SHORT FORM and FORM CO Bruxelles, 27 November 2012 Giorgio Castaldo / Michele Piergiovanni* * The views and opinions expressed in this presentation are those of the authors and do not reflect the official policy or position of the European Commission.
Outline • Pre-notification • Short Form / Form CO • Reform • Questions 2
Preliminary remarks • Framework: DG COMP Best practices • Main features • Voluntary • Strictly confidential (code/project names if requested)
Purpose of pre-notification contacts • Pre-notification phase is a crucial part of the process • Opportunity to discuss and anticipate the following issues • Jurisdictional and other legal questions / consultation • Scope of the information to be submitted (possible waivers) • Identification of key issues and possible competition concerns at an early stage – possibility for limited market investigation (parties' consent required) • International cooperation (confidentiality waivers) • Minimizes risk of incompleteness • Useful to have pre-notification contacts even in seemingly non-problematic cases
Goals of pre-notification contacts • The goals of the pre-notification contacts are linked to the complexity of the case • Three categories of cases • Simplified cases • Goal: make sure the case is simplified • Allegedly unproblematic cases • Goal: collect all relevant information to avoid surprises • Complex cases • Goal: collect all information needed to run a proper phase I market investigation
Timing of pre-notification contacts • Key steps in pre-notificationcontacts • Case team allocation request, possibly, but not necessarily, including a memorandum providing a brief background to the transaction (relevant markets and likely impact of the transaction(by Friday at 12.00) • Attribution of case number and appointment of case team (typically the following Monday) • Parties informed of case team composition (typically the following Tuesday) • No formal deadlines, average length • Two weeks, simplified • One month, normal case • Two months, complex cases
Content of pre-notification contacts • Pre-notification contacts in practice • Kick-off meeting/conference call – do’s & don'ts • Submission of draft Short Form / Form CO – usually a couple of rounds • Best practices: five working days to review the draft and send questions • Possibility of technical meetings (more complex cases) • Parties are allowed to notify when they deem the notification form to be complete
Pre-notification and legal issues • Consultations in pre-notification • Parties often approach the Commission with a query on the reportability of a proposed transaction (C number) • The case team will coordinate with A2 and provide feedback • Most of the consultation are unproblematic, however, if no clear-cut answer, the case team will also consult the Legal Service • If no jurisdiciton, reply to a consultation in the form of a letter signed by the competent Director • Reply of the services not substitute of legal advice
Completeness of the notification (1) • When important information required by the Short Form or the Form CO is missing and the parties notify, the notification may be declared incomplete (unless waiver was granted) • Incompleteness decision (Article 5(2) IR) • Has to be reasoned vis-à-vis Form CO requirements • Can be appealed before the Court of Justice • Is public(parties usuallywithdraw the notification) • Incorrect and misleading information is considered incomplete information!
Completeness of the notification (2) • Grounds for incompleteness under Article 5(2) IR • New relevant market discovered in the course of the Commission'sinvestigation • Missing data • Application of Article5(3) IR – new date of notification • Usualdeadlines and extensionsshouldapply • Remediesshould be submittedagain, ifprovidedbefore
Cooperation with non-EU authorities • Pre-notification discussions include discussions on parallel proceedings in other non-EU jurisdictions • Waivers on information sharing with other jurisdictions • Why? • To enhance efficiency of the respective investigations • To reduce burden on the merging parties and third parties • To increase overall transparency of the merger review process • EU / US Best Practices on cooperation in merger investigations
Preliminary remarks • Power of attorney for notification • Power of attorney for decision • Format of submission (hard copies, CD-Roms) • Merger Registry opening hours
Short Form – Practical Tips (1) • Explain why the proposed transaction falls within the scope of application of the simplified procedure • CommissionNotice on a simplified procedure • EEA turnover of the joint venture or of the assets and value contributed to the joint venture in the EEA below EUR 100 million 5(a); or • No reportable markets 5(b) or affected markets 5(c); or • Joint to sole control (please also briefly explain why the proposed transaction would not have any anti-competitive effects) 5(d) • The Commissionmayalwaysrevert to a normalPhase I procedure
Short Form – Practical Tips (2) • In case of joint ventures, do keep in mind the horizontal overlaps and the vertical relationships between the parent companies • Semi-simplified procedure • Use Short Form but complete Sections 6 and 7 for the markets that are affected as a result of the parent companies' activities • Provide an adequate description of the proposed transaction • Explain the control structure pre- and post-transaction; and • In case of full-function joint ventures, explain why the proposed transaction is FF by reference to the criteria laid down in the JN
Form CO – Practical Tips (1) • Section 5(4) internal documents (sufficient for completeness) • Understand how the companies work and discuss the relevant information • Understand the rationale of the transaction • In complex cases, request for additional internal documents • Both before and after notification (but typically not required for completeness) • The request may include inter alia • Business plans, sales and marketing reports • Strategy and pricing documents (including emails) • Market reports of investment bankers consultant firms or sectorial associations • Do consult with the case team on the format of these submissions
Form CO – Practical Tips (2) • Market definition • Clearly define the relevant product and geographic markets and indicate whether you agree with previous case law, if not provide detailed reasoning • if precedent too old, likely less relevant, particularly in fast-moving markets
Form CO – Practical Tips (3) • Competitive assessment: data and information required • Do contact the case team proactively to discuss what data/information is available and the possibility of waivers • Market shares in volumes and value figures, total market size, source • If estimates of market shares, provide methodology • If large figures for “others”, provide reasoning and break down the figures • Economic data • In complex cases, discussions on what data is available and in what format likely to start in pre-notification • Actual data collection could start in pre-notification of after filing (particularly if the case is likely to go into phase II) • Provision of economic data typically not required for completeness
Form CO – Practical Tips (4) • Contact details • Key tool for the Commission's investigation (lack or incompleteness thereof is a possible ground for declaration of incompleteness) • Must be complete and in the right format • Common issues • Selection criteria • Non-functioning e-mails/faxes • Non-personalized e-mails (avoid info@)
THE FUTURE 21
Simplification of merger notifications Announced by VP Almunia in his recent speech at a conference on competition policy, law and economics in Cernobbio: "[…] I have asked DG Competition to see how our procedures can be made even more business friendly than they are today. I want to make notifications easier to cut the red tape and find faster and simpler ways to handle the cases that clearly pose no problems to competition. I intend to streamline the system so that we can focus on the cases that have a real impact on competition and consumers in the internal market and require complex analyses […]. In practice, this simplification exercise can be done within the current system. Once we have worked out the concrete proposals we will consult stakeholders before adopting the final package, which can be introduced in a relatively short time frame in the course of next year […]."