2016 did not break all M&A records. Last year, most attention went to transactions in the telecom and agrochemical sector. At national level, transactions in the healthcare sector were once more subject to frequent and critical evaluation. We expect a similar critical attitude of the competition authorities in 2017. In addition, 2017 may be the year in which the introduction of new jurisdiction thresholds (regarding the transaction value) will enter into force. This will further increase the powers of the competition authorities in merger control cases.

International

The European Commission (the “Commission”) carried out several in-depth investigations in 2016, some of which continued into 2017. We list the most important ones below.

Due to the consolidation in the agrochemical sector, the Commission focuses on:

In the latter case, ChemChina has submitted remedies to alleviate the concerns of the Commission that the concentration would become a dominant player in the market. The Commission has most likely investigated the links between ChemChina and other Chinese state-owned companies, which has become standard practice in its assessment of mergers: in an earlier case in 2016 the Commission implied that all Chinese energy companies controlled by the Chinese government committee SASAC were in fact one undertaking.

In the telecom sector the Commission gave the 'go ahead' for the combination of the Dutch activities of Vodafone and Liberty Global. As a condition for the clearance of this transaction, T-Mobile took over Vodafone's fixed-line activities in the Netherlands. This transaction was approved by the Dutch Authority for Consumers & Markets (’ACM’). In a previous blog we reported on various other complex transactions in the telecom sector.

Furthermore, the Commission launched an investigation into Facebook. Facebook stated in its notification for the takeover of WhatsApp in 2014 that its own data could not be matched with that of WhatsApp. At the time, this was considered as a relevant element in the Commission's assessment of the proposed transaction. Nevertheless, Facebook decided to combine its own and WhatsApp’s data in August 2016. Therefore it now risks a fine amounting to 1% of its total group revenue.

Related to this case, a legislative act was drafted in Germany last year, which aims to introduce a particular transaction value as notification threshold. Such transaction value related thresholds have been in existence for many years in other jurisdictions, such as in the US and Canada. The Commission is currently considering to change its thresholds as well and, in that context, it held a public consultation on the present rules and thresholds in 2016. At present, virtually all EU jurisdictions only apply thresholds based on turnover. Plans to adjust the thresholds within the framework of merger control arise mainly from the Facebook/WhatsApp transaction which was not subject to merger control in Germany due to WhatsApp's low turnover in spite of a 19 billion dollar purchase price. The draft of the legislative act to change merger control thresholds in Germany makes sense as the impact of major deals between online platform companies is better measured by the number of users than the generated turnover. It is quite conceivable that other Member States will follow this example.

National

2016 was once more another eventful year for the national authorities (the Dutch Authority for Consumers & Markets (“ACM”) and the Dutch Healthcare Authority (the “NZa”)). For instance, Brocacef obtained approval from ACM to take over Mediq on the condition that it divested a large number of pharmacies and its Distrimed wholesale business. Brocacef lodged an appeal against this conditional approval, but the corresponding request of Brocacef to suspend one of the remedies was rejected by the District Court of Rotterdam. Interesting, however, is that ACM recently agreed to amend its decision. Some pharmacies in The Hague no longer needed to be divested, because the market conditions in that area had apparently already changed. Furthermore, ACM determined that further investigation (second phase) was necessary with regard to the intended takeover of Faco (wholesaler and franchisor in the drugstore sector) by Holland Farma (wholesaler in the drugstore sector). In late 2016, ACM approved this concentration, because it concluded that drugstores would still have sufficient choice from which company to buy their drugstore items.

ACM won an important case before the District Court of Rotterdam. The appeal against the first and only prohibition of a hospital merger (Albert Schweitzer – Rivas) by ACM was rejected by the court. About a month earlier, ACM had stated that studies showed that mergers between hospitals have not demonstrably contributed to an improvement in quality. It is debatable to what extent these developments will impact on new or pending mergers in the healthcare sector. In any case, ACM recently decided that a merger between the two Amsterdam university hospitals - AMC and VUmc - require an in-depth investigation. ACM intends to investigate overlaps between the two hospitals in the context of top-quality healthcare. Parties will have to apply for a licence in order to obtain clearance for their merger from ACM.

We have previously written about the plans to transfer the assessment of healthcare mergers from the NZa to ACM and about the plans to adjust the thresholds. So far, the legislative act has not yet been adopted and it is unclear when exactly this will happen, inter alia given the impending parliamentary elections. The need to raise the thresholds was once more underscored in 2016: The NZa issued no fewer than 103 merger decisions last year, while it had forecasted in 2012 that approximately only 25 merger notifications would need to be assessed per year.