The European Antitrust Review 2015

Merger Control

EU Merger Control in 2013/2014: Tough but Fair?

With the current European Commission’s (the Commission) term drawing to a close, a review of merger control enforcement activity in the last year of the mandate reveals a number of interesting trends.1 Over the past year, we have seen a hardening of the Commission’s attitude towards procedural infringements as it opened proceedings in two cases relating to the alleged provision of misleading information2 and breach of the standstill obligation.3 The Commission has also shown that, while it will try to find solutions in negotiating with merging parties, the remedies demanded can be complex, extensive and wide-ranging (eg, Syniverse/Mach)4 and it will not hesitate to prohibit mergers where it considers that remedies proposed by the merging parties fall short (Ryanair/Aer Lingus,5 UPS/TNT6). The Commission is also keener than ever to preserve its exclusive jurisdiction and has refused a number of referral requests by national authorities even in markets that are clearly confined to one national territory (Telefonica/E-Plus, Liberty Global/Ziggo).7 Another development that has attracted much debate has been the clearance of two Phase II cases on the basis of the infrequently used failing-firm defence (Aegean/Olympic II, Nynas/Shell/Harburg).8

On 5 December 2013, the Commission adopted a package of measures designed to simplify and streamline EU merger control procedures, which came into force on 1 January 2014. Despite the Commission’s well-publicised objectives that these reforms are intended to reduce the burden on businesses, it remains to be seen whether this will be the outcome. In particular, although these changes will see a greater percentage of cases notified under the simplified procedure, the Commission has at the same time increased certain obligations to provide information, notably in relation to internal documents. These, and other developments, are explored in greater detail below.

Overview of key trends in EU Merger Regulation cases

A return for the failing-firm defence?

A key development in 2013 was the Commission’s use of the failing firm defence to clear two Phase II mergers.9 This was particularly surprising in the case of Aegean/Olympic Airlines II, which saw the Commission reversing its previous position due to market changes (the merger had been prohibited by the Commission three years earlier in 2011 on the basis of serious competition concerns and a rejection of the failing firm defence).10 The case concerned Aegean Airlines’ acquisition of Olympic Airlines. The case was notified on 28 February 2013 and the Commission opened a Phase II investigation on 23 April 2013, noting that its preliminary investigation indicated that the transaction gave rise to serious competition concerns on a number of domestic routes (for example, the merged entity would have a monopoly on six domestic routes).11 In July 2013, the Commission sent the parties a statement of objections announcing its intention to prohibit the transaction, but just three months later, the Commission cleared the merger without commitments. Why the sudden turnaround? In summary, during the intervening period, the Commission concluded that Olympic’s financial situation had deteriorated significantly and that Olympic would have exited the market in any event. Any loss of competition would have been brought about regardless of the merger and the merger could therefore be cleared. The Commission’s approach is an interesting example of the application of the failing-firm defence doctrine, which has been applied very sparingly over the years.

The EU Merger Regulation (EUMR) does not explicitly address the failing firm defence. However, in its Horizontal Merger Guidelines, the Commission notes that:

the Commission may decide that an otherwise problematic merger is nevertheless compatible with the common market if one of the merging parties is a failing firm. The basic requirement is that the deterioration of the competitive structure that follows the merger cannot be said to be caused by the merger. This will arise where the competitive structure of the market would deteriorate to at least the same extent in the absence of the merger.

The Commission considers three cumulative criteria to be ‘especially relevant’ for the application of a failing firm defence:

  • the allegedly failing firm would, in the near future, be forced out of the market because of financial difficulties if not taken over by another undertaking;
  • there is no less anti-competitive alternative purchaser than the notified merger; and
  • in the absence of a merger, the assets of the failing firm would inevitably exit the market.12

Importantly, in Aegean/Olympic II, the Commission concluded that all of these criteria were met (in the earlier Olympic/Aegean I case, none of the three criteria were met). As regards the first criterion, the Commission concluded that Olympic had never been profitable since its privatisation in 2009 and had received considerable support from its sole shareholder, Marfin Investment Group (Marfin). It was considered ‘highly unlikely’ that Olympic would become profitable in the foreseeable future under any business plan, and Marfin had therefore decided to discontinue supporting Olympic in the event that the transaction was prohibited by the Commission (ie, the sale to Aegean did not go ahead). It appears that Marfin’s own financial troubles played a key role in the application of the failing firm defence: during summer 2013, Marfin had tried to raise finances through a bond offering but was unsuccessful.13 The other two criteria were also met: there was no credible purchaser other than Aegean (Olympic had been on sale since the 2011 prohibition decision); and there had been no credible expression of interest for Olympic’s assets (including the sale of the brand). The Commission concluded that the most likely scenario was that, absent the merger, the assets would leave the market completely and the merger was therefore cleared.

