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? Are there different tests that apply to particular sectors?
Merger Control (3rd edition)
Different to the EUMR which uses the SIEC-Test (Significant Impediment of Effective Competition Test), Austrian merger control still employs the dominance test. Hence, the authorities examine whether or not the notified transaction creates or strengthens a dominant position.
Pursuant to jurisprudence, a dominant position is given if an undertaking can prevent the maintaining of effective competition on the relevant market by being able to behave independently with regard to its competitors, customers and/or consumers to a notable extent.
In applying the substantive test, the Cartel Court (the BWB does not issue any binding decision but may simply refrain from or waive its right to ask for an in-depth examination of a merger case) evaluates the effects of the concentration on the market structure in a predictive approach. Competition conditions before and (hypothetically) post implementation of the concentration are compared. All circumstances may be taken into account, with market shares being a major factor. Strong buyer power, for example, is also considered.
In many cases, the Cartel Court relies on (economic) expert opinions.
Besides, when a merger concerns sectors subject to specific regulation (e.g. electricity and gas, broadcasting and telecommunication), the competition authorities collaborate closely with experts from the sector specific regulators.
Under the new merger control regime, the substantive test applied is the “substantial lessening of competition” test. Therefore, the FNE shall authorize a concentration in case the operation, purely and simply or subject to remedies, is not suitable to substantially reduce competition.
Neither DL 211 not the FNE’s Guidelines indicate how this test should be applied in practice. However, the FNE’s Guidelines on Jurisdiction expressly states that for horizontal mergers the FNE will use as a reference the substantive criteria set out in the FNE’s Guide on Horizontal Concentration Operations Analysis, dated October 2012. The above, until the issuance of new substantive guidelines by the FNE.
There are no different tests applicable to particular sectors. In certain sectors such as banking and electricity, concentrations require additional regulatory approval by other regulatory or supervisory agencies. These authorities do not consider the effect of the operation on the competitive structure of the markets in question in their assessment.
The substantive test is a typical dominance test. As a matter of Article 7 of Law No.4054 and Article 13 of the Communiqué, mergers and acquisitions which do not create or strengthen a dominant position and do not significantly impede effective competition in a relevant product market within the whole or part of Turkey, shall be cleared by the Board.
Article 3 of Law No.4054 defines a dominant position as “any position enjoyed in a certain market by one or more undertakings by virtue of which, those undertakings have the power to act independently from their competitors and purchasers in determining economic parameters such as the amount of production, distribution, price and supply”.
However, the substantive test is a two-prong test and a merger or acquisition can only be blocked when the concentration not only creates or strengthens a dominant position but also significantly impedes the competition in the whole territory of Turkey or in a substantial part of it.
There are certain other special merger control rules to be considered in respect of a number of specific sectors.
First, similarly to the EU, there are specific rules regarding turnover calculation for specific sectors such as banks, financial institutions, leasing companies, factoring companies, securities agents, insurance companies, etc. See Article 9 of Communiqué No. 2010/4.
Second, there are specific merger control provisions for banks and privatisation tenders.
(i) Banks: Banking Law No. 5411 provides that Articles 7, 10 and 11 of the Law No.4054 are not applicable if the sectoral share of the total assets of the banks subject to the transaction does not exceed 20%. In practice, the Competition Board distinguishes between: (i) transactions involving foreign acquiring banks with no operations in Turkey, to which the Law No.4054 is fully applied; and (ii) foreign acquiring banks already operating in Turkey, to which the Law No.4054 is not applied if the conditions for the application of the Banking Law exception are fulfilled.
(ii) Privatisation tenders: Communiqué No. 2013/2 prescribes an additional pre-notification process. This only applies to privatisations in which the turnover of the undertaking or asset or unit intended for production of goods or services to be privatised exceeds TL 30 million (approximately EUR 7.2 million, USD 8.2 million). For this calculation, sales to public institutions and organisations including local governments made on the basis of a legislative provision should not be taken into account. If the threshold is met, a pre-notification should be filed with the Competition Authority before the public announcement of the tender specifications. The Competition Board will issue an opinion that will serve as the basis for the preparation of the tender specifications. This opinion does not mean that the transaction is cleared. Following the tender, the winning bidder will still have to make a merger filing and obtain clearance before the Privatisation Administration’s decision on the final acquisition.
