EU Mergers

Phase I Mergers

  • M.8152 ARKEMA / DEN BRAVEN (4 November 2016)
  • M.8208 CPPIB / GLENCORE / GLENCORE AGRI (28 October 2016)

EU Competition 

Commission conditionally clears Alteo ARC and Alufin acquisition by Imerys. On 28 October 2016, the European Commission (Commission) granted conditional approval to Imerys on its proposed acquisition of fellow specialty alumina businesses Alteo ARC and Alufin GmbH Tabularoxid (both a part of Alteo). The Commission’s Phase I investigation identified concerns of a reduction of competition in the market for white fused alumina for refractory and abrasive applications, noting a merger between these two entities would leave the market with only one other major competitor. In order to ease the Commission’s concerns and to avoid a Phase II investigation, Imerys offered to divest Alteo ARC's entire white fused alumina business and its white fused alumina related businesses in France. The Commission accepted this divestiture and approved the merger, noting that such divestiture would completely remove the overlap between the activities of the two companies on the markets for white fused alumina, both in the EEA and at the global level.

Commission conditionally approves acquisition of Rofin-Sinar by Coherent. On 26 October 2016, the Commission conditionally approved the acquisition of US-German laser and laser-based systems supplier, Rofin-Sinar by U.S. based supplier of lasers and related accessories, Coherent. Following a Phase I investigation, the Commission noted both entities’ worldwide markets overlapped significantly; that they were the two largest suppliers of low power CO2 lasers (with a combined EU market share of above 50%); and had been competing closely against one another before the merger. In order to ease the Commission’s concerns about a reduction of competition in this field, Coherent offered to sell Rofin-Sinar’s UK business. The Commission accepted this, noting that this divesture would entirely remove the overlap between the activities of the two entities at the global level.

Commission launches Phase II investigation into Syngenta’s acquisition by Chemchina. On 28 October 2016, the Commission announced that it had opened, under Article 6(1)(c) of the EU Merger Regulation, an in-depth Phase II investigation into the proposed acquisition of Swiss agrochemical and seeds company Syngenta by ChemChina, a Chinese state-owned diversified company which is also active in the agrochemical sector through its subsidiary China National Agrochemical Corporation (CNAC), and CNAC’s wholly-owned subsidiary Adama Agricultural Solutions (Adama). The overlap in EU activity between these entities mainly lies with Adama and Syngenta’s manufacturing of crop protection products, including herbicides, insecticides, fungicides, and plant growth regulators. During the Phase I investigation, the Commission noted Adama may be an important competitor of Syngenta in many of these markets. Commenting on the Commission's decision to open a Phase II investigation, Commissioner Margrethe Vestager noted that “[t]his deal would lead to the combination of a leading crop protection company with one of its main generic competitors. Therefore we need to carefully assess whether the proposed merger would lead to higher prices or a reduced choice for farmers”. The Commission has until 15 March 2017 to complete its Phase II investigation.

State Aid 

Commission deems Hungarian advertisement tax unlawful. On 4 November 2016, the Commission ruled that Hungary’s tax on advertising is in breach of State aid rules because its progressive tax rates grant a “selective advantage” to certain companies. The Commission found that Hungary’s Advertisement Act 2014 (Act) taxed companies at a progressive rate (ranging from 0% - 50%) dependent on their advertisement turnover. Thus, companies with a higher advertisement tax turnover are subject to a significantly higher tax rate. The Commission also noted the Act favored companies that did not make a profit in 2013, by allowing such companies to pay less tax. When the Commission began investigating the Act, it had asked Hungary to suspend the advertisement tax. Hungary instead implemented an amended version of the tax, without notifying or consulting the Commission. The Commission further investigated the amended tax, and although noted it made efforts to address the Commission’s initial concerns of the Act, the Commission found “it maintains progressive rates based on turnover over a smaller range (0% and 5.3%)… [and] there is still no objective justification for this differential treatment. Moreover, the limitations on deduction of past losses remained unchanged.” The Commission therefore requires Hungary to remove the unjustified discrimination between companies under the 2014 Advertisement Tax Act and/or the amended version and restore equal treatment in the market. To achieve this, Hungarian authorities must determine and recover the precise amounts of tax from each company, as determined by the methodology established in the Commission’s decision. The Commission has advised that Hungarian authorities can also avoid recovery for a company, if Hungary successfully demonstrates that the advantage the company received meets the criteria of the de minimis Regulation.

French high-speed broadband plan cleared by Commission. On 7 November 2016 the Commission cleared France’s national broadband scheme, Plan Très Haut Débit, finding it to be in line with State aid rules. The scheme aims to connect all households and businesses to very high speed broadband by 2022. France will invest around €13 billion on local authorities’ infrastructure projects (which will be put out to tender) to deliver the high speed broadband to areas that currently lack high speed connectivity and where no private investment is planned. Commissioner Margrethe Vestager, in charge of competition policy said: “With these plans all French households and businesses will have access to high speed broadband by 2022. The plans also give more choice in suppliers. This is good news for citizens and for small and medium sized companies in France. Access to high speed broadband is also a key priority of our Digital Single Market strategy.

Speeches/Publications/Consultations/Communications

BREXIT ruling: High Court rules that Parliament must vote on Britain leaving the EU. On 3 November 2016, Senior High court judges ruled that the Crown alone did “not have power” to trigger Article 50 of the Treaty on the European Union, and that the option to leave the European Union (EU) could only be triggered lawfully with the sanction of Parliament. The Prime Minister and the UK Government were relying on the convention (a well-established rule or custom) of Royal prerogative to empower the Government to give notice of Article 50 to the Commission, without an Act of Parliament. Royal prerogative is a collection of powers which resides with the Prime Minister and Government, and includes a power to control the UK’s international relations and the ability to make or break international treaties. The Government argued that the high turnout of the referendum on the EU, in which the majority of voters supported the option of UK leaving the EU, showed the strong will of the voters and should permit the Government to activate Article 50 under their powers of Royal prerogative without having to be enabled by an Act of Parliament. The opposing side however, argued the Government’s power under Royal prerogative is limited as it cannot be used to alter existing law. The High Court was referred to 44 years of legislation passed both by Parliament and the Commission which derived from the UK’s membership of the EU. It was argued that such legislation is only relevant and effective for so long as the UK remains in the EU, and as a result only Parliament can initiate steps that would undo that legislation. The High Court agreed with this approach and found the argument put forward by the government “gave no value to the usual constitutional principle that unless Parliament legislates to the contrary, the Crown should not have power to vary the law of the land by the exercise of its prerogative powers.” Any appeal of this decision has been permitted to "leapfrog" past the Court of Appeal, directly to the Supreme Court.