UK: Commission Launches Consultation on Reform of EC Merger Regulation

Last Updated: 14 December 2001

On 11 December 2001, the European Commission published a Green Paper aimed at launching a debate on the functioning of the European merger control regime. Comments are invited, to be submitted to the Commission’s Merger Task Force, by 31 March 2002. On the basis of the comments received during this consultation, the Commission intends to adopt a proposal for revision of the Merger Regulation during the course of 2002. 

The Green Paper addresses issues of jurisdiction, substance and procedure. In certain areas, it puts forward specific proposals whereas in others, it simply outlines the issues and welcomes contributions from interested parties. 


The Commission’s review of the functioning of the Merger Regulation highlights that, despite the supplementary thresholds introduced under Article 1(3), which were aimed at reducing the burden of multiple filings on companies, there nevertheless appears to be an increase in multiple filings to three or more Member States. Having analysed various modifications to the combination of thresholds and other requirements of Article 1(3), the Commission is inviting comments on the possibility of introducing an automatic Community jurisdiction over cases subject to multiple filing requirements to three or more Member States. 

Article 9 and 22 Referrals
The referral mechanism set out in Article 9 of the Merger Regulation, which allows the authorities of a Member State to request jurisdiction over a transaction which would otherwise qualify under the Regulation, is intended to allow the best placed authority to deal with a case. Simplification of the requirements for the submission of a referral request would allow for the current timeframe for the submission and grant of a request to be shortened. 

By way of simplification, the Commission is proposing to separate the referral request from evidence of a threat of creation or strengthening of dominance. A substantial claim of effect on competition in a distinct market within the Member State should be sufficient. There should also not be any need for defining the geographic scope of the relevant market, provided that the effects do not extend beyond the Member State’s borders. 

The Commission is also proposing that it should be able to refer a case, or part of a case, to national authorities where these criteria are met. Article 22, which allows Member States to refer a case which does not have a Community dimension to the Commission, has always had the role of mirror image to Article 9. The Commission is therefore proposing to simplify the referral test in Article 22 along the same lines. 

Concept of Concentration
Based on experience gained over the years and on changes in business practices, the Green Paper explores a number of potential adjustments to the concept of concentration as set out in Article 3 of the Regulation. With regard to minority shareholdings and strategic alliances, the Green Paper, whilst acknowledging the potential structural effects of such transactions, describes the difficulties in drawing borderlines with sufficient legal certainty. As far as full-function co-operative joint ventures are concerned, it concludes that, at this stage, more experience should be gained before considering any changes. It also seems that for the time being, there is no convincing argument for extending the Regulation to partial function production joint ventures. 

The Green Paper proposes to amend current provisions on multiple transactions, in order to ensure a more consistent and effective application of the merger control rules to certain categories of multiple transactions. The Commission also invites comments as to whether the group concept (Article 5(4)) should be harmonised with the concept of control (as set out in Article 3(3)). 


The Substantive Test
The Green Paper launches a debate on the respective merits of the “dominance test” as laid down in the Regulation and of the “significant lessening of competition test” used in certain other jurisdictions, such as the US. The value and effectiveness of the dominance test is recognised and the Commission points out that international convergence is already occurring to a considerable extent, independently of any actual harmonisation of the legislation. Nevertheless, the Commission believes that the time is right to initiate a thorough debate on the respective merits of the two tests for merger control. 

Simplified Procedure
Experience so far in respect of the Notice on Simplified Procedure (September 2000) has been very positive and the Commission intends to build on its success in order to further streamline its procedure. For example, the Commission would like to introduce a simpler Form CO specifically designed for such cases. It has also been suggested that the practice on simplified procedure might be consolidated, either into the Regulation itself, or into a block exemption Regulation. Along the same lines, the Commission is inviting comments on the possibility of introducing a ‘de minimis’ threshold under which the Commission would not examine dominance concerns that might arise in small markets. 


Comments indicating the need to review the procedural rules relating to commitments have been submitted both by industry representatives and by the Member States. In response to a number of concerns raised, the Commission is proposing a re-organisation of the time schedule for the submission and discussion of commitments, both in the first and second phases of the investigation, with a view to allowing more time for all involved to make considered contributions. More specifically, the Green Paper proposes a ‘stop-the-clock’ provision, which would give the parties an additional 10-15 working days to find an appropriate solution, after which the Commission would have the same amount of time to verify the viability of the final proposal. Such a provision would operate at the parties’ request, thereby avoiding any ex officio prolongation of the procedure.

Due Process and Judicial Review
The Green Paper sets out the various mechanisms of relevance to due process in merger proceedings and invites comments and suggestions for improvement. The Commission also recognises that the current system of judicial review of merger decisions is considered by some to be unsatisfactory and ineffective. Although the reform of judicial procedure falls outside the scope of the review of the Merger Regulation, the Commission is inviting comments on the relative merits of the overall procedural system provided for in the Merger Regulation as compared to merger control procedural systems applied in other jurisdictions.

Other Procedural Issues
The Green Paper also discusses current practices concerning the notification triggering event and the timing thereof, as well as the suspension obligation. Comments are invited on the possibility of introducing electronic filings, submission of notification copied directly to Member States by the parties themselves, filing fees, declaration of incompleteness and the introduction of working days for the calculation of deadlines.

The Commission intends to model enforcement provisions on its proposals for modernisation for Articles 81 and 82. These proposals give the Commission increased powers of investigation, including the possibility to search private homes if there is reason to suspect that professional documents are kept there.

The full text of the Green Paper on the review of Council Regulation No 4064/89 is available on the Commission’s Competition website:

Herbert Smith will be making detailed representations to the Commission on its proposals. Please contact one of the partners in the EU and Competition Department if you would like to discuss any of the issues raised in the Green Paper, or if you would like us to assist you in making your own submissions.

"© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us."

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