This country-specific Q&A provides an overview to merger control laws and regulations that may occur in the EU.
It will cover jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.
This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/merger-control
Merger control in the European Union (“EU”) is governed by Council Regulation (EC) No 139/2004 (“EUMR”). The EUMR contains the main rules for the assessment of “concentrations”. Under the EUMR, the term “concentration” captures mergers, acquisitions or the creation of joint ventures that perform on a lasting basis all the functions of an autonomous economic entity (see question 10).
The EUMR is complemented by the Implementing Regulation (Commission Regulation (EC) No 802/2004 of 21 April 2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings) and a number of interpretative notices, guidelines and best practices published by the European Commission (the “Commission”) (available on its website at http://ec.europa.eu/competition/mergers/legislation/legislation.html). These set out the procedural and substantive aspects of the assessment of concentrations under the EUMR and provide practical guidance with respect to the implementation of the EUMR.
The EUMR is enforced by the Directorate General for Competition of the Commission (“DG Commission”), which is the executive arm of the EU. There are several constituencies involved in the decision making process at the Commission and these include the case team assembled to review the concentration, the Legal Service, the Hearing Officer and the Chief Competition Economist.
The EUMR provides a “one-stop shop” for merger control, where companies can request clearance for their concentrations in the whole of the European Economic Area (currently comprised of the 28 EU Member States and three members of the European Free Trade Association, i.e. Iceland, Liechtenstein and Norway). The Commission in principle examines only concentrations with an “EU dimension”, i.e. those that satisfy the turnover thresholds set out in the EUMR. Transactions without an EU dimension may fall within the jurisdiction of the national laws of one or more Member States. The EUMR provides for a referral mechanism which allows the Member States and the Commission to refer cases between them, at the request of the parties involved in the concentration or at the request of Member States. As a result of such referral, a transaction that does not satisfy the turnover thresholds of the EUMR could be examined by the Commission or a transaction that does satisfy these thresholds may be reviewed under the merger control rules of one or more Member States.
Is mandatory notification compulsory or voluntary?
The EUMR applies turnover thresholds as a bright-line jurisdictional test to determine whether or not a concentration has an EU dimension. If the jurisdictional test is satisfied, a notification to the Commission is mandatory.
Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?
A notifiable concentration cannot be implemented before receiving clearance from the Commission. The Commission has the power to impose a fine if this so-called “standstill obligation” is infringed.
The standstill obligation also applies to public bids, but in those case the bidder is allowed to acquire the shares, provided that it notifies the concentration to the Commission without delay and it refrains from exercising the voting rights attached to the acquired shares before the Commission approves the concentration.
The EUMR does not provide for the possibility to carve out and close the remainder of a global transaction. A derogation from the standstill obligation is however possible and could be granted by the Commission upon reasoned application. In practice, the Commission grants a derogation only in exceptional circumstances.
What are the conditions of the test for control?
A concentration arises where a change of control on a lasting basis results from the merger of two or more previously independent undertakings, the acquisition of direct or indirect control of the whole or parts of one or more other undertakings or the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity. Control could be constituted by rights, contracts or any other means that confer the possibility of exercising “decisive influence” on an undertaking. The change of control test is met if the concentration results in the acquisition of control or a qualitative change in the nature of control.
What are the conditions on minority interest in your jurisdiction?
The trigger for the Commission’s jurisdiction is a change of control. The concept of control under the EUMR covers both de jure and de facto types of control. If specific rights attached to a minority shareholding enable the shareholder to determine the strategic commercial behaviour of an undertaking, this may result in de jure control.
De facto control may exist when a minority shareholder is likely to achieve a majority at shareholders’ meetings due to certain circumstances such as the attendance of other shareholders at past shareholder meetings, past voting patterns, dispersed shareholdings etc., which permit the minority shareholder to exercise decisive influence.
What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?
The EUMR provides two alternative jurisdictional tests.
The first alternative test is satisfied if the combined worldwide turnover of the parties to the concentration exceeds €5bn and the EU-wide turnover of each of at least two of the parties to exceeds €250m.
The second alternative test is satisfied if the combined worldwide turnover of the parties to the concentration exceeds €2.5bn, the EU-wide turnover of each of at least two parties to exceeds €100m, the combined turnover of the parties in each of at least three Member States exceeds €100m and at least two of the parties have a turnover in each of those three Member States of at least €25m.
