European Union: Merger Control

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Introduction 1

The number of cross-border deals in the European Union remained high in 2018, with a record year in notifications to the European Commission (the Commission). 2 Deal value in European M&A remained high in 2018 and slightly increased in comparison to the levels seen in 2017 (€1,061 billion in 2018 compared to €1,004 billion in 2017). 3 Correspondingly, the number of mergers notified to the Commission in 2018 surpassed the 2017 total (414 versus 380) and for the first time exceeded the levels seen pre-financial crisis (ie, the 402 merger notifications made in 2007). It remains to be seen whether this trend will continue in 2019, with 92 mergers already notified to the Commission as of 31 March 2019.

The number of cases reviewed by the Commission under the simplified procedure has increased steadily since 2014 and constitutes the vast majority of notified cases (302 in 2018 (73 per cent of all notified cases in 2018) and already 79 cases as of 31 March 2019 (86 per cent of all notified cases)). The 12 Phase II investigations opened by the Commission in 2018 represent a sharp increase from the seven opened in 2017, although there were no prohibition decisions in 2018 (but there have already been two prohibitions in early 2019). In addition, in 2018 the Commission cleared 23 deals subject to remedies (17 at Phase I and six at Phase II), while 12 deals were withdrawn prior to a decision (10 in Phase I and two in Phase II).

Key highlights

In summary, the key developments in EU merger control in 2018–2019 are as follows.

  • In early 2019, the Commission blocked, on the same day, two transactions (Siemens/Alstom and Wieland/Aurubis), 4 which would have allowed the merging parties to become global leaders in their respective industries. The prohibition of the Siemens/Alstom deal in particular was met with open and heavy criticism from the French and German governments and fuelled the debate on the need to revamp the European Merger Regulation (EUMR) 5 to facilitate the creation of ‘European champions’.
  • Procedural fairness remained one of the key themes in EU merger control in 2018–2019. The Commission imposed a fine of €52 million on General Electric for providing incorrect information during the review of its planned acquisition of LM Wind, while the investigations into Merck and Sigma-Aldrich for provision of incorrect information during the Commission’s review of the Merck/Sigma-Aldrich deal and Canon for implementing its acquisition of Toshiba Medical Systems prior to clearance, remain ongoing at the time of writing. Moreover, in early 2019 the Commission sent a statement of objections to Telefónica Deutschland alleging that it breached a behavioural commitment it had offered to secure the Commission’s approval of its 2014 acquisition of E-Plus. This marks the first time the Commission is pursuing a company for breach of its merger commitments.
  • A new EU framework for the screening of foreign direct investments (the FDI Regulation) entered officially into force in April 2019. The FDI Regulation is a response to increased foreign direct investments into European strategic assets (in particular from China) and is expected to be instrumental in safeguarding Europe’s strategic interests. The president of the Commission, Jean-Claude Juncker, has stated in this regard that he wants Europe to remain open for business but noted ‘we are not naïve free traders . . . when it comes to defending Europe’s interests we will always walk the talk’. 6
  • The Special Advisers’ Report on Competition Policy for the Digital Era, published in April 2019, reopened the issue of whether additional EUMR thresholds need to be introduced to capture acquisitions of high-value, low-turnover targets (similar to those recently introduced in Germany and Austria), which has been on the Commission’s radar for a considerable period of time. Although the report does not exclude this possibility, it highlights that appropriate amendments to the EUMR should only be made if it becomes apparent that major juris­dictional gaps arise in the future.
  • One of the transactions that attracted high publicity last year was the proposed acquisition of Shazam by Apple. The transaction ultimately received a Phase II unconditional clearance but the Commission’s assessment of the Apple/Shazam deal highlights its increasing focus on the importance of data in digital mergers.
  • At the time of writing this article, the terms of the United Kingdom’s relationship with the European Union post-Brexit remain highly uncertain. In March 2019, the Commission published a ‘Notice to Stakeholders’ providing clarification on certain issues relating, inter alia, to how the EUMR will apply following the UK’s withdrawal from the EU.