Only one month earlier, the Commission had cleared Nynas’ acquisition of the Harburg refinery assets of Shell Deutschland Oil (Shell), also on the basis of the failing-firm defence. In the press release clearing the transaction, Commissioner Almunia stressed that ‘If this acquisition did not take place, the Harburg plant would simply close down, dramatically reducing production capacity in Europe for a number of specific oil products. We authorised this acquisition because it is the only way to avoid a price increase for consumers.’14

In this case, the Commission had originally expressed concerns that, post-merger, Nynas would remain the only naphthenic base and process oil producer and largest producer of transformer oils (used to insulate power transformers) in the EEA.15 However, during the Phase II investigation, Shell successfully demonstrated to the Commission that it would not continue to operate the Harburg refinery, since it was economically unsustainable under its current business model. The refinery required significant investment to make it viable and Nynas intended to run the refinery under a different business model. The first criterion was therefore met, despite the fact that the seller, Shell, was clearly not in financial difficulties itself (in contrast to Marfin in Aegean/Olympic II). This element makes this a ‘failing division,’ rather than a failing firm, case: the Commission has traditionally been more sceptical when faced with ‘failing division’ arguments as it is difficult to assess whether any decisions at parent level are due to objective reasons requiring closure of the division. The case therefore shows that the Commission is prepared to accept such arguments when the facts bear them out. As for the two remaining failing firm defence criteria, the Commission concluded that there were no alternative buyers for the Harburg refinery assets and that the most likely alternative scenario was the closure of the refinery.

After years of crisis, failing firm arguments may seem particularly attractive in acquisitions of distressed businesses or assets, but these two recent cases do not show any particular relaxation in the Commission’s approach. It remains incredibly hard to persuade the Commission that the relevant criteria are met but these cases show that, with the right evidence, the defence can be used successfully.

Complex remedies in Phase II

Other Phase II cases in the past year have received conditional clearances. It is worth mentioning two of these cases which saw the Commission engage in extensive negotiations resulting in complex remedies packages in order to clear two mergers: Syniverse/Mach16 and INEOS/Solvay.17

Syniverse/Mach concerned the merger of the two largest providers, in the EEA and globally, of technical services enabling mobile roaming. This would have created a dominant player with ‘virtual monopoly market shares’.18 The Commission therefore required a substantial remedies package and approval of the transaction was conditional on the divestment of a significant part of Mach’s assets. This involved the entirety of two of Mach’s EEA services which enable people to use their mobile phones while travelling abroad: Data Clearing (DC) services and Near Trade Roaming Data Exchange (NRTRDE). The aim of this remedy was to create a competitor which had sufficient scale and ability to compete with the newly merged entity.

However, this would only be achieved if the divestment included not only the DC and NRTRDE infrastructure but also a comprehensive set of other roaming-related services as required by customers. Further, the Commission concluded that a proven reputation and a successful track record with large mobile network operators (MNOs) were crucial for a competitor to credibly bid for the largest customers. Therefore, Syniverse also committed to divest the former Mach personnel dedicated to providing the DC and NRTRDE services in the EEA; and a range of customer (MNO) contracts. Finally, the Commission required an ‘up-front buyer’ for the divested business, so that the merging parties were prohibited from completing the transaction until they had entered into an agreement with a purchaser deemed suitable by the Commission.

INEOS/Solvay/JV19is another case in which approval was conditional on remedies involving the divestment of assets requiring an ‘up-front buyer’, which seems to be increasingly required by the Commission when agreeing remedies with merging parties.20 This transaction concerned the combination of INEOS and Solvay’s European chlorovinyls businesses into a newly created joint venture. However, in two markets – suspension polyvinyl chloride (S-PVC) in North West Europe and sodium hypochlorite (bleach) in Benelux – the Commission had concerns that this would result in the combination of the two largest suppliers. Remedies were therefore required to address these concerns. The parties had initially offered to sell two production plants in Germany and two supporting plants in the UK at Phase I. The commitments finally agreed with the Commission at Phase II (the parties submitted two remedies proposals) went much further than this. In particular, the parties committed to divest INEOS’ S-PVC plants in Germany, France and the Netherlands, together with the upstream production assets in Belgium and the UK for chlorine and ethylenedichloride (EDC).21 The merged entity was also required to enter into a joint venture agreement with the purchaser of the divested business for the production of chlorine. The aim of this divestment package was the creation of a fully integrated self-standing S-PVC business. The Commission concluded that these commitments were sufficient to address its concerns in both the Benelux bleach and North West Europe S-PVC markets.