Third, there are various sector-specific rules alongside the merger control rules for sectors such as media, telecommunications, energy and petrochemicals. For example:
(i) Energy: regarding electricity and natural gas, approval is required for share transfers of more than 10% (5% in case of publicly traded company shares) following the Electricity Market License Regulation the Natural Gas Market License Regulation.
(ii) Broadcasting: under Law No. 6112, the transfer of the shares of a joint stock company holding a broadcasting licence should be notified to the Turkish Radio and Television Supreme Council.
In addition, it should also be noted that Article 3 of Communique No. 2017/2 introduced a new paragraph to be included to Article 10 of Communique No. 2010/4. This new paragraph reads as follows:
“If the control is acquired from various sellers by way of series of transactions in terms of securities within the stock exchange, the concentration could be notified to the Turkish Competition Board after the realization of the transaction provided that the following conditions are satisfied: (a) the concentration should be notified to the Turkish Competition Board without delay, (b) the voting rights attached to the acquired securities are not exercised or exercised solely to maintain the full value of its investments based on a derogation granted by the Turkish Competition Board. The Turkish Competition Board may impose conditions and obligations in terms of such derogation in order to ensure conditions of effective competition.”
This newly introduced provision by Article 3 of Communique No. 2017/2 is similar to Article 7(2) of European Commission Merger Regulation. At any rate, although there was no similar specific statutory rule in Turkey on this matter until the promulgation of Communique No. 2017/2, the case law of the Board were shedding light on this matter.
In essence, the substantive test applied by the DCCA to assess whether or not to clear a merger is whether the merger will significantly impede effective competition, in particular due to the creation or strengthening of a dominant position. When carrying out merger control, the DCCA will in general apply the same tests as the Commission.
Thus, the Commission’s merger practice and relevant case law from the EU Courts will apply. The Commission’s guidelines on the assessment of horizontal mergers as well as non-horizontal mergers will also provide an important contribution to the interpretation of the DCCA’s merger assessments.
Historically, the Council and the DCCA seemed to apply a more static, market-share based approach to findings of dominance and unilateral effects compared to the Commission. Over the last few years, however, there has been a change towards a more economic approach, and recent merger decisions thus show an increasing use of economic evidence such as diversion ratios and upward pricing pressure (UPP) calculations.
Furthermore, public statements from the DCCA indicate that the use of diversion ratios and UPP calculations is becoming the new standard in cases concerning consumerrelated markets, and that diversion ratios and UPP calculations may also be used for the purpose of defining the relevant markets. Nonetheless, during the initial assessment of a merger, the classic approach of defining markets and calculating market shares is still applied. The initial test may then be supplemented with a more economic assessment in case the DCCA finds that the merger could potentially give rise to concerns.
In general, the same substantive test applies to all sectors. However, it should be noted that mergers between providers of telecommunications (which do not meet the normal thresholds for merger control, cf. above) must be notified to the Danish Business Authority if the parties have a combined turnover in Denmark of at least DKK 900 million and the merger includes a public telecommunications network. The Danish Business Authority will consider whether such merger cases should be referred to the DCCA for further assessment. If a merger is referred to the DCCA, the DCCA will apply its usual substantive test applicable to all mergers.
Under the Competition Act, the CCPC is required to examine whether the notified merger or acquisition will lead to a substantial lessening of competition (“SLC”) in the supply of goods or services in the State. The CCPC has stated that the SLC test must be applied in terms of the effect that the proposed merger or acquisition would have on consumer welfare which, in its view, refers to a range of variables including price, output, quality, variety and innovation.
The CCPC’s approach in applying the SLC test is based heavily on economic analysis and, in practical terms, mirrors closely the approach of the European Commission in applying the significant impediment to effective competition test under the EUMR. In analysing whether an SLC arises, the CCPC will first typically look to define relevant product and geographic markets by reference to demand-side and supply-side substitutability. It will then examine the impact of the transaction in relation to unilateral effects at the horizontal and vertical level, as well as the possibility of coordinated effects arising on relevant markets. The assessment will focus on the competitive constraints on the merged entity, including those exerted by competitors, customers and the threat of new entry or expansion. The CCPC will consider efficiency arguments, if presented. It will also consider the failing firm defence (Baxter/Fannin), although the criteria required for establishing this defence are difficult to meet.
Unlike the position under the EUMR, in which the European Commission must proceed to an in-depth Phase 2 investigation only where it has "serious doubts" regarding the compatibility of a proposed transaction with the internal market, there is no specific test under the Competition Act that must be satisfied in order for the CCPC to open a Phase 2 investigation. The CCPC will move to Phase 2 if it is unable, on the basis of the information before it, to form a view that the result of the merger or acquisition will not be to substantially lessen competition during the Phase 1 period of 30 working days.
