The European Commission has announced measures to simplify its procedures for reviewing concentrations under the EU Merger Regulation. The changes – announced on December 5, 2013 and applicable from January 1, 2014 – widen the scope of the pre-existing “simplified procedure” to review unproblematic mergers, and it is expected that 60 to 70 per cent of all cases will be covered.
Broadening the scope of the Notice on simplified procedures
Mergers or concentrations that are unlikely to raise competition concerns are reviewed by the Commission under its “Notice on a simplified procedure for treatment of certain concentrations”. Such mergers are notified to the Commission using a shorter form (the Short Form CO), can be cleared by the Commission without a detailed market investigation, and do not require a full reasoned decision. The changes announced by the Commission will expand the scope of the simplified procedure as follows:
- where the merging entities compete in a relevant market (i.e., there is “horizontal overlap”), a merger involving combined market shares below 20 per cent, as opposed to the current threshold of 15 per cent, will qualify for the simplified procedure;
- where one of the merging entities sells an input to a market where the other entity is active (“vertically related markets”), a merger involving combined market shares below 30 per cent, as opposed to the current threshold of 25 per cent, will qualify for the simplified procedure; and
- if the combined market share of the merging entities is between 20 and 50 per cent but the increase in market share from the merger is small (where the change in market concentration as measured by the Herfindahl-Hirschman Index (HHI) is below 150), the merger may be assessed under the simplified procedure at the Commission’s discretion.
Adjustments to the Merger Implementing Regulation
Generally, the information required to notify a merger to the Commission will be reduced both for simplified procedure cases and mergers subject to normal reviews. Further, the procedure enabling merging parties to obtain a waiver from certain information requirements has been made easier by pre-identifying which categories of information might be good candidates for a waiver. “Pre-notification” contacts will no longer be required for cases where there are no horizontal overlaps or vertical links. Finally, the amount of information to be provided by parties requesting a referral of a case from Member States to the Commission, or vice versa, has been significantly reduced.
These amendments are expected to make the pre-notification contacts between companies and the Commission easier, and to reduce the time needed for such contacts.
Amendments to standard commitment texts
The Commission also has updated its model texts for divestiture commitments that may be required to win approval for a transaction. The Commission first introduced model texts in 2003 for use by merging parties when offering commitments to divest assets and for establishing a mandate for trustees who monitor the implementation of such commitments. These voluntary model texts are intended to make it easier for parties to design commitments that effectively address competition concerns. The Commission has now aligned the model texts to the “Notice on remedies acceptable under the Merger Regulation” adopted in 2008.