Prohibited mergers

Conversely, extensive commitments offered by the merging parties in UPS/TNT22 and Ryanair/Aer Lingus III23were rejected by the Commission and both mergers were prohibited (the cases are now both under appeal to the General Court).24

Ryanair/Aer Lingus III consisted of the merger of the only two major Irish carriers thus affecting the majority of short haul flights from Ireland. This was Ryanair’s third attempt to acquire sole control of Aer Lingus. Ryanair had offered a detailed package of commitments intended to address the Commission’s competition concerns on a route-by-route basis. The commitments were ‘fix-it-first’ remedies25 (which the Commission considers are particularly suitable in cases where the identity of the purchaser is crucial for the effectiveness of the proposed remedy) and were intended to help a second carrier (Flybe) establish a base at Dublin airport. Ryanair offered to divest Aer Lingus’s operations on almost all of the overlap routes to Flybe (43 out of 46) and the transfer of take-off/landing slots at London airports to allow British Airways to offer services on three more routes. Flybe and BA committed to operate these routes for three years. Ryanair also indicated that it would make up to €100 million available to Flybe to support flights in its start-up phase. However, these commitments failed the Commission’s market test and the merger was consequently prohibited. The Commission concluded that Flybe was not a suitable purchaser; it could not be certain that the commitments could be put in place in a timely manner; nor was it convinced that Flybe or BA would have the incentives to continue operating the flights after three years.

UPS/TNT saw the prohibition of a ‘gap’ case (where the merger does not create or strengthen a dominant position but nonetheless seriously impedes effective competition), which remain relatively rare. In the case, the Commission focused its review on the markets for international express deliveries of small packages in the EEA. The main providers of these services are ‘integrators’ that control international integrated air and ground small package delivery networks, and there were only four in Europe (UPS, TNT, DHL and FedEx). The Commission concluded that the merger restricted competition in 15 member states: in a number of these, DHL would have been left as the only alternative to the merged entity. UPS offered a wide-ranging remedies package to address these concerns, including the divestment of TNT’s subsidiaries in those 15 member states, thereby eliminating the problematic overlap. However, the purchaser would have needed suitable networks or partners in those countries and this severely limited the number of suitable purchasers. For this reason, the Commission required an up-front buyer. The only suitable purchaser would have been FedEx; however FedEx, which was opposed to the deal, did not have any interest in purchasing the divested assets. Attempts to secure another potentially suitable purchaser failed and the Commission therefore prohibited the transaction.

During the Phase II investigation, the parties had also submitted efficiency arguments, claiming that the transaction resulted in €400 million–€550 million of cost savings. In order for efficiency arguments to be accepted, they must meet three cumulative requirements: they must benefit consumers; be verifiable; and be merger-specific. However, the Commission concluded that only certain efficiencies put forward by the parties met these conditions. After calculating the amount of savings that would be passed on to consumers, the Commission concluded that these were not sufficient to outweigh the price increases predicted by the price concentration analysis. This was despite the fact that in three member states, the Commission’s economic analysis suggested that prices would have fallen as a result of the merger.

The outcome is hardly surprising as the Commission has never accepted efficiency arguments to overcome a finding of a significant impediment to effective competition. Nonetheless, the Commission’s assessment of efficiencies forms one of UPS’s pleas in its appeal of the prohibition decision, in which UPS claims that the Commission set an ‘arbitrary standard for verifiability of efficiencies’.26 The case is currently pending.

