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NEW LEGISLATION TO STREAMLINE MERGER CONTROL PROCEDURES (December 12, 2013)

The European Commission (EC) has adopted legislation that simplifies merger control procedures.

On December 5, 2013, the EC adopted an amendment to Commission Regulation No. 802/2004, which implements Council Regulation No. 139/2004 (Implementing Regulation) and its annexes, Form CO, Short Form CO and Form RS. The amendment will enter into force on January 1, 2014. It introduces changes that should streamline merger control procedures that have been criticized as bureaucratic, cumbersome and ineffective. The major changes can be divided into the following areas:

WIDER USE OF SHORT FORM CO

A concentration is notified to the EC either on Form CO or Short Form CO. The Short Form CO is a simplified application with relaxed information requirements. The amendment permits more companies to use the Short Form CO. Pursuant to the amendment, parties to a concentration can use the Short Form CO if their combined market share:

  • does not exceed 20% (originally 15%) and they are active on the same product and geographic market (horizontal overlaps);
  • does not exceed 30% (originally 25%) and they are active on vertically related markets (vertical overlaps);
  • is between 20% and 50% and the increase in market share resulting from the concentration is limited (HHI delta of less than 150).

 

However, even if the above criteria are met, the EC may always request that parties notify the concentration on Form CO if there are any competition concerns.

CHANGES TO NOTIFICATION FORMS

The EC omitted or revised certain information requirements from the notification forms which have proven to be unnecessary. Most notably, the amended Form CO provides that parties must submit detailed information only for those "affected markets" where the horizontal overlaps are more than 20 % (originally 15%) and vertical overlaps are more than 30 % (originally 25%).

On the other hand, the notification forms now require the submission of various documents prepared in connection with the concentration. Such documents include analyses, reports, studies, surveys and/or presentations prepared by or for the Board of Directors, Supervisory Board and other comparable bodies. The extent to which such documents must be provided depends on the notification form used.

STREAMLINED PRE-NOTIFICATION CONTACTS

"Pre-notifications contacts" give the parties an opportunity to discuss thescope of the notification with the EC and to identify the EC's competition concerns. However, they can be redundant when concentrations have a negligible effect on competition. Hence, the Form Short CO now states that there might be no need for the pre-notification contacts if the concentration does not lead to any horizontal or vertical overlaps. Parties to a concentration often request waivers from the obligation to submit certain information which they consider not relevant for the merger analysis during pre-notification contacts. The revised notification forms now clearly identify information that will most likely be waived by the EC. Thus, the EC also believes that the time needed for pre-notification contacts will be shortened as a result of the reduced information requirements.

Any attempt by the EC to simplify the merger control procedure is more than welcome. However, the actual effects of the recent package are yet to be seen, as the EC still enjoys wide discretion and may often reject waiver requests and require the use of Form CO.