European Union: Merger Control In The EU: More Red Tape For Companies Ahead?

Keywords: merger control, European Commission, EU, Towards more effective EU merger control, acquisitions, competition, antitrust,

Consultation provides opportunity for comments

The European Commission has published a staff working document "Towards more effective EU merger control" ("Proposal") which discusses (i) the need for the acquisition of minority shareholdings to be reviewed under the EU merger control regime, (ii) ways to streamline the current case referral mechanism between Member States and the EU, and (iii) other potential improvements, such as to limit jurisdiction for joint ventures that have no conceivable impact on EEA markets. Interested parties have the opportunity to comment on the Proposal until 12 September 2013. The Proposal can be found on the Commission's website.

We have significant experience of the EU merger control regime and offer support if needed in making your views known to the Commission.

Minority Shareholding

Under the current framework, acquisitions of minority shareholdings are not subject to scrutiny by the Commission. A change of jurisdiction will have a significant impact for companies acquiring a minority stake. While from a legal and economic perspective it is recognized that acquisitions of minority shareholdings are less likely to cause detrimental antitrust effects, the Commission has identified an enforcement gap and proposes three options to deal with the issue:

  • Apply the existing mandatory notification requirement to acquisitions of minority shareholdings, including the procedural burden, and the prohibition to close the acquisition prior to the Commission's approval (notification system);
  • Authorize the Commission to investigate acquisitions of minority shareholdings whenever it deems necessary without requiring prior notification by the parties and without prohibition to close (self-assessment system); potentially allow parties voluntarily to make a notification;
  • Require the parties to file a brief information notice to the Commission (presumably only in relation to acquisitions that satisfy a certain test), and authorize the Commission to investigate where it deems necessary, without prohibition to close (transparency system); potentially allow parties to voluntarily make a notification.

The Commission seeks input, inter alia, on the appropriateness of the potential scrutiny options in light of the costs and burden involved, on meaningful safe-harbour rules, on the possibility of voluntary notifications, and on the limitation period after which the Commission would be barred to investigate acquisitions of minority shareholdings.

Referral Mechanisms

The Proposal discusses the mechanism for referrals from Member States to the Commission that can be initiated by parties for a transaction that would have to be notified in at least three Member States (Article 4(5) EUMR referral), and the mechanism for referrals from Member States to the Commission that can be initiated by Member States (Article 22 EUMR referral).

Article 4(5) EUMR Referral

Under the current regime, parties seeking to refer to the EU a transaction that would normally be reviewed by three or more Member States, have to seek consent by Member States using a burdensome referral request (Form RS). Once the referral request is accepted, parties have to submit yet another notification (Form CO) to the Commission. Since only rarely Member States have opposed referral requests, the Proposal provides a quicker and leaner procedure:

  • Abolition of the referral request (Form RS);
  • Direct notification of the transaction to the Commission which starts its investigation, and consults with Member States who originally were competent to review the deal as to whether they agree that the Commission pursues its investigation;
  • If only one Member State who originally was competent to review the deal objects to the referral within 15 or even 10 working days, the Commission would lose jurisdiction;
  • A broader right to information exchange between the Commission and Member States which might be useful to allow Member States to gather the information the Commission has analysed already.

The Commission, inter alia, seeks confirmation that the abolition of Form RS is an appropriate way to increase the attractiveness of a referral, and requests the quantification of savings. It also raises questions about the information sharing between the Commission and Member States.

Article 22 EUMR Referral

This referral provides Member States the possibility to refer to the Commission a case that originally was notified to Member States. It was frequently criticised that even Member States that were not competent to review a transaction in the first place could request a referral, and that a successful referral does not automatically lead to the Commission's jurisdiction over the whole of the EEA. Indeed, under the current regime, there were cases of parallel investigations between the Commission and Member States in relation to the same transaction. The Proposal recommends the following:

  • Referral requests could only be made by Member State that under its domestic law is competent to investigate the deal;
  • Commission has EEA-wide jurisdiction if no other competent Member State objects, and Commission accepts referral request;
  • Commission has no jurisdiction at all if one competent Member State objects against referral request.

The Commission, inter alia, seeks confirmation that parallel jurisdiction should be avoided. It raises questions about potential conflicting timetables between national proceedings and the referral mechanism.

Other Improvements: Extraterritorial Joint Ventures

The Proposal deals with other areas of improvement, such as the treatment of extraterritorial joint ventures. Currently, joint venture with no conceivable effects in the EEA nevertheless have to be notified to the Commission if the joint venture parent companies' worldwide and EU-wide turnover is sufficiently high to meet the turnover thresholds established by EU merger control law. Although the Commission is prepared to accept a shorter notification, the parties have to run through the full procedure (including pre-notification, prohibition to close until clearance etc.) which has negative impacts on timing and cost. The Commission considers to:

  • Limit the right to scrutinize joint ventures which have no conceivable effects on markets in the EEA.

Mayer Brown will also be making a submission to the Commission and we would welcome to discuss with you any comments you would like to have included.

Originally published 4 July 2013

Learn more about our Antitrust & Competition practice.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.