Analysing large volumes of internal documents can be complicated, and agencies need to make sure that merger control is administrable “within a reasonable timetable”, Andrea Coscelli has said.
The chief executive of the UK’s Competition and Markets Authority said today that the sheer volume of internal documents that authorities need to assess, particularly for large deals, “makes everything quite complicated”. Coscelli was speaking at GCR Live 2nd Annual Merger Control in Brussels.
He said the agency has no interest in ending up with a biased assessment of the documents, and it is an area the CMA is spending “quite a lot of time on”.
Coscelli said his agency is in detailed discussions with colleagues in the US and Brussels, as those jurisdictions are ahead of the CMA in processing internal documents for merger control cases. “They have been dealing with global deals for quite some time,” he noted.
After the UK's departure from the European Union, the CMA will have to assess more cross-border mergers that previously had been left to the European Commission.
In January, the UK enforcer published guidelines on requests for internal documents in merger investigations.
On top of this, Coscelli said today that the authority is investing internally in technology to help it process documents, through its newly established data unit. This investment is really critical, he said, and the CMA is trying to learn from the best agencies in this space.
It is “not something six months from now I’ll be sitting on a panel and say I’ve cracked it, but it is an ongoing process,” he remarked.
Coscelli said “there are a number of issues with internal documents”, such as deciding which areas to focus on and how to target third parties. “Logistically it is a big exercise,” he said.
The CMA can use its formal powers to collect evidence from third parties, he noted, and the authority is enforcing more against companies who do not provide it with the relevant information in merger investigations.
However, Coscelli said the fines the CMA can impose for failure to provide information are relatively low, and could be more meaningful in terms of deterrence.
The CMA’s recent Phase I and Phase II decisions have involved detailed forensic assessments of internal documents, he said, but “there is a genuine issue of making sure you cover all the core areas.”
Suyong Kim, a partner at Hogan Lovells in London, said she understands why agencies like to see contemporaneous business documents, but the correct balance must be struck to make sure the process is not too onerous on merging companies. The burden at the European Commission level is “pretty disproportionate”, she said, and guidelines from the EU enforcer would be welcome.
“For larger mergers on a European scale, you need a vast team and it’s like running a litigation team," she said. "But I’m slightly beginning to hanker after the US model. It’s certainly more predictable,” she said.
Kim questioned whether the balance is right in Europe, as the commission regularly seeks large volumes of documents even before taking a deal to Phase II.
“What bothers me is that you don’t have the ability to examine in chief the person who read the documents,” she said. “I do welcome the CMA’s guidance."
Coscelli and Kim spoke alongside Karen Kazmerzack, a partner at Sidley Austin in Washington, DC, and Frontier Economics director Mette Alfter. Hengeler Mueller partner Christian Staedler moderated the panel.
The conference concluded today.