Week 5
Principles
What?
Control of artificial growth of undertakings and thereby prevent abuse of dominance
o Artificial growth is growing not because you are the best but because you are taking over
your competitor
o There is nothing about merger control in the treaties, there is only secondary legislation on
this
‘Deal is done’ in the heads of the business people need for fast and final decisions
If you are working on a merger case: in their mind the deal is done and now “there are these annoying
lawyers with their rules” which require authorization of an authority
They need a fast decision, otherwise their best people will run away that is why we need a fast and
final decisions.
In EU ‘one-stop shop’ principle: it has either a community dimension or it has not.
• If it has a community dimension then it will be the Commission to the decide, if it has not then it is for
the national authorities to decide
• No parallel application of EU and national law
• But risk of having to notify in many jurisdictions increases (if you have deal you will have to notify it to
lots of national authorities but you don’t want to loss time because you want a fast and final decision
so they want to go to the Commission to avoid that: what we see is that the risks to notify to lots of
Member states increases because all of them have their own merger control regime)
o Extraterritorial reach of merger control
o Development of nat’l concentration regimes in all MS
Sources, incl weight of precedents
Institutional ‘balance’: EC or NCAs
Evolution
No Treaty provision (Art. 66(1)-(6) ECSC): which is bizarre but the Member States did not want them in the
Treaty at first (it would give too much power to the EU and less to them).
Concentration (‘Merger’) Regulation 139/2004
EC proposals 1973, 1982, 1984, 1986, ...
ECJ steps in (it took 2 judgements to make the Member States change their mind: merger can be seen as an
abuse of dominance so can be checked under 102 TFEU or it can be seen as a restrictive agreement so I can
check the mergers under 101 TFEU the member states cannot stop this as the articles are in the treaty and
there is supremacy of EU Law)
• Concentration as abuse of dominance
• Concentration as restrictive agreement
1989 Merger Regulation after 20 years of negotiation
2004 revised slightly.
,[2014 White Paper for further revision]
2016 Public consultation ?
Comparison with Articles 101-102 TFEU
2 striking differences with 101 and 102 TFEU: here we have to notify (we want to prevent) and it is a 2 stages
procedure (Just like with staid aid) (one very fast informal and then the second phase that you want to avoid
more public, longer and where all your competitors will be involved).
No prohibition in Concentration Regulation, no mention of nullity (left to the EC to verify whether compatible
or not)
No exemption possible (although defences exist)
Duty to notify concentrations with Union dimension
Two-stage procedure
No real direct effect (Regulation, but grants exclusive competence to EC)
4. Concept of ‘concentration’
(Art. 3) lasting change in the structure of the undertakings concerned
Lasting = at least 5 years
Structure = change of control
Control = change of decisive influence
Decisive influence = change of influence over strategic decisions
+ Exceptions in Art. 3(5): if you have shares and don’t have the intention to control the undertakings, you
become shareholder against your will.... there will be no concentration.
Horizontal merger
Direct competitors e.g. Case M.8454 – KKR/Pelican Rouge (vending machines)2 direct competitors joined
forces on the market. 2 companies active on the same market merge. (ex: Merger between Pepsi and Coca-
Cola)
, Vertical merger
Companies at different levels of the supply chain
e.g. Case M.4854 – TomTom/Tele AtlasIt was one of the possible factors leading to dominance. Less afraid from
that than horizontal integration.Merger of 2 or more companies not active at the same level of the supply
chain, so they are at different levels of the production and distribution chain and they vertically integrate.
Vertical integration is one of the possible factors leading to dominance. We care of it but we are not of afraid of
it as we are of horizontal integration
Conglomerate merger
Relationship is neither horizontal nor vertical
e.g. Case M.5984 Intel/McAfee: producer of chip whit the producer of security software. They are active in
different product markets, there are no horizontal or vertical issues. But we do see issues because if they joined
forces perhaps they will start tying their products.Merger between companies that are active in totally
unrelated business.
Concentration with ‘Community dimension’ (Art. 1)
De minimis + impact on trade between Member States + EU dimension (not third country) all in one set of
turnover criteria
We don’t care about small transactions, need to have an impact on trade between Member States (but here
we will take into account only numbers + EU dimension (not third country) = all these in 2 sets of turnover
criteria. = art. 1 Reg.
Why? need for fast and final decisions
1. Criteria set 1
(a) aggregate worldwide turnover"combined _ of all undertakings concerned + 5.000 mio euro"
(b) aggregate Union-wide turnover"_ of each of at least two undertakings concerned + 250 mio euro"
(c) transnational character"unless each of undertakings concerned achieves + 2/3 of (b) within one and same
MS“ If one of the criteria is not fulfilled you move to the second set, if criteria is set in 2 not fulfilled: it is not a
merger with community dimension no need to notify to the Commission but to the MS
Principles
What?
