Competition

← Competition

Merger Control

Summary
Evaluation
Commission Proposal
Legal Act
Implementation

Overall state of play

Evaluation: an evaluation of procedural and jurisdictional aspects of EU merger control - Finalised: SWD(2021)66, 26 March 2021
Commission proposal: ongoing; to be adopted by the Commission in 2023

State of play, main conclusions, outlook

The European Commission adopted in 2014 the White Paper “Towards More Effective EU merger control”, which proposed two areas for action:

- to close a regulatory gap by allowing the Commission in the future to review at EU level certain acquisitions of non-controlling minority shareholdings that can raise competition concerns, and

- to make the case referral system between Member States and the Commission more effective and business-friendly, as well as to streamline and simplify other procedures.

Respondents to the White Paper public consultation mostly agreed that the EU merger control system works well overall. They welcomed the White Paper’s proposals in relation to the streamlining of the case referral system and simplification. Stakeholders were, however, more critical as regards the necessity and proportionality of the proposed system for the introduction of a review of minority shareholdings.

The evaluation of procedural and jurisdictional aspects of EU merger control completed in March 2021 built on the White Paper. On 26 March 2021, the Commission launched a public consultation on several options aiming at further streamlining merger control procedures. This first public consultation closed on 18 June 2021.

Estimated savings and benefits

In the first public consultation, stakeholders (in particular law firms and law associations), estimated the time savings related to streamlining referrals and other procedural aspects of merger control mostly at around 1-2 months.

The cost saving were mostly not quantified, however, one law firm estimated them to be 20% - 30% lower than under the current procedure.

The evaluation focused on the following aspects: (1) the jurisdictional thresholds set out in Article 1 of the Merger Regulation, (2) the procedure for the treatment of certain types of concentrations that generally are not susceptible of raising competition concerns and (3) some aspects of the referral system as set out notably in Articles 4 and 22 of the Merger Regulation.

As regards the simplification measures, the evaluation showed that the 2013 simplification package has been effective in increasing the application of simplified procedures to unproblematic mergers and in reducing administrative burden both for businesses and the Commission in terms of resources and time spent on the merger review, while ensuring effective enforcement of the merger rules. At the same time, the evaluation found that there was room for further simplification and targeting of the rules.

State of Play:

Finalised, SWD(2021)66, 26 March 2021

Scope:

Evaluation of procedural and jurisdictional aspects of EU merger control related to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings.

Evaluation findings

As regards the jurisdictional thresholds, the evaluation results showed that at this stage, the turnover-based jurisdictional thresholds, complemented with the referral mechanisms, have generally proved effective in capturing significant transactions in the EU internal market. Recent market developments, however, have resulted in a gradual increase of concentrations involving firms that play or may develop into playing a significant competitive role in the markets despite generating little or no turnover at the moment of the concentration.

Estimated savings and benefits

The results of the evaluation indicate that the higher number of cases treated under the simplified procedure since 2014 has led in fact to significant cost savings for both the Commission and companies. Due to limitations in the availability of data, however, such cost savings could only be approximated.

State of play:

Ongoing: to be adopted by the Commission in 2023.

Which objective(s) does the Commission pursue?

On 26 March 2021 the Commission launched an impact assessment with the aim to provide evidence to amend the Implementing Merger Regulation and the Simplified Notice. The impact assessment builds upon the findings of the evaluation of procedural and jurisdictional aspects of EU merger control summarised in a staff working document published on the Commission’s website on 26 March 2021. The Commission proposal, as announced in the inception impact assessment aims to address the potential for further targeting and simplification identified during the evaluation:

⮚ By expanding and clarifying the categories of simplified cases;

⮚ By streamlining the review of simplified cases (by reducing information requirements and pre-notification discussions in such cases);

⮚ By streamlining the review of non-simplified cases;

⮚ By introducing electronic notifications.

In parallel, the Commission launched a 12-week public consultation to gather stakeholders’ views on the different policy options considered, in particular on the perceived benefits and risks of each of them.

The impact assessment will be published in 2023 in connection with adoption of the Commission proposal.

A public consultation on the draft legal texts (Implementing Regulation and Notice on Simplified Procedure) took place in 2022.

Estimated savings and benefits

Stakeholders responding to the public consultation generally welcome all the options proposed in the Inception Impact Assessment and considered that they will contribute to further reducing administrative burden and costs for businesses and the Commission alike.

It is expected that further simplification will have several positive impacts in terms of estimated savings and benefits.

Firstly, further simplification may entail fewer information requirements. As it appears from the evaluation, the information requirements in a notification under the simplified procedure are 46% less than those required under the normal procedure, and the envisaged new categories of simplified cases are expected to reduce the number of cases notified under the normal merger procedure by 10%. Information requirements are expected to be even further cut under the ongoing simplification initiative.

Secondly, it is expected that the new simplification initiative will reduce the overall duration of merger procedures. The evaluation showed that parties already now save on average more than 25 working days in cases treated under the simplified procedure.

Finally, third parties are also expected to save costs under the initiative as they are not required (but retain the possibility) to provide information to the Commission in the context of a simplified merger procedure, as opposed to a normal merger procedure.