The European Commission publishes cartel enforcement and merger control statistics at regular intervals. This article looks back at the Commission’s activities in these two areas of competition law in 2017 and discusses recent trends.
Merger control – notifications
In 2017 the Commission has seen The EU Merger Regulation and the highest number of The EU competition rules on cartels. notifications in a decade, with 380 cases having been notified under the Merger Regulation. This represents a continuous upward trend which was initiated in 2013, reflecting a significant increase in the level of merger activity in Europe. However, it is still below the pre-financial crisis peak in 2007 (402 cases).
Merger control – Phase I
There were 378 Phase I decisions in 2017. Of these, 93 per cent (353 decisions) were unconditional clearances, 5 per cent (18 decisions) were conditional clearances and 2 per cent (seven decisions) resulted in a Phase II investigation. A record number of 278 unconditional clearances used the simplified procedure, significantly more than in 2007 (238 cases); by contrast only 75 unconditional clearances were adopted under the non-simplified procedure, substantially down from 2007 (130 cases).
Merger control – Phase II
The seven transactions for which the Commission opened in-depth Phase II investigations were:
- Monsanto/Bayer (agrochemicals);
- Knorr-Bremse/Haldex (car parts – brake systems);
- Qualcomm/NXP (semiconductors);
- Essilor/Luxotica (optics);
- ArcelorMittal/Ilva (steel);
- Tronox/Cristal (chemicals – titanium dioxide); and
- Celanese/Blackstone (chemicals – acetate filter tow).
2017 saw the adoption of only four Phase II decisions compared with seven the previous year. Two of those decisions were conditional approvals, namely Dow/DuPont (cleared on 27 March 2017) and ChemChina/Syngenta (cleared on 5 April 2017), which both involved the chemicals sector and which both required the divestment of certain European pesticide assets. The other two decisions led to prohibitions.
In HeidelbergCement/Schwenk/Cemex Hungary/Cemex Croatia (prohibited on 5 April 2017), the Commission was concerned that the proposed transaction would reduce competition in the Croatian markets for grey cement. In Deutsche Börse/London Stock Exchange Group (prohibited on 29 March 2017), which would have created the world’s largest stock exchange by total income, equities listings and derivatives trades, the Commission concluded the merger would have created a de facto monopoly in the markets for clearing fixed income instruments.
Merger control withdrawals and referrals
Nine cases were withdrawn in 2017 – seven in Phase I and two in Phase II – which confirms the tendency of notifying parties to abandon their transaction rather than be subject to an adverse or unfavourable Commission decision.
There were also several referrals to and from Member States, including 29 under the pre-notification reallocation procedure (compared to 33 the previous year) and one under the post-notification reallocation procedure (the same as one in the previous year).
Since a peak of activity in 2014 (when 10 cartel cases were decided), the Commission in 2017 has maintained the same level of activity in cartel cases as in the previous year, taking a decision in seven cases against 31 undertakings.
Four of the decisions above – Thermal Systems, Car Battery Recycling, Occupant Safety Systems and Lighting Systems – are part of a series of major cartel investigations into the automotive parts sector, which so far have resulted in fines totalling €1.6 billion.
In 2017 the total amount of cartel fines amounted to €1.9 billion, down from the record high in 2016 (€3.7 billion).
The largest individual fine to be imposed last year was the €880 million fine against Scania, the only nonsettling party in Trucks. Unusually, Scania chose not to cooperate with the Commission and did not receive a reduction in its fine under the Leniency Notice, nor under the settlement procedure. For more information about this case, see our previous newsletter on the subject. Four cases were settled in 2017 - Occupant Safety Systems, Lighting Systems, Paper Envelopes and Thermal Systems – bringing the total number of cases settled to 25 since this procedure was introduced in 2008.
Looking ahead, a number of cartel investigations are ongoing. The Commission in October confirmed unannounced inspections concerning online access to bank account information. Earlier in the year, it raided the premises of companies active in ethylene purchasing, the manufacture of kraft paper and industrial paper sacks and motor insurance in Ireland. However, investigations into exhaust systems and bioethanol were closed.
Competition Commissioner Vestager has signalled that the use of algorithmic systems to facilitate price collusion will be of interest to the Commission in the future. The Commission is also pressing forward with its proposal for a directive to make national competition authorities more effective enforcers by giving them a minimum common toolkit and effective enforcement powers. The proposed directive will, for example, enable national competition authorities to act independently without taking instructions from public or private entities and enhance their ability to impose fines and collect evidence. The proposal is now with the European Council and European Parliament for consideration.