Crucial changes expected in EU Merger Control

Europe

'There will be no major overhaul of EU merger controls, but more fine-tuning to concentrate on the things that matter' – This was the bottom-line of a speech by EU Commissioner Margrethe Vestager at the International Bar Association 24th Annual Competition Conference on 11 September 2020. However, some of that fine-tuning could have significant impact on EU merger-control practice.

 The EU watchdog will potentially have the means to pick up mergers that previously remained off the Commission's radar, but the procedure for easy cases could become simpler.

In her speech on the EU Commission's preliminary evaluation of EU Merger Control Rules, Vestager stated that the EU Commission will publish a full report on the evaluation in early 2021. Her remarks now focused on the following three important topics of EU Merger Control:

  • Thresholds: The EU Commission takes the view that the current turnover-based threshold system works well and that no new thresholds, such as a "value of the transaction" threshold, are warranted. Instead, Vestager indicated that the Commission will likely change its practice in respect to referrals. Pursuant to Article 22 EUMR, a member state can ask the EU Commission to examine a concentration that does not have a community dimension, but affects trade between member states and threatens to significantly affect competition within the territory of the member state making the request. Article 22 EUMR does not explicitly set out whether the member state making such a request must have the competence under its domestic thresholds to review the case. In recent years, the Commission has adopted the practice of discouraging national authorities from making an Article 22 EUMR request for cases that they did not have the power to review themselves. This makes sense already from the wording since it is only possible to "refer" something for which they already have competence.

    Vestager, however, now indicated that the Commission would change its approach and begin accepting referrals from national competition authorities regardless of whether those authorities have the power to review the cases. In practice, this would give the Commission wide discretion over which mergers to review since there is no turnover threshold a merger would need to meet on either the EU or the national level. This policy change seems far-reaching and in order to maintain some legal certainty, Vestager also indicated that the Commission would adopt a guidance) on how and when such referrals would be accepted. According to Ms Vestager this guidance would likely be published in the middle of 2021.

  • Simplification: Vestager stressed the Commission's commitment to assess how the merger process can be made easier, particularly in cases that do not raise substantive concerns. Such assessments of its procedures will include a review of the Commission's Best Practices, the Notice on the Simplified Procedure and the Merger Implementing Regulation. Vestager also promised that the Commission would review how to cut back on pre-notification discussions. While pre-notification is not prescribed by the Merger Regulation, the Commission currently advises against filing a merger notification without previously discussing the notification with the Case Team in charge of the file. In practice, even obviously unproblematic cases undergo pre-notification talks, which adds to the overall time duration of the merger control process.

  • Substantive assessment: Vestager indicated that the Commission would launch an evaluation regarding its substantive assessment of cases. Even though no immediate revision of the Commission's merger guidelines is expected, the Commission is obviously interested in refining its assessment of the impact of digitisation on the economy. Vestager also noted that in the large European economies "several industries are more concentrated now than they were twenty years ago" and that the Commission would like to look into the reasons for such concentration. Before launching this review, however, the Commission will await the outcome of its appeal with the Court of Justice in the landmark "CK Telecoms" case in which the lower-tier General Court found fault in much of the Commission's practices in merger control.

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