Control of artificial growth of undertakings and thereby prevent abuse of dominance
o Artificial growth is growing not because you are the best but because you are taking over
your competitor
o There is nothing about merger control in the treaties, there is only secondary legislation on
this
‘Deal is done’ in the heads of the business people need for fast and final decisions
If you are working on a merger case: in their mind the deal is done and now “there are these annoying
lawyers with their rules” which require authorization of an authority
They need a fast decision, otherwise their best people will run away that is why we need a fast and
final decisions.
In EU ‘one-stop shop’ principle: it has either a community dimension or it has not.
• If it has a community dimension then it will be the Commission to the decide, if it has not then it is for
the national authorities to decide
• No parallel application of EU and national law
• But risk of having to notify in many jurisdictions increases (if you have deal you will have to notify it to
lots of national authorities but you don’t want to loss time because you want a fast and final decision
so they want to go to the Commission to avoid that: what we see is that the risks to notify to lots of
Member states increases because all of them have their own merger control regime)
o Extraterritorial reach of merger control
o Development of nat’l concentration regimes in all MS
Sources, incl weight of precedents
Institutional ‘balance’: EC or NCAs
Evolution
No Treaty provision (Art. 66(1)-(6) ECSC): which is bizarre but the Member States did not want them in the
Treaty at first (it would give too much power to the EU and less to them).
Concentration (‘Merger’) Regulation 139/2004
EC proposals 1973, 1982, 1984, 1986, ...
ECJ steps in (it took 2 judgements to make the Member States change their mind: merger can be seen as an
abuse of dominance so can be checked under 102 TFEU or it can be seen as a restrictive agreement so I can
check the mergers under 101 TFEU the member states cannot stop this as the articles are in the treaty and
there is supremacy of EU Law)
• Concentration as abuse of dominance
• Concentration as restrictive agreement
1989 Merger Regulation after 20 years of negotiation
2004 revised slightly.
,[2014 White Paper for further revision]
2016 Public consultation ?
Comparison with Articles 101-102 TFEU
2 striking differences with 101 and 102 TFEU: here we have to notify (we want to prevent) and it is a 2 stages
procedure (Just like with staid aid) (one very fast informal and then the second phase that you want to avoid
more public, longer and where all your competitors will be involved).
No prohibition in Concentration Regulation, no mention of nullity (left to the EC to verify whether compatible
or not)
No exemption possible (although defences exist)
Duty to notify concentrations with Union dimension
Two-stage procedure
No real direct effect (Regulation, but grants exclusive competence to EC)
4. Concept of ‘concentration’
(Art. 3) lasting change in the structure of the undertakings concerned
Lasting = at least 5 years
Structure = change of control
Control = change of decisive influence
Decisive influence = change of influence over strategic decisions
+ Exceptions in Art. 3(5): if you have shares and don’t have the intention to control the undertakings, you
become shareholder against your will.... there will be no concentration.
Horizontal merger
Direct competitors e.g. Case M.8454 – KKR/Pelican Rouge (vending machines)2 direct competitors joined
forces on the market. 2 companies active on the same market merge. (ex: Merger between Pepsi and Coca-
Cola)
, Vertical merger
Companies at different levels of the supply chain
e.g. Case M.4854 – TomTom/Tele AtlasIt was one of the possible factors leading to dominance. Less afraid from
that than horizontal integration.Merger of 2 or more companies not active at the same level of the supply
chain, so they are at different levels of the production and distribution chain and they vertically integrate.
Vertical integration is one of the possible factors leading to dominance. We care of it but we are not of afraid of
it as we are of horizontal integration
Conglomerate merger
Relationship is neither horizontal nor vertical
e.g. Case M.5984 Intel/McAfee: producer of chip whit the producer of security software. They are active in
different product markets, there are no horizontal or vertical issues. But we do see issues because if they joined
forces perhaps they will start tying their products.Merger between companies that are active in totally
unrelated business.
Concentration with ‘Community dimension’ (Art. 1)
De minimis + impact on trade between Member States + EU dimension (not third country) all in one set of
turnover criteria
We don’t care about small transactions, need to have an impact on trade between Member States (but here
we will take into account only numbers + EU dimension (not third country) = all these in 2 sets of turnover
criteria. = art. 1 Reg.
Why? need for fast and final decisions
1. Criteria set 1
(a) aggregate worldwide turnover"combined _ of all undertakings concerned + 5.000 mio euro"
(b) aggregate Union-wide turnover"_ of each of at least two undertakings concerned + 250 mio euro"
(c) transnational character"unless each of undertakings concerned achieves + 2/3 of (b) within one and same
MS“ If one of the criteria is not fulfilled you move to the second set, if criteria is set in 2 not fulfilled: it is not a
merger with community dimension no need to notify to the Commission but to the MS