‘4 to 3’ mergers in the telecoms sector

Close on the heels of 2012’s Hutchison 3G Austria/Orange Austria Phase II clearance decision27 came another two cases in the mobile telephony sector. The two cases were notified to the Commission within one month of each other: Hutchison 3G UK/Telefonica Ireland28 and Telefonica Deutschland/E-Plus.29 Both take place against a broader debate within the sector regarding the need for market consolidation in order to achieve economies of scale necessary for investments in new technologies such as 4G. In addition, despite the fact that cases in this sector continue to be assessed on the basis of national markets, the Commission has been keen to retain jurisdiction and in fact rejected a request by the German national competition authority (NCA) to review the Telefonica Deutschland/E-Plus deal.30

The Commission recently cleared Hutchison 3G UK/Telefonica Ireland following a Phase II investigation, subject to commitments.31 The Commission expressed concerns that the merger would combine two of the four mobile networks in Ireland and would eliminate an important competitive force in the market (H3G, through its subsidiary Three, was the smallest of the four operators and the ‘maverick’ operator). The merged entity would have only two competitors, Vodafone and Eircom, and would create a player similar in size to the largest operator, Vodafone.32 The Commission accepted a package of commitments in order to remedy these concerns. The commitments had two elements.

The first aimed at ensuring the entry of two competitors as mobile virtual network operators (MVNOs) on to the Irish market and was intended to replace the competitive force exercised by Three previously. Hutchison committed to sell up to 30 per cent of the merged entities’ capacity to its network to the MVNOs at fixed payments.33 One of the MVNOs will also have the option to become a mobile network operator by acquiring spectrum at a later stage. To facilitate this, Hutchison has committed to divest blocks of spectrum. The second element of the remedy package consisted of Hutchison committing to continue the network sharing agreement that O2 Ireland had with Eircom. This remedy was required because the Commission had concerns that Hutchison may attempt to terminate or frustrate the agreement with Eircom, thereby limiting Eircom’s ability to offer nationwide coverage and to continue its roll-out of 4G services.

Unsurprisingly, these commitments, aimed at creating a new entrant, are similar to those previously offered in Hutchison 3G Austria’s acquisition of Orange Austria as well as those offered in the other ‘4 to 3’ telecoms Phase II case currently being investigated by the Commission, Telefonica Deutschland/E-Plus, which is expected to receive merger clearance shortly.34The Hutchison/Telefonica commitments have, however, been heavily criticised as being insufficient to address the competition concerns by the Irish telecoms regulator, which has vowed to closely monitor the competitive dynamics of the affected mobile markets.35

The Commission becomes more aggressive in pursuing suspected procedural infringements

A number of developments show that the Commission is getting tougher when parties violate the procedural rules of the EUMR by failing to provide adequate information or providing incorrect or misleading information or by breaching the standstill obligation in the EUMR.

Hutchison 3G UK/Telefonica Ireland saw the Commission ‘stopping the clock’ during the course of its merger assessment. This is a relatively rare occurrence and it appears to have been triggered by the receipt of ‘essential information’ that had come to light during the Commission market test and was ‘not provided by the parties’.36Failure to provide information to the Commission, or provisions of incorrect or misleading information during the merger review process, can have serious consequences, as experienced by Munksjö and Ahlstrom. On 25 February 2014, the Commission sent a SO to both parties, alleging that they had provided misleading information with regard to the market for abrasive paper backings during the course of the Commission’s review of their merger in 2012/2013.37 Under article 14 of the EUMR, the Commission may fine parties up to 1 per cent of their annual worldwide turnover for providing incorrect or misleading information during the merger review process. The outcome of the case is awaited.

The most serious type of procedural infringement is failure to notify and receive clearance for a deal prior to implementation (the so-called standstill obligation).38 The Commission does not hesitate to pursue parties for such violations as evidenced by a number of recent cases. The 2009 Electrabel case showed that the Commission will impose very high fines for failures to notify. The case resulted in a fine of €20 million imposed on Electrabel, which was fully upheld by the General Court on appeal39 and, as this article went to press, by the Court of Justice.40Prior to Electrabel, the Commission had only imposed fines under the EUMR in two cases. The Commission is now pursuing a new case, suggesting that the Commission is taking a harder line on suspected procedural infringements. On 31 March 2014, the Commission sent a statement of objections to Marine Harvest ASA for the early implementation of its acquisition of Morpol. The Commission notes that Marine Harvest acquired a 48.5 per cent stake in Morpol in December 2012, which it considers conferred control over Morpol. The implementation of the acquisition therefore took place on 18 December 2012, but the transaction was notified only in August 2013 (and was subsequently cleared subject to conditions in September 2013)41 The Commission considers breach of the standstill obligation to be an extremely serious offence and has the power to impose fines of up to 10 per cent of annual group worldwide turnover for failure to notify a transaction and for the implementation of a transaction in breach of the standstill obligation, whether intentionally or negligently.42As noted by the Commission in its press release:

