On 13 March 2017, it was announced that a United States (“U.S.”) chipmaker will acquire an autonomous vehicle technology company based in Israel for approximately USD 15.3 billion. This transaction may provide an interesting case study for the lively debate on whether the EU merger control regime (“EUMR”) needs to be reformed.
Currently, under the EUMR, a concentration has to be notified to the European Commission (“Commission”) if the merging firms reach certain turnover thresholds, giving it a so-called “Union dimension”. At national level, even though certain Member States (e.g. Spain, Portugal) also rely on the merging parties’ market shares to assert jurisdiction over a transaction, the notification thresholds are generally based on the level of sales of the merging parties in a given country. Even if a transaction does not have a Union dimension, it may still be reviewed by the Commission thanks to the referral system.
However, the question has been raised whether the purely turnover-based thresholds enable the Commission to review all transactions which may have a significant impact on the internal market. The issue concerns mainly the pharmaceutical and digital sectors, where a big player may wish to acquire a small innovative company. Such companies often do not yet have a turnover high enough to satisfy the European Union (“EU”) notification thresholds, but may have a “competitive role, hold commercially valuable data, or have a considerable market potential for other reasons”.
For example, in 2014 the Commission was only able to review the acquisition of a consumer communications services provider by a U.S. company providing a social networking platform thanks to the referral system. As the EU merger filing thresholds were not met, the transaction would have otherwise escaped scrutiny at EU level.
In this context, the Commission launched in October 2016 a public consultation on “Evaluation of procedural and jurisdictional aspects of EU merger control”, which ran until 13 January 2017. It asked, among other things, about the relevance of a complementary jurisdictional threshold based on the value of the transaction (i.e., a deal size threshold).
A similar debate is ongoing in Germany, where a revision of the merger control notification thresholds to take into account the value of a transaction is expected to enter into force during the second quarter of 2017.
It is interesting to see whether the recently announced acquisition will add useful elements to these debates. If the transaction does not meet the EU notification thresholds or even those of EU Member States, it may add to the arguments in favor of a revision of the EU jurisdictional thresholds to include a deal size threshold.