United States: Overview of merger control activity during the last 12 months

Last Updated: April 29 2013
Article by Alec J. Burnside and Anne MacGregor

Most Read Contributor in United States, October 2018

Numbers of notifications

During calendar year 2012, there were 283 cases notified to the European Commission's Directorate General for Competition ("DG Comp" or "the Commission") under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings ("the Merger Regulation"). This is fewer than 2011 (309), more than 2010 (274) and 2009 (259), but substantially fewer than 2008 (347).

Of the cases notified in 2012, five were withdrawn, four in Phase I and one in Phase II (M.6362 Cin/ Tirrenia Business Branch). This is a substantial decrease on 2011 where 10 were withdrawn, nine in Phase I and one in Phase II.

Phase I clearances

In 2012, there were 254 Phase I clearance decisions. DG Comp issued: 170 simplified procedure clearances (all without commitments); 75 Phase I clearances without commitments under the normal procedure; and nine clearances under the normal procedure with commitments. This is a decrease on 2011, when there were 299 Phase I clearance decisions issued.

The percentage of notified cases dealt with under the simplified procedure remains in the majority: 60% in 2012; 62% in 2011; 52% in 2010; 55% in 2009; and 55% in 2008.

Phase II investigations

In 2012, nine cases were put into Phase II, i.e. an "in-depth investigation", an increase of one case on 2011.

In 2012, there were seven Phase II clearances, six with commitments (M.6266 J&J Synthes, M.6286 Südzucker/ED&FMan, M.6458 Universal/EMI, M.6410 United Technology/Goodrich, M.6471 Outokumpu/Inoxum and M.6497 Hutchison/Orange Austria) and one without (M.6314 Telefonica/ Vodafone JV). At the end of 2012, there were four ongoing Phase II investigations: M.6570 UPS/ TNT Express, M.6663 Ryanair/Aer Lingus, M.6690 Syniverse/Mach and M.6576 Munksjö/Ahlstrom. UPS/TNT Express was subsequently prohibited on 30 January 2012. During 2011, there were five Phase II clearances: four without remedies (M.5907 Votorantim/Fischer JV, M.6101 UPM/Myllykoski and Rhein Papier, M.6106 Caterpillar/MVM and M.6214 Seagate Technology/The HDD Business of Samsung Electronics), and one with remedies (M.6203 Western Digital Ireland/Viviti Technologies).

Between 2010 and 2012, the following interesting statistics emerge. Of the 20 Phase II cases, there were 13 statements of objection issued and approximately nine oral hearings. All those cleared with remedies required extensive divestments. There were voluntary extensions under Article 10(3) in 14 cases1. In seven cases, the maximum possible under Article 10(3) of 20 days was used. In nine cases, remedies were submitted after working day 55 in Phase II, triggering a 15-day extension.

New developments in jurisdictional assessment or procedure

Planned review of the simplified rules

In early 2013, the Commission unveiled a roadmap2 which should eventually lead to more cases being notified under the simplified procedure. Although the document is the first step by the Commission to achieve changes on this issue, it is a welcome move. The proposed improvements aim to reduce the administrative burden on businesses by allowing more deals to be notified using a Short Form filing. First, the Commission intends to increase market share thresholds for both horizontal and vertical transactions from the current 15% and 25%, to 20% and 30% respectively. Second, it is considering allowing simplified treatment of horizontal transactions with very small market share increments, in line with the "safe harbour" provisions of the Commission's Horizontal Merger Guidelines. Finally, the Commission will streamline its notification and referral forms (Form CO, Short Form and Form RS) which will reduce the amount of required information. The Commission expects that these changes will raise the number of total notifications treated under the simplified rules by around 10%, to 70% of the total. A public consultation for this initiative is expected in spring 2013.

Upward referral requests by Member State authorities

The use of Article 22 (three or four cases per annum) is now increasingly coordinated between Member State competition authorities, with more of them "joining" other Member States' requests than in earlier years. This means that in cases where the Merger Regulation thresholds are not met, and even if the parties themselves do not have the option to seek upwards referral in advance of notification because they have a notification obligation in only one or two Member States, the case may still end up in Brussels if it affects trade between Member States, or threatens to significantly affect competition in the territory of the Member State making the request. This is beyond the control of the companies concerned, and can make for a significant extension of the timeline for clearance, increasing legal uncertainty.

