Luxembourg is the only country in the European Union ("EU") that has no prior merger control system. In principle, acquisitions do not fall within the scope of antitrust rules (prohibition of anticompetitive agreement and abuse of dominance). For instance, acquisitions can certainly lead to a dominant position but the mere attainment of such position does not in itself constitute an abuse within the meaning of Article 102 of the Treaty on the Functioning of the European Union ("TFEU").
At several occasions, questions have been raised as to the applicability of the so-called Continental Can doctrine in absence of any prior merger control in Luxembourg. According to the ECJ judgment in Case 6/72 Europemballage and Continental Can v Commission ( ECR 215, paras 26 and 27), acquisitions can amount to an abuse of dominant position if the acquisition is likely to strengthen the existing dominant position of an undertaking in such a way that the degree of dominance reached “substantially fetters competition”.
Decision of 17 June 2016
In a recent decision dated 17 June 2016, the Luxembourg Competition Council applied the Continental Can-doctrine for the first time in a case where Utopia, the owner of most cinema complexes in Luxembourg had acquired a competing cinema complex in financial difficulties. The Competition Council decided on the basis of the ECJ judgment in Continental Can that this acquisition amounted in principle to an abuse of dominance as Utopia already had a dominant position which would be further strengthened by that acquisition.
The Competition Council however dismissed the case as the acquisition most probably would have no detrimental impact on competition as the acquired cinema complex was in financial difficulties and was about to disappear from the market anyway. Furthermore, the acquisition also had some positive effects as it is in line with other TFEU objectives in terms of social cohesion and the promotion of culture.
Conclusions and recommandations
- The Luxembourg Competition Council is, as a matter of principle, determined to investigate transactions whereby the dominant position of firms is further strengthened. Therefore, deals which are not investigated by the European Commission under the EU merger control regime (Regulation (EC) No 139/2004) but which have a local importance, can, under certain circumstances, be investigated by the Luxembourg Competition Council and this even in the absence of a national prior merger control regime.
- The discussed Utopia case concerns an acquisition that took place in April 2013, which was challenged in March 2015 and decided upon in June 2016, so more than three years after the acquisition. In order to reduce the risk that a competitor or any other interested third party would file a complaint against the transaction after the closing of the deal, it is thus recommended to proactively reach out to the Competition Council at an early stage of the transaction. The Competition Council has explicitly stated in its press release related to the Utopia case that it is open to discuss Continental Can like transactions. However, the Competition Council did not indicate whether undertakings can contact it before the acquisition has taken place, i.e., before an actual abuse would have occurred, but we believe that would be possible.