In this article, we consider in more detail a number of jurisdictional, procedural and substantive developments.

Jurisdictional developments

Further debate surrounding amendments to EUMR jurisdictional thresholds


The issue of whether the EUMR jurisdictional thresholds need to be updated to close a supposed ‘gap in enforcement’, enabling acquisitions of high-value, low turnover targets to escape the Commission’s review, has been on the Commission’s radar for a considerable period of time. Indeed, in our previous annual update, we reported on the Commission’s launch of a public consultation on several jurisdictional and procedural aspects of the EUMR, including whether to complement the existing turnover-based thresholds with a threshold based on transaction-value (similar to those recently introduced in Germany and Austria). A summary of the results of that consultation was published in July 2017. 7

The ‘enforcement gap’ that transaction value-based thresholds are intended to address is principally the acquisition of digital companies in their early stages of development (eg, where the target has an innovative idea and broad user-base, but no established business model and therefore low turnover), or companies in other research and development-intensive industries, such as pharmaceuticals (eg, where the target has innovative pipeline products that it has yet to bring to the market). Such transactions may avoid the EUMR’s jurisdictional thresholds despite the target’s notable ‘competitive significance’, such as its potential to raise barriers to entry (eg, if a dominant platform acquires a target with a specific, non-replicable data set) or be used as a strategy to ensure the early elimination of a potential rival (often referred to as ‘killer acquisitions’). 8

Special Advisers’ Report on Competition Policy for the Digital Era

On 4 April 2019, attention was refocused on this subject following the publication of a special advisers’ report commissioned by the Commission on ‘competition policy for the digital era’ (the Special Advisers’ Report). 9 Commissioner Vestager appointed a panel of three special advisers, all academics, to prepare the report in order to contribute to the Commission’s ongoing deliberations regarding how competition policy should develop to ensure pro-consumer innovation in digital markets. Among other things, the Special Advisers’ Report analyses the proposals to introduce transaction value-based jurisdictional thresholds to the EUMR.

The Special Advisers’ Report acknowledges that many digital start-ups focus their attention on constructing their products and growing their user-bases at the expense of short-term profits and that, consequently, should such companies be acquired, their low turnover will often mean that the existing EUMR thresholds are not met. Consequently, the Commission will only gain jurisdiction to review such transactions if they are referred by the parties to the concentration 10 or by a member state. 11 This was indeed the manner by which the Commission gained jurisdiction to review Apple’s recent acquisition of Shazam, which received a Phase II clearance in September 2018. 12

The Special Advisers’ Report considers that it is ‘too early’ at this stage for additional EUMR thresholds to be introduced, pointing to the complexity of designing new thresholds and the need for a local nexus under public international law, as well as the administrative burden that would accompany such an extension of jurisdiction. Instead, the report suggests closely monitoring the performance of the transaction value-based thresholds introduced at member state level (ie, in Austria and Germany) and waiting to see whether the referral system does enough to ensure that, where appropriate, such transactions are reviewed by the Commission. While the authors of the Special Advisers’ Report display some openness to introducing appropriate amendments to the current EUMR thresholds in the future, they emphasise that this should only be the case if it becomes apparent that major, systematic jurisdictional gaps arise. 13

EU regulation on the screening of foreign direct investment enters into force

March 2019 saw the Commission’s proposal for a regulation to screen foreign investments into the European Union successfully pass through the co-legislative procedure, 14 accentuating a wider trend of traditionally open economies enacting increasingly protectionist policies.

While the EUMR does not allow for political considerations to be taken into account as part of the merger review process, 15 the FDI Regulation creates the framework for an additional, independent form of review that focuses on safeguarding Europe’s security, public order and strategic interests.

Among other factors, the FDI Regulation enables EU member states to take into account:

  • whether the investor is controlled (directly or indirectly) by the government of a third country;
  • has previously been involved in activities affecting the security or public order of a member state; or
  • is considered to be at serious risk of engaging in illegal activities.