In practice, however, the majority of cases reviewed by the CCPC are cleared at Phase 1. The CCPC’s latest Mergers & Acquisitions Report notes that 9 of the 72 cases notified to the CCPC in 2017 were subject to an extended Phase 1 review, while none was subject to a full Phase 2 investigation. In April 2018, the CCPC cleared the acquisition of the Irish Examiner by the Irish Times following a full Phase 2 investigation.
The substantive test for compatibility of a concentration with competition in the market is whether such concentration does or does not significantly impede effective competition in Cyprus or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.
In assessing the compatibility of a concentration, the CPC takes into consideration the following criteria:
- the need to maintain and develop conditions of effective competition in the relevant markets, taking into account, inter alia, the structure of the affected markets, other markets upon which the concentration may have significant effects and the potential competition on behalf of undertakings within or outside Cyprus;
- the position in the market of the undertakings concerned and undertakings connected to them;
- the financial power of such undertakings;
- the alternative sources of supply of products or services in the affected markets and/or other markets upon which the concentration may have significant effects;
- any barriers of entry to the affected markets and/or other markets upon which the concentration may have significant effects;
- the interests of the intermediate and end consumers of the relevant products and services;
- the contribution to technical and economic progress and the possibility of such contribution being in the interest of consumers and not obstructing competition; and
- the supply and demand trends for the relevant markets.
To the extent a joint venture that constitutes a concentration has as its object or effect the coordination of competitive conduct of undertakings that remain independent, the Service shall particularly take into account:
- whether two or more parent companies retain, to a significant extent, activities in the same market as the joint venture or in a market which is downstream or upstream from that of the joint venture or in a neighbouring market closely related to this market; and
- whether the coordination that directly emanates from the creation of the joint venture provides the undertakings concerned the ability to eliminate competition for a substantial part of the relevant products or services.
While the Law is silent in this regard, the CPC’s approach and analysis of harm is substantially aligned with the respective approach of the European Commission. Besides high market shares, the assessment usually takes into account the anti-competitive effects that could potentially arise out of a concentration, such as coordinated effects as well as unilateral effects.
The test and factors considered by the competent authority in the course of assessing whether a concentration should be cleared is consistent for all sectors.
A concentration is prohibited if it creates or strengthens a dominant position on the national market, thus eliminating or appreciably reducing competition on a lasting basis.
Notably, the national rule formally differs from the (more extensive) “substantial lessening of competition” test adopted at the EU level. However, the ICA tends to interpret the “dominance test” rather broadly, thus mirroring the approach followed by the EU Commission.
There are no different tests that apply to particular sectors. However, concentrations affecting the banking, insurance and media, telecommunication and broadcasting sectors need to be filed also with the competent regulatory authority (Banca d’Italia, IVASS, and AgCom, respectively), and be cleared according to the specific criteria set forth by the applicable regulatory provisions.
The SIEC test applies across all sectors.
The test applied by the PCC is the Substantially Prevents, Restricts or Lessens Competition (“SLC”) Test. The PCC will look at the effects on competition over time in the relevant market or markets affected by the merger. A merger gives rise to an SLC when it has a significant effect on competition, and consequently, on the competitive pressure on firms to reduce prices, improve quality, become more efficient or innovative. A merger that gives rise to an SLC is likely to result to an adverse effect on consumers.
FAS assesses whether or not the transaction leads to a limitation of competition in the relevant market.
A limitation of competition usually occurs when the notified transaction leads to the creation or expansion of a dominant position of any entity in the relevant market. A market share of more than 35% is required for market dominance, and in case of more than 50% market share is the market dominance to be presumed. A lower market share percentage can suffice in case several companies together are regarded as market dominant. Sometimes a dominant market position can easily be obtained, in case the relevant market is defined very narrowly (e.g. specific spare parts, consumables, medicine). Other assumptions of dominance apply to financial organisations, telecom operators and certain other regulated industries.
Apart from market dominance, other effects of the notified transaction are evaluated in order to assess a potential limitation of competition:
- reduction in the number of independent participants of a certain product market;
- increase or decrease in the price for a particular product that is not connected with the relevant changes of general conditions of circulation for that product;
- refusal of market participants that do not belong to the same group to independently conduct their business activity on the market;
- determination of general terms and conditions for commodity circulation on a particular goods market by an agreement between market participants; or
- any other circumstances enabling one or several market participants to affect the general conditions for circulation of goods on a market at its/their sole discretion.