Even if either of these tests are met, a concentration will not have an EU dimension if each of the parties to the concentration achieves more than two thirds of its EU-wide turnover within one and the same Member State.
How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?
The turnover refers to the amounts derived from the sale of goods and the provision of services which correspond to the ordinary activities of the company in the previous financial year.
The turnover to be taken into account is “net” turnover. Discounts, rebates and refunds granted by the company to its customers in connection with sales and which directly affect sale proceeds have to be deducted. Value-added tax and other taxes directly related to turnover are also to be deducted.
The turnover of all the entities belonging to the groups involved in the concentration has to be taken into account when determining whether the jurisdictional thresholds are met. If a seller does not retain control over the target business, its turnover should not be taken into account.
Turnover should not include turnover from intra-group transactions between affiliated companies, e.g. between parent companies and subsidiaries within the target business. Adjustments should also be made to reflect post-year end acquisitions or disposals.
Turnover should generally be allocated geographically by reference to the location of the customer.
Is there a particular exchange rate required to be used for turnover thresholds and asset values?
Conversion of currencies into Euros should be done at the official average exchange rates for the relevant financial year (twelve month period) as published by the European Central Bank (ECB).
Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?
The EUMR provides that so-called “full function joint ventures” which meet the jurisdictional thresholds should be notified. A full-function joint venture exists if there is (a) joint control; (b) sufficient resources, assets, and financial resources to operate the joint venture business autonomously; and (c) the joint venture business will exist for a sufficiently long duration as to bring about a lasting change in the structure of the market concerned.
In the case of joint ventures, the whole turnover of the parents (and their groups) intending to share joint control of the venture is taken into account.
In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?
The EUMR applies to all transactions that meet the jurisdictional test. For transactions with little or no nexus to the EU, the Commission can grant waivers from the obligation to provide information in the notification form, but this needs to be discussed with the case team.
For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?
Not applicable. Filing is mandatory if the jurisdictional thresholds of the EUMR are met.
Additional information: Jurisdictional Test
What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?
The substantive test is whether the concentration could significantly impede effective competition in the EEA, or a substantial part of it, in particular as a result of the creation or strengthening of a dominant position. The wording of the EUMR clearly establishes that a merger may be prohibited, even if it does not create or strengthen a dominant position, as long as a significant impediment to effective competition is established. This means that the substantive assessment on which decisions are based is a forward-looking evaluation of the market conditions.
There are two possible defences against the potential impediment of competition: the “efficiency defence” and the “failing firm defence”. In making its appraisal the Commission must take into account substantiated claims of efficiencies brought about by the merger, as well as evidence that one of the parties to the concentration is a “failing firm”. The rationale behind the failing firm doctrine is that the company concerned would have exited the market anyway because of its financial difficulties, so any reduction of competition caused by the loss of that specific market player would occur even without the merger.
Are non-competitive factors relevant?
The substantive test described above does not allow for non-competition factors to be taken into account. However, this does not mean that there is no room for political considerations.
Are there different tests that apply to particular sectors?
There are no different substantive competition tests applying to particular sectors. However, the Member States have the power to intervene in concentrations with an EU dimension in order to protect their legitimate interests, such as public security, plurality of the media or prudential rules.
Are ancillary restraints covered by the authority’s clearance decision?
The treatment of ancillary restraints (such as non-compete obligations or transitional supply agreements) is set out in the EUMR and the Commission’s notice on restrictions directly related and necessary to concentrations (the “Ancillary Restraints Notice”). The EUMR provides that any Commission decision approving a concentration will automatically cover restrictions that are directly related and necessary to the implementation of the merger. The Ancillary Restraints Notice introduces the principle of “self-assessment”, according to which merging parties will need to assess for themselves whether or not the restrictions in their contracts are permissible. In cases, however, where the parties request the Commission to assess certain ancillary restraints as the case presents novel or unresolved questions giving rise to genuine uncertainties, the Commission has to expressly assess such restrictions.
Typical examples of ancillary restrictions that are generally permissible:
- non-competition clauses, as long as their duration, their geographical field of application, their subject matter and the persons subject to them do not exceed what is reasonably necessary to achieve the legitimate objective of implementing the concentration
- territorial restrictions in license agreements (e.g. license of patents, of similar rights, or of know-how) in the context of a sale of a business
- purchase and supply obligations providing for fixed quantities (possibly with a variation clause)
What is the earliest time or stage in the transaction at which a notification can be made?