For pre-notification upwards referral requests under Article 4(5), which parties have the option to make if the transaction qualifies for national review in three or more Member States, there were 22 such requests made in 2012 and only one case in which a Member State authority blocked the request.

Commissioner Almunia has raised the question of whether the European Competition Network (ECN) model can be applied in the sphere of merger control to bring about more cooperation among competition authorities. In November 2011 DG Comp published a set of Best Practices on cooperation between EU National Competition Authorities in Merger Review, aimed at fostering cooperation and facilitating information-sharing between national competition authorities ("NCAs") within the European Union, for mergers that are not reviewed at an EU level but require clearance in several Member States. The consent of the parties to the transaction is required before confidential information can be exchanged between authorities.

Downwards referral requests

In 2012 there were 13 pre-notification Article 4(4) downward referrals to Member State competition authorities at the request of notifying parties, none of which were refused.

For post-notification downward referrals under Article 9, in 2012 there were two requests made by Member State authorities, resulting in one full referral and one partial referral. In M.6497 Hutchison/ Orange Austria, the Commission, considering itself to be the best placed authority, refused a referral request from Austria even though it fulfilled the legal requirements for referral.

Lack of review of acquisitions of minority shareholdings not conferring control

In a speech in March 2011 Commissioner Almunia acknowledged that there "is probably an enforcement gap" at the EU level concerning transactions involving the acquisitions of minority shareholdings that do not give rise to a "change of control" within the meaning of the Merger Regulation, and announced that he had instructed DG Competition to study the matter. Following up in a November 2012 speech, the Commissioner outlined that there are two options for merger control law reform for cases involving non-controlling minority shareholdings. The first would be a selective system, whereby the Commission identifies the cases that may raise specific competition problems; the other would be a mandatory notification system. The Commissioner indicated his preference for the first option, but it is unclear when the Commission might put forward a proposal for the Council to amend the Merger Regulation on this point.

Key industry sectors reviewed, and approach adopted, to market definition

Exchange derivatives sector

M.6166 Deutsche Börse/NYSE Euronext Prohibition Decision

The Commission's 1 February 2012 prohibition of the proposed tie-up between the operators of the world's two largest derivatives exchanges (Eurex, operated by Deutsche Börse and Liffe, operated by NYSE Euronext) brought to 22 the number of transactions blocked under the Merger Regulation since it came into force in 1991. The merger would have created a near-monopoly in European financial derivatives traded globally, with the companies controlling 90% of global trade. A critical factor was that the parties were each other's closest competitor. The Commission found that due to high barriers to entry, new competitors were unlikely to sufficiently enter the markets so as to constrain the behaviour of the merged entity.

Market definition in this case was crucial and much debated between the notifying parties and the regulator. The Commission found that there were two separate markets for derivatives; "over-thecounter" derivatives (OTC) and "exchange-traded" derivatives (ETD), the relevant market in this case being the market for ETDs. The investigation indicated that OTCs and ETDs are not substitutable. ETDs are highly liquid, relatively small in size and fully standardised contracts in their terms, whereas OTCs are larger and the contracts may be customised. Moreover, some ETD users are not authorised to operate in the OTC market.

The Commission also found that Eurex and Liffe operate closed "vertical silos", linking their exchanges to their own clearing house. Thus, the merger would have created a single silo, trading and clearing more than 90% of the global market of European financial ETDs. Due to the advantages Flowing from the ability to clear ETDs in a single clearing house, customers would be reluctant to trade at other exchanges, creating a barrier to entry.

The parties argued that benefits to consumers would arise from increased liquidity. However, the Commission reasoned this was unlikely to occur directly as a result of the merger. The parties further claimed customers would benefit from having to post less collateral for security, but the Commission deemed these benefits to be overrated and not specific to the merger. Although efficiencies were vigorously argued, the Commission decided that any efficiencies that might arise would not outweigh the harm to consumers from the merger.

