The European Commission (Commission) has launched a public consultation on proposals to make changes to EU merger control. Transactions that meet certain thresholds must be notified to the Commission and otherwise they may need to be notified to Member State merger control authorities such as the Irish Competition Authority.
In its White Paper "Towards More Effective EU Merger Control", the Commission has made proposals that would allow it to assess non-controlling minority shareholdings which may affect competition, and that would make referral procedures simpler and faster. Currently, EU merger control only requires mergers, acquisitions and JV leading to a change in control to be notified for approval by the Commission where the necessary thresholds for notification are met. The Commission takes the view that EU merger control should be able to assess a wider range of transactions that may harm competition while making sure that the administrative burden by the system is kept light for the companies concerned.
The key proposals are:
- A review of acquisitions of non-controlling minority shareholdings which could harm competition. Companies acquiring minority stakes in competitors may influence their behaviour and reduce competition in the market. The EU’s merger rules currently do not allow the Commission to examine these effects, while the merger control rules of some Member States allow national authorities to do so (e.g. Austria, Germany and the UK (but not Ireland which is similar to the current EU merger control rules)). The envisaged reform would ensure that the Commission can examine those transactions which raised competition concerns and had a cross-border impact within the EU. The Commission believes that this would also not create a significant extra regulatory burden for businesses, since only transactions that appeared to be problematic from a competition point of view would face review. The proposed review system would specifically target problematic transactions with an EU dimension (e.g. those that give a certain degree of influence in a competitor). The Commission believes that this would cover an estimated 20 to 30 cases per year and would leave benign transactions unaffected.
- Making case referrals between Member States and the Commission more effective. Under the EU Merger Regulation, cases can be referred between the Commission and national competition authorities (such as the Irish Competition Authority) where appropriate. Under the proposals, companies who notify a merger could more easily refer a case to the Commission through a simpler procedure. In addition, the rules for national competition authority requests to have a case reviewed by the Commission would become more streamlined, to avoid parallel investigations. The new procedure would also allow national competition authorities to better cooperate amongst themselves when they are not referring a case to the Commission.
- Simpler procedures. Certain non-problematic transactions would be excluded from the scope of the Commission's merger review, such as the creation of JVs that would operate outside the European Economic Area (EEA) and have no impact on EU markets.
The period of consultation ends on 3 October 2014 and there is likely to be significant debate about extending the merger control competence of the Commission to minority shareholding acquisitions.
No such changes are proposed in relation to Irish merger control by the Competition and Consumer Protection Bill. Irish merger control will continue only to apply to mergers (including media mergers), acquisitions and JVs which involve a change in control. However, if the changes to EU merger control are adopted then an equivalent change to Irish merger control may become more likely.