A notification can be made as soon as the undertakings concerned are able to demonstrate a good faith intention to conclude an agreement, for example on the basis of a letter of intent which is sufficiently concrete and binding or an advanced draft of the agreement. In case of a public bid, the parties can file the notification once they have publicly announced an intention to launch the bid.
For mandatory filing regimes, is there a statutory deadline for notification of the transaction?
There is no specific deadline for making a filing under the EUMR, but the proposed concentration must be notified and cleared prior to implementation. This is known as the “suspensory effect” of the EUMR. Thus, on the one hand there is no deadline to file, but on the other hand a transaction that is subject to notification may not be implemented until clearance is obtained.
Exemptions from the suspension obligation:
- One exemption from the suspension obligation is the exemption for public takeover bids. The EUMR does not prevent the implementation of a public bid that has been notified to the Commission, provided that the acquirer does not exercise the voting rights attached to the shares in the target company. This exception is not often used in practice due to its strict requirements and the commercial risks involved (i.e. the payment of considerable amounts for the purchase of shares without being able to exercise control over the target company).
- In exceptional circumstances, and if the acquisition is necessary for the survival of the target company, the Commission may grant a derogation from the suspension obligation and allow the implementation of the transaction prior to the Commission’s approval. However, this derogation is rarely granted in practice.
As far as the notification requirement is concerned, it cannot be satisfied by a letter. The notification form has to completed and submitted in full.
What is the basic timetable for the authority’s review?
The Commission must reach a Phase I decision within 25 working days from the effective date of notification.
Should the Commission initiate a Phase II investigation, the decision must be taken within 90 working days from the date on which the proceedings were initiated (i.e. from the beginning of Phase II).
Under what circumstances the basic timetable may be extended, reset or frozen?
The period described above for Phase I may be extended up to 35 working days if the Commission receives a referral request from a Member State or the parties submit commitments (remedies) to resolve possible competition issues.
The period described above for Phase II may be extended up to 105 working days if the parties offer commitments after the 55th day of the Phase II proceedings. Furthermore, the investigation period may be extended if the parties request a one-off extension (which they must do within 15 working days after the initiation of the Phase II proceedings) or if the Commission decides to extend the Phase II investigation period with the consent of the parties. In both cases, the cumulative extension cannot exceed 20 working days.
There are certain events that can impact the timetable:
- In cases where the Commission has to issue a decision to request information or to order an inspection, the time period may be suspended (”stop the clock”).
- In cases where the parties submit commitments (remedies) to resolve competition issues, the time period may be increased up to 35 working days (for Phase I), or up to 105 working days (for Phase II) if the parties offer commitments after the 55th day of the Phase II proceedings.
- In cases where the Commission finds that the notification or a response to an information request is incomplete, incorrect or misleading, the Commission may suspend the time periods (“stop the clock”) and either issue a decision to request information or order an inspection.
Possible submissions or other types of interventions by third parties do not extend the Commission’s timetable for clearance.
Are there any circumstances in which the review timetable can be shortened?
There is no formal means to accelerate the review under the EUMR. However, the Commission has showed some flexibility in certain cases, notably by issuing “accelerated” clearance decisions during the financial crisis, even in cases that raised competition concerns and required remedies. Moreover, in cases that clearly do not raise any competition concerns, the Commission sometimes issues the clearance decision a few days ahead of the formal deadline.
Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?
In case of an acquisition by one undertaking of a controlling interest in another, the acquirer alone is responsible for the filing. In case of either an acquisition of joint control or a merger, the filing must be jointly submitted by the parties to the merger or by the undertakings acquiring joint control. In case of a public bid to acquire an undertaking, the bidder must complete the notification. In case of a failure to file the required notification, the Commission may impose fines up to 10% of the aggregate turnover of the party(/-ies) responsible for the notification.
What information is required in the filing form?
Notification is made to DG Competition using a so-called “Form CO”. The parties are required to provide the Commission with detailed information regarding the transaction, the undertakings involved (corporate details and structure), the definition of the relevant markets, as well as the potential effect of the merger on any affected markets (including information on competitors and customers and economic evidence in more complex cases) and possible efficiency gains arising from the transaction. The notification should typically include contact details for customers, suppliers and competitors.
