Consultation provides opportunity for comments
The European Commission has published a staff working document "Towards more effective EU merger control" ("Proposal") which discusses (i) the need for the acquisition of minority shareholdings to be reviewed under the EU merger control regime, (ii) ways to streamline the current case referral mechanism between Member States and the EU, and (iii) other potential improvements, such as to limit jurisdiction for joint ventures that have no conceivable impact on EEA markets. Interested parties have the opportunity to comment on the Proposal until 12 September 2013. The Proposal can be found on the Commission's website.
We have significant experience of the EU merger control regime and offer support if needed in making your views known to the Commission.
Under the current framework, acquisitions of minority shareholdings are not subject to scrutiny by the Commission. A change of jurisdiction will have a significant impact for companies acquiring a minority stake. While from a legal and economic perspective it is recognized that acquisitions of minority shareholdings are less likely to cause detrimental antitrust effects, the Commission has identified an enforcement gap and proposes three options to deal with the issue:
The Commission seeks input, inter alia, on the appropriateness of the potential scrutiny options in light of the costs and burden involved, on meaningful safe-harbour rules, on the possibility of voluntary notifications, and on the limitation period after which the Commission would be barred to investigate acquisitions of minority shareholdings.
The Proposal discusses the mechanism for referrals from Member States to the Commission that can be initiated by parties for a transaction that would have to be notified in at least three Member States (Article 4(5) EUMR referral), and the mechanism for referrals from Member States to the Commission that can be initiated by Member States (Article 22 EUMR referral).
Article 4(5) EUMR Referral
Under the current regime, parties seeking to refer to the EU a transaction that would normally be reviewed by three or more Member States, have to seek consent by Member States using a burdensome referral request (Form RS). Once the referral request is accepted, parties have to submit yet another notification (Form CO) to the Commission. Since only rarely Member States have opposed referral requests, the Proposal provides a quicker and leaner procedure:
The Commission, inter alia, seeks confirmation that the abolition of Form RS is an appropriate way to increase the attractiveness of a referral, and requests the quantification of savings. It also raises questions about the information sharing between the Commission and Member States.
Article 22 EUMR Referral
This referral provides Member States the possibility to refer to the Commission a case that originally was notified to Member States. It was frequently criticised that even Member States that were not competent to review a transaction in the first place could request a referral, and that a successful referral does not automatically lead to the Commission's jurisdiction over the whole of the EEA. Indeed, under the current regime, there were cases of parallel investigations between the Commission and Member States in relation to the same transaction. The Proposal recommends the following:
The Commission, inter alia, seeks confirmation that parallel jurisdiction should be avoided. It raises questions about potential conflicting timetables between national proceedings and the referral mechanism.
Other Improvements: Extraterritorial Joint Ventures
The Proposal deals with other areas of improvement, such as the treatment of extraterritorial joint ventures. Currently, joint venture with no conceivable effects in the EEA nevertheless have to be notified to the Commission if the joint venture parent companies' worldwide and EU-wide turnover is sufficiently high to meet the turnover thresholds established by EU merger control law. Although the Commission is prepared to accept a shorter notification, the parties have to run through the full procedure (including pre-notification, prohibition to close until clearance etc.) which has negative impacts on timing and cost. The Commission considers to:
Mayer Brown will also be making a submission to the Commission and we would welcome to discuss with you any comments you would like to have included.
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