The parties offered to sell Liffe's single stock equity derivatives products where these competed with Eurex. However, the Commission judged this divestment to be too small to be viable on a stand-alone basis. In the problem area of European interest rate derivatives, the companies did not offer to sell overlapping derivatives products, but only access to the merged company's clearing house for some categories of new contracts. There were also concerns as to the feasibility of such an access remedy.

The adoption of the prohibition decision in this case was notable for the fact that the Commissioner for the Internal Market, Michel Barnier, took the very unusual procedural step of entering a "waiting reserve" on the case a few days before the full College of Commissioners met to adopt the decision formally. At the meeting itself on 1 February 2012, it was reported that there was considerable discussion on the case, although ultimately the prohibition decision was adopted as expected by the full College. Technically only a majority vote of Commissioners is required for the adoption of Phase II decisions, and it is extremely rare for there to be an actual vote at such meetings.

Deutsche Boerse brought an action appealing the prohibition decision in the General Court in Luxembourg on 12 April 2012. Perhaps looking ahead at potential future transactions, NYSE Euronext, on the other hand, decided not to appeal: on 20 December 2012 the US stock market operator Intercontinental Exchange (ICE) and NYSE Euronext announced an agreed merger.

Steel sector

M.6471 Outokumpu/Inoxum–ThyssenKrupp

This deal was notified on 10 April 2012 and went into Phase II on 21 May 2012, with the European Commission at that point finding "potential serious competition concerns in markets for the production and distribution of stainless-steel flat products, where the merged entity would have very high marketshares", noting that "only three integrated producers of stainless-steel fl at products would remain". On 7 November 2012, the Commission approved the deal with commitments.

Finnish stainless steel company Outokumpu initially offered to sell its Swedish melting and coil operations in Avesta, Nyby and Kloster as well, as part of its European sales network. This was rejected by the Commission and was not included in the commitments which were ultimately accepted. The package was changed and improved on 9 October 2012 to include divestments of Inoxum's stainless steel mill in Terni, Italy, and some stainless steel service centres. The regulator found that these would provide the purchaser with a fully-integrated, stand-alone production and distribution business with access to all major EEA countries. The final version of the commitments included, at the option of the purchaser, the divestment of Terni's forge and a large bright annealing line. The Commission ultimately found the transaction did not raise concerns in the distribution of stainless steel products, only in its supply.

Barroso suggestion of early notice of competition cases of broader importance

Both the Deutsche Börse/NYSE Euronext and Outokumpu cases prompted European Commission President Barroso to suggest in November 2012, at the College of Commissioners meeting at which the Outokumpu Phase II decision was adopted, that all Commissioners should receive early notice of competition cases that might have an impact on broader EU policies.

In Outokumpu, there was great political interest in the transaction, given its potential impact on the numerous industries in Europe that rely on stainless steel. Deutsche Börse/NYSE Euronext was examined against a backdrop of significant legislative reforms in the financial services sector being driven by DG Internal Market.

Mining sector

M.6541 Glencore/Xstrata

The £39bn deal between commodities trader Glencore and mining giant Xstrata, announced in February 2012, and notified to the European Commission on 2 October 2012, raised concerns on the market for the supply of zinc in Europe. Glencore was the largest supplier of zinc in the EEA on the basis of an off-take agreement with Nyrstar, a relationship covering some of Xstrata's EEA output and production from Glencore's own smelter and imports. Glencore also controlled Pacorini, the owner of a London Metal Exchange (LME) approved storage warehouse in New Orleans, and a large amount of exports. Xstrata was the second-largest producer of zinc metal in the EEA.

In the 2006 Xstrata/Falconbridge case, the Commission had found that Glencore controlled Xstrata at that time because it was "in a position to exert a decisive influence on Xstrata's strategy and operations". At the time of announcing its acquisition of Xstrata in early 2012, Glencore owned 34% of Xstrata. There was initially a jurisdictional discussion as to whether the deal would require notification to the European Commission, because it was unclear whether in 2012 Glencore still had "control" over Xstrata with its stake within the meaning of the Merger Regulation. Ultimately, the deal was notified in Brussels, after an eight-month long pre-notification period.

