21. Mergers (2): EU law

This chapter examines EU merger control. The chapter is organized as follows. Section 2 provides an overview of EU merger control. Section 3 discusses the jurisdictional rules which determine whether a particular merger should be investigated by the European Commission in Brussels or by the national competition authorities (‘the NCAs’) of the Member States. Section 4 deals with the procedural considerations such as the mandatory pre-notification to the Commission of mergers that have a Union dimension and the timetable within which the Commission must operate. Section 5 discusses the substantive analysis of mergers under the EU Merger Regulation (EUMR), and section 6 explains the procedure whereby the Commission may authorise a merger on the basis of commitments, often referred to as remedies, offered by the parties to address its competition concerns. The subsequent sections describe the Commission’s powers of investigation and enforcement, judicial review of Commission decisions by the EU Courts and cooperation between the Commission and other competition authorities, both within and outside the EU. The chapter concludes with an examination of how the EUMR merger control provisions work in practice.

The Effects of Mega-Mergers

Chapter 4 shows that a good part of the decrease in competition has resulted from the recent wave of large mergers. Merger regulation, which is based solely on economic considerations, is limited to assessing the potential anticompetitive effects among the competing firms, without any consideration of the size alone of the combined firm or the effects on noncompeting firms. In addition, many mergers are justified by a claim of increased efficiencies in the new firm, which is often the result of layoffs and plant closures. Not only does this cause significant job losses, it also hurts families and communities. Even though economic theory does not take these kinds of externalities into account, they are nonetheless harmful consequences of mergers. Numerous studies have shown that many mergers do not result in lower prices, while some mergers have even led to price increases. In these mergers, workers suffered not for the sake of consumers but for the financial benefits reaped by the shareholders and managers of the merging firms and by the professionals who put the deals together. It also appears that investment advisors encourage mergers just so that they can profit from the transactions, regardless of the degree of benefit provided to consumers (or even shareholders). With little or no benefit to consumers from some mergers and significant harm to labor, the chapter argues that we need to reassess how the government should review mergers.

17. Competition Law

This chapter assesses the EU competition law on private undertakings. The relevant Treaty section is here built upon three pillars. The first pillar deals with anticompetitive cartels and can be found in Article 101 of the Treaty on the Functioning of the European Union (TFEU). The second pillar concerns situations where a dominant undertaking abuses its market power and is found in Article 102. The third pillar is unfortunately invisible, for when the Treaties were concluded, they did not mention the control of mergers. This constitutional gap has never been closed by later Treaty amendments, yet it has received a legislative filling in the form of the EU Merger Regulation.

Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition

We assess the consequences for consumers in 76 countries of multinational acquisitions in beer and spirits. Outcomes depend on how changes in ownership affect markups versus efficiency. We find that owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counter-factual national merger regulation. The US beer price index would have been 4-7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.

EU merger control: life without the UK – Brexit and beyond

Since 1 January 2021, the ‘one-stop shop’ principle under the EU Merger Regulation (EUMR) no longer applies to the UK, and UK turnover is no longer relevant for determining whether a merger satisfies the EUMR jurisdictional thresholds. Merger control analysis will now need to factor in possible interactions with both the European Commission (Commission) and the Competition and Markets Authority (CMA). The two regimes have different procedures, timelines and substantive tests, which will impact on deal planning and strategy. Dual reviews by both authorities will likely lead to an additional burden on merging parties as well as a risk of a deal being cleared by the Commission but blocked by the CMA, or vice-versa. This article assesses the procedural and practical implications of these changes and highlights some of the key risks businesses may face in merger control looking ahead.

Das Vollzugsverbot in der EU-Fusionskontrolle

Under its Article 7, concentrations that fall within the scope of the EU Merger Regulation (EUMR) may only be completed once approval has been granted by the European Commission. This standstill obligation, which also exists in a similar form in many national jurisdictions, has for decades been a source of some uncertainty for M&A practitioners. After examining the foundations of the standstill obligation in competition law, business economics and EU primary law, the author goes on to develop a systematically and teleologically coherent concept for its scope of application and substantive reach, paying special attention to the issue of partial completion. The book takes into consideration the rulings recently handed down by the European Commission and the EU courts in Marine Harvest (Mowi), Altice, Ernst & Young, and Canon and is therefore currently the most up-to-date and comprehensive monograph on the standstill obligation under the EUMR. Because it takes a systematic look at all the relevant rulings to date, the article is also, and especially, intended for practitioners in public authorities and courts, law firms and consultancy firms.

Merger Regulation in Eastern and Southern Africa

The socio-economic and political characteristics of the Eastern and Southern Africa (ESA) jurisdictions call for a different approach to competition policy. Competition Policy in the ESA context draws one’s mind to three major themes: development, small market economies and regional integration. This is against a backdrop of other socio-economic and political factors that led to the adoption of competition policies in ESA. Through a comparative assessment of merger review in the European Union, the United States, South Africa, the United Kingdom and ESA, this book seeks to reveal whether or not the merger regulation approach in ESA is optimal and to what extent the approach can be optimised.

Der wesentliche Teil des Binnenmarkts und die Zuständigkeitsallokation nach der FKVO

Pursuant to Sec. 2 subsec. 3, Sec. 9 subsec. 2, 3 of the European Merger Regulation, a merger within the meaning of Sec. 1 subsec. 2, 3 of the European Merger Regulation can only be prohibited or referred, respectively, if a “substantial part of the internal market” is affected. However, it is unclear under which conditions a substantial part of the internal market is affected and how to proceed with mergers that do not affect such a substantial part. Taking this as a starting point, the analysis defines the term “substantial part of the internal market”. In addition, the study develops a mandatory and ex-officio referral to the EU Member States, which ensures examination and prohibition of mergers pursuant to Sec. 1 II, III European Merger Regulation, which do not affect a substantial part of the internal market.