[T]he prohibition of implementation of a concentration before it is notified and cleared by the Commission constitutes a cornerstone of EU merger control.... The early implementation of a concentration affects the structure of the market and may make it more difficult for the Commission to restore effective competition where necessary. In order to avoid any permanent and irreparable damage to effective competition, companies are obliged to give prior notification of concentrations exceeding certain thresholds, and not to implement these concentrations before having received clearance from the Commission. Any infringement of these obligations is serious, since it undermines the very essence of EU merger control [emphasis added].43

EUMR cases before the EU courts

The EU courts continue to deal with a number of EU merger-related cases. On 11 December 2013, the General Court handed down its judgment rejecting Cisco’s appeal of the Commission’s decision to clear Microsoft’s acquisition of Skype.44 In particular, the General Court held that the Commission had not erred in concluding that the merger did not raise horizontal competition concerns in the consumer communications market. This was despite the fact that the merger may have led to very high combined shares (80–90 per cent) on the basis of the narrowest market definition possible. The General Court concluded that high market shares were not indicative of a degree of market power that would enable Microsoft to significantly harm effective competition: the consumer communications sector is a recent and fast-growing sector characterised by short innovation cycles in which large market shares may turn out to be ‘ephemeral’.

There are also a number of pending cases before the General Court, including all three of the Commission’s most recent prohibition decisions that are currently under appeal45 and two cases relating to the Commission’s conditional clearance of IAG’s acquisition of bmi.46

Simplification package

The most important development in the last year from a practical perspective was the Commission’s adoption of a package of measures designed to simplify and streamline EU merger control procedures.47 A detailed review of the changes is set out below.

Package of measures

The Commission’s package of ‘simplification’ measures came into force on 1 January 2014.48This included:

  • revisions to the ‘implementing regulation’, including revisions to the annexed Form CO, Short Form CO, and Form RS (used to request referrals of cases between the member states and the Commission) template notification forms;
  • a revised version of its Notice on the Simplified Procedure; and
  • revised versions of its model texts relating to divestment remedies.

The key changes resulting from these measures are discussed below.

Extension of the simplified procedure and revisions to the Short Form CO

The principal change regarding the simplified procedure has been the increase in the market share thresholds for use of the procedure and the Commission estimates that these changes will lead to a 10 per cent increase49 in the number of cases being reviewed under the simplified procedure and notified using the Short Form CO. The market share thresholds for cases in which the Commission will (in principle) apply the simplified procedure are:

  • for transactions involving parties active in the same product and geographic market (ie, horizontal relationships) the combined market share threshold is below 20 per cent (increased from 15 per cent);
  • for transactions involving markets where one of the merging parties is active upstream or downstream of the others (ie, vertical relationships), the combined market share threshold is below 30 per cent (raised from 25 per cent); and
  • the Commission may apply the simplified procedure in a further category of case involving horizontal relationships. This is where:
    • although the combined market share of the merging entities exceeds the 20 per cent market share threshold noted above, it remains below 50 per cent; and
    • the market share increment and increase in concentration resulting from the transaction is very low (measured by reference to the Herfindahl-Hirschman Index).

In a joint venture context, the revised Notice on the Simplified Procedure also clarifies that horizontal or vertical relationships between the parents to a joint venture that fall outside the field of activity of the joint venture are not relevant when assessing these market share thresholds. This is an important clarification which will allow more cases to benefit from the simplified procedure in joint venture situations.

Additional changes to the Short Form CO also effectively mean that there is now a ‘super-simplified notification’ for joint ventures not active in the EEA50 The Short Form CO clarifies that in a joint venture context, reportable markets will only arise where there are horizontal or vertical overlaps between the joint venture itself and at least one parent (rather than merely between the parents) in the EEA. Where there are no reportable markets, the Short Form CO requires relatively limited information to be provided.51

However, the Commission retains the right to insist on a full Form CO being used and to follow the normal EUMR procedure. The Notice on the Simplified Procedure sets out a number of specific circumstances where the Commission may revert to the normal EU procedure52 and now also includes cases where joint ventures have EU turnover of less than €100 million at notification, but can be expected to exceed this turnover threshold within the next three years.

