Concentration control

Question 1

Principles of merger control

Answer 1

– control of artificial growth of undertakings
– prevent abuse of dominance
– fast and final decisions
– one-stop-shop principle in EU

Question 2

Characterisation of Merger Regulation

Answer 2

• no prohibition in Merger Regulation, no mention of nullity (left to the EC to verify whether compatible or not)
• no exemption possible (defences exist)
• duty to notify concentrations with Union dimension
• no real direct effect (Regulation, but grants exclusive competence to EC)

Question 3

Categories of merger levels

Answer 3

• horizontal merger
• vertical merger
• conglomerate merger (relationship neither horizontal nor vertical)

Question 4

Definition of “concentration”

Answer 4

Art. 3: Lasting change in the structure of the undertakings concerned
-> structure, control (over strategic decisions)

Question 5

Community dimension

Answer 5

Art. 1:

Effect on trade between Member States + de minimis + implementation in EU all through turnover criteria

Question 6

Substantive test

Answer 6

Art. 2 (2): significantly impede effective competition
-> goes beyond controlling abuse of dominant position: prevention rather than repression

Defences available:
– efficiency defence
– failing firm defence
– emerging market defence

Question 7

Herfindahl-Hirschman Index

Answer 7

HHI = measure of the market concentration

1. Sum of the squares of the market shares (market share²)
2. Relevant are absolute number + delta (post- minus pre-merger)

Question 8

Tresholds for horizontal mergers

Answer 8

HHI < 1000
HHI 1000 - 2000, delta < 250
HHI > 2000, delta < 150 (and markets shares ≤ 25 %)

Question 9

Tresholds for vertical mergers

Answer 9

HHI < 2000 (and market shares < 30 %)

Question 10

Joint ventures

Answer 10

Undertaking which is jointly controlled by two or more other undertakings -> joint control: parents can VETO strategic decisions

Question 11

Assessment of joint ventures

Answer 11

1. joint control, actual JV?
2. ‘full function’? (Art. 3 (4))
3. ‘concentrative’ or ‘cooperative’?

Concentrative: Art. 2(4) -> if yes, substantive test of Merger Regulation (Art. 2(2))
Cooperative: substantive test of Art. 101 TFEU

Question 12

Procedure - 2 stages

Answer 12

• pre-notification talks
• Phase I: initial examination (max. 25/35 working days); commitments, modifications possible in first stage
• Phase II: ‘initiation of proceedings’ only if ‘serious doubts’ (Art 6 (1) (b)); max. 90 working days (Art. 10)

Question 13

Possible decisions in stage 1

Answer 13

• decision declaring Merger Regulation inapplicable (Art. 6)
• decision declaring concentration compatible (subject to conditions) (Art 6, 8)
• decision to initiate Phase II
• referral to competent authorities of MS (Art 9)
• lack of decision (= compatibility)

Question 14

Possible decisions in stage 2

Answer 14

• decision declaring concentration compatible (subject to conditions)
• decision declaring concentration incompatible
• referral to competent authorities of MS
• lack of decision (=compatibility)

Question 15

Procedure - investigative powers

Answer 15

• requests for information
• EC can call upon NCAs
• ‘necessary investigations’
• sanctions

Question 16

Merger regulation in numbers

Answer 16

Phase I: 90% approved without conditions, 4% with
Phase II: majority approved with conditions

Mostly majority acquisitions and Joint Ventures need to be approved