Legal Alert – Simplified EU Merger Rules
BORENIUS Group welcomes the European Commissions proposal to simplify the merger procedure under the EU Merger Regulation. After the change, a simplified procedure can be used more often. The proposed changes are notable, and it will be seen in practice whether the Commissions aim set in the proposal will be achieved as significant amount of information will still be necessary and it is only the European Commission that can grant waivers to the EU notification. The new proposal is encouraging as it will allow a quicker, less burdensome and more business-friendly merger control procedure. The Commissions investigation could be a reasonable alternative for multiple filings e.g. in Estonia, Finland, Latvia and Lithuania.
More competitive Europe through simplified merger procedure
The European Commission has recently published for public consultation a proposal to simplify and lessen the administrative burden regarding procedures for notifying mergers under the EU Merger Regulation. The main aim of the proposed changes is to expand the scope of the simplified procedures for mergers that do not raise competition concerns and to make merger control more business-friendly and less burdensome as less information on the merger and the relevant markets will be required. Thereby the European Commission considers that the proposed changes could allow up to 70% of all notified mergers to qualify for a review under the simplified procedure.
1) Increase in the market share thresholds
It is proposed to increase the applicable market share thresholds for applying the simplified procedure by 5%. As a result, in case of horizontal mergers the simplified procedure will be applied if the combined market share of all merging parties is less than 20%, and as to vertical relations, if the individual or combined market share of all parties is less than 30%. The thresholds for horizontal and vertical relationships apply to all plausible alternative product and geographic market definitions that may have to be considered in a case.
The proposed changes foresee a new category of concentration to which the simplified procedure may be applied if both of the following conditions are fulfilled under all plausible alternative market definitions: the combined market share of all the parties to the concentration that are in a horizontal relationship is less than 50% and the increment (delta) of the Herfindahl-Hirschman Index (HHI) resulting from the concentration is below 150. The European Commission will decide on a case-by-case basis whether, under the particular circumstances of the case at hand, the increase in the market concentration level indicated by the HHI delta is such that the case should be examined under the normal first phase merger procedure.
2) Simplified merger notification forms
A number of amendments are proposed to merger notification forms i.e. Form CO, Short Form CO and Form RS (for a reasoned submission for a pre-notification referral). The main aim of the proposal is to reduce the net amount of information required to notify a merger that will significantly lessen the administrative burden on the merging parties.
The proposed amendments to merger forms, for example, alter the amount of definition and information that is necessary to submit regarding affected markets. It is proposed that the merging parties would need to submit detailed information regarding affected markets where there are horizontal overlaps of more than 20% and vertical overlaps of more than 30%.
The proposed changes to Form CO include more detailed guidance regarding the possibility to request waivers from providing particular categories of required information. It is specified that such categories of information regard, for example, (a) details of acquisitions made during the last three years by group undertakings active in affected markets; (b) analyses, reports and any comparable documents of the last three years for the purpose of assessing the affected markets; (c) estimates of the total Union-wide and EEA-wide capacity for the last three years; (d) trends and intensities of research and development; and other.
The proposed amendments to Form RS encourage the parties to consult the Commission prior to a reasoned submission and request for waiver as in the majority of cases it will result in a significant reduction of the information required.
Borenius Group consists of over 200 lawyers in six jurisdictions. The member firms of Borenius Group are separate legal entities practicing advocacy for their own account and following their respective local Bar rules.
For additional information