The FCA examines whether the contemplated transaction significantly lessens competition. In this respect, Article L.430-6 of the Code provides that the FCA assesses if a transaction may harm competition, notably
- by creating or strengthening an individual or collective dominant position; or
- by creating or strengthening a situation of buying power which places suppliers in a situation of economic dependency.
The market shares of the parties (and their competitors) play a predominant role in the competitive assessment of the transaction, but the FCA also takes into consideration other indicators, such as the importance of barriers to entry, market structure and evolution (both of supply and demand), closeness of competing products/services, etc. The FCA also takes into account the results of the market tests launched as the case may be.
Both unilateral and coordinated effects (horizontal, vertical and/or conglomerate) on the various markets impacted by the transaction are assessed by the FCA, as well as the efficiency gains expected thereon.
There are no tests specific to given sectors, but the FCA takes into consideration the specificities of the sectors concerned, especially for regulated sectors such as telecoms, medias or energy, if needed after having consulted other independent administrative authorities.
The substantive test to assess whether or not to clear the merger, or to clear it subject to remedies, is whether the merger is likely to substantially prevent or lessen competition, and, if so, whether any technological, efficiency or other pro-competitive gains are likely to result from the merger that may offset the lessening of competition. Relevant factors to be considered are:
- the strength of competition in the market;
- the probability that firms in the market will behave competitively following the merger;
- the actual and potential level of import competition;
- ease of entry into the market, including tariff and regulatory barriers;
- the level and trends of concentration and history of collusion in the market;
- degree of countervailing power in the market;
- likelihood of the merged firm having market power;
- dynamics of the market, including growth, innovation and product differentiation;
- the nature and extent of vertical integration;
- whether the business of a party has failed or is likely to fail; and
- whether the merger will result in the removal of an effective competitor.
Section 7 of the Clayton Act prohibits mergers or acquisitions where ‘the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.’ The 2010 Horizontal Merger Guidelines set out the agencies’ framework and general approach to determining whether a merger is likely to enhance or create market power or facilitate an exercise of market power. Merger review is forward-looking and attempts to determine whether a merger may lead to anticompetitive effects by facilitating increased prices, reducing output, or diminishing innovation, or would otherwise harm consumers as a result of a reduction in competition. The agencies analyse two ways in which a merger can reduce competition: by enhancing the ability of the remaining competitors to act in a coordinated way (coordinated effects) or by enabling the merged firm to independently raise prices profitably (unilateral effects).
Regardless of the industry sector involved in a proposed transaction, the FTC or DOJ will conduct a fact-specific inquiry concerning the effects of the specific transaction on that industry. Across all industries, the FTC and DOJ apply the same test: Section 7 of the Clayton Act and the Horizontal Merger Guidelines.
Upon receipt of notification of a merger, the ComCo decides within one month whether an investigation is to be carried out and informs the undertakings involved of its decision (phase 1, Initial Review). An extended review (phase II) must be carried out if there are indications that the merger creates or strengthens a dominant position.
During the extended review, the ComCo will have to verify whether the concentration creates or strengthens a dominant position liable to eliminate effective competition and does not improve the conditions of competition in another market such that the harmful effects of the dominant position can be outweighed. In this context, the ComCo also takes account of any market developments and the position of the undertakings in relation to international competition.
With regard to the dominant position, a distinction must be made between individual dominance and collective dominance:
- The question of whether an individual dominant position exists is assessed on the basis of the interaction between current competition (market shares and market concentration), potential competition (barriers to entry) and the position of the opposing market.
- The question of whether a collective dominant position exists is assessed in a two-stage assessment. In a first step, the ComCo carries out a behavioural analysis and examines the market and the parties' previous behaviour for signs of coordinated behaviour. In a second step, the ComCo analyses whether parallel behaviour on the market is likely after the merger. In this respect, it is oriented towards the criteria of market concentration, market transparency, market stability, symmetries, the position of the opposite market side and any interdependencies and vertical integrations.
By concentrations of banks, the interests of creditors may be given priority. In these cases, FINMA takes the place of the ComCo, which it shall invite to submit an opinion.