Changes to the Form CO and other notification forms

Revisions to the notifications forms

The Commission has promoted the ‘streamlining’ of information required under the Form CO, Short Form CO and Form RS,53 consequently easing the burden on the notifying parties:

  • in line with the increase in the market share thresholds for the applicability of the simplified procedure, the thresholds for the existence of ‘affected markets’54 in the Form CO (in relation to which the most detailed market data must be provided) has been increased to 20 per cent (for horizontal relationships) and 30 per cent (for vertical relationships);
  • as noted above, for the Short Form CO information required in relation to transactions which do not give rise to any ‘reportable markets’ remains limited;
  • certain questions in the previous notification forms have been amended or deleted, reducing the information required; and
  • additional categories of information have now been specifically highlighted within the Form CO as potential candidates for waivers from the Commission.55 This is where the Commission agrees to waive the obligation to provide certain information, on the request of the parties.

The Commission has also published revised versions of its model texts for divestiture commitments and trustee mandates, which have been updated to be brought in line with the Commission’s Notice on Remedies.56

Internal documents – a significant increase in the information burden on notifying parties

However, revisions to the notification forms also mean that there will be an increase in certain information requirements. In particular, there is an increase in the number of internal documents concerning the transaction and the relevant markets that the merging companies will need to provide to the Commission together with the Form CO (the ‘5(4) documents’).

First, whereas previously section 5(4) requested documents were those ‘prepared by or for’ any members of the board, this test has now been widened to include documents merely ‘received by’ any members of the board.

Second, section 5(4) of the Form CO now asks for copies of internal documents not only when these discuss the specific transaction in question (which was the previous requirement) but also when they discuss any affected markets, regardless of whether the documents relate to the transaction. Another new element is the Commission’s power to request these internal documents over a two-year period. This is a significant expansion of the test and although the Commission previously could request such documents, the move to routinely require these in all cases risks imposing heavy additional burdens on the parties, akin to those in place under the US system which traditionally has had a greater focus on internal documents than in the EU.

The Commission has also amended the requirements of the Short Form CO, which now requires certain internal documents to be provided together with the notification (under a new section 5(3)). This obligation only arises where there are reportable markets (ie, where there are either horizontal or vertical overlaps between the parties) and the category of documents involved is more limited than in the case of the Form CO. Nonetheless, this is a surprising change to make within a package intended to streamline procedures and reduce burdens on business.

Affected markets and ‘plausible’ alternative markets

The Form CO now provides that the concept of affected markets (in relation to which significant market data must be provided) includes ‘plausible alternative’ relevant product and geographic markets. This requirement was already in the Short Form CO (in relation to reportable markets) and has now been extended to the Form CO. Although the Commission’s practice has been to consider various potential market definitions when determining whether affected markets exist, this appears to go further. The concern widely expressed by practitioners at the time of the Commission consultation is that if the Commission routinely requires market data to be provided in the Form CO (and the parties risk the Form CO being deemed incomplete without this) on the basis of each such plausible (but not necessarily economically realistic) market definition, then this risks significantly increasing the burdens on the merging parties.


Over the years a practice of ‘pre-notification contacts’ has grown up in which the parties must submit a draft Short Form CO or draft Form CO to the Commission and discuss various drafts of this with the case team before being allowed to formally submit the notification and start the 25-working-day clock. This pre-notification period can last from a couple of weeks, to several months or more in more complicated cases. There are no formal deadlines for this informal procedure. The Commission has now included some comments on pre-notification contacts within its Notice on the Simplified Procedure, and the revised notification forms. Whilst these comments stress the voluntary nature of such contacts, the position is that these have become de facto mandatory.

The Notice on the Simplified Procedure does, however, indicate that in cases where there are no reportable markets (including, for example, the case of joint ventures that are not active in the EEA) the parties ‘may prefer to notify immediately’. However, given the risk of a notification being declared incomplete (and restarting the clock), it is unclear how often this will occur in practice.

Conclusions and looking forward to the year ahead

The past year has seen significant enforcement activity on the substantive and procedural front. The Commission has become more interventionist as it steps up its pursuit of alleged procedural cases for failures to notify and provision of incorrect or misleading information – it will be interesting to see the outcome of these cases over the coming year. The Commission also appears to have got tougher when negotiating remedies packages (including increasingly insisting upon up-front buyers) and blocking transactions outright whenever it considers that even extensive remedies packages are not sufficient to cure the identified competition problems in their entirety.