Glencore achieved a Phase I clearance with remedies by offering to terminate its "off-take" deal with zinc producer Nyrstar. Glencore also committed not to buy any zinc metal from Nyrstar or to engage in any other practices which would have the effect of materially restricting Nyrstar's ability or incentive to compete with Glencore for a period of ten years. Finally, Glencore committed to sell its 7.79% stake in Nyrstar.

Telecommunications sector

M.6497 Hutchison Whampoa – Hutchison 3G Austria/Orange Austria

On 7 May 2012, Hutchison notified the acquisition of Orange Austria. A Phase II investigation was opened on 29 June 2012, with the Commission citing "significant competition problems by removing Orange as a competitor in the retail market for end consumers, and on the wholesale market for network access and call origination". The transaction meant that the number of players in the wholesale and retail mobile services in Austria would be reduced from four to three, with the merged entity enjoying a 22% market share.

On 21 August 2012, Hutchison submitted remedies, including the opening up of its network to virtual mobile operators wishing to enter the Austrian market, by offering to grant lower wholesale rates, and an upfront deal with a virtual mobile network operator. However, this was deemed insufficient to achieve an early Phase II clearance, and the Commission issued a Statement of Objections on 21 September 2012, outlining doubts over Hutchison's potential to raise the prices at which it offered mobile services to consumers. On 19 October 2012, Hutchison bolstered its remedies offer.

The final remedies package included a commitment to divest 2.6GHz radio spectrum rights to an interested new market entrant. This new mobile network operator will also acquire additional spectrum 800MHz frequency reserved for the new entrant by the Austrian telecom regulator in a 2013 auction. This combination would enable the operator to provide a competitive mobile broadband network. Secondly, Hutchison committed to provide wholesale access to its network for up to 30% of its capacity to up to 16 mobile virtual network operators in the next 10 years. This was an upfront commitment, meaning that the acquisition cannot be completed before a wholesale access agreement has been entered into. On this basis, the Commission conditionally cleared the transaction on 12 December 2012.

Hutchison illustrates the Commission's preference for structural remedies over access remedies. The access remedy first offered was deemed insufficient and ultimately a divestment was required.

M.6281 Microsoft/Skype

Microsoft's acquisition of Skype, announced on 10 May 2011, was notified to the Commission on 2 September 2011 and unconditionally cleared on 7 October 2011. The Commission's investigation revealed that overlaps in the area of consumer communications were present in video communications due to Microsoft's Windows Live Messenger. However, there were no competition concerns, as there were many players active on the market. In enterprise communications, Skype was found to have a limited market presence and did not compete with Microsoft's Lync, which is used mostly by large enterprises.

The Commission also checked for possible conglomerate effects, since the parties were active in neighbouring markets. It researched the possibility of Microsoft hindering Skype's interoperability with competing services, and tying its own products (e.g. Windows operating system) with Skype, thereby limiting the ability of other players to compete. However, it was found that Microsoft would have no incentive to hinder interoperability, as Skype seeks to be accessible on as many systems as possible. On the issue of bundling, the majority of customers who buy a PC with Skype pre-installed are registered Skype users, and most of them subsequently download a different version.

Interested third parties Cisco and Messagenet have appealed the clearance decision to the General Court in Luxembourg, arguing the Commission misjudged the network effects which eliminate incentives to offer operability with competing products.

M.6690 Syniverse/Mach

The €550m acquisition by Syniverse of fellow telecommunications technology company MACH, announced on 30 June 2012, was notifi ed to the European Commission on 16 November 2012 and went into Phase II on 20 December 2012. The parties are the leading players in the market for data clearing and both are present on the market for financial clearing, MACH being the market leader.

In its investigation to date, the Commission has looked at various issues, including whether there are any costs when switching providers, whether any new entrants to the market have failed in the past fi ve years, and whether operators would switch to in-house data clearing if the merger resulted in price increases. The Commission has also looked into whether companies would object to using a competing operator's in-house data-clearing services. At the time of going to press, the deadline for the Commission's decision was set at 15 May 2013.

