Under the EU merger control regime, transactions which meet the EU turnover thresholds must be notified to the Commission for review before they can be implemented. The review procedure is organized in two phases, each with set time limits. During phase I, the Commission has 25 working days for the review of the transaction. If commitments (i.e., modifications of a transaction, aiming at eliminating the competition concerns identified by the Commission) are offered in phase I, the deadline is extended by additional 10 working days.
If it decides to open a phase II investigation in order to conduct a more in-depth analysis, the Commission has 90 working days to make its assessment. This deadline can be extended if commitments are offered or at the request of the notifying party or the Commission up to 125 working days.
The timing of review of a transaction can be impacted by a so-called “stop-the-clock”. For instance, if the Commission has requested information from the parties or if the filing is incomplete, it can stop the clock until the information is provided or until the filing is declared complete. This results in pushing back any initially set deadline for the Commission to decide on a deal.
The Commission has made use of this tool in a growing number of cases in the recent months, which were not hostile takeovers. For example, it suspended its review of a merger between a lens manufacturer and a frame maker after it decided to start an in-depth review of the transaction. It has suspended twice so far the review of an acquisition by a German chemical and pharmaceutical company of a US-based agrochemical company. It has also stopped the clock two times concerning a takeover by a US chipmaker of a Dutch semiconductor supplier.
Stopping the clock for the review of a transaction may be more common in more complex cases which require more extensive analysis and information gathering by the Commission. In these circumstances protracted pre-notification discussions could facilitate the review process. However, this increased recourse by the Commission to the “stop-the-clock”, including in non-hostile transactions, poses significant risks to companies. This should be factored in when agreeing the timing for closing of a transaction. It remains to be seen whether this trend may further impact non-contentious cases as well.