EU Mergers

Phase I Mergers

  • M.7518 KENDRICK INVESTMENTS / ESSO IRELAND (25 June 2016)
  • M.8200 PLATINUM EQUITY GROUP / EMERSON NETWORK POWER BUSINESS (8 November 2016)
  • M.8220 EURO GARAGES / EFR (8 November 2016)
  • M.8232 DIAMOND OFFSHORE WIND HOLDINGS II / ENECO WIND BELGIUM / ELNU / NORTHER (10 November 2016)
  • M.8250 ARDIAN / WEBER AUTOMOTIVE (10 November 2016)

EU Competition 

Ombudsman finds no fault in Commission’s handling of a complaint relating to alleged dominance abuse by Google. On 7 November 2016, the European Ombudsman (Ombudsman) published a decision finding no maladministration by the European Commission (Commission) in its handling of a complaint alleging abuse of a dominant position by Google. In a complaint considered separately to the Commission’s investigation into Google’s online search activities, a French IT company (the complainant) made a complaint alleging abuse by Google of its dominant position in “online search” services. Unhappy with the Commission’s conduct during this investigation, namely their lack of transparency, the complainant subsequently passed its criticisms to the Ombudsman. The Ombudsman disagreed with the complainant’s criticisms, noting that it has not been mandatory for the Commission to provide a copy of its preliminary assessment, nor were they obliged to take account of the complainant’s views regarding the second set of commitments proposed by Google in the context of the main Google investigation. A complaint alleging bias by the former Competition Commissioner was also rejected. Nevertheless, the Ombudsman did express concern about the Commission’s delay in sending the complainant a pre-rejection letter, but also acknowledged that the Commission’s limited resources were taken up with the ongoing (main priority) investigation into Google.

Commission conditionally approves acquisition of Merial by Boehringer Ingelheim. On 9 November 2016, the Commission conditionally approved Germany’s Boehringer Ingelheim’s acquisition of Merial, the French Sanofi’s animal health business, after Boehringer Ingelheim agreed to divest a number of animal health vaccines and pharmaceuticals. This approval was the last stage in the asset swap between Sanofi and Boehringer Ingelheim; an exchange of Sanofi’s animal health business, Merial and Boehringer Ingelheim’s consumer healthcare business (which was already conditionally cleared by Commission in August 2016). The Commission noted that the overlap of Merial and Boehringer Ingelheim’s EU activities lay in producing swine and ruminant vaccines for animals, anti-inflammatory drugs in injectable and oral forms, anti-microbials, and other specialty products and osteoarthritis feed nutrients for pets. In order to address the Commission's competition concerns, the two companies offered to divest a number of Merial's marketed and pipeline products, including its existing vaccines Circovac, Progressis, Parvovax, Parvovurax and Mucossifa and pharmaceuticals Ketofen, Wellicox, Allevinix, Genixine, Equioxx Injectable, and Equioxx Paste. The divestment also included the full transfer of production technology (antigens and finished products) to the purchaser, who has been identified as Ceva Santé Animale (Ceva). Ceva is an established company in the animal health sector with expertise and experience in the relevant production technologies and an established distribution and marketing network throughout Europe. The Commission noted Ceva has “strong capabilities and incentives to run the divested businesses successfully in the long term”, however the divestment to Ceva will require separate merger approval from the relevant competition authorities.

Trade

Ecuador joins EU free trade agreement with Colombia and Peru. On 11 November 2016, the Commission, the member states, Ecuador, Colombia and Peru signed the protocol of accession of Ecuador, enabling Ecuador to join the Commission’s free trade agreement with Colombia and Peru. The Commission noted “the agreement eliminates high tariffs and tackles technical barriers to trade. It also liberalises service markets, protects EU geographical indicators and opens up public procurement markets. It includes commitments on the enforcement of labour and environmental standards, as well as rapid and effective dispute settlement procedures”. It will provide all parties with new market access opportunities; the Commission and its member states will gain an additional market for its automobiles, alcoholic beverages and dairy products, and Ecuador will be able to trade their main exports with the other parties, being their fisheries, banana, cut flowers, and cacao. Ecuador will access the agreement based on the principle of regional integration with the Andean Community. The agreement will also remain open for signature by Bolivia, the other member of the Andean Community. Parties aim to finalise the remaining procedural steps before the end of the year so they will be able to begin provision application on 1 January 2017.

State Aid

Commission approves revised French energy capacity mechanism plans. On 8 November 2016, the Commission approved France’s revised plan to implement a national market-wide capacity mechanism where capacity obligations are traded between electricity capacity providers (power plants or demand side operators) and electricity suppliers. In order to alleviate the Commission’s initial concerns that these plans would be favourable to certain companies and, therefore, may breach State aid rules, France has made certain revisions to its energy-capacity mechanism plans, which aim to ensure the security of electricity supply. The Commission noted that the inclusion of longer-duration contracts of up to seven years to entice new participants into the market sufficiently addressed their initial concerns of certain State aid breaches. France also pledged to introduce a series of measures to prevent market manipulation, in  particular, France stated that the capacity declarations of providers will be compared to historical benchmarks, to prevent providers from under-certifying their capacities to artificially drive up capacity prices. The French capacity mechanism will also be open to providers located in neighbouring Member States; it is the first mechanism to explicitly include and remunerate foreign capacities, thereby also contributing to building an Energy Union in Europe.

UK Competition

CMA’s decision on Novomatic’s acquisition of Talarius. On 28 October 2016, the UK’s Competition and Markets Authority (CMA) decided to refer the completed acquisition by Novo Invest GmbH, acting through Novomatic UK Ltd of Talarius Limited, unless undertakings in lieu are offered. The parties operate a total of 264 adult gaming centres in the UK, overlapping in 15 local areas. The CMA identified concerns in respect of five local areas of the 15 which overlapped, noting that in these five areas there would be an insufficient number of other adult gaming centres or similar bodies to give Novomatic effective competition. The CMA therefore concluded that the merger gave rise to “a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of gaming products in five local areas: Chesterfield, Clapham, Dartford, Darlington (around Northgate) and Grimsby (around Freeman Street)”. Novomatic had until 4 November 2016 to offer an undertaking to the CMA. If no such undertaking was offered or accepted by the CMA, then the CMA will refer the merger for a phase II investigation.

CMA approves Acadia Healthcare’s purchase of Priory. On 10 November 2016, the CMA announced that is has accepted undertakings in lieu of a reference to a phase II investigation, in Acadia Healthcare Company, Inc’s (Acadia) purchase of 21 Partnerships in Care and Priory Group No1 Ltd. (Priory) hospitals from BC Partners. In July this year, the CMA voiced concerns over ensuring improved choice and better outcomes in mental healthcare services. The CMA stated the lack of competition resulting from Acadia acquiring 21 additional hospitals could raise prices for the National Health Service and lower the quality of care given to patients. In order to appease the CMA’s concerns, Acadia offered to divest 21 of their existing hospitals and one unopened hospital site; this was accepted by the CMA.