Airline sector

M.6663 Ryanair/Aer Lingus

In the latest in the convoluted saga involving Ireland's two airlines, which has been running since 2006 and yielded a prohibition decision under the Merger Regulation in June 2007, Ryanair announced a third hostile takeover attempt of Aer Lingus on 19 June 2012. This occurred just days after theUK's Competition Commission opened an in-depth investigation into Ryanair's 29.8% minority shareholding in Aer Lingus, following a referral to it by the UK's Offi ce of Fair Trading. Ryanair notified the proposed takeover to the Commission in Brussels on 24 July 2012.

The case went into Phase II on 29 August 2012 after the Commission found that on a large number of routes, mainly out of Ireland, the two airlines are each other's closest competitor and barriers to entry are high, with a higher number of overlaps than at the time of the 2007 prohibition. The deadline for decision by the Commission is 6 March 2013; at the time of writing, a succession of remedy proposals had been submitted.

In parallel, Ryanair has been arguing in the UK that the UK Competition Commission's investigation into its minority stake should be suspended until EU merger control proceedings have finished. It bases its arguments on the Member States' Treaty "duty of sincere cooperation" with the European Commission, meaning they should not run parallel investigations into the same subject matter, so as to avoid conflicting decisions. The UK Competition Commission and Aer Lingus are arguing in response that the minority stake does not form part of the EU's review, which involves a separate transaction – the full takeover of Aer Lingus. The UK's Competition Appeal Tribunal agreed that the Competition Commission could continue its investigation, as did the UK's Court of Appeal on 13 December 2012. Ryanair has now sought permission from the UK Supreme Court to appeal the matter further.

M.5830 Olympic Air/Aegean Airlines

In what might be called the second repeat airline saga, in October 2012, Marfin Investment Group Holdings announced the signing of an agreement for the sale of its portfolio company Olympic Air to Aegean Airlines for €72m. The European Commission will shortly have to review the merger of the two Greek airlines for the second time: it prohibited the first attempt in January 2011. Although the Commission did not have original jurisdiction to look at the latest transaction (the new deal is structured as an outright sale, so Marfin's turnover falls out of the turnover calculation this time), in late 2012 the Greek and Cypriot competition authorities both made upwards referral requests to Brussels under Article 22(5) of the Merger Regulation.

Although Aegean is no longer active on two of the 2011 problem routes, the parties still compete head-to-head on many Greek domestic routes. The parties' joint appeal to the General Court against the 2011 prohibition decision remains pending.

M.6447 IAG/bmi

On 30 March 2012 the European Commission granted conditional Phase I clearance of the acquisition of bmi by IAG. Approval was contingent on the release of 14 daily slot pairs at London Heathrow (LHR) in order to facilitate new entry, and the promise to carry connecting passengers to feed the longhaul flights of competing airlines out of LHW. The Commission found that without the commitments, the transaction would have led to high market shares and even monopolies on a number routes out of LHR. It took the view that slots and other incentives, such as the acquisition of grandfathering rights after a certain period, should facilitate entry. Finally, a feeder arrangement ensured passengers would continue to have a choice to use airlines other than IAG when connecting at LHR. Interested third party Virgin has fi led a challenge to the clearance decision in the General Court. Clearance came against the background of indications that bmi would not be able to survive for the duration of a Phase II inquiry.

Package delivery sector

M.6570 UPS/TNT Express: Prohibition Decision

On 19 March 2012 UPS announced that it would acquire competitor TNT Express. The transaction was notifi ed to the European Commission on 15 June 2012, going into Phase II on 20 July 2012.

The Commission issued a Statement of Objections on 1 November 2012. It limited its concerns to the market for intra-EEA international express package delivery, in other words, next-day parcel delivery from one EEA country to another EEA country. Although there were overlaps in some domestic express parcel markets, and on some intercontinental routes, the Commission chose not to pursue those aspects.

