of 13 March 2009.

  36. Almunia (2012).

  37. Levy (2013), p. 5–7; Schmidt (2013), paras 33–36; see also a number of submissions to the European Commission’s (2013) Consultation Paper, available at http://ec.europa.eu/competition/consultations/2013_merger_control/index_en.html, and to the White Paper, available at http://ec.europa.eu/competition/consultations/2014_merger_control/index_en.html.

  38. Cases 142/85 and 156/84 British American Tobacco Company Limited and RJ Reynolds Industries Inc v European Commission [1987] ECR 4487, para 37.

  39. See for instance Commission decision of 10 November 1992, case IV/33.440 – Warner Lambert/Gilette; Commission decision of 11 November 1994, case IV/34.410 – Olivetti/Digital; Commission decision of 27 July 1994, case IV/34.857—BT/MCI.

  40. See Koch (2008), paras 5-1-032 to 5-1-035.

  41. Stefan Rusu (2014), p. 491.

  42. See footnote 39.

  43. For details see European Commission, Consultation Paper (2013), Part 3, paras 43–90, and Burnside (2013).

  44. See Section 37(1) No 3 lit b of the Act against Restraints of Competition or GWB (Gesetz gegen Wettbewerbsbeschränkungen).

  45. Within the meaning of Section 37(1) No 4 GWB.

  46. See for example MacGregor and Burnside (2014).

  47. European Commission, White Paper (2014), para 42.

  48. European Commission, White Paper, (2014), para 44.

  49. It is true that in the case of full mergers (“concentrations”), the Merger Regulation applies a rather broad jurisdictional test and makes all transactions that fall under the bright-line test provided by the turnover thresholds subject to a prior notification requirement and standstill obligation, even though the Commission only intervenes on the basis of competition concerns in about 6–8 % of all notified mergers (if one compares the number of mergers blocked, cleared only subject to commitments in Phase I or Phase II or abandoned after opening of Phase Ii proceedings to the overall number of notified transactions). However, this is justified because (1) it is generally very difficult to unwind an anticompetitive merger once consummated, (2) a clear (and, hence, necessarily broad) jurisdictional test is in the interest of companies’ legal certainty and (3) most benign mergers are cleared within the short 5 week deadline of Phase I (close to 70 % even under the so-called simplified procedure).

  50. European Commission, White Paper (2014, para 47).

  51. European Commission, SWD (2014, para 104).

  52. See Federal Ministry of Economics and Technology and Bundeskartellamt, Written Statement, (2013), p. 4–5.

  53. Though the proposed waiting period would expire after three weeks unless the Commission asked for a notification, whereas the standstill obligation under Article 7(1) of the Merger Regulation prohibits implementing a merger until the Commission has cleared it.

  54. European Commission, SWD (2014, paras 111–113).

  55. European Commission, Competition Policy Brief (2014), p. 5.

  56. Commission Notice on restrictions directly related and necessary to concentrations (OJ C 56, 5 March 2055, p. 24).

  57. See Commission Notice on case referral in respect of concentrations (OJ C 56, 5 March 2005, p. 2), paras 8–12.

  58. European Commission, 2009 Report.

  59. European Commission, White Paper (2014), paras 65–68; European Commission, SWD (2014), paras 135–138.

  60. See the Notice on case referral, para 45.

  61. See Notice on case referral, paras 4–5.

  62. The EEA includes the 28 Member States of the European Union as well as Iceland, Liechtenstein and Norway, for which the EU Merger Regulation applies by virtue of the EEA Agreement.

  63. However, the Commission generally does not accept a referral under Article 22 if the transaction mainly affects markets in a Member State that does not support the referral request, see for instance case COMP/M.6502—London Stock Exchange/LCH Clearnet, Commission decision of 4 July 2012.

  64. European Commission, SWD, 2014, paras 153–159.

  65. Note that under Regulation 1/2003, it is entirely for the Commission and NCAs to allocate Article 101 and 102 cases among each other, see Articles 4, 5, 11 and 13.

  66. Except under the circumstances where the affected national market does not constitute a "substantial part of the internal market": since in such a case the Commission has no power to intervene under the substantial test of Article 2(2) and (3) of the Merger Regulation, it must refer the case to a Member State asking for such referral (see Article 9(3), 2nd subparagraph).

  67. European Commission, White Paper, (2014, paras 76–77); European Commission, SWD, (2014, paras 175–200).

  68. Commission Implementing Regulation (EU) No 1369/2013 of 5 December 2013 amending Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ L 336, 14 December 2013, p. 1) and Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (OJ C 366, 14 December 2013, p. 5); see also Commission press releases IP/13/1214 and MEMO/13/1098 of 5 December 2013.

  69. International Competition Network, Recommended Practices for Merger Notification and Review Procedures, available at http://www.internationalcompetitionnetwork.org/uploads/library/doc588.pdf.

  70. See for instance for Germany Section 130(2) GWB and the Bundeskartellamt's Guidance on domestic effects in merger control (Merkblatt Inlandsauswirkungen in der Fusionskontrolle) of 30 September 2014.

  71. See Annex II to Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing Council Regulation (EC) No 139/2004 (OJ L 133, 30 April 2004, p. 1) as amended ("Short Form CO") and the Commission Notice on a simplified procedure (see footnote 66).

  72. Beyond such "no-overlap" cases, the simplified procedure also applies i.e. to mergers with horizontal or vertical overlaps but limited market shares (20 % for horizontal and 30 % for vertical cases) or no significant overlap, see Commission notice on a simplified procedure (footnote 66), paras 5 and 6.

  73. Vestager, Margrethe (2015).

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  1. Mergers Case Support and Policy Unit, European Commission, Brussels, Belgium

    Ulrich von Koppenfels

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von Koppenfels, U. A Fresh Look at the EU Merger Regulation? The European Commission’s White Paper “Towards More Effective EU Merger Control”. Liverpool Law Rev 36, 7–31 (2015). https://doi.org/10.1007/s10991-015-9163-x

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