The Commission recently published a decision that describes when it allows mergers to be completed prior to EU Merger Regulation (EUMR) clearance being granted, particularly where continued suspension of the deal poses a risk of the target failing to secure continued business. The decision relates to the purchase by Orica of certain assets of competitor Dyno-Nobel, which was permitted by the Commission despite numerous competition concerns relating to the parties' respective European subsidiaries. The consent was granted subject to the requirement that Orica ringfence the European parts of the target business to prevent any information being passed between those entities and Dyno-Nobel's non-European businesses, which were not subject to the merger review.
The EUMR empowers the Commission to grant derogations from the suspensory effect in exceptional circumstances. Any decision to waive the suspensory effect must take into account the impact of the suspension on the concerned undertakings and third parties, and the threat to competition posed by the proposed concentration.
In this case, Dyno-Nobel was being managed by its parent company, "New Dyno," which was responsible for supplying Dyno-Nobel's customers until the acquisition was complete. New Dyno had also made known its intention to re-enter the markets of Dyno-Nobel, as a competitor, to the extent of approaching Dyno-Nobel's existing joint venture partners with a view to taking over the contracts, and had approached and recruited key members of Dyno-Nobel's staff. Furthermore, Orica was in discussions with certain joint venture partners of Dyno-Nobel to acquire their stakes in these ventures. Orica argued that it would be at a disadvantage in these negotiations if the transaction were suspended because it would lack proper knowledge of Dyno-Nobel's business.
The Commission agreed with these submissions, finding that Orica had legitimate concerns over a potential loss of business to New Dyno. Despite the fact that Orica entered into the transaction knowing the risks involved and could have entered into a non-compete obligation, it was able to show specific and exceptional harmful effects that went beyond the normal effects of a suspension. On that basis, Orica was allowed to complete its acquisition of Dyno-Nobel assets prior to EUMR clearance.
The decision is available here.
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