Under certain circumstances, in cases where the concentration is unlikely to raise competition concerns, the parties can opt for a simplified notification procedure and submit a “short form” filing (a so-called “Short Form CO”). This form requires less detailed information from the parties than the standard Form CO. Recent amendments to the Notice on Simplified Procedure and the Short Form CO have extended the categories of merger cases suitable for the simplified procedure.
The Commission may, however, require the submission of a full Form CO where it appears either that the conditions for using the Short Form CO are not met, or, exceptionally, where these conditions are met but the Commission nonetheless determines that a full Form CO notification is required for an adequate investigation of possible competition concerns.
Which supporting documents, if any, must be filed with the authority?
The parties must submit one original, three hard copies and two copies on CD or DVD-ROM of the Form CO and the supporting documentation (such as the transaction documents, audited accounts and relevant internal documents, for example board presentations, surveys, analyses, reports and studies discussing the proposed concentration). The supporting documents shall be submitted in their original language. Where the original language is not one of the official languages of the EU, a translation into the language of the proceeding has to be submitted as well.
The supporting documents shall be either originals or copies of the originals. In the latter case the notifying parties have to certify that they are true and complete.
Is there a filing fee? If so, please specify the amount in local currency.
No filing fees are required.
Is there a public announcement that a notification has been filed?
The Commission publishes a brief summary of all notifications in the Official Journal of the EU. This summary includes the names of the undertakings concerned, their country of origin, the nature of the concentration and the economic sectors involved the date upon which the notification was received by the Commission. The summary of the notification shall normally not contain business secrets.
Does the authority seek or invite the views of third parties?
Third parties have various possibilities to express their views at every stage of the merger review procedure under the EUMR.
The primary way for third parties to contribute to the Commission’s investigation is by means of replies to requests for information. For example, when a market test is carried out, the Commission sends out detailed questionnaires to third parties (usually to customers, suppliers, competitors and trade associations) seeking their views on the transaction.
The Commission also welcomes individual submissions other than direct replies to questionnaires, where third parties provide information and comments they consider relevant for the assessment of a given transaction. The Commission may also invite third parties for meetings to discuss and clarify specific issues raised.
Third parties which show a sufficient interest in the investigation (including worker representatives) may also apply to be heard by the Commission, by giving oral or written evidence. They may further be given a non-confidential copy of the statement of objections in Phase II proceedings, enabling them to submit comments to the Commission on its preliminary assessment.
What information may be published by the authority or made available to third parties?
The following information is published by the Commission:
- the fact of the notification, including the names of the parties involved and a brief description of the proposed concentration. This information is published by the Commission in the Official Journal, in the form of a notice, inviting third-party comments. A draft of this notice is provided by the notifying party (-ies) as part of the notification form;
- the adoption of the Commission’s decision at the end of the Phase I examination and (if applicable) the Phase II examination. The Commission will publish a press release and after some time in a non-confidential version of the decision (see below). If the Commission decides to initiate a Phase II investigation, it will issue a decision setting out its serious doubts which justify the launch of a Phase II investigation. However, this Phase I decision will not be published by the Commission;
- a non-confidential copy of the Commission’s final decision, which is made available on the Commission’s website after the Commission and the parties have agreed which information should be redacted as business secrets. In the case of a short-form decision for simplified procedure cases, the Commission will publish a notice of the fact of the decision in the Official Journal of the EU.
Does the authority cooperate with antitrust authorities in other jurisdictions?
The Commission cooperates both with the national competition authorities in the EU and other non-EU jurisdictions.
To this effect, the Commission has entered into a number of cooperation agreements with other jurisdictions, such as the US, Brazil, Canada, China, India, Japan, South Korea and Switzerland. This cooperation with other competition authorities on specific transactions typically consists of information exchange.
In addition, the Commission actively participates in the International Competition Network’s working group on multi-jurisdictional merger control, which was established in 2001 with the aim of promoting best practices and international cooperation.
What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?
The Commission has a strong preference for structural rather than behavioural remedies, in particular divestments, as it believes that the most effective way of restoring competition is either to create a new competitive entry or to strengthen existing competitors through divestments. The Commission may also accept other structural remedies, such as the severing of links with competitors or important players in a supply chain.
On the contrary, commitments relating to the future behaviour of the merged entity (“behavioral remedies”) are only accepted in exceptional circumstances. More precisely, commitments in the form of undertakings not to raise prices, to reduce product ranges or to remove brands, etc. will generally not be considered to eliminate competition concerns resulting from horizontal overlaps. However, there have been a few cases though where the Commission has accepted behavioural remedies as part of a package which also included divestments and structural commitments.
