European Merger Control
Necessary adjustments from the perspective of German industry
22. August 2024
Introduction
Effective merger control by the European Commission is a key pillar of European competition law and therefore one of the core elements of the European Single Market. The legal basis for its implementation can be found in particular in the EC Merger Regulation (EC) No. 139/2004 (ECMR), which has remained unchanged since 2004. The Horizontal and Non-Horizontal Merger Guidelines have also not been updated since 2004 or 2008. Far-reaching economic changes in recent years, such as the digitalisation of the economy, the effects of globalisation and new geopolitical developments, have not yet been reflected in the rules.
Therefore, 20 years after the publication of the ECMR and at the beginning of a new EU legislative period, it seems to be a good time to evaluate and update the existing EU merger control law. This applies all the more in light of the current political demands for greater promotion of the competitiveness of the European economy ("New European Competitiveness Deal"), the announcements by Commission President von der Leyen in her Political Guidelines 2024-2029 to better align competition policy and merger control with common European goals and global markets, and the European institutions' commitment to better regulation and a reduction in bureaucracy.
In the view of the Federation of German Industries (BDI), the future of competition and merger control law must be characterised by a more progressive competition policy that gives European companies effective opportunities in global markets. It is important to find a balanced approach that promotes the global competitiveness and growth of European companies while ensuring fair competition in the internal market. In this sense, competition policy and industrial policy do not contradict each other, but complement each other.
Particularly with regard to the competitiveness of European companies, the European Commission must always carry out a forward-looking market assessment when taking merger decisions and, in addition to competition in the Internal Market, also take greater account of the global competitive situation, dynamic market developments and the potential market entry of other companies as well as possible efficiency gains. In addition to the traditional assessment criteria, the long-term positive effects of a merger on innovation, quality, sustainability and investments should also play a decisive role in the Commission's assessment.
For some years now, discussions on the scope of application of merger control have increasingly focussed on cases involving companies with currently low turnover but high competitive and innovation potential ("nascent competitors"), particularly when these are acquired by large established companies. The European Commission is looking for ways to also examine these transactions in specific cases, even if according to the turnover thresholds it is not originally in charge. However, within the competence structure of the European institutions, it is not the Commission's task to determine which mergers are subject to European merger control. This is the responsibility of the Council. A decisive factor for sound corporate decisions regarding merger projects are clear administrative thresholds for taking up and examining merger cases. The approach taken by the Commission since 2021 of requesting a referral of cases from Member States based on Art. 22 ECMR, even if neither the European nor the Member States' thresholds are met, leads to great legal uncertainty for European and international companies. This legal uncertainty needs to end - if necessary, by amending the European merger threshold criteria
In addition to necessary adjustments to the Merger Regulation itself and the associated Commission guidelines, it is also crucial to bring about improvements in the European Commission's procedural practice. The "Simplification Package" adopted by the Commission in 2023 is welcomed, but only represents a first step in the necessary simplification and acceleration of procedures. The Commission's practice must change fundamentally: The often excessive requests for information and documents in the context of merger notifications must be reduced to a reasonable and manageable level for all parties involved and lengthy pre-notification phases should not be the rule.
1. Mergers below the turnover thresholds - Competence of the European Commission
▪ Referrals in accordance with Art. 22 ECMR
The Commission's new interest in Article 22 ECMR referrals in cases where neither European nor national thresholds are exceeded significantly increases the legal uncertainty surrounding planned mergers, particularly in innovative business areas. While the existing turnover thresholds previously made it possible to clearly categorise when a project would be taken up by the European Commission, it is now no longer certain whether a case that is generally not subject to notification will end up in Brussels for review - with the associated time and cost expenditure and uncertain outcome. To make matters worse, the Commission has announced that it may also accept referrals of mergers that have already been completed and subsequently prohibit them. The publication of guidelines and Q&As as well as the European Commission's repeated assurances that it only intends to apply the new practice in a few special cases cannot sufficiently alleviate the fundamental legal concerns of the business community, the existing legal uncertainty and the additional effort for companies. According to the Commission, it has already looked at around 80 cases since 2021 with regard to a possible referral under Art. 22 ECMR. Even if ultimately only a few cases were actually referred, it remains unpredictable which cases the Commission will take up. The BDI is therefore against the continuation of the referral practice under Art. 22 ECMR, regardless of the outcome of the ongoing ECJ proceedings in the Illumina/Grail case.
If the Commission sticks to the new referral practice in accordance with Art. 22 ECMR despite the major criticism and the existing legal uncertainty, and if this is also approved by the ECJ, it is indispensable to implement significant procedural improvements. These include stricter framework conditions, e.g. a clearer time limit and the introduction of a one-stop shop regime. Similar to the CMA, the parties should have the opportunity to submit a short "briefing paper" (comparable to the requirements under Art. 14 (2) DMA) to the Commission and to obtain a binding statement within a period of two weeks or less on whether or not the Commission would take up the transaction.
▪ Introduction of an EU transaction value threshold
Compared to the legal uncertainty caused by the referrals based on Art. 22 ECMR, the introduction of a new threshold, for example in the form of a transaction value threshold, as in Germany or Austria, seems clearly preferable. This could address cases in which a company involved in the merger has not yet achieved any significant turnover in the European Economic Area, but nevertheless has considerable market potential, which is reflected in a high purchase price. Such a transaction value threshold could probably also be introduced without an official revision of the Merger Regulation, on the basis of the simplified procedure pursuant to Art. 1 (5) ECMR. Although a new European transaction value threshold would create additional work for companies due to the new notification obligations, such a threshold - particularly in connection with simplified notification procedures and fast decisions - would also provide the urgently needed legal certainty. On the one hand, it would be clear which cases must be notified ex ante and which cases can be concluded with certitude, and, on the other hand, companies would have it in their own hands to bring about legal certainty and would not have to worry about ultimately arbitrary referrals and examinations on the basis of Art. 22 ECMR.
The introduction of a transaction value threshold could be structured in a similar way to Germany, i.e. the turnover thresholds would generally continue to take precedence. The transaction value threshold would only come into play if the turnover of the target remains below the turnover thresholds. As soon
as the European transaction value threshold is exceeded, there would be no obligation to register under national transaction value thresholds (currently in Germany or Austria).
In terms of amount, there would have to be a clear demarcation from the existing transaction value thresholds in the Member States (e.g. Germany (EUR 400 million) and Austria (EUR 200 million)). The transaction value threshold at EU level could be around EUR 1-2 billion. In order to ensure that only transactions with an actual substantial impact on competition in the European Economic Area are covered by the obligation to notify the European Commission, a "local nexus" requirement must be included in European merger control (see also below under 3.).
Recommendations
▪ Ensure clear and legally secure thresholds in European merger control
▪ Abandon the Commission's new practice of requesting case referrals under Art. 22 ECMR if neither European nor national thresholds are exceeded. Alternatively, introduce at least significant procedural improvements to reduce time and cost expenditure and legal uncertainty for companies
▪ Preferable, compared to Art. 22 ECMR referrals: Introduce an EU transaction value threshold as a new criterion to examine the acquisition of "nascent competitors"
2. Adjustment of the EU turnover thresholds
The EU turnover thresholds in Art. 1 ECMR have not been adjusted since 1989. An increase is appropriate in order to adequately compensate for inflation. Since 2004, price increases in Germany alone have totalled 47.9%, and since 1989 as much as 106.4%. Against this background and in view of the corresponding considerations to raise the national turnover thresholds in Germany and other Member States, the EU thresholds must be raised significantly - the Community-wide turnover threshold, for example, to EUR 500 million, comparable with the requirements in the Foreign Subsidies Regulation. This will allow the Commission to focus on cases with Community dimension
Furthermore, even after the threshold values have been increased, it must be ensured that a future adjustment does not fail to materialise for several decades. Irrespective of the specific adjustment mechanism, such a long period of standstill must be ruled out from the outset. A regular mechanism, such as an annual adjustment of the values in line with inflation as in the USA or Italy, would reflect the current level of inflation, but could also lead to random notification obligations, depending on the stage of the transaction at the time of the increase.
However, a review of the appropriateness of the threshold values must be carried out at least at regular intervals, which can then lead to new adjustments if necessary. Such a review could take place every 3-5 years, for example. In future, it should be possible to adjust the thresholds in a simplified procedure, such as that already provided for in Art. 1 (5) ECMR for adjustments regarding Art. 1 (3) ECMR, without the need for an extensive legislative process to amend the Merger Regulation. It would also be conceivable to regularly adjust the thresholds via delegated acts, comparable to the procedure for adjusting the thresholds in European public procurement law.
At the same time, the efficiency of the "one-stop shop" offered by the Commission must be guaranteed as comprehensively as possible, so that in individual cases companies can request a referral to the Commission. The corresponding referral provisions in Art. 4 (5) ECMR should be adapted in such a way that the Commission must accept a referral request from the notifying parties and that the referral can only be refused if all Member States, in which notification of the transaction is required under national law, reject it.
Recommendations
▪ Significantly raise the EU turnover thresholds with a view to inflation compensation and regularly review their appropriateness
▪ Ensure the efficiency of the "one-stop shop" by facilitating referrals in accordance with Art. 4 (5) ECMR by restricting the veto right of Member States
3. Local nexus requirement / effects test
A local nexus requirement must be introduced into European merger control in order to categorically exclude transactions without any connection to the EU from a notification obligation. This is particularly relevant if an EU transaction value threshold is introduced. A local nexus can be achieved, for example, with an additional turnover threshold, but also with an "appreciable local effect on the internal market in the foreseeable future". In accordance with the principles of international law and the ICN's Recommended Practices, merger control proceedings should only be conducted where a transaction also has substantial, i.e. not merely insignificant or even only potential, effects. This also corresponds to the German legal situation and the administrative practice of other antitrust authorities. Under EU law, for example, joint ventures outside the EU that have no impact on the internal market must currently be notified to the Commission if the parent companies reach the European turnover thresholds. Due to the exemplary effect that the Commission has on many merger control authorities worldwide, such a change would also have efficiency-enhancing effects beyond the EU (e.g. also with regard to proceedings in Ukraine and other EU accession candidates).
Another example of fundamentally superfluous notifications are financing rounds for venture capital investments. Here, the participation of two or more strategic global players in a small investment vehicle can quickly lead to joint control under the ECMR. The turnover of the strategic global players alone then leads to the turnover thresholds being exceeded. Such attribution of turnover in the context of small transactions triggers merger control unnecessarily, especially as there is often no alignment of interests. A remedy would be to consider only the isolated turnover of the investor and the target. If the latter is small, a transaction value threshold - as proposed above - could help to only cover the really significant financing rounds.
Recommendations
▪ Introduce a local nexus requirement into European merger control in order to exclude transactions without any connection to the EU from a notification obligation
▪ In the context of financing rounds, only consider the isolated turnover of the investor and the target when assessing turnover thresholds in order to avoid superfluous merger filings
4. Dynamic market analysis and global competition
Faced with international competition to attract business investments, Europe needs a sustainable merger control law that promotes and protects competition in the Internal Market, but also takes into account the competitiveness and global competitive situation of European companies. Procedural improvements and economies of scale play an important role here, as does the consideration of global market conditions. An overly narrow view of markets and the European Commission's often very critical attitude towards consolidation in individual sectors leads to disadvantages compared to international market participants.
