What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?
MOFCOM’s review process has been expedited due to the introduction of the simplified review procedure and its internal restructuring.
The simplified review procedure regime has become more and more mature in China. In 2015, 75% of the concentrations (237 cases) reviewed fell within the scope of simple cases and all of them were unconditionally cleared.
In September 2015, the MOFCOM Anti-monopoly Bureau underwent a major restructuring, with the previous Consultation Division being changed into the Merger Review Division III. As a result, no division is in charge of pre-acceptance reviews in all cases and the case handling divisions are performing reviews both before and after case establishment. Due to the introduction of the simplified review procedure and MOFCOM’s internal restructuring, MOFCOM’s efficiency in performing merger reviews is improving, and the average review periods have witnessed a substantial drop.
IP related concentration transactions are attracting more attention from MOFCOM.
In the past few years, MOFCOM has imposed restrictions on an increasing number of concentration transactions involving intellectual property (IP), such as the Microsoft/Nokia deal, Nokia/Alcatel-Lucent deal, Merck/AZ Electronics deal and NXP/Freescale deal, which demonstrates that IP-related cases are an area of focus for MOFCOM.
There has been a trend towards a more economic approach in merger cases, and recent merger decisions from the DCCA illustrate an increasing use of economic evidence, especially in cases concerning consumer-related markets.
Furthermore, there is an increasing tendency among merging parties to withdraw notifications in cases where it seems highly likely that the merger will otherwise be prohibit-ed. Thus, even though the DCCA has only prohibited one merger to date, this tendency may indicate that the DCCA’s approach to assessing mergers is becoming stricter.
The CCPC continues to maintain a high workload of cases in the area of merger control, particularly as the Irish economy continues to recover and the new procedures established under the 2014 Act bed in. While it may yet be too early to discern specific trends emerging in relation to the CCPC's general policy approach to merger control, there have been a number of notable features under the new regime:
- First, the amendments in the 2014 Act and the revised financial thresholds for notification (particularly the lower threshold of €3 million) have resulted in a large number of asset acquisitions (including the acquisitions of property generating rent rolls) being notified to the CCPC. The need to obtain CCPC approval prior to closing in reportable cases is now a significant consideration for those considering property acquisitions in Ireland.
- Second, the DCCAE has published detailed guidelines on the media merger process, and the Minister for Communications has begun to examine cases under the media plurality rules in the Competition Act (including Liberty Global/UTV and NewsCorp/Wireless). The sector has seen a considerable degree of consolidation in recent years and, given the potentially broad definition of "media mergers" under the Competition Act, there is likely to be a number of such cases examined over the coming years.
- Third, the decision in Baxter/Fannin saw the CCPC for the first time clear a transaction under the “failing firm” defence. While it is clear that the criteria for establishing the defence will continue to be difficult to meet, Baxter/Fannin shows a clear willingness on the CCPC's part to use sophisticated analyses and apply the latest thinking when reviewing complex transactions.
Several trends are noticeable in the recent year:
- The Israeli Antitrust Authority does not hesitate to object to mergers, even when the market size is relatively small or when market shares are small but there are few competitors. For example, in the recent household water purifier case, the Israeli Antitrust Authority objected to a merger between competitors no. 2 and 3 in a market where competitor no. 1 held over 90% of the market.
The Israeli Antitrust Authority pursues a policy of vigorous enforcement by means of imposing administrative sanctions. This applies to both gun-jumping and entirely avoiding notification. This trend recently gained support from the Antitrust Tribunal, which upheld a decision to impose an administrative fine on a buyer which injected funds into a company which it intended to acquire, without first receiving the Commissioner's consent to the merger or to the injection of funds.
The JFTC more often attempts to conduct an economic analysis using its own economic experts. Accordingly, the JFTC tends to request the parties to submit more detailed information than before. To obtain the JFTC’s clearance safely and swiftly for a transaction in which the case team of the JFTC includes economic experts, it is sometimes advisable for the parties to employ their own economic experts.
Approach has remained consistent. It is determined on a case-by-case basis. The OFC encourages a transparent approach and is proactive in guiding undertakings towards positively achieving their desired outcomes, provided that the market is not distorted and competition not lessened.
Until 2013, the Competition Board dealt with a significant number of merger control cases. Since the notification threshold was increased by Communiqué 2012/3 on the Amendment of Communique 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board, this trend has changed and the number of transactions reviewed by the Competition Authority has gradually decreased. As expected, the board shifted its focus from merger control cases to concentrate on the fight against cartels and abuse of dominance. The board finalised 303 merger control cases in 2012 – this number fell to 213 in 2013 and 215 in 2014 (a drop of approximately 30%).
