EU Mergers

Phase I Mergers

  • M.8091 SEB INTERNATIONALE / WMF GROUP (22 November 2016)
  • M.8132 FMC TECHNOLOGIES / TECHNIP (23 November 2016)
  • M.8191 ARCELORMITTAL / CLN / JV (22 November 2016)
  • M.8217 CPPIB / HAMMERSON / GRAND CENTRAL (17 November 2016)
  • M.8235 IPIC / MUBADALA (17 November 2016)

EU Competition 

Commission conditionally approves acquisition of St Jude Medical by Abbott Laboratories. On 23 November 2016, the European Commission (Commission) announced its conditional approval of US based medical device company Abbotts Laboratories’ proposed acquisition of another US medical device company, St Jude Medical. The Commission’s Phase I investigation raised concerns about the combined market strength of the parties’ vessel closure devices, and took the view that there was insufficient competitive pressure from the remaining players on that market. Further, the Commission was concerned that after the acquisition, Abbott Laboratories might abandon the launch of their transseptal sheath product, Vado, which had the potential to challenge St Jude Medical’s leading position in the market. In order to address the Commission’s concerns, and to prevent a Phase II investigation, Abbott Laboratories offered to divest two devices used in cardiovascular treatments. The Commission is satisfied that these commitments address all identified competition concerns.

Commission conditionally clears UASC acquisition by Hapag-Lloyd. On 23 November 2016, the Commission announced its conditional approval of the proposed acquisition of United Arab Shipping Company (UASC) by Hapag-Lloyd. The Commission’s Phase I investigation found that this acquisition would result in the fifth largest container liner shipping company worldwide, with access to the Asia-to-Europe, trans-Atlantic and trans-Pacific trade routes. In particular, the Commission raised concerns on the “insufficient competitive constraint" the merged entity would face by being on both the Northern Europe - North America trade routes consortia and alliances in which Hapag-Lloyd is currently member and the NEU1 (ex-Pendulum) consortium, in which UASC is a member. To address these concerns and prevent a Phase II investigation, Hapag-Lloyd agreed to terminate UASC’s participation in the NEU1 consortium. The Commission conditionally approved the merger on the condition that this divestment is fulfilled.

Trade

Commission policymakers reach agreement on minerals trading rules. On 22 November 2016, the Commission announced that all policymakers have “reached an agreement on the final shape of an EU Regulation on conflict minerals”. The agreement, which follows the political understanding on the core elements of the Regulation, aims to stop the financing of armed groups in developing countries through the trade of minerals such as tin, tantalum, tungsten and gold (minerals). Trade Commissioner Cecilia Malmström commented “The rules we [have] agreed upon are a huge step forward in our efforts to stop human rights abuses and armed conflict financed by trade in minerals. I'm convinced that it will have real impact on the ground, for the people suffering from such conflicts. I sincerely hope that the EU model will now set an example for other countries to follow.” Member States have agreed that due diligence provisions will apply for the trade of more than 95% of all European imports of minerals from 1 January 2021, in order to ensure the traded minerals are sourced responsibly. Support will also be provided to EU importers who are caught by this agreement, especially small and medium sized enterprises, in the form of development aid and foreign policy actions. The Regulation can now be formally adopted by the Council and the European Parliament, following which, Member States and the Commission will be able to build the necessary structures to ensure the rules will be implemented EU-wide.

European Parliament rejects request to refer the CETA to ECJ. On 23 November 2016 the European Parliament rejected a request to refer the Comprehensive Economic and Trade Agreement (CETA), signed between the EU and Canada on 30 October 2016, to the European Court of Justice (ECJ) for an opinion. The CETA still requires consent from the European Parliament to enter into force provisionally. The referral request was made by 89 members of the European Parliament (MEP), who wished to have the ECJ determine whether the Investment Court System (ICS) of the CETA is compatible with EU treaties. Under pressure from three of its regional parliaments, the Belgian federal government has already pledged to refer to the ECJ the question of whether the CETA’s investor protection provisions are in line with the right of governments to regulate in order to achieve legitimate public policy aims, such as protecting health, safety or the environment, but the exact timing of this referral remains unclear. There are concerns that the CETA’s ICS arbitration panel may allow multinational corporations to sue Member States over laws and regulations protecting the environment, health and labour standards. The European Parliament's legal service found “no contradiction” between the CETA's investment chapter and the EU Treaties when it assessed the issue earlier this year. Thus, the referral request was rejected by 419 votes to 258 (with 22 abstentions), paving the way for a vote on the CETA itself. "Our legal experts said that CETA has no effect on our legal framework, on the competencies of the EU or on our constitutional rights. This agreement provides an answer to our concerns regarding globalization without causing problems for democracy", said rapporteur MEP Daniel Caspary. The CETA is to be put to a vote by the International Trade Committee of the European Parliament on 5 December 2016.