The Commission contended that the transaction would raise competition concerns because it would result in the removal of a close competitor. Essentially there are only four global "integrated" express parcel companies in the world (DHL and FedEx being the other two), and this would have been a four-to-three transaction. A key distinguishing feature of integrated express parcel companies is that they control all the infrastructure on which the parcel travels, from the moment of pick-up until the moment of delivery. Ownership, or at least control, over night air uplift is essential.

Whilst the Commission found that non-integrators do offer some intra-EEA express parcel services (e.g. DPD and GLS), its investigation revealed that they failed to provide any true competition. Further, amongst the four integrators, FedEx was found to have a far lesser presence in the EEA than UPS, TNT Express and DHL, so that it was judged to exercise only a weak competitive constraint on the merging parties.

Following UPS's reply to the SO, and an oral hearing on 12 November 2012, the list of problematic countries was much shorter by the time UPS came to make a remedies offer. On 29 November, UPS offered remedies comprising the divestment of TNT subsidiaries including assets, consumer contracts and personnel in 12 countries, and access to UPS' air network (TNT Express had lined up the ASL Aviation Group to buy its airline, conditional upon the deal with UPS closing). UPS improved its commitments offer on 16 December 2012, and again in early January 2012. At the same time, UPS was understood to be talking to DPD as a potential buyer of the divestment package, FedEx having expressed no interest.

Following a state of play meeting with the Commission on 11 January 2013, UPS and TNT Express announced on 14 January that they anticipated that the regulator would prohibit the deal. That decision was formally adopted on 30 January 2013.

Other sectors

M.6266 Johnson & Johnson/Synthes

This medical devices transaction was notified to the European Commission on 27 September 2012 and went into Phase II on 3 November 2012. On opening its in-depth investigation, the Commission felt that "the proposed transaction would combine two of the leading suppliers of spine devices and would strengthen the position of Synthes as the current market leader in trauma and craniomaxillofacial (CMF) devices, and of Johnson & Johnson in-shoulder devices, in a substantial number of EEA member states".

A Statement of Objections was issued on 25 January 2012. At that stage, the Commission only had remaining concerns on the market for trauma products. On 21 February 2012, J&J submitted commitments, offering to sell its DePuy trauma products business. The transaction was then conditionally cleared on 19 April 2012, and DePuy was sold shortly thereafter to Biomet, Inc.

M.5549 EDF/Segebel-SPE-Centrica

This case involved EDF's acquisition of Centrica's subsidiary Segebel, which in turn owns a 51 per cent shareholding in the Belgian electricity company SPE-Luminus. The deal was notified on 23 September 2009 and was given Phase I conditional clearance on 12 November 2009. EDF committed to immediately divest the assets of one of its companies in charge of the development of these power stations. In addition, if EDF had not invested in a second planned power station by June 2012, or no decision to invest had been taken, EDF committed to divest the assets of the company in charge of the project.

On 17 May 2010, the Belgian consumer group "Test Achats" brought a General Court annulment action against the Commission's clearance decision. On 12 October 2011, the General Court ruled that Test Achats, as a consumer association, had the right to be heard during a merger control procedure conducted by the Commission, as long as the merger related to goods or services used by final consumers, and on condition that it made an application to be heard by the Commission in writing following notification of the deal. Here, Test Achat had asked to be heard two months prior to notifi cation, but the court said it should have engaged with the EU regulator after formal notification of the transaction on 23 September 2009. The court also ruled that third parties cannot challenge a Commission decision not to refer a case to a national regulator.

In an interesting codicil to the original conditional clearance decision, on 5 September 2012, EDFtook the European Commission to court to annul its decision refusing to give the firm more time to comply with its commitment obligations. EDF also applied for interim measures, which were refused on 16 October 2012. EDF has now fi led an appeal on the interim relief point with the ECJ.

M.6410 United Technologies/Goodrich

The transaction was notified to the Commission on 20 February 2012 and went into Phase II on 26 March 2012 due to concerns over the merged entity's extremely high market shares in engine controls and power generators used in aircraft.

On 26 July 2012, the Commission cleared the acquisition subject to the divestment of Goodrich's electrical power generation and engine controls for small engines businesses. In addition, Rolls Royce was granted the option to acquire Goodrich's lean-burn fuel nozzle R&D project. During the investigation, Rolls Royce announced a buy-out of Goodrich's share in Aero Engine Controls, which held all Goodrich's activities for engine controls for large engines. This, in combination with the engine controls for small engines business divestment, removed the entire overlap between UTC and Goodrich in the engine controls market.