The ComCo shall complete its investigation within four months. If the ComCo comes to the conclusion that the concentration creates or strengthens a dominant position, it may prohibit the concentration or authorise it subject to conditions and obligations.
The basic test is whether a merger would result in a significant impediment of competition and whether a dominant market position may result from, or further increase by, the merger. The FCO will take horizontal, vertical, unilateral and coordinated effects of the transaction into account. The test takes a forward-looking approach when assessing future developments and potential effects on the market. Considerations about the structure of the market are a very important factor as a market share of 40% is sufficient for a rebuttable statutory presumption of a dominant market position in German competition law. The FCO examines a timeframe of up to five years of likely future developments.
German merger control provides further for a de-minimis provision for the substantive test. This de-minimis provision was recently moved to the substantive test. According to this de-minimis rule, the FCO cannot take into consideration any effects on a market which exists for more than five years and whose market volume in Germany does not exceed EUR 15 million. In practice, the definition of the markets concerned and the total market volume is of high relevance in this context.
In addition, there is also a newly introduced exemption for press companies if the target is a small or medium press company which achieved a significant loss in the last three years prior to the transaction and who could not survive without the transaction. In addition to the aforementioned prerequisites, the parties in these cases have to prove that there was no other acquirer available.
According to the Greek Competition Act, a concentration which would not significantly impede effective competition in the Greek market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared permissible .
In the context of such test the HCC runs a substantive scrutiny examining among other the following factors: the structure of the relevant markets; the actual or potential competition; the existence of barriers to entry; the market position of the undertakings participating in the concentration and their financial power; the access to supply sources or resale markets of suppliers and users; the evolution of supply and demand in the relevant product and services markets; the interests of intermediaries and final consumers; and the contribution of the concentration in technical and economic progress, and economic efficiency, under the condition that such contribution must benefit consumers and does not impede competition.
In a solid line of jurisprudence, the HCC considers the following criteria when assessing whether a horizontal concentration between two or more undertakings could significantly impede effective competition in the Greek market or in a substantial part thereof, both relating to the creation or strengthening of a dominant position:
a) A possible elimination of any existing significant competitive pressures as far as on one or more undertakings are concerned, resulting, thus, in their increased and stronger market power without them having resorted to any concerted practice or conduct (unilateral effects). Furthermore, concentrations effected in oligopolistic markets could impede effective competition in the relevant markets due to an elimination of the existing competitive constraints between the competitive. Proxies used by the HCC in its decisions are the market shares of the undertakings participating in the concentration, the market shares of closest competitors, the HHI, the close substitutability of products/ services of the undertakings participating in the concentration and their rivals, the potential for exclusion of competitors and the purchasers’ counterveiling power
b) A possible change in the nature of competition in the relevant market in the sense that, following the consummation of the concentration, it is more likely for undertakings which had previously not aligned their conduct to do so in the future (co-ordinated effects). Proxies used by the HCC entail the symmetry of market shares of rivals in the market, the ease of co-ordination due to conditions prevailing in the market (eg stagnating demand, stability of market shares, similar cost structures), as well as the possibility of detecting deviations from the co-ordinated conduct.
In its jurisprudence, the HCC has also evaluated vertical mergers and focused on unilateral and –co-ordinated effects. In most circumstances, unilateral effects relate to the exclusion of a competitor from indispensable inputs.
The HCC does not confine its assessment on the anticipated conduct of the undertakings participating in the concentration, but also on parties non-participating in it; more particularly, the latter could also benefit from the concentration, since an increase in the prices offered by the participating undertakings, would incite the non-participating parties to also increase their own prices.
The substantive test under Law No. 26876 is whether a proposed merger may have the effect of diminishing, damaging or impeding competition in the generation, transmission and/or distribution of electric power markets.
To this end, INDECOPI determines the position of companies in the market, the relevant market, the structure of the market, the possibilities of choosing suppliers, distributors and users, barriers to entry, among other criteria.
Likewise, INDECOPI must evaluate the following aspects:
a) The improvement of the production and commercialization systems, the promotion of technical progress and the efficiencies that the operation can create within the market and if said contribution is sufficient to compensate the possible restrictive effects on competition.
b) If the operation produces a significant increase in concentration in the market, significantly limiting competition.
c) If the operation facilitates the performance of anti-competitive behavior and/or generates barriers to the entry of new competitors.
d) The possible exclusion effect that competing companies may suffer in the market.
The Bills also provide the significant impediment of effective competition in the market test so is essentially the same.
