The European Commission is currently conducting a public consultation (closing on June 19, 2013) on the simplification of procedures for merger control in the European Union ("EU"). This merger control review is one of several key initiatives put forward by the Commission in view of stimulating competitiveness.
The Commission’s stated aim in pursuing these reforms is to create a more streamlined and flexible system of merger control procedures, reduce administrative burdens for businesses, and enable DG Competition to focus on cases requiring more in-depth analysis.
The proposed modifications notably call for:
- Broadening the availability of the simplified merger procedure for non-problematic cases (so-called "Short Form CO").
- Amending the content required in the forms for the notification of concentrations (both the full-length "Form CO" and Short Form CO).
These proposed procedural modifications to the EU merger control system are detailed below. It is notable that the Commission’s proposed changes will actually result in increasing the scope of information required in certain cases.
Broadening the scope of the simplified merger procedure
The proposed merger simplification project first aims at expanding the availability of the simplified merger procedure.
The proposed modification of the Commission’s Notice on a Simplified Procedure (2005) would extend the scope of the simplified merger procedure to non-problematic cases by easing market share thresholds as follows:
- Raising the relevant market share thresholds from 15% to 20% for horizontal mergers and from 25% to 30% for vertical mergers.
- Expanding the availability of the simplified procedure for companies competing in the same markets, even if the merged entity would exceed 20% market share, in cases where the merger would result in a very small increase in market share.
The Commission's press release on the simplification process explains that these modifications are anticipated to result in an increase of 10% of cases treated under the simplified procedure, with the total number of cases submitted using simplified procedure rising to some 70% of all concentrations notified to the Commission.
Amending the forms for notifying concentrations – expansion of information requirements
The proposed procedural simplification also seeks to update and streamline the merger notification process under the EU Merger Regulation No. 139/2004. Such notifications consist of providing all information requested in either the Form CO or the Short Form CO, as provided in the EU Implementing Regulation (Commission Regulation No. 802/2004).
In seeking to amend the EU Implementing Regulation, a stated aim is to decrease the amount of information required in the notification forms. Indeed, it appears that the increase in the number of transactions subject to the simplified notification procedure may result in decreasing the aggregate amount of information to be provided for all transactions notified under Form CO and Short Form CO. However, the information to be provided upfront (and therefore subject to evaluation of the completeness of the form) effectively increases for both Form CO and Short Form CO:
Increased scope of information required for "supporting documentation" concerning the proposed concentration (Section 5), which would require the following additional elements in particular (emphasis added):
- Information related to the concentration that is received by (not only prepared by), any member of the board of management (not only board of directors).
- Information from the last three years for the purpose of assessing any of the affected markets (currently, only information concerning the notified concentration is required, without the requirement of providing for the last three years).
Expansion of the provision of detailed information on relevant markets (Section 6), and in particular the following additional requirements (emphasis added):
- Market definitions must now include all plausible alternative product and geographic market definitions (in particular but not limited to alternative product and geographic market definitions that were considered in previous Commission decisions) (currently, only market definitions considered as relevant by the parties need be provided).
- Detailed market information must now be provided for each of the affected markets under all such plausible market definitions.
Thus, while the net amount of information required to notify all mergers (short form and full form) may decline, as stated by the Commission, the actual end result of the Commission’s proposed changes is a potential, material increase in various and upfront information requirements placed on parties.