M.6381 Google/Motorola Mobility

This $12.5bn acquisition of smart phone and tablet developer Motorola Mobility by Google, the search engine and developer of the Android mobile operating system, was notified to the Commission on 25 November 2011 and cleared unconditionally on 13 February 2012.

The issue was whether Google would be likely to prevent Motorola's competitors from using its Android operating system. The Commission found that Android helps spread Google's other services and therefore Google would not restrict the use of Android solely to Motorola, a relatively minor player. Secondly, all smartphones adhere to telecommunication standards, for example 3G, and Motorola holds patents that are essential to comply with these standards – access to such standardessential patents is crucial for players on the smartphone market. However, the Commission found the transaction would not materially change this situation. Finally, the Commission investigated whether Google would be able to use those patents to obtain preferential treatment for its services.

At the time of the unconditional clearance decision in this case, Commissioner Almunia cautioned technology companies generally against abusing the power that standard-essential patents (SEPs) confer, and threatened to act against Google and others if they disregard fair-licensing commitments. The Commission has recently increased its scrutiny of SEPs, notably issuing Samsung with a Statement of Objections in an Article 102 dominance investigation on 21 December 2012.

Key economic appraisal techniques applied

M.6203 Western Digital/Hitachi is a good example of the Commission's use of economic analysis. This merger would have reduced the players in the hard disk drive industry from four to three, and in some markets from three to two. First, qualitative methods were employed, revealing that HDD customers need multiple sources of supply. This need was then confirmed by the economic analysis undertaken by the Chief Economist's Team. This revealed that the presence of a third supplier was crucial for competition, so as to keep prices stable. Bidding data also showed that Hitachi participated in most bids and was an important competitor, whose removal would lead to higher prices. Ultimately, divestments allowing a competitor to replace Hitachi as the third supplier in the market were sufficient for the merger to be cleared.

In October 2011 DG Comp published provisionally applicable Best Practices on the Submission of Economic Evidence. These aim to ensure that the economic data submitted by parties, during both anti-trust and merger control procedures, meets certain standards. Guidance is given on how economic models should be built, and parties are encouraged to inform the Commission of the kind of empirical analysis they consider appropriate in each case. The document also recommends that parties should consult early on the type of data available. Since the Best Practices were published, the Commission has sent more draft information requests than previously, seeking to tailor its requests to data which is actually available.

Approach to remedies

Viability of remedies remains paramount

As the discussion of a number of commitments cases above indicates, the viability of remedies packages remains paramount in the Commission's determination of whether to accept or reject them, such that in some cases the parties may have to include more in their packages than would be strictly required to address the concerns identified.

In M.6458 Universal/EMI, the Commission considered that the £1.2bn acquisition by market leader Universal of EMI's recording business would lead to competition concerns in the wholesale of physical and digital recorded music at the European level. To obtain Phase II clearance, Universal undertook to divest a significant number of music catalogues and assets. Significantly, the rights divested were worldwide, so that prospective buyers would be able to exploit the assets in a viable and competitive way, despite the fact that concerns were only raised at the European level. Furthermore, two-thirds of the divested music catalogues had to go to a single buyer experienced in the music industry to ensure credible competition. The requirement to divest global rights follows the approach in the earlier case of M.6459 Sony/Mubadala Development/EMI Music Publishing.

Key policy developments

There were no notable key policy developments in 2012 in the sphere of European merger control.

Reform proposals

Since taking office in early 2010, Commissioner Almunia has not brought forward any concrete legislative proposals to amend the Merger Regulation or its Implementing Regulation. The initiatives in relation to minority shareholdings, and extension of short-form fi lings, mentioned above, remain at an early stage.

Footnotes

1. Cases in which a decision is still pending have not been taken into account.

2. http://ec.europa.eu/governance/impact/planned_ia/roadmaps_2013_en.htm#COMP

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions