• Johannes Lübking and Michele Piergiovanni• DG Competition

• Antitrustitalia• Brussels, 26 November 2013

• All views expressed are strictly personal and do not necessarily reflect the official position of the European Commission

The future of EU Merger Control – Simpler and better?

Improving the functioning of EU merger control

• The EU Merger Regulation is well proven …… but all legal instruments should regularly be reviewed ("Refit" programme)

• Two on-going policy projects:• Merger Simplification Project • Possible reform of the Merger Regulation: Towards

more effective EU merger control

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Simplification

Simplification

Objectives• Streamline procedures and cut red tape

• For non-complex cases/simplified procedure • Reduction of information requirements for all

cases, including complex ones

Effects• Save on cost and time for business• Focus resources on problematic cases

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Simplification: State of Play

• Public consultation during first half of 2013 on• Revised Implementing Regulation, including

Form CO, Short Form and Form RS• Revised Simplified Notice

• Overall very positive reaction but also some critical comments

• Adoption (hopefully) by the end of the year

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Simplification – Simplified Notice• Extended scope of simplified procedure

• 20% combined share in case of horizontal overlaps (previously 15%)

• 30% share upstream and downstream in case of vertical relationships (previously 25%)

• New category: 50% combined share and HHI delta below 150

• Other categories unchanged, but clarification of notion of vertical relationship

• Semi-simplified

• Shifting around 10% of cases from normal procedure to simplified procedure – resulting share of simplified procedures expected around 70%

• Main criticism: parties required to provide share under all “plausible alternative markets”

• Market definition should be “plausible”

• Usually the only “safeguard” for the Commission in these cases

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Simplification – Short Form

• More targeted and, in particular, very limited information in relation to

• Proposed transactions not giving rise to reportable markets

• Non-EEA joint ventures

• Other technical improvements

• Explanation of why the proposed transaction falls within the scope of the simplified notice

• Clearer requirements to establish that the proposed transaction is a concentration (what type of transaction is at stake) and that it is reportable (within the meaning of Article 4(1) of the Merger Regulation (also Form CO)

• Main criticism: the Short Form now asks for internal documents

• Not for all simplified cases, but only for those giving rise to reportable markets

• Documents requested are limited and should be readily available7

Simplification – Form CO

• Higher thresholds for affected markets → less affected markets → less information required

• Only data for plausible market definitions• Greater scope for waivers (nine sets of candidate information)• Other technical improvements across all Sections

• Main criticisms: increased information requirements and broadened scope of internal documents to be provided

• Economic data not required for Form CO completeness• Limited scope of additional internal documents requested

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Simplification – Form RS

• Information requirements from parties requesting a referral of a case from the Commission to Member States or vice-versa significantly reduced

• In essence, only information that is required to assess whether the pre-conditions for a referral are met

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Simplification – Pre-notification

• Continues to be offered as a service to the parties, including in simplified cases

• However, it may not be needed in all categories of simplified cases

• More responsibilities for the parties

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Possible reform of the Merger Regulation

Possible reform of the Merger Regulation

• Consultation paper "Towards more effective EU merger control" published 20 June 2013

• No need for a major overhaul of the EUMR (report on functioning of the EUMR, 2009).

• Limited number of issues examined:– Minority shareholdings– Referrals– Technical issues

• No decision taken yet on amendment of the EUMR

• Around 70 replies

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Enforcement gap in relation to acquisition of non-controlling minority shareholdings?

• Under the EU Merger Regulation:• The Commission has no jurisdiction to examine cases of

acquisition of minority stakes which do not confer control …• … but where it has jurisdiction, the Commission:

– takes existing minority shareholdings into account when analysing effects of a merger on competition

– may require divestiture of minority stake as condition for clearance

• … leads to the unsatisfactory situation that control depends on timing of acquisition of minority stake

• Articles 101 and 102 TFEU insufficient legal basis for comprehensive tackling of the problem

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Minority shareholdings – theories of harm

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Theory of Harm Silent StakeRights short of

control

Horizontal unilateral effects

Coordinated effects

Input foreclosure ()

Customer foreclosure

Findings

• Need to extend EU merger control to the acquisition of non-controlling minority shareholdings

• Appropriate to apply substantive test of EU Merger Regulation

• Limited number of cases expected, but relevant enforcement activity

• Objective: to strike the right balance with a system that

1. ensures to catch the (relatively small) number of potentially anti-competitive transactions

2. avoids unnecessary administrative burden

3. fits in the existing system of merger control at EU and national levels

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Minority shareholdings – Design and Options

• Two basic options in the Consultation Paper:• Notification system:

• Extend current system of ex ante notification of mergers to minority shareholding

• Selective system: • Commission may investigate transactions most likely to raise

competition concerns; Commission's discretion to examine cases

• No stand-still obligation

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Minority shareholdings – Design and Options (cont'd)

• Selective system: possible designs Self-assessment system

• No filing obligation

• Commission relies on market intelligence and complaints

Transparency system• Parties file short information notice (to be published on

website) to inform the Commission and to allow Member States to ask for referral

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Minority shareholdings – Design and Options (cont'd)

How the systems work is closely linked to the thresholds/ definition of minority stakes captured

•Quantitative threshold (10% like in US or even 5%): high number of cases, of which only a small part may be problematic, or

•Qualitative threshold (like material influence): small number of cases, most of which may warrant scrutiny

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Minority shareholdings – Design and Options (cont'd)

• Delineation to Article 101 TFEU / joint ventures

• Delineation of competences between Commission/Member States

• Same turnover thresholds as under current Merger Regulation

• Referrals

• Procedure • Voluntary notifications in selective system?

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Referral system

Article 4(5)• Objectives: Save time and cost for businesses• Proposal

• Maintain basic system: at least three Member States competent and only at the request of the parties

• but streamline procedure: abolish Form RS and Parties can directly notify to the Commission

• Member States have 15 workings days to veto

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Referral system – Article 22

Objectives• Original purpose of Article 22 ("Dutch clause") obsolete• Instead: normal system of case referral: Commission should

deal with a case if it is the more appropriate authority • Achieve "one-stop-shop": Commission can accept referral if

no competent Member State opposes; then it has jurisdiction for the whole EEA

• Enhance legal certainty: only a competent Member State can refer case to Commission

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Next steps:

VP Almunia to decide on the basis of the public consultation and the discussions with Member States on further steps

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