While the Commission has emphasised its desire for the European Union to remain one of the world’s most attractive destinations for foreign direct investment, this development nevertheless signals a more cautious stance to the open investment environment the European Union has traditionally been associated with. In this regard, Ștefan-Radu Oprea, representing the current Romanian presidency of the Council of the EU, stated that ‘the new rules on the screening of investments will ensure that openness goes hand in hand with sensible protection of our strategic assets’. 16

The FDI Regulation does not require member states to adopt or maintain a screening mechanism, but provides a framework for those that do to ensure that the foreign direct investment meets a number of basic requirements. Cooperation, collaboration and information sharing between member states, and member states and the Commission, are central themes of the FDI Regulation. Member states will have the opportunity to comment on foreign direct investment taking place elsewhere in the European Union and the Commission will be able to issue an opinion when an investment poses a threat to the security or public order of more than one member state.

While the member state receiving foreign direct investment will be required to give ‘due consideration’ to other member states’ comments and the Commission’s opinion, the member states receiving the foreign direct investment will retain the authority as final decision-maker. However, this obligation is heightened for projects or programmes of interest to the European Union as a whole, 17 where the recipient member state must take ‘utmost account’ of the Commission’s opinion and provide an explanation in the event that this is not followed.

The FDI Regulation is without prejudice to the application of the EUMR; the two regimes remain fully independent. 18 This presents the Commission with an opportunity to exert dual influence: in addition to being the substantive decision-maker for competition issues, it is also able to provide a non-binding advisory opinion where countries seek to review a transaction domestically.

Following its successful passing through the co-legislative process, the FDI Regulation officially entered into force on 10 April 2019; 19 however, its provisions will only apply as from 18 months after this date. Member states therefore have until 11 October 2020 to make any necessary amendments to their domestic regimes to ensure compliance with the regulation.


On 25 March 2019, the Commission published a ‘Notice to Stakeholders’ providing clarification on certain issues relating to how EU competition law rules, including the EU merger control regime, will apply following the United Kingdom’s withdrawal from the European Union. 20 A number of the key developments are outlined below.

  • First, if the relevant event 21 for establishing jurisdiction for the review of a transaction falls on a date prior to Brexit, the Commission will maintain jurisdiction. However, if jurisdiction is established after this date, the notifying parties will no longer be able to avail themselves of the ‘one-stop-shop’ principle with respect to transactions satisfying the jurisdictional thresholds of both the European Union and the United Kingdom. In such scenarios, the Commission and the UK Competition and Markets Authority (CMA) will be competent to review the transaction, meaning that two separate notifications will be required. The CMA has estimated that this will increase the number of UK merger investigations by up to 40 per cent, while the Commission has indicated that it expects a reduction in EUMR filings of up to 15 per cent.
  • In reviewing contemplated transactions, the Commission will no longer consider the UK market in its assessment of whether the transaction will significantly impede effective competition in the European Union.
  • The fact that a transaction is notifiable in the United Kingdom will no longer be taken into account for the purposes of pre-notification referrals by the notifying parties to the Commission under article 4(5) (ie, this will not count towards the requirement that the jurisdictional thresholds of at least three member states be triggered); nor will it be relevant to post–notification referrals to the Commission under article 22.
  • In addition, in circumstances where merger commitments were made by the notifying parties to address competition issues in the United Kingdom and these commitments remain in force, the parties can request that these be waived, modified or substituted by the Commission.

It should also be noted that Andrew Tyrie, the chair of the CMA, has proposed changes to the UK merger control rules following Brexit, 22 notably the introduction of mandatory merger notifications. It is anticipated that the UK government will publish a green paper on the proposed reforms during the course of summer 2019.