In its revised Notice on the Definition of the Relevant Market, the Commission states that it can define a market as extending beyond the EEA or as a worldwide market. In practice, however, it should take greater account of the fact that markets increasingly go beyond national borders and the Internal Market. For example, in cases where the merging companies compete outside the EU and other competitors from third countries do not (yet) have business activities or revenues in the EU, the global market environment should also be sufficiently taken into account - in addition to the necessary examination of market conditions in the Internal Market. This applies all the more if, following an appropriate economic analysis, it becomes apparent that non-European competitors could become active in the EU in the foreseeable future. Under these circumstances, the Commission should take a more dynamic analysis and a long-term view of the markets.
The Notice on the Definition of the Relevant Market does contain information on special situations in which the Commission carries out a "forward-looking assessment" or takes account of expected structural market transitions. In principle, however, the Commission should always take foreseeable market changes - not only of a structural nature - into account when analysing the market. In order to accurately assess the competitive forces and the competitive pressure from other competitors after the merger, potential competitors should also be taken into account already at the market definition stage. This applies in particular if companies have already made their market entry plans public or if a company's history shows that it regularly enters new markets.
Recommendations
▪ Take greater account of global markets in the context of market definition and the competitiveness of sectors in order to promote the emergence of internationally competitive global players from Europe
▪ Carry out future-oriented market analyses which, in addition to competition in the Internal Market, also take into account the international competitive situation, dynamic market developments and the expected entry of other companies into the market
5. Theories of Harm
The expansion and new development of theories of harm by the European Commission is not subject to effective judicial review. Transactions are usually time-critical and must be completed quickly. In practice, merger control parties only have the choice of accepting the Commission's view and, if necessary, offering corresponding commitments, terminating their transaction plans or receiving a prohibition decision from the Commission. Even if a judicial review of this prohibition decision subsequently comes to the conclusion that the Commission's legal opinions and/or factual assessments were
incorrect, the parties generally no longer have the option of completing the transaction. Damage claims for companies in cases where a Commission decision based on new theories of harm proves to be unlawful in judicial appeal proceedings should be facilitated.
In order to increase the legal certainty of companies when planning a merger, the Commission should explain in more detail how it takes into account new theories of harm, such as the focus on innovation aspects or ecosystems. In principle, interpretative guidelines, such as the Horizontal and Non-Horizontal Merger Guidelines, are important orientation aids, but they should be updated at regular intervals. It would also be conceivable to include general specifications and guidelines for the assessment of theories of harm in the guidelines in order to create a valid framework for the future development and application of new theories. This would ensure that new theories of harm have a clear basis. The "effects-based approach" should play a key role, placing the economic effects at the centre of the analysis. It would be even more legally secure to amend the ECMR itself in order to clarify new concepts regarding the theory of harm.
Consolidated guidelines on the framework conditions and the enforcement practice and case law of the European Commission and the European Courts when applying the SIEC test would also be helpful, for example on the question of when concepts such as “closeness of competition” and “important competitive force” are considered to be a significant impediment under the SIEC test or which standards of proof are applied to prove a significant impediment in "gap cases". This is of particular interest following judgements such as CK Telecoms UK Investments Ltd (C-376/20 P)
Recommendations
▪ Better explain the development and application of new theories of harm, in interpretative guidelines or in the ECMR itself, to increase legal certainty for businesses
▪ Publish consolidated guidelines on the enforcement practice of the European Commission and the case law of the Courts regarding the application of the SIEC test
6. Efficiencies
Potential efficiency gains and the positive effects on the global competitiveness of the industry concerned must be given much greater weight in the assessment of a merger project than has been the case to date. Even though recital 29 ECMR and the explanations in the Horizontal Merger Guidelines and the Non-Horizontal Merger Guidelines state that efficiency considerations can theoretically be taken into account, these appear to be of little significance in practice to date. This is due to the European Commission's very high standards of scrutiny and the different requirements of proof for the assessment of harm and the assessment of efficiency gains. As a result, society is deprived of important potential efficiency gains. According to the ICN Recommended Practices for Merger Analysis, the assessment of efficiencies should also be an integral part of the overall assessment of a transaction: "The assessment of potential efficiencies should be part of a competition agency's overall analytical framework for merger review. In specific cases where the merging parties assert that a merger is unlikely to harm competition significantly because of expected efficiencies, agencies should carefully assess appropriate efficiency claims." The stronger consideration of efficiencies is also in line with the principle of the more economic approach
The assessment standard for efficiencies should be consistent with the standards for theories of harm and remedies. It is disproportionate that potential efficiencies should only be taken into account within short periods of time, while much longer periods of time are sometimes applied to theories of harm. The standard of proof for efficiencies should also not be higher than for theories of harm. A credible demonstration of efficiencies on the basis of business plans should suffice. It will not be possible for the parties to fully prove in advance efficiencies that will only materialise in the future; after all, this is only a forecast.
The evidence required under the Horizontal Merger Guidelines and the Non-Horizontal Merger Guidelines is very difficult or even impossible to provide in practice. It is also inappropriate that, according to the Non-Horizontal Merger Guidelines, the European Commission largely applies the same very strict principles as in the assessment of horizontal mergers (para. 53 of the Guidelines). As vertical and conglomerate mergers are much less likely to lead to competition problems than horizontal mergers and have considerable potential for pro-competitive efficiencies, different standards of scrutiny should also apply when assessing efficiencies.
Changes to the guidelines are therefore required. However, the standards for the consideration of efficiencies should also be more firmly anchored in the Merger Regulation itself, for example by clarifying how the "likely" standard of proof referred to in recital 29 of the Merger Regulation is to be interpreted in connection with efficiencies. In certain cases, the Commission should also take into account efficiencies outside the market, e.g. in relation to sustainability benefits arising in markets other than the affected market.
Recommendations
▪ Always examine potential efficiency gains as an integral part of the overall assessment and provide realistic evidence requirements and standards of proof for efficiency gains
▪ Recognise efficiency gains also outside the affected market, e.g. in relation to sustainability benefits
7. Remedies
The European Commission should clarify when it considers commitments to be "proportionate to the competition problem" (recital 30 ECMR). Remedies should always relate to the potential harm expected from the merger and cannot be used as an instrument to correct market failures that are unrelated to the proposed merger. Examples of behavioural remedies that focus on potential harm to competition may include, for example, longer-term supply commitments to improve competitiveness and choice for the benefit of consumers.
Recommendation
▪ Do not use remedies as an instrument to correct market failures unrelated to the proposed merger
8. Necessary procedural improvements
The measures published by the European Commission in 2023 on simplifications in merger control contain many good approaches for actual procedural simplifications. A streamlining of the notification forms through "tick the box" options, the expansion of the case categories to be examined under the simplified procedure or the anchoring of the "extremely simplified procedure" without pre-notification are welcomed by companies. At the same time, however, the Commission's simplification package has failed to introduce simplifications in areas that are particularly burdensome for companies; this applies in particular to mergers that do not fall under the simplified procedure. The expenses incurred by companies in these mergers often no longer comply with the principle of proportionality. For example, the requirement to submit all plausible alternative market definitions and the corresponding market data should be cancelled or at least significantly reduced. Elsewhere, the Commission has even increased the information obligations of companies through the Simplification Package, for example when enquiring about pipeline products.
It remains the case that merger control proceedings before the European Commission often take a very long time and are disproportionately costly. The excessive requests for information and documents must be reduced to a reasonable and manageable level for all parties involved and the often lengthy pre-notification meetings should not be the rule. The impression often arises that information is requested "pro forma", even though it cannot contribute to the actual competitive assessment in the specific case or is not taken into account. In many cases, the requested market data is not directly available to the companies, but has to be determined or estimated individually, which leads to considerable personnel and time expenditure. In addition to improvements to the procedure, the elements of "checks and balances" within the Commission should also be significantly strengthened, for example by creating separate teams to determine and prepare the decision.
▪ Streamlining the pre-notification phase
Companies are generally subject to a very tight timetable in the context of merger projects: As a rule, the success of a merger depends on the rapid completion and speed of the subsequent integration of the companies involved. Delays cause costs for the companies, paralyse the continuation of business operations and have a demotivating effect on employees, especially those of the target company in the event of a company acquisition. Against this background, the swift implementation of merger control proceedings is of the utmost importance for the companies concerned. While the actual merger control procedure is subject to tight procedural deadlines, the duration of the pre-notification phase is completely open and often significantly exceeds the duration of the official Phase 1 procedure.
In order to streamline the pre-notification phase, it is crucial that the European Commission deploys sufficient and experienced staff from the outset, which can also make a binding statement on the completeness of the draft notification. From the companies' point of view, once a pre-notification phase has been carried out, the European Commission must not question the completeness of a notification weeks after it has been submitted. Otherwise, the transaction schedule of the companies concerned would be unnecessarily jeopardised and the procedural deadlines specified by the Merger Regulation would lose credibility. Clearer requirements should be introduced here - e.g. the rule that the notification can be made at the latest after two reviews of the draft Form CO by the Commission in the pre-notification phase and that this review in the preliminary phase excludes a later incomplete decision pursuant to Art. 5 (2) Regulation 2023/914. In this case, the Commission would still have the option of requesting additional information during the procedure.
The responsible case handlers should be involved in case investigations in the same economic sector for a longer period of time, as is the case at the German Federal Cartel Office, for example. Such specialisation would provide the case handlers with a wealth of experience and in-depth knowledge of the relevant market and a better understanding of internal company processes right from the start of proceedings, which would not only contribute to shorter pre-notification phases, but also to more targeted requests for information.
▪ More targeted requests for information
The European Commission often demands very detailed information from the companies concerned as early as the pre-notification phase, which even goes beyond the requirements of the Form CO or the simplified form. For the companies concerned, a great deal of information, especially information on markets in which they only have minor activities or on possible alternative market definitions, can only be obtained in acceptable quality with great effort, if at all. It is therefore necessary for the Commission to be more flexible and pragmatic when requesting information from the companies concerned in the pre-notification phase and in the later examination phase and also to make more frequent use of its option to waive certain information.
The responsible case team should act with sound judgment and also be given the necessary authorisation and support within their own hierarchy to request only the information relevant to the decision, depending on the case. It should be ensured that the questions are clear and tailored to the respective party. Requests for information should - as far as possible - be summarised and consolidated. Greater flexibility on the part of the case team in this respect would in turn also help to significantly streamline the pre-notification procedure.
Companies are obliged to provide correct and complete information as part of merger control proceedings. This is being scrutinised critically by the Commission, as the current statement of objections in the Kingspan case shows. Against this background, it is also important to limit the amount of information and documents required to what is really needed so that companies can consolidate their capacities, compile this information with the necessary care and avoid unnecessary liability risks.
Requests for information regularly contain very detailed questions on all possible markets and segments, which are often very close to each other. In most cases, the enormous level of detail in the requests for information is neither necessary nor helpful in gaining a realistic picture of the conditions on the market in question. The increasing trend towards e-discovery procedures in the context of merger reviews is seen critically. Data requests should be limited to a small number of custodians in order to minimise the company's workload. After all, this is not an antitrust procedure.
Requests for information addressed to third parties (competitors, customers, suppliers) are also often disproportionately complex and not very relevant. This is also shown by the fact that the enquiries for customers and competitors are often identical and therefore not tailored to the respective market participant being surveyed. The sole use of online tools to answer questionnaires is also not appropriate in every case. Coupled with the generally very short processing times, the increasing complexity, especially in questionnaires directed at third parties, tends to mean that questions can only be answered briefly or evasively. This in turn reduces the quality of the statements, and therefore the quality of the market test and thus the quality of the Commission's final decision.
