Merger review

Powers of competition authority

Does the competition authority have the same authority with respect to reviewing mergers involving IP rights as it does with respect to any other merger?

The Competition Authority has the same powers of supervision for mergers involving an intellectual property right of not.

Analysis of the competitive impact of a merger involving IP rights

Does the competition authority’s analysis of the competitive impact of a merger involving IP rights differ from a traditional analysis in which IP rights are not involved? If so, how?

The Competition Authority supervises the effects of a merger in terms of competition law to ensure that the operation does not result in an abuse of dominant position or in the economic dependence of another company. To summarise, the Authority checks that the proposed operation does not distort the free play of competition.

In principle, its supervision does not vary depending on whether intellectual property rights are involved in the merger or not. It does, however, take these among other factors into account in its analysis. It will also determine whether the merger of intellectual property rights might lead to a dominant position or any other anticompetitive situation on completion of the merger.

Thus, in its decision 17-DCC-53 of 25 April 2017 concerning the taking of exclusive control of Adria Mobil by Trigano, the Competition Authority ruled because there was no risk of anticompetitive effects on the construction and leisure vehicle markets, whether through a brand effect that, following the merger, that would enable the new entity to strengthen its market position and increase its brand portfolio.

At the European level, however, the European Commission authorised the acquisition by Thales of Gemalto, provided that Thales dispose of its business in general security equipment modules, noting that the acquisition would lead to a very large market share that could result in price rises, a reduction in choices for customers and a reduction in innovation (European Commission press release of 11 December 2018).

Challenge of a merger

In what circumstances might the competition authority challenge a merger involving the transfer or concentration of IP rights? Does this differ from the circumstances in which the competition authority might challenge a merger in which IP rights were not a focus?

In this case, the merger could have had negative consequences for the free play of competition in that it would involve an anticompetitive practice, the Competition Authority could challenge such a merger involving the transfer of intellectual property rights.

The circumstances under which the Competition Authority could challenge a merger do not differ depending on whether or not the merger involves a transfer of intellectual property rights.

Remedies to address the competitive effects of mergers involving IP

What remedies are available to address competitive effects generated by a merger when those effects revolve around the transfer of IP rights?

In the event of a merger involving the transfer of intellectual property rights implying an anticompetitive practice, the Competition Authority can require the notified party to take specific measures to avoid such a negative impact on competition. If the notified party does not accept the measures required by the Authority or the refusal decision of this latter to proceed with the merger, the notified party becomes liable to penalties.

Thus, the Competition Authority can require the disposal of certain intellectual property rights, whether industrial property rights or copyrights. In addition, it can require that the scope of the intellectual property rights is reviewed involving, for example, revisions to the contracts covering these.

As a result, concerning the acquisition of the Beauty products division of Procter & Gamble by Coty, the European Commission asked whether this purchase would reduce competition and lead to higher prices for these consumer goods in Europe. The Commission concluded that competition in the relevant perfume and cosmetics product markets would be strong enough to prevent price rises for European consumers.

In another case, regarding the proposed acquisition of Gemalto by Thalès, the European Commission made its approval of the acquisition conditional on Thalès disposing of one of its business division in order to prevent any distortion of competition (European Commission press release of 11 December 2018).