Divestments can only be made to a suitable purchaser, approved by the Commission. When assessing the suitability of the purchaser the Commission typically applies the following criteria:
- The purchaser must be independent of and unconnected to the parties
- The purchaser must possess the financial resources, proven relevant expertise and have the incentive and ability to maintain and develop the divested business as a viable and active competitive force in competition with the parties and other competitors, and
- The acquisition of the business by the proposed purchaser must neither be likely to create new competition problems nor give rise to a risk that the implementation of the commitments will be delayed. Therefore, the proposed purchaser must reasonably be expected to obtain all necessary approvals from the relevant regulatory authorities for the acquisition of the business to be divested.
These requirements may have to be supplemented on a case-by-case basis (e.g. in certain cases the Commission might require that the purchaser is industrial, rather than financial).
The Commission typically requires the sale of the divestment business to be completed within a specified time limit (usually six months from the adoption of the Commission’s clearance decision).
In case of doubts about the viability of the business to be divested, or other uncertainties as to whether suitable purchaser will be found, an “up-front buyer” may be required (i.e. a commitment by the parties that they will refrain from closing the transaction until they have signed a binding agreement for the sale of the divestment to the third party).
The Commission may also require a “fix-it-first” remedy, meaning that the parties must identify a purchaser for the divestment business, enter into a binding agreement with that purchaser and complete the sale to this purchases during the Commission’s merger control review. The Commission welcomes fix-it-first remedies in cases where the identity of the purchaser is crucial for the effectiveness of the proposed remedy.
As a general trends, it can be observed that the Commission increasingly requires “up-front buyers” and “fix-it-first” remedies.
What procedure applies in the event that remedies are required in order to secure clearance?
During the course of a Commission investigation, the parties can offer undertakings to the Commission to remedy competition issues. Proposed remedies will need to be submitted in a “Form RM”. The Commission will accept remedies both in Phase I and Phase II. In Phase I, the commitments must be submitted to the Commission within 20 working days from the date of receipt of the notification. The notifying parties can also, in certain circumstances, withdraw their notification and resubmit it following appropriate changes to the original concentration in order to avoid Phase II proceedings. In Phase II, remedies must be submitted to the Commission at the latest within 65 working days from the initiation of the Phase II investigation.
What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?
For a failure to notify the Commission may impose a fine of up to 10% of the aggregate turnover of the undertaking(s) responsible for the filing, irrespective of whether the failure was intentional or due to negligence. For late notifications the Commission may impose a fine of up to 1% of the aggregate turnover of the undertaking(s) concerned. These fines are of an administrative law nature (not criminal law).
The Commission’s powers to impose fines for a failure to (timely) notify concentrations also apply to foreign-to-foreign mergers. However, to date there are no examples of such sanctions having been imposed in case of foreign-to-foreign mergers.
While fines for a failure to (timely) notify concentrations can be imposed irrespective of whether the concentration is compatible with the internal market, the Commission can require the undertakings concerned to dissolve the concentration or to take any other measure to restore the situation prevailing prior to the implementation of the concentration, in cases where the undertakings have implemented a concentration declared incompatible or contravened a condition attached to a decision declaring the concentration compatible. The Commission can also order interim measures to restore or maintain conditions of effective competition.
What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?
For incomplete or misleading information in a submission, a certification, a notification or a response to an information request involve fines of up to 1% of the aggregate turnover of the undertaking concerned can be imposed. This penalty is not of a criminal law nature.
In May 2017, the Commission imposed a fine of €110m on Facebook for providing misleading or incorrect information in the context of the Commission’s review of the acquisition of WhatsApp in 2014. In July 2017, the Commission announced that it opened two additional formal investigations into suspected breached of the EUMR, in particular the provision of incorrect or misleading information (Merck/Sigma-Aldrich and General Electric/LM Wind).
These investigations are still ongoing.
Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?
All decisions by the Commission are subject to judicial review by the General Court and ultimately by the European Court of Justice.
In the context of merger control, such decisions include Phase I or Phase II decisions which prohibit or approve a concentration (as well as other decisions for as long as they have legal effects (e.g. a decision finding that a concentration does not have an EU dimension, or decisions which are conditional to commitments). Commission decisions to initiate a Phase II examination are not subject to judicial review.
