New EU Merger Control Regulations in force
On 1st May 2004, the same day as the European Union's enlargement, the new Merger Control Regulations (Regulations) came into force. The Rules now apply to all 25 Member States.
The aim behind the new regime is to improve the referral process and to try to ensure that mergers are examined by the best placed authority.
Which authority examines the proposed merger?
Under the Regulation the procedure is simplified on the referral of mergers from the Commission to the national authorities and vice versa to ensure that the best placed authority examines the deal.
Companies that are party to a merger that does not meet the turnover threshold can ask to benefit from the Commission's "one stop shop" procedure if the transaction would have to be notified in at least three member States.
Conversely where the effects are limited primarily to one country the firms can request the Commission to refer the case to the national regulator
to review.
What is the review timetable for the proposed merger?
The time-table is legally binding and has been changed to give the Commission more time to discuss remedies to a potential competition problem. However, merging parties continue to be prohibited from implementing the merger unless or until the deal has been approved.
Pre 1st May 2004 |
Post 1st May 2004 |
1st phase |
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• One month starting on the day which follows the receipt of the notification
• Extended to six weeks if undertakings are offered or a referral request is received |
• 25 working days starting on the day which follows the receipt of the notification
• Extended to 35 working days if undertakings are offered or a referral request is received |
2nd phase |
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• Four months from the day that follows the decision to carry out an in depth inquiry |
• 90 working days from the day that follows the decision to carry out an in depth inquiry
+ 20 working days if requested by the notifying parties or by the Commission with the agreement of the notifying parties |
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• + 15 working days if companies offered remedies after the 54th working day that followed the initiation of the in depth inquiry2 |
There are detailed and helpful guidelines published on the Commission website on best practices to be followed by undertakings on the conduct of EC merger control proceedings. The web-address is http://europa.eu.int/comm/competition/index_en.html
What test will the Commission use in deciding whether the merger can proceed or not?
Under the new rules a merger will be blocked by the Commission if it would "significantly impede effective competition". This replaces the "dominance" test. The new wording expressly permits the Commission to prohibit more mergers than in the past but how the test will be applied in practice remains to be seen.
The new Regulations strengthen the Commission's enforcement powers including the power to impose higher fines if companies fail to supply information requested by the Commission or supply incorrect information.
It is hoped that the new rules will benefit consumers by helping to prevent higher prices and avoiding less choice of products.
For further information please contact:
Anthony Layng
T: +353-1-4395600
F: +353-1-4395601/4395602
E: alayng@kilroys.ie
© Kilroys Solicitors June 2004
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