On the other hand, the Commission has shown in its simplification reforms that it will try to reduce the burdens of notification on businesses. However, it remains to be seen to what extent the Commission has succeeded in making the EU merger control process more streamlined and business friendly, particularly given the additional information requested in the notification forms. Although the expansion of the simplified procedure in particular and the ‘super-simplified notification’ will be welcome news for merging parties, it is queried whether the Commission went far enough. For example, respondents to the Commission’s initial consultation57 took the opportunity to question whether certain clearly non-problematic transactions, namely joint ventures that are not and will not be active in the EEA (but that nevertheless meet the turnover thresholds due to parental turnover), should require notification under the EUMR at all. This was on the basis that such transactions cannot have any negative impact on competition in the EEA. However, the Commission in its announcement of the reform measures stressed that any such change would require changes to the EUMR itself, which was not in the scope of this initiative.58

Changes to the EUMR itself are, however, expected in the near future, and the outcome of the Commission’s 2013 consultation59 on the possibility of extending the EUMR to cover non-controlling minority stakes is keenly awaited.60The Commission also consulted on various other potential changes, including the system of case referrals between the Commission and the member states, and a number of other technical amendments. The Commission has confirmed that it intends to extend the EUMR to cover non-controlling minority stakes, although the existing notification system will not be transferred completely to such stakes. Rather, the Commission has expressed the need to have a more flexible system which focuses on acquisitions that are more likely to raise competition concerns.61 The Commission is to publish a White Paper regarding the options for non-controlling minority shareholdings and improvements to the case referral system in the next few months. Following the White Paper, a legislative proposal will propose changes to the EUMR, although this will be a task for the next Commission which is to take office towards the end of this year. Watch this space.


