The future of EU Merger
Control – Simpler and better?
• Johannes Lübking and Michele Piergiovanni
• DG Competition
•
•
Antitrustitalia
Brussels, 26 November 2013
•
All views expressed are strictly personal and do not necessarily reflect the official position of the European
Commission
Improving the functioning of EU
merger control
• The EU Merger Regulation is well proven …
… but all legal instruments should regularly be
reviewed ("Refit" programme)
• Two on-going policy projects:
• Merger Simplification Project
• Possible reform of the Merger Regulation: Towards
more effective EU merger control
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Simplification
Simplification
Objectives
• Streamline procedures and cut red tape
• For non-complex cases/simplified procedure
• Reduction of information requirements for all
cases, including complex ones
Effects
• Save on cost and time for business
• Focus resources on problematic cases 4
Simplification: State of Play
• Public consultation during first half of 2013
on
• Revised Implementing Regulation, including
Form CO, Short Form and Form RS
• Revised Simplified Notice
• Overall very positive reaction but also some
critical comments
• Adoption (hopefully) by the end of the year
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Simplification – Simplified Notice
•
Extended scope of simplified procedure
• 20% combined share in case of horizontal overlaps (previously 15%)
• 30% share upstream and downstream in case of vertical relationships
(previously 25%)
• New category: 50% combined share and HHI delta below 150
• Other categories unchanged, but clarification of notion of vertical relationship
• Semi-simplified
•
Shifting around 10% of cases from normal procedure to simplified procedure –
resulting share of simplified procedures expected around 70%
•
Main criticism: parties required to provide share under all “plausible alternative
markets”
• Market definition should be “plausible”
• Usually the only “safeguard” for the Commission in these cases
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Simplification – Short Form
•
More targeted and, in particular, very limited information in relation to
• Proposed transactions not giving rise to reportable markets
• Non-EEA joint ventures
•
Other technical improvements
• Explanation of why the proposed transaction falls within the scope of the
simplified notice
• Clearer requirements to establish that the proposed transaction is a
concentration (what type of transaction is at stake) and that it is reportable
(within the meaning of Article 4(1) of the Merger Regulation (also Form CO)
•
Main criticism: the Short Form now asks for internal documents
• Not for all simplified cases, but only for those giving rise to reportable
markets
• Documents requested are limited and should be readily available
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Simplification – Form CO
• Higher thresholds for affected markets → less affected markets
→ less information required
• Only data for plausible market definitions
• Greater scope for waivers (nine sets of candidate information)
• Other technical improvements across all Sections
• Main criticisms: increased information requirements and
broadened scope of internal documents to be provided
• Economic data not required for Form CO completeness
• Limited scope of additional internal documents requested
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Simplification – Form RS
• Information requirements from parties requesting
a referral of a case from the Commission to
Member States or vice-versa significantly reduced
• In essence, only information that is required to
assess whether the pre-conditions for a referral
are met
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Simplification – Pre-notification
• Continues to be offered as a service to the parties,
including in simplified cases
• However, it may not be needed in all categories of
simplified cases
• More responsibilities for the parties
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Possible reform of the Merger
Regulation
Possible reform of the Merger Regulation
• Consultation paper "Towards more effective EU merger
control" published 20 June 2013
• No need for a major overhaul of the EUMR (report on
functioning of the EUMR, 2009).
• Limited number of issues examined:
– Minority shareholdings
– Referrals
– Technical issues
• No decision taken yet on amendment of the EUMR
• Around 70 replies
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Enforcement gap in relation to acquisition of
non-controlling minority shareholdings?
• Under the EU Merger Regulation:
• The Commission has no jurisdiction to examine cases of
acquisition of minority stakes which do not confer control …
• … but where it has jurisdiction, the Commission:
– takes existing minority shareholdings into account when
analysing effects of a merger on competition
– may require divestiture of minority stake as condition for
clearance
• … leads to the unsatisfactory situation that control depends
on timing of acquisition of minority stake
• Articles 101 and 102 TFEU insufficient legal basis for
comprehensive tackling of the problem
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Minority shareholdings – theories of harm
Theory of Harm
Silent Stake
Rights short of
control
Horizontal unilateral
effects


Coordinated effects


()

Input foreclosure
Customer foreclosure

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Findings
• Need to extend EU merger control to the acquisition of noncontrolling minority shareholdings
• Appropriate to apply substantive test of EU Merger Regulation
• Limited number of cases expected, but relevant enforcement activity
• Objective: to strike the right balance with a system that
1. ensures to catch the (relatively small) number of potentially
anti-competitive transactions
2. avoids unnecessary administrative burden
3. fits in the existing system of merger control at EU and
national levels
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Minority shareholdings –
Design and Options
• Two basic options in the Consultation Paper:
• Notification system:
• Extend current system of ex ante notification of mergers to
minority shareholding
• Selective system:
• Commission may investigate transactions most likely to raise
competition concerns; Commission's discretion to examine
cases
• No stand-still obligation
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Minority shareholdings –
Design and Options (cont'd)
• Selective system: possible designs
 Self-assessment system
• No filing obligation
• Commission relies on market intelligence and complaints
 Transparency system
• Parties file short information notice (to be published on
website) to inform the Commission and to allow Member
States to ask for referral
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Minority shareholdings –
Design and Options (cont'd)
How the systems work is closely linked to the
thresholds/ definition of minority stakes captured
• Quantitative threshold (10% like in US or even 5%): high number of cases,
of which only a small part may be problematic, or
• Qualitative threshold (like material influence): small number of cases, most
of which may warrant scrutiny
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Minority shareholdings –
Design and Options (cont'd)
• Delineation to Article 101 TFEU / joint ventures
• Delineation of competences between Commission/Member
States
• Same turnover thresholds as under current Merger Regulation
• Referrals
• Procedure
• Voluntary notifications in selective system?
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Referral system
Article 4(5)
• Objectives: Save time and cost for businesses
• Proposal
• Maintain basic system: at least three Member States
competent and only at the request of the parties
• but streamline procedure: abolish Form RS and
Parties can directly notify to the Commission
• Member States have 15 workings days to veto
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Referral system – Article 22
Objectives
• Original purpose of Article 22 ("Dutch clause") obsolete
• Instead: normal system of case referral: Commission should
deal with a case if it is the more appropriate authority
• Achieve "one-stop-shop": Commission can accept referral if
no competent Member State opposes; then it has
jurisdiction for the whole EEA
• Enhance legal certainty: only a competent Member State
can refer case to Commission
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Next steps:
VP Almunia to decide on the basis of the public
consultation and the discussions with Member States
on further steps
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