Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC to simplify process for EU merger regulation, (Dec 6, 2013)

The European Commission (EC) has announced its adoption of a package to simplify procedures for reviewing concentrations under the European Union (EU) Merger Regulation. The package expands the scope of its simplified procedure to review unproblematic mergers which brings the total ratio of cases covered under this procedure to 60 to 70 percent. The EC has also reduced the amount of information required for notifying transactions in all cases. The adoption is expected to bring significant benefits for businesses and advisers in terms of preparatory work and related costs. The merger simplification package will be applicable as of January 1, 2014.

The initiative is a step toward the goal of the EC’s Regulatory Fitness and Performance (REFIT) program to make rules and regulations less burdensome on businesses. To further streamline the review of mergers at the EU level, the EC has revised two texts: (1) the notice on simplified procedures and (2) the merger implementation regulation. The EC has also updated its model texts for divestiture commitments.

Joaquin Almunia, EC Vice President for Competition Policy, said “The merger simplification package shows that we are listening to our stakeholders. It is the most comprehensive reform of our merger procedures to date and will make them much simpler. This will reduce the administrative burden and cost for business at a time when it needs it the most.”

Notice on simplified procedures. Mergers that are generally unlikely to raise competition concerns are examined under a simplified procedure. Companies may use shorter notification form and the EC may clear such cases without investigation. The EC has expanded the scope of the simplified procedure for (1) markets in which two merging companies compete (horizontal overlap) - mergers below a 20 percent combined market share will now qualify for the simplified procedure (instead of 15 percent currently); and (2) mergers where one of the companies sells an input to a market where the other company is active (vertically related markets), such as a merger between a producer of auto parts and an auto manufacturer - mergers below a 30 percent combined market share will be assessed under the simplified procedure (instead of 25 percent currently).

Under new criteria introduced by the package, if the combined market shares of two merging companies are between 20 percent and 50 percent, but the increase in market shares due to the merger is small, the merger may now also be reviewed under the simplified procedure.

The package will allow the EC to treat between 60 and 70percent of merger cases under the simplified review procedure, 10 percent more than today. This will reduce the in-house work that companies undertake before they notify the EC of a merger and could also reduce attorneys” fees by up to one third.

Merger implementing regulation. The information required to notify a merger to the EC will also be reduced, particularly for cases being assessed under the simplified procedure and for other cases. The package makes it simpler for the merging companies to ask the EC to waive its obligation to provide certain information in their notification. Finally, the information required from companies that request a referral of a case from the EC to Member States or vice versa has also been significantly reduced.

In addition, the changes are expected to simplify the exchanges between companies and the Commission before a notification (pre-notification contacts), reducing the time needed for these contacts even further. The package also foresees that in some very straightforward cases, companies may prefer to forgo pre-notification contacts altogether and notify their merger immediately.

Standard commitment text. Merging parties may offer commitments in order to remove competition problems raised by a notified merger. The EC has developed model texts for offering commitments to divest assets and for the establishment of a mandate for the trustees who will monitor the implementation of the commitments. While the use of the models is voluntary, they make it easier for parties to design commitments that effectively address competition concerns. Along with the simplification package, the EC has updated these standard model texts. The changes also integrate the EC’s experience since the standard texts were first published in 2003.

The standard model texts are available at the EC’s legislation webpage.

Merger rules and procedures. The EC clarified that mergers treated under the simplified procedure are and will remain fully subject to the system of merger control as provided for by the EU Merger Regulation. They must be notified to the EC, reviewed by it, and implemented only after the EC has made a decision to authorize the merger. For cases reviewed with under the simplified procedure, the EC will act in a way that is far less burdensome for the merging companies.

News: Antitrust