On 28 September 2010 Nadia Calviño, the European Commission’s Deputy Director General for Competition, spoke at a conference in favour of greater harmonization of national merger control rules. Acknowledging that the differences between the national regimes, both substantive and procedural, creates the “risk of inconsistent outcomes”, Calviño suggested that there is a need to examine more closely the opportunities for convergence.
Calviño noted that convergence need not be limited to the substantive assessment test applied, but could also take in national public interest tests and any national exclusions. Referring to some of the deals waived through by the authorities during the financial crisis, a driving factor behind the comments was undoubtedly a desire to address any potential trends towards national protectionism.
In making these comments, Calviño was developing a theme voiced in the opening keynote speech of the conference delivered by the Competition Commissioner, Joaquín Almunia. Talking on the past and future of merger control, Almunia noted that great strides had been made on the one hand, with all Member States bar one (Luxembourg) having national merger control regimes in place compared to only a handful twenty years ago. In reaching that point, however, the method of assessment and substantive test has developed quite differently in some Member States. This has raised the need for some convergence in order to provide legal certainty for businesses.
Almunia was himself influenced by the May 2010 report by Professor Mario Monti, to the President of the European Commission entitled “A new strategy for the single market”. In it, Monti considers how the single market can continue to be developed and supported in the current political and economic climate. One point which Monti stressed was the need to encourage European champions, but to avoid the creation of national champions that will impede the single market. This, he thought, required effective merger control, and to achieve that Monti argued that greater convergence was necessary, particularly with regard to the substantive aspects of the review.
Obviously, any move to harmonise national merger control rules will have multiple hurdles to overcome - not least the desire to protect national traditions, or “if it isn’t broke, why fix it” line of thinking. Indeed, although Germany is currently debating whether to replace its substantive assessment test with the European test, Andreas Mundt, the President of the German competition authority, speaking in the same session, noted that he did not consider any cases would have been decided differently had the test already been harmonized. The strength of opposition is likely vary in accordance with the degree of current divergence from the European merger control model, as well as in relation to the particular element of the national regime where change is required.
Convergence certainly would have benefits for business operating internationally. Starting with the jurisdictional thresholds that merging parties must contend with, there is real value in agreeing a standard formula for those thresholds, with the qualifying amounts varying depending on the size of the national economies. At the moment, the UK and Spain’s continued use of a share of supply test sticks out like two sore thumbs - this type of jurisdictional assessment should either be considered so essential that it is applied across the board, or discarded in its entirety.
As to the substantive test, if all Member States adopted the European “significant impediment of effective competition” formulation, this should ensure greater consistency of merger review outcomes throughout Europe, as well as enhancing the ability of companies to benefit from the learning that can be extracted from precedential decisions.
That said, perhaps Calviño herself, in the same presentation, demonstrated why we are a long way off from achieving that level of convergence. Referring to the ongoing cooperation between the Commission and other global regulatory agencies, Calviño noted that the Commission would not simply “swallow any remedy that has been designed in another jurisdiction”. Whilst that comment was explicitly targeted at scenarios in which a merger is being simultaneously reviewed by two or more regulators, it is not hard to see how the same mind-set might be true for national regulators that are happy with their regime and how it operates, and do not want to see it swept aside in favour of the Commission’s blueprint. In Europe, however, stranger things have happened. Reforms in this area have a tendency to start slowly and then build an unstoppable momentum.