State Aid

Commission approves the extension of and amendments to Big Society Capital in UK. On 21 November 2016, the Commission announced that it has approved amendments to the UK investment scheme, Big Society Capital, and a prolongation of the scheme until 20 December 2026. Big Society Capital assists social companies that have difficulties in procuring affordable funding from the markets. The UK government, through Big Society Capital, are able to address market failures affecting the funding of the social sector by investing in social investment finance intermediaries and funds that in turn invest in the social companies. Such funding is safeguarded to prevent any distortion of competition at the social investment finance intermediary level. The original scheme was approved by the Commission in December 2011, with the Commission finding that the scheme met the de minimis exception under State aid rules as all State aid delivered to the end recipients would be too small to constitute State aid. Under the approved amendments, the UK will now inject £600 million into Big Society Capital, £200 million more than previously authorised in December 2011. The additional State aid will allow Big Society Capital to invest £300 million to fund itself and to “have more discretion in respect of its diversification policy”.

Commission approves Banif resolution asset transfer. On 21 November 2016, the Commission provided the last leg of its approval of State aid granted by Portugal to Portuguese Banco Internacional do Funchal (Banif). Since 2013, Portugal has provided support of around EUR 3 billion to enable Banif to comply with minimum regulatory capital requirements, in order to cover a funding gap in the resolution of Banif and to enable the sale of its assets to Banco Santander Totta. In December 2015, due to the urgent nature of the transaction, the Commission provisionally approved the transfer of impaired assets to Oitante (a special purpose asset management vehicle owned by the Portuguese Resolution Fund), pending a final assessment of the State aid involved in the asset transfer. All other State aid measures received a definitive approval as part of the December 2015 decision and did not require further assessment. 

Commission clears Romanian State aid for closing coal mines. On 24 November 2016, the Commission cleared Romania’s funding of RON 447.8 million (approximately EUR 99 million), to provide “support to alleviate the social and environmental impact” in the closure of two uncompetitive coal mining units. State aid rules, in particular Council Decision 2010/787/EU, permit Member States to decide whether to close public coal mines and to allocate State aid to support the closure of such uncompetitive coal mines, with the aim of reducing the social and environmental impact associated with such closures. The Commission noted that the State aid provided by Romania was in line with the above State aid rules and concluded the support would not “unduly distort competition”. The State aid will be awarded to workers who have lost or will lose their jobs due to the closures of the coal mines by way of funding compensation salaries, funding programmes to re-train the coal mine workers in alternative professions, and provide other social security benefits for these workers. The State aid will also be used to ensure the coal mines have complied with the necessary underground safety measures, that the mine shafts are secured and fund the decommissioning of mine infrastructure. The aid will also go towards repairing any damage to the environment that has been caused by mining and the costs incurred in re-cultivating the land after the mine closures. The remainder of the support totalling RON 214.1 million (approximately EUR 47 million) will cover the production losses of the mines until their closure.

Commission clears Italian funding to support shift from road to rail. On 24 November 2016, the Commission announced its approval of Italian State aid for Italy’s road to rail scheme, Ferrobonus, finding that the scheme was in line with the 2008 Commission Guidelines on State aid for railway undertakings (Guidelines) that allow State aid to be given to the rail transport sector under certain conditions. The Commission found that Ferrobonus operates in line with the Guidelines, as the level of State aid Italy is to deliver is based on reduction in external costs that rail transport allows in comparison to road. Ferrobonus aims to shift freight traffic, which predominately uses road transportation, to use rail transport links instead. The Commission’s assessment found that this transition would be beneficial for the environment as it is “supporting a mode of transport that is less polluting than road”. The Commission also found Ferrobonus to be “beneficial in terms of mobility” as it would decrease road congestion, further noting that as Ferrobonus will be open to all operators (both freight forwarders and cargo forwarding customers), it would not “distort the level playing field by unduly impacting on maritime transport or inland navigation”.