An appeal against a Commission decision under the EUMR has to be lodged within 2 months and 10 days from the notification of the decision to the parties concerned or, in the absence of such notification, within 2 months and 10 days from the 14th day following the publication of the decision in the Official Journal of the EU.
The notifying party(-ies) and the merging entities (if different) are considered to be directly and individually concerned by the Commission’s decision and therefore have standing to lodge an appeal. The same is true for Member States which are considered to be “privileged applicants” that do not need to demonstrate direct or individual concern in order to have standing.
Third parties (e.g. competitors) can be found to have standing to lodge an appeal if they have participated in the administrative procedure that led to the contested decision. Other third parties (e.g. competitors that have not participated in the administrative procedure) may also have standing, if they demonstrate that they are directly and individually concerned by the Commission’s decision.
An appeal before the General Court on average lasts around 38 months, although in some cases the process can take longer. The General Court has instituted an expedited procedure, which allows for cases to be adjudicated in a much shorter time frame (e.g. 7 months).
Appeals against the General Court’s judgments before the European Court of Justice on average take around 11 months to be concluded.
Appeals before the General Court and the European Court of Justice do not suspend the applicability of the Commission decision. However, there is a possibility for the parties to lodge a request for interim measures seeking the suspension of the decision until the judgment of the General Court is issued.
What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?
The majority of mergers notified to the Commission are cleared in Phase I without commitments. However, in 2016 the Commission lodged in-depth investigations in eight cases, which is a relatively high number but still only 3% of the mergers that were notified to the Commission in that year. These eight in-depth investigations resulted in one prohibition (Hutchison 3G UK / Telefonica UK) and one abandonment of the transaction (Halliburton / Baker Hughes).
From a substantive point of view, it can be noted that the Commission increasingly focusses on the impact that proposed concentrations may have on investments and innovation. This was a key concern of the Commission in Novartis / GlaxoSmithKline oncology business, Halliburton / Baker Hughes and Dow / DuPont.
From a procedural standpoint, it is noteworthy that, since the entry into force of the Commission’s merger simplification package on 1 January 2014 and up to the end of June of 2017, the average number of cases reviewed under the simplified procedure increased substantially to 67%, compared to 59% over the period 2004-2013.
Finally, the Commission is increasingly active in enforcing the EUMR in cases where allegedly incorrect or misleading information was provided by the notifying parties. The Commission has several cases in the pipeline examining this issue (see question 8.2). Recently, the Commission also opened a formal investigation into an alleged breach of the “standstill obligation” by Canon when acquiring Toshiba Medical Systems.
Are there any future developments or planned reforms of the merger control regime in your jurisdiction?
The Commission has assessed the functioning of EU merger control on several occasions, the most recent being in 2014 with the adoption of the White Paper “Towards More Effective EU Merger Control”. This paper stated that the EU merger control system overall works well, but it proposed to improve and simplify certain aspects of this system. In that regard, the Commission launched a public consultation in 2016 which builds upon these proposals and addresses some new issues which have since emerged. In particular, the Commission is considering reform in the following areas:
- the turnover-based thresholds. The Commission considers that such certain high-value acquisitions may not be captured by the current turnover-based thresholds and considers the possibility of introducing complementary thresholds, such as deal size thresholds which are based on the value of the transaction. This may be particularly relevant in certain sectors, such as the digital and pharmaceutical industries, where the target company, while having generated little turnover as yet, may play an important competitive role, hold commercially valuable data or have a considerable market potential for other reasons.
- the further simplification of the notification procedure for non-problematic cases. The Commission is assessing the effectiveness of the Simplification Package it had adopted in December 2013 and examines the possibility of further simplifying the notification procedure by, for example, exempting certain cases from the notification requirement; introducing lighter information requirements and introducing a self-assessment system, which would allow merging parties to decide whether to notify the transaction or not (subject to the Commission’s right to investigate on its own initiative or following a complaint).
- the case referral system. The Commission is considering the abolition of the current two-step procedure which requires that the parties first file a “reasoned submission” (Form RS) and then the notification form (Form CO). It further considers to amend the current post-notification referral system.
Finally, in October 2016 the Commission published a study assessing the impact of a possible extension of the scope of the EUMR to capture also minority shareholdings. This idea was floated by the Commission in its 2014 White Paper, but many respondents had raised concerns about the additional administrative burden that such amendment to the EUMR would create.