The future of EU Merger Control – Simpler and better?

1. The future of EU Merger Control – Simpler and better? • Johannes Lübkingand Michele Piergiovanni • DG Competition • Antitrustitalia • Brussels, 26 November 2013 • All views expressed are strictly personal and do not necessarily reflect the official position of the European Commission

2. Improving the functioning of EU merger control • The EU Merger Regulation iswellproven … … but all legal instrumentsshouldregularlybereviewed ("Refit" programme) • Two on-going policy projects: • Merger Simplification Project • Possible reform of the Merger Regulation: Towards more effective EU merger control

3. Simplification

4. Simplification Objectives • Streamlineprocedures and cutredtape • For non-complexcases/simplifiedprocedure • Reductionofinformationrequirementsfor all cases, includingcomplexones Effects • Save on cost and time forbusiness • Focus resources on problematiccases

5. Simplification: State of Play • Public consultation during first half of 2013 on • Revised Implementing Regulation, including Form CO, Short Form and Form RS • Revised Simplified Notice • Overall very positive reaction but also some critical comments • Adoption (hopefully) by the end of the year

6. Simplification – Simplified Notice • Extended scope of simplified procedure • 20% combined share in case of horizontal overlaps (previously 15%) • 30% share upstream and downstream in case of vertical relationships (previously 25%) • New category: 50% combined share and HHI delta below 150 • Other categories unchanged, but clarification of notion of vertical relationship • Semi-simplified • Shifting around 10% of cases from normal procedure to simplified procedure – resulting share of simplified procedures expected around 70% • Main criticism: parties required to provide share under all “plausible alternative markets” • Market definition should be “plausible” • Usually the only “safeguard” for the Commission in these cases

7. Simplification – Short Form • More targeted and, in particular, very limited information in relation to • Proposed transactions not giving rise to reportable markets • Non-EEA joint ventures • Other technical improvements • Explanation of why the proposed transaction falls within the scope of the simplified notice • Clearer requirements to establish that the proposed transaction is a concentration (what type of transaction is at stake) and that it is reportable (within the meaning of Article 4(1) of the Merger Regulation (also Form CO) • Main criticism: the Short Form now asks for internal documents • Not for all simplified cases, but only for those giving rise to reportable markets • Documents requested are limited and should be readily available

8. Simplification – Form CO • Higher thresholds for affected markets → less affected markets → less information required • Only data for plausible market definitions • Greater scope for waivers (nine sets of candidate information) • Other technical improvements across all Sections • Main criticisms: increased information requirements and broadened scope of internal documents to be provided • Economic data not required for Form CO completeness • Limited scope of additional internal documents requested

9. Simplification – Form RS • Information requirements from parties requesting a referral of a case from the Commission to Member States or vice-versa significantly reduced • In essence, only information that is required to assess whether the pre-conditions for a referral are met

10. Simplification – Pre-notification • Continues to be offered as a service to the parties, including in simplified cases • However, it may not be needed in all categories of simplified cases • More responsibilities for the parties

11. Possible reform of the Merger Regulation

12. Possible reform of the Merger Regulation • Consultation paper "Towards more effective EU merger control" published 20 June 2013 • No need for a major overhaul of the EUMR (report on functioning of the EUMR, 2009). • Limited number of issues examined: • Minority shareholdings • Referrals • Technical issues • No decision taken yet on amendment of the EUMR • Around 70 replies 12

13. Enforcement gap in relation to acquisition of non-controlling minority shareholdings? • Underthe EU Merger Regulation: • The Commissionhasnojurisdictiontoexaminecasesofacquisitionofminoritystakeswhich do not confercontrol … • … but whereithasjurisdiction, theCommission: • takesexistingminorityshareholdingsintoaccountwhenanalysingeffectsof a merger on competition • mayrequiredivestitureofminority stake asconditionforclearance • … leads to the unsatisfactory situation that control depends on timing of acquisition of minority stake • Articles 101 and 102 TFEU insufficient legal basis for comprehensive tackling of the problem 13

14. Minority shareholdings – theories of harm 14

15. Findings • Need to extend EU merger control to the acquisition of non-controlling minority shareholdings • Appropriate to apply substantive test of EU Merger Regulation • Limited number of cases expected, but relevant enforcement activity • Objective: to strike the right balance with a system that • ensures to catch the (relatively small) number of potentially anti-competitive transactions • avoids unnecessary administrative burden • fits in the existing system of merger control at EU and national levels 15

16. Minority shareholdings – Design and Options • Two basic options in the Consultation Paper: • Notification system: • Extend current system of ex ante notification of mergers to minority shareholding • Selective system: • Commission may investigate transactions most likely to raise competition concerns; Commission's discretion to examine cases • No stand-still obligation 16

17. Minority shareholdings – Design and Options (cont'd) • Selective system: possible designs • Self-assessment system • No filing obligation • Commission relies on market intelligence and complaints • Transparency system • Parties file short information notice (to be published on website) to inform the Commission and to allow Member States to ask for referral 17

18. Minority shareholdings – Design and Options (cont'd) How the systems work is closely linked to the thresholds/ definition of minority stakes captured • Quantitative threshold (10% like in US or even 5%): high number of cases, of which only a small part may be problematic, or • Qualitative threshold (like material influence): small number of cases, most of which may warrant scrutiny 18

19. Minority shareholdings – Design and Options (cont'd) • Delineation to Article 101 TFEU / joint ventures • Delineation of competences between Commission/Member States • Same turnover thresholds as under current Merger Regulation • Referrals • Procedure • Voluntary notifications in selective system? 19

20. Referral system Article 4(5) • Objectives: Save time and cost for businesses • Proposal • Maintain basic system: at least three Member States competent and only at the request of the parties • but streamline procedure: abolish Form RS and Parties can directly notify to the Commission • Member States have 15 workings days to veto

21. Referral system – Article 22 Objectives • Original purpose of Article 22 ("Dutch clause") obsolete • Instead: normal system of case referral: Commission should deal with a case if it is the more appropriate authority • Achieve "one-stop-shop": Commission can accept referral if no competent Member State opposes; then it has jurisdiction for the whole EEA • Enhance legal certainty: only a competent Member State can refer case to Commission

22. Next steps: VP Almunia to decide on the basis of the public consultation and the discussions with Member States on further steps