The Commission should therefore endeavour to significantly reduce the need for information and limit it to what is necessary and reasonable. The norm should be - as in US practice - meetings and telephone calls with the merging parties and third parties. If the clarification of the facts still requires a request for information, this should be brief and self-explanatory and ideally be drawn up in dialogue
with the merging parties. Stricter quality control of questionnaires within the hierarchy of the European Commission could also provide a remedy.
▪ Justification of approval decisions
Merger control proceedings at the Commission are also particularly time-consuming because the Commission has to issue detailed approval decisions even in unproblematic cases. To do so, it requires detailed information from both the companies involved and other market participants, which in turn leads to extensive requests for information. In order to reduce the existing workload, it would be helpful if the Commission were only obliged to issue detailed approval decisions in certain cases:
▪ If it only authorises a transaction subject to conditions.
▪ In cases in which third parties are formally summoned to merger control proceedings because they have sufficiently demonstrated that they are affected.
In all other cases, it should be sufficient to publish only a brief approval decision or a short case report. This way, transparent decisions and information to the public on interesting new factual or legal issues would continue to be guaranteed without the effort of a detailed approval decision.
Recommendations
▪ Streamline the pre-notification phase, for example through clearer rules on the binding nature of the Commission's statements in the pre-notification phase and by specialising case handlers in certain economic sectors
▪ Develop more targeted requests for information in dialogue with the respective market participants
▪ Delete fixed requirements for companies to submit all plausible alternative market definitions and the corresponding market data and instead request market data relating to the specific case
▪ Limit data requests in e-discovery procedures to a small number of custodians
▪ Reduce bureaucracy in approval decisions
▪
9. Priority of the ECMR over national divestiture orders
In 2023, Germany introduced new powers for the Federal Cartel Office following sector enquiries as part of the 11th amendment to the German Act against Restraints of Competition. If the Federal Cartel Office identifies a significant and continuing malfunctioning of competition, it can impose behavioural and structural remedies, even if the companies concerned have behaved lawfully. Under certain circumstances, even the obligation to sell company shares or assets is conceivable. According to German law, there is a ten-year blocking period for ordering a divestment of assets that were previously subject to merger control clearance by the European Commission or the Federal Cartel Office. However, after ten years following the approval decision, the obligation to sell the corresponding assets is also permitted in these cases.
This means that companies can only rely on the approval of a merger for a period of 10 years - even below the market dominance threshold, in the case of completely lawful behaviour and in compliance with all commitments and remedies imposed. After that, a divestiture order would be possible under national law. Through this regulation, German law expressly reserves the right to (partially) reverse a transaction authorised by the Commission. This calls into question the reliability of German and European merger control and is also in clear contradiction to the principles of the Merger Regulation. Once a merger has been cleared by the European Commission, it cannot simply be prohibited and unbundled at a later date - especially by a national authority. The Commission itself can impose obligations and conditions on its clearance in order to dispel any competition concerns. In this respect, however, only a breach of these conditions can lead to the subsequent revocation of the approval. If, on the other hand, the conditions are complied with and, contrary to expectations, obstacles to competition arise in the market, the clearance remains irrevocable. Remedial measures in retrospect would contradict the principle of preventive market structure control by the European Commission.
In view of this violation of the division of competences in European merger control, corresponding clarifications should be included in the Merger Regulation - for example in Article 21 ECMR. Otherwise, there is also a risk that other Member States will introduce similar provisions into their respective national law. This problem should therefore be clarified for the future.
Recommendation
▪ Clarify that for reasons of competence transactions authorised under the ECMR cannot later be dissolved by national divestiture orders
Imprint
Federation of German Industries (BDI)
Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
Editors
Nadine Rossmann
Law, Competition and Consumer Policy
T: +32 2 792-1005
n.rossmann@bdi.eu
Dr Ulrike Suchsland
Law, Competition and Consumer Policy
T: +49 30 2028-1408
u.suchsland@bdi.eu
EU-Transparency Register: 1771817758-48
Lobby Register: R000534
BDI document number: D1973