The substantive test used by the PCA is to assess whether a merger constitutes significant impediment to effective competition (SIEC). Mergers are therefore cleared if they do not create SIEC in the national market or in a substantial part of it.
The PCA reviews the horizontal, vertical and conglomerate aspects of a notified concentration, and investigates whether the transaction gives rise to coordinated effects. In this assessment, the PCA typically takes into account inter alia: the structure of the relevant market(s) and the existence of effective competition; the position of the parties and their competitors in the relevant market(s), and their economic and financial strength vis-à-vis their competitors; the market power of the acquirer, also assessed in order to prevent the creation of situations of economic dependence (abuse of economic dependence is a separate infringement under the Competition Act); potential competition and barriers to entry in the market; alternatives available to suppliers, clients and users; access to suppliers or markets; the structure of existing distribution networks; supply and demand trends; special or exclusive rights granted by law or attached to the nature of the products traded or services provided; the control of essential facilities by the undertakings in question and the access opportunities to such facilities offered to competing undertakings; technical and economic progress, to the extent that it does not create an obstacle to competition and allows efficiencies that benefit consumers.
The only situation in which sector specific tests are applied is that referred to in the next question, regarding the media sector.
The substantive test under the Antimonopoly Act is whether a proposed merger may substantially restrain competition in any relevant market. In applying the substantive test to an actual case, the JFTC will consider both horizontal and vertical effects potentially caused by unilateral and coordinated conducts.
In the substantive analysis, the JFTC will consider every relevant factor, such as the market shares of the parties, the number of competitors in the market, the extent of import trade barriers and entry barriers, the likelihood of entry from adjacent markets, market power that customers possess, and efficiency that the transaction will bring about. Market shares and HHI basically take an important position in the JFTC’s analysis. The JFTC usually does not put significant weight on efficiency. The JFTC provides a “safe harbour” that applies to both horizontal and vertical effects analysis on the basis of the HHI.
There are no sector specific substantive tests.
The CCI by way of its review process examines whether a combination causes or is likely to cause an appreciable adverse effect on competition (“AAEC”) in the relevant market. To determine whether a combination causes AAEC or not, the CCI assesses the combination with regards to the various factors set out in Section 20(4) of the Competition Act. Set out below are the factors mentioned under Section 20(4) of the Competition Act:
- actual and potential level of competition through imports in the market;
- extent of barriers to entry in the market;
- level of combination in the market;
- degree of countervailing power in the market;
- likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;
- extent of effective competition likely to sustain in a market;
- extent to which substitutes are available or are likely to be available in the market;
- market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;
- likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market;
- nature and extent of vertical integration in the market;
- possibility of a failing business;
- nature and extent of innovation;
- relative advantage, by way of the contribution to the economic development, by any combination having or likely to have an AAEC; and
- whether the benefits of the combination outweigh the adverse impact of the combination, if any.
Post filing of the merger notification form, the CCI takes 30 working days to form a prima facie opinion of whether or not the combination is likely to cause an AAEC in the relevant market. This is referred to as the Phase I review, during which the CCI may direct the parties to provide additional information to conduct its AAEC assessment. Additionally, parties may also propose amendments to the combination prior to the CCI forming its prima facie opinion. Thereafter, the CCI either approves the combination with or without modifications (where the parties have proposed any) or proceeds to conduct a Phase II review. A Phase II review is a more detailed assessment of the combination which may take up to 210 days from the date of filing the merger notification form.
The parameters set out in Section 20(4) of the Competition Act are applied by the CCI while examining all transactions uniformly. The factors do not change based on sectors.
The CMA has a duty to open a detailed second-phase investigation (known as 'referring' or 'making a reference' of the merger) if it has a reasonable belief, objectively justified by the relevant facts, that there is a realistic prospect that the merger will or may be expected to result in a substantial lessening of competition (SLC) in any market. By 'realistic prospect' is meant not only a prospect that has a more than 50% chance of occurring, but also a prospect that has a less than 50% chance of occurring, but is more than fanciful, though within this latter range the CMA can exercise its judgement.
If a second-phase investigation is opened, the CMA must decide whether a relevant merger situation has been created and, if so, whether that situation is likely – on the balance of probabilities – to result, or to have resulted, in an SLC in any market.
The EUMR requires that the Commission examine whether a transaction would cause a “significant impediment to effective competition” (SIEC test). The adoption of this test in 2004 has led to a more effects-based approach to merger control review by the Commission.