  1. This article seeks to provide an overview of the main EU merger control developments from January 2013 to the end of May 2014.
  2. Commission press release IP/14/189, 25 February 2014.
  3. Commission press release, IP/14/350, 31 March 2014.
  4. Case COMP/M.6690 Syniverse/Mach.
  5. Case COMP/M.6663 Ryanair/Aer Lingus III.
  6. Case COMP/M.6570 UPS/TNT.
  7. See Case COMP/M.7018 Telefonica/E-Plus, Case COMP/M.7000 Liberty Global/Ziggo.
  8. Case COMP/M.6796 Aegean/Olympic II and Case COMP/M.6360 Nynas/Shell/Harburg Refinery Assets.
  9. Case COMP/M.6796 Aegean/Olympic II and Case COMP/M.6360 Nynas/Shell/Harburg Refinery Assets.
  10. Case COMP/M.5830 Olympic/Aegean Airlines, 28 January 2011.
  11. Commission press release, IP/13/361, 23 April 2013.
  12. Horizontal Merger Guidelines, paragraph 90.
  13. By contrast, in Olympic/Aegean I, the Commission concluded that Marfin had significant incentives to continue supporting Olympic.
  14. Commission press release IP/13/804, 02 September 2013.
  15. Commission press release IP/13/290 26 March 2013.
  16. Case COMP/M.6690 Syniverse/Mach.
  17. Case COMP/M.6905 INEOS/Solvay/JV.
  18. Commission press release IP/13/481, 29 May 2013.
  19. Case COMP/M.6905 INEOS/Solvay/JV.
  20. Over the past three years, up-front buyers formed part of remedies packages in seven cases (see Case COMP/M.6690 Syniverse/Mach, Case COMP/M.6905 INEOS/Solvay/JV, Case COMP/M.6857 Crane Co/MEI Group, Case COMP/M.6497 Hutchison 3G/Austria, Case COMP/M.6992 Hutchison 3G UK/Telefonica Ireland, Case COMP/M.6203 Western Digital/Viviti, Case COMP/M.7018 Telefonica Deutschland /E-Plus).
  21. The divestments agreed with the Commission included the majority of INEOS’s Tessenderlo assets that it had acquired in 2011.
  22. Case COMP/M.6570 UPS/TNT.
  23. Case COMP/M.6663 Ryanair/Aer Lingus III.
  24. T-194/13 United Parcel Service v Commission, T-260/13 Ryanair Holdings v Commission.
  25. A ‘fix-it-first’ remedy is where the parties identify and enter into a legally binding agreement with a buyer outlining the essentials of the purchase during the Commission’s procedure. The Commission then decides whether the proposed divestment to the identified purchaser sufficiently addresses its competition concerns.
  26. T-194/13 United Parcel Service v Commission, publication of application OJ C 147 from 25.05.2013, p30.
  27. Case COMP/M.6497 Hutchison 3G Austria/Orange Austria.
  28. Case COMP/M.6992 Hutchison 3G UK/Telefónica Ireland.
  29. Case COMP/M.7018 Telefonica/E-Plus.
  30. Commission press release IP/14/95, 30 January 2014. The Commission also rejected a request by Germany and the Netherlands respectively to review two other Phase II cases: Holcim/Cemex West (Case COMP/M.7009), Commission press release IP/14/2, 6 January 2014; and Case COMP/M.7000 Liberty Global/Ziggo.
  31. Commission press release IP/14/607.
  32. Commission press release IP/13/1048, 6 November 2013.
  33. Hutchison was prevented from closing the transaction until it had concluded an agreement with at least one MVNO (ie, a partial upfront remedy was required).
  34. After this article was written, the Commission cleared the merger subject to conditions on 2 July 2014.
  35. Commission for Communications Regulation, ComReg Information Notice 14/53, 28 May 2014.
  36. M-lex update 3 April 2014.
  37. Commission press release IP/14/189, 25 February 2014. Following an in-depth investigation, the Commission conditionally cleared the merger in May 2013 (Case COMP/M.6576 Munksjö/Ahlstrom).
  38. The parties to a transaction that falls within the scope of the EUMR rules are required to notify the transaction to the Commission and cannot implement the transaction before approval is granted (the ‘standstill obligation’) (article 7(1) EUMR).
  39. Case COMP/M.4994 Electrabel/Compagnie Nationale du Rhône. See also, ‘Electrabel: a shock to the system’, GCR European Antitrust Review 2014.
  40. Case C-84/13P Electrabel SA v Commission, judgment of 3 July 2014.
  41. Case COMP/M.6850 Marine Harvest/Morpol.
  42. Article 14(2), EUMR.
  43. Commission press release, IP/14/350, 31 March 2014.
  44. Case T-79/12 Cisco Systems and Messagenet v Commission.
  45. T-194/13 United Parcel Service v Commission, T-260/13 Ryanair Holdings v Commission, Case T-175/12 Deutsche Borse v Commission. The Commission’s prohibition decision in Case COMP/M.5830 Olympic/Aegean Airlines was also under appeal but this case was removed from the General Court register in September 2013 (Case T-202/11 Aeroporia Aigaiou Aeroporiki and Marfin Investment Group Symmetochon v Commission).
  46. Case T-101/13 Aer Lingus v European Commission and Case T-344/12 Virgin Atlantic Airways v Commission.
  47. These measures were adopted on 5 December 2013, following a consultation in 2013. Commission press release IP/13/1214, 5 December 2013.
  48. Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013 amending Commission Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings. O J L 336, 14 December 2013, pp1–36.
  49. Commission press release IP/13/1214, 5 December 2013. The Commission estimates that around 60–70 per cent of all merger cases will be reviewed under the simplified procedure.
  50. Commission FAQ, MEMO/13/1098, 5 December 2013, section 6 Short Form CO.
  51. Reportable markets consist of all relevant product and geographic markets (including plausible alternative relevant product and geographic markets) in the EEA where there are either horizontal or vertical overlaps between the parties. The bulk of the information requirements in a Short Form CO relate to the reportable markets. For each reportable market notifying parties are required to provide: descriptions of the relevant product and geographic markets; turnover information for each of the parties; a description of the parties’ businesses; and market share estimates (and contact details) of the three largest competitors (sections 6 and 7, Short Form CO).
  52. Articles 8–19 Notice on Simplified Procedure.
  53. The Form RS is used by parties in order to request a referral of a case from the Commission to member states, or from member states to the Commission, pursuant to article 4(4) and article 4(5) EUMR.
  54. Affected markets consist of all relevant product and geographic markets (including plausible alternative relevant product and geographic markets) in the EEA where there are either horizontal overlaps resulting in a combined market share of 20 per cent or more, or vertical overlaps resulting in a combined market share of 30 per cent or more.
  55. Note that parties may also request waivers in connection with information provided in the Short Form CO and Form RS.
  56. Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004.
  57. Commission press release IP/13/288, 27 March 2013.
  58. Commission press release IP/13/1214, 5 December 2013.
  59. Commission staff working document, ‘Towards more effective EU merger control’, Brussels 25.6.2013 SWD(2013) 239 final.
  60. This has long been seen by commentators (and the Commission itself) as a potential enforcement gap in the EUMR.
  61. See, for example, Almunia, ‘Honing the instruments of EU competition control’, St Gallen, 15 May 2014.

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