European Union
Answer ... Pre-notification: There are no legal or indicative periods for pre-notification. The length depends on the case, but for the most straightforward cases it can be as short as a week, while for complex cases it can extend to many months.
Phase I of the review: The European Commission will ask third parties, such as customers and competitors, for their opinion on the transaction and send out questionnaires regarding the relevant markets. The case team may interact with the notifying parties via informal contacts, requests for information and a state of play meeting. Phase I concludes with a decision either to clear the transaction unconditionally/conditionally or to open a Phase II investigation due to serious doubts as to the compatibility of the transaction with the common market. Most cases are cleared in Phase I.
The commission has 25 working days from receiving a complete notification to carry out its Phase I review and adopt a decision. Failure to issue a decision within the time limit results in the transaction being unconditionally cleared. If the parties submit remedies or a member state makes a referral request, the review process is automatically extended by 10 working days.
Phase II of the review: Unless it is granting unconditional clearance, the commission must issue a statement of objections before issuing a decision detailing its concerns and must grant the parties access to the case file along with the opportunity to request an oral hearing.
Phase II lasts 90 working days, which may be extended by 15 working days if the notifying parties offer remedies within 55 working days of the start of Phase II. An extension of 20 working days may be granted with the agreement of the parties or, if requested by the parties, within 15 working days of the start of Phase II.
The review period may be suspended at any time if the commission considers that responses to requests for information were not provided in time.
European Union
Answer ... Discussions and additional information during pre-notification consultations and the preparation of comprehensive draft notifications may accelerate the review timetable.
The Phase I and II timetables may be suspended by stopping the clock – for example, if the commission issues a formal decision ordering the production of documents or an inspection owing to circumstances caused by the parties, such as a party’s failure to respond to a request for information within a specified deadline.
European Union
Answer ... A simplified procedure may be available in certain transactions and the parties can submit Short Form CO, which is less onerous to complete than Form CO. The application of a simplified procedure is at the discretion of the commission. It is not bound by its decision to use the simplified procedure and may revert to the standard procedure, even when a transaction meets the criteria for the simplified procedure and a Short Form CO has been submitted.
The circumstances in which the simplified procedure may apply include concentrations where:
- two or more undertakings acquire joint control of a joint venture with negligible or no foreseen activities within the European Economic Area (EEA) – that is, the EEA turnover is less than €100 million and the total value of assets transferred to the joint venture is less than €100 million in the EEA territory at the time of the notification;
- two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking, and the combined market share of all parties engaged in business activities in the same product and geographic market is less than 20%, and in upstream or downstream markets less than 30%; or
- a party acquires sole control of an undertaking over which it already has joint control
European Union
Answer ... It is common practice for the European Commission to cooperate with its counterparts in other jurisdictions. When assessing mergers with an EU dimension, the commission regularly draws on the expertise of the competition authorities in EU member states. This may involve disclosing the contents of the parties’ formal notification. In Phase II, the competition authorities of member states form part of an advisory committee that provides an opinion on the preliminary draft decision of the commission.
The commission also has formal cooperation agreements with authorities outside the European Union, most notably the US Federal Trade Commission and the US Department of Justice Antitrust Division. The commission is also active in the International Competition Network working group on multi-jurisdictional merger control, which facilitates international cooperation in merger reviews.
According to Article 2.4 (2) of the Trade and Cooperation Agreement between the United Kingdom and the European Union, the UK Competition and Market Authority and the commission are also committed to cooperate and coordinate enforcement of the same or related transactions, among other things.
The commission is required to receive waivers from the parties to allow it to share information with other authorities that are also reviewing the transaction. The waiver can be limited in scope.
European Union
Answer ... The European Commission may request additional information throughout the pre-notification consultation and Phases I and II, either by simple request or by formal decision. These requests for information must clearly identify:
- the information sought;
- the legal basis upon which the request relies;
- its purpose; and
- the penalties (see question 7.1) that the parties will face if they provide incorrect or misleading information purposefully or negligently.
Undertakings are required to respond only to formal decisions, which are rarely used and normally only where a simple request has been ineffective. However, if the parties respond to informal requests, their response must be complete and not misleading.
European Union
Answer ... Yes. The European Commission actively invites third parties to participate in the review process by submitting comments on the transaction. Shortly after the notifying parties have submitted Form CO, a notice is published on the commission’s website inviting third-party views. The commission also sends out requests for information to third parties, such as customers, competitors and suppliers, with a view to verifying the information provided by the notifying parties. Third parties may submit complaints against the proposed transaction before or during an investigation.
European Union
Answer ... Apart from the two exceptions to the standstill rule (see question 3.8), there are no local carve-out provisions that avoid delaying closing while the review is ongoing.
European Union
Answer ... A concentration that would significantly impede effective competition in the common market or a substantial part thereof is prohibited. Historically, the assessment has focused on the creation or strengthening of a dominant position. In recent years, novel theories of harm have dominated the discussion as the European Commission has increased scrutiny for mergers involving nascent competitors or mergers that allegedly pose a risk to innovation (so-called ‘killer acquisitions’), regardless of the fact that the targets in those mergers may not have any market significance at the time of the transaction (and may never have with or without the merger).
Any transaction that does not significantly impede effective competition must be cleared.
This test is equally applicable across all economic sectors.
European Union
Answer ... Notifiable joint ventures are subject to the same substantive test as other transactions – that is, whether the concentration significantly impedes effective competition (see question 4.8). Furthermore, the assessment of joint ventures can take into account the risk of coordination between parent companies in markets beyond the joint venture. If a joint venture is not considered as full-function – that is, it does not perform all functions of an autonomous economic entity on a lasting basis – then the transaction may also be reviewed under Article 101 of the Treaty on the Functioning of the European Union on restrictive agreements.
European Union
Answer ... The European Commission has issued guidelines detailing its review standard. In horizontal cases it will investigate, in particular, whether:
- the merging firms have large market shares;
- the merging firms are close competitors;
- customers have limited possibilities to switch supplier;
- competitors would be unlikely to increase supply if prices increased;
- the merged entity would be able to hinder expansion by competitors; and
- the merger would eliminate an important competitive force.
Recently, the theory of harm relating to the elimination of an important competitive force has become more relevant as the commission focused on so-called ‘killer acquisitions’ – that is, transactions in which a company buys a nascent or potential competitor which has not yet reached any relevant competitive position but is anticipated to do so within a reasonably short timeframe.
Regarding non-horizontal mergers – that is, those involving companies in upstream, downstream, adjacent or entirely unrelated markets – the commission will focus on whether the deal will enable the merging parties to deny competitors access to input products or potential competitors (foreclosure).
The commission will also always consider so-called ‘coordinated effects’. These exist if the market characteristics are such as to facilitate coordination between the remaining market participants.