The European Union merger control regime coexists with national merger control regimes in almost all of the 28 EU Member States. Depending on the parties’ turnover and market shares, the filing and clearance of transactions by one or more national competition authorities or the EU Commission may be required. This Alert summarizes recent and upcoming changes in merger control rules in Europe.

European Union - More transactions are eligible for the simplified procedure

The EU Commission applies a simplified procedure to certain types of transactions which are considered as unproblematic for competition.

This is the case if none of the merging companies are engaged in business activities on the same product and geographic market or in a product market which is upstream or downstream from a product market in which any other merging company is engaged or if the merging companies’ market shares on such markets do not reach a certain threshold.

As of January 1st, 2014, the EU Commission raised the market share thresholds below which cases qualify for a short form review.

  • For markets in which merging companies compete (horizontal overlap markets), the threshold is raised from 15% to 20%;
  • For markets in which one of the merging companies  operates and which are upstream or downstream  from a market in which another merging company  operates (vertical relationship), the threshold is  raised from 25% to 30%.

If the combined market share of two or more merging companies is between 20% and 50%, but the increment in market share resulting from the combination of their activities is limited, the transaction may also qualify for the simplified procedure.

An important change was also introduced for joint ventures which have no, or negligible, actual or foreseen activities in Europe, but which fall within the scope of EU merger control rules since the parent groups achieve turnover in Europe exceeding certain thresholds. Instead of filing a notification form, the parties may only provide a description of the transaction and their business and provide their turnover figures.

UK – The newly created Competition and Markets Authority has increased powers in merger control

From April 1st, 2014, a new Competition and Markets Authority (CMA) replaces and combines the functions of the Office of Fair Trading (OFT) and the Competition Commission (CC).

The filing of a notification with the CMA is still voluntary and the current thresholds remain unchanged. But major procedural changes came into force bringing the UK merger control regime closer to a mandatory notification process and exposing the companies to higher risks if the transaction is not scrutinized by the authority.

Under the previous merger control regime, UK competition authorities had the power to prevent companies from further integrating their businesses, but could not reverse integration that had already taken place.

Now, the CMA has the power to suspend and maybe even reverse at an early stage an integration that has already happened. Fines up to 5% of the parties’ worldwide turnover can be imposed in case of non- compliance with such an order.

The merger review procedure is structured in a Phase I / Phase II investigation carried out by the CMA, which replaces the previous consecutive procedures  before  the  OFT  and  the  CC.  Phase  I Decisions  are  to  be  taken  within  40  working  days. Potentially problematic transactions are subject to an in- depth 24-week Phase II review.

More extensive data has to be provided in the newly introduced form of notification and parties will need to provide a potentially large volume of information, in particular internal documents, to the CMA.

Increased transparency is introduced in the procedure to allow parties to propose and discuss remedies with the CMA.

Norway – Significant increase of merger control thresholds

On January 1st, 2014, important changes in merger control rules entered into force including a significant increase of turnover thresholds for mandatory merger notification which were previously very low.

Under the new rules, parties will only have to notify a transaction:

  • if the parties’ combined annual turnover in Norway  exceeds NOK 1 billion (approx. €120 million),  instead of previously NOK 50 million (approx.  €5,9 million), and
  • if at least two of the parties each has an annual  turnover in Norway exceeding NOK 100 million  (approx. €12 million), instead of previously  NOK 20 million (approx. €2,4 million). 

However, for mergers below these thresholds, the Norwegian Competition Authority (NCA) has the power to require the submission of a notification within three months after closing, if it believes that the transaction may raise competition concerns.

New time limits and milestones are introduced to increase efficiency in the review process and encourage parties to enter into remedy discussions at an early stage.

Announced changes in other European jurisdictions

  • Ireland

A bill published on March 31st, 2014 and expected to enter into force by the end of the year will introduce a new merger control regime for transactions in the media sector. The assessment of media mergers will involve the newly created Competition and Consumer Protection Commission (CCPC), but the final decision will be made by the Minister for Communication, Energy and Natural Resources by reference to a “media plurality test”.

Time limits for the merger review process are extended by replacing “calendar days” by “ working days”. Joint ventures created on a “lasting basis” would be notifiable rather than as currently on an “indefinite basis”.

  • Latvia

Planned amendments to Latvian Competition law will set out new criteria for merger notifications. Current market share criteria will be replaced by turnover thresholds.

Prior notification to the Competition Council of Latvia will be required when the domestic combined turnover of the merging entities exceeds €30,000,000.

  • Poland

The new competition  law currently under discussion before the Polish parliament and expected to enter into force shortly, will replace the current two-month single phase merger control procedure and introduce a two- phase merger review process.

After a one-month Phase I scrutiny, the President of the Office for Competition and Consumer Protection may either clear the transaction or open a four-month Phase II in-depth enquiry. By contrast with the current procedure, the authority will inform the parties about the competition concerns raised by the transaction and Parties will be able to comment on such objections and enter into remedy discussion.

  • Mergers, acquisitions and changes of  control of an undertaking are subject to  EU merger control rules, irrespective of  the parties’ nationality or presence in the  EU, if they sell products or provide  services in the EU.
  • Depending on the parties’ turnover and  market shares, the filing and clearance of  such transactions may be required in one  or more EU Member States or at EU level.
  • Breaches of EU or national merger control  rules may result in fines up to 10% of an  undertaking’s group worldwide turnover.