According to the 17th Annual Activity Report of the Turkish Competition Authority for 2015, the board finalised 158 merger control cases. Among these 158 transactions, four were granted conditional approval and one was prohibited.
The 158 overall transactions included one merger, 124 acquisitions, 25 joint ventures and eight privatisations. Considering the fact that in 2014, the board assessed 215 transactions and seven were taken into Phase II review, the significant increase in the number of Phase II reviews and conditional approval decisions in 2014 and 2015 leaves the impression that the board will not hesitate to go into Phase II review and seek commitments if it deems this necessary based on the potential competition law concerns. This strongly indicates that remedies and conditional clearances are becoming increasingly important under Turkish merger control enforcement. In line with this trend, the number of cases in which the Competition Board decided on divestment or licensing commitments, or other structural or behavioural remedies, has increased dramatically over the past four years. Traditionally, the Turkish Competition Authority has paid particular attention to transactions in sectors where competition law infringements are frequently observed (eg, the cement and ready mixed concrete sector) and the concentration level is high. Concentrations concerning strategic sectors that are important to the national economy (eg, automotive, telecoms, energy, pharmaceuticals and airlines) attract particular scrutiny.
2015-2016 was a very fruitful period for the Ukrainian competition law and its regulatory framework. The Ukrainian Parliament and the AMC addressed the long-expected requests of the European Union, Ukrainian business community and foreign investors and introduced essential legislative changes, which are aimed at the overall improvement of the domestic competition law. In particular, a new system of the financial thresholds was introduced (as described in our answers to section 3). The previous financial thresholds were much lower.
On 15 September 2015 the AMC adopted guidelines on the calculation of fines for competition law violations (as restated on 9 August 2016). In addition to addressing the issue of fines, the guidelines also provide for the amnesty for the companies, which performed a concentration without the AMC clearance and reached the AMC with a respective amnesty application before 15 September 2016. In this case the companies will have to pay a fixed fine in the amount of 6,000 tax-exempt minimum incomes (currently UAH102,000 or approximately EUR3,500), which is much less than most of them would have paid outside of the amnesty procedure.
Both the FTC and DOJ have taken an increasingly aggressive approach to merger enforcement in recent years. Healthcare has been a focus for both agencies, with the FTC challenging several recent hospital mergers, and the DOJ challenging two large health plan mergers. The agencies also seem to be increasingly sceptical of the sufficiency of divestiture relief to remedy perceived competitive problems, preferring to block problematic mergers in their entirety.
The enforcement policy of the FAS in relation to the clearance control procedure in Russia is quite stable. The vast majority of decisions are positive and are issued within the initial 30 calendar day period without any orders. Consequently, invalidation of the transaction or appeal against the FAS decision are very rare cases.
Following the introduction in 2014 of binding first-phase deadlines, new information-gathering powers and a revised filing form with substantial information requirements, the CMA has spent the past few years refining its procedures with a view to reducing the duration of its first-phase investigations and the (typically high) volume of its information requests, and imposing 'hold-separate' obligations that create fewer unnecessary burdens for merging parties. It has also introduced mechanisms that allow parties to seek some informal, non-binding comfort that the CMA will not 'call in' a merger for review. It has achieved some initial success in these areas, but there remains scope for further improvement.
The Authority adopted 20 merger decisions in 2015, 16 of which were adopted under the simplified procedure. Only one notified concentration required remedies, namely De Persgroep Publishing NV/Humo NV, Story, Teve-blad, Vitaya. In the same case, the Authority imposed a fine of €50,000 for failure to comply with an information request.
To date in 2016, the Authority has adopted conditional approval decisions in two cases: Delhaize NV/Koninklijke Ahold NV, which required the divestment of 23 retail stores; and Kinepolis Group NV/Utopolis (Utopia NV), which required the divestment of two cinemas and additional behavioural commitments.
The Austrian competition authorities and particularly the BWB are kept quite busy with merger control. In 2015, 366 concentrations were notified, of which 98.6%, more precisely 361, were cleared in Phase I.
In 2015, five cases concerned violations of the standstill obligation. The fines imposed ranged between EUR 20,000 and EUR 155,000.
As mentioned, particularly in complex cases it can be advisable to hold pre-notification talks with the official parties. In 2015, more than 30 such talks are reported.
The Competition Act's preoccupation with public interest considerations has had a material impact on enforcement. Merger-related job losses receive particular scrutiny (and are often remedied by way of moratorium) as does as any potential impact on domestic procurement (particularly where a large multinational is an acquirer). Increasingly, Black-Economic Empowerment objectives are also being considered. Some commentators make the point that from a policy perspective, the acquisition of domestic champions by multinationals may be targeted for remedies related to developing the local economy (such as supplier development funds).
Regarding substantive competition matters, the concentrated nature of the local economy means that acquisitions by dominant firms as well as vertical mergers are carefully considered.
In 2015, the FCA adopted 192 clearance decisions, 6 of which required remedies. In 2016, the FCA adopted more than 200 clearance decisions, 6 of which required remedies in the sectors of energy, media and retail.
The “Macron Bill” (Law No. 2015-990), which entered into force on August 6, 2015, introduced certain changes in the French merger control regime, namely in relation to the timeframes for merger assessment, the suspensive effect of merger filings and the remedies in case of non-compliance with commitments.
Most notably, on 8 November 2016 the FCA imposed a fine of €80 million on Altice Luxembourg and SFR Group jointly and severally for implementing a transaction that had been notified before receiving the FCA’s approval. This was the first time ever that the FCA imposed a fine for behaviour commonly known as “gun-jumping”.
Mexican merger control regime has considerably strengthened with the constitutional reform and issuance of new statutory legislation. Likewise, each day enforcers have more communication and contact with other major antitrust authorities worldwide so the level of scrutiny and review has become more sophisticated and complex.
In addition, enforcers, especially Cofece, have begun to include economic analysis of the cases and have used new investigative tools to perform a better task. In addition, analysis of vertical effects of concentrations is increasingly becoming more important and the authorities are focusing in ancillary restrictions more often.
The FCO received approximately 1,200 merger notifications in 2016, which represents a slight increase over the 1,100 transactions that were notified in 2015. Only about 1% of all notified transactions (10 in 2016) attract an in-depth Phase II review, half of which on average still end up being approved without conditions.
The number of notified transactions substantially decreased following the 2013 reform of Italian merger control rules, according to which the turnover thresholds are no longer alternative, but cumulative. The ICA reviewed 55 cases in 2016, against the 451 cases registered in 2012. The most recent cases were either fully cleared or cleared with commitments.
For instance, in case C12023 - Arnoldo Mondadori Editore v RCS Libri of 23 March 2016 – the ICA authorized with conditions the concentration between Arnoldo Mondadori Editore and RCS Libri. In particular, Arnoldo Mondadori Editore offered to divest its publishers Marsilio and Bompiani in order to allow the entry in the market of a new player. In addition, Arnoldo Mondadori Editore waived the rights of option and preferential rights, regarding future narrative and non-fiction works, contained in the authors’ contracts.
In respect of informal clearance, the ACCC is increasingly merging its pre-assessment and confidential review processes into a longer confidential pre-assessment process. If a transaction is public (or becomes public) through this process, it will sometimes engage in ‘targeted’ market inquiries as part of this process, instead of, or prior to, commencing a full public review.
The Tribunal’s recent grant of authorisation in Application by Tabcorp Holdings Limited  ACompT 1, following the authorisations granted by the Tribunal in 2016 in Application by Sea Swift Pty Limited  ACompT 9 and in 2014 in Application for Authorisation of Acquisition of Macquarie Generation by AGL Energy Limited  ACompT 1, has solidified authorisation as a credible alternative to informal clearance in appropriate cases.
Cross-border collaboration between the Bureau and the U.S. DOJ/FTC is becoming more common and more extensive (Staples/Office Depot, Canexus/Superior). Despite this, the Bureau continues to enforce its own Canadian legislation and may reach a different result than the relevant U.S. authority, particularly where the unique Canadian efficiencies defence is engaged (Canexus/Superior).
In 2016, following the first ever mediation procedure in connection with a challenged merger, the Bureau also entered into a settlement agreement with parties that were litigating a challenged merger (Parkland/Pioneer). The case also resulted in the first ever contested injunction in a merger application.
In a number of cases over the past year, the CPC has demonstrated a particular concern as regards the ability of undertakings controlling a joint venture to acquire business secrets held by the joint venture in a manner which could distort competition in the markets in which the controlling undertakings operate.