Procedural developments


Altice contests the Commission’s fine

In last year’s edition, 23 we reported on the Commission’s decision to fine the telecoms company, Altice, €124.5 million for implementing its takeover of PT Portugal prior to its notification and prior to the Commission’s approval, in breach of articles 4(1) and 7(1) of the EUMR, respectively. The Commission had identified three types of problematic behaviour:

  • rights granted in the transaction agreement gave Altice the possibility of blocking decisions that went further than required to preserve the value of the target;
  • in practice, Altice exercised control over the target even beyond that provided for in the transaction documents (eg, through its involvement in marketing campaigns); and
  • the parties systematically exchanged commercially sensitive information outside the framework of any confidentiality agreement. 24

On 5 July 2018, Altice applied to the General Court for annulment of the Commission’s decision. 25 Altice argued, inter alia, that:

  • the Commission applied the notion of ‘implementation’ beyond its scope and meaning in breach of articles 4(1) and 7(1) of the EUMR;
  • the Commission erred in law and in fact in establishing the existence of the relevant infringements on the ground that the pre-closing covenants in the transaction documentation had an ancillary nature and did not amount to an early implementation of the concentration; and
  • Altice did not actually exercise any decisive influence over PT Portugal prior to closing.

At the time of writing, the General Court’s judgment is pending.

European Court of Justice judgment in Ernst & Young

In last year’s edition, we also discussed the European Court of Justice (CJEU) judgment in Ernst & Young, which was issued after the Commission’s decision fining Altice. 26 The CJEU clarified in that case that the European Union standstill obligation only captures ‘a transaction which, in whole or in part, in fact or in law, contributes to the change in control of the target undertaking’ and provided some guidance regarding the permissible steps parties can take prior to merger approval.

As the CJEU judgment is quite fact-specific (despite making the general point that a contribution to the transfer of control is necessary to trigger a gun jumping violation), it remains to be seen how the General Court will assess Altice’s appeal in light of the Ernst & Young ruling and also to what extent this ruling will curtail the Commission’s (and national competition authorities’) enforcement action in this area.

Supplementary statement of objections to Canon for possible gun-jumping

Last year, we also reported on the statement of objections that the Commission sent to Canon in 2017 alleging that Canon used a ‘warehousing two-step transaction structure’ involving an interim buyer, which allowed it to acquire Toshiba Medical Systems before obtaining clearance. On 30 November 2018, the Commission sent a supplementary statement of objections 27 to Canon complementing the first one. At the time of writing, the Commission’s investigation is ongoing, with a closed-door meeting reportedly having taken place in February 2019 where Canon is said to have contested the allegations of gun-jumping. 28

Further guidance on gun-jumping?

The Commission has not, to date, issued formal guidance on gun-jumping. However, as part of the Organisation for Economic Co-operation and Development roundtable discussions, the European Union (together with a number of other countries) submitted in November 2018 a note on the suspensory effects of merger notifications and gun-jumping. 29 This note is helpful as it gives an overview of the legal framework, the relevant EU decisions and investigations (eg, Electrabel/Compagnie Nationale du Rhône, 30 Marine Harvest/Morpol 31and Altice/PT Portugal (discussed above)) as well as some guidance on failure to notify and gun-jumping conduct. However, a number of practical gun-jumping issues are not addressed in the note, which indicates that additional guidance from the Commission may be required.

Provision of incorrect or misleading information

Commission fines General Electric €52 million for providing incorrect information

On 8 April 2019, the Commission imposed a fine of €52 million on General Electric (GE) for providing incorrect information during the review of GE’s planned acquisition of LM Wind.

In its notification to the Commission on 11 January 2017, GE had stated that it did not have any higher power output wind turbine for offshore applications in development, beyond its existing 6 megawatt turbine. However, through information collected from a third party (the identity of which has not been disclosed), the Commission found that GE was simultaneously offering a 12 megawatt offshore wind turbine to potential customers. When confronted with this information, GE withdrew its notification on 2 February 2017 and re-notified the transaction on 13 February 2017, this time including complete information on its future project. The transaction received an unconditional Phase I clearance on 20 March 2017, but on 6 July 2017 the Commission sent GE a statement of objections for breaching its procedural obligations under the EUMR.

The Commission’s investigation confirmed that, contrary to GE’s statements in its first notification in January 2017, GE had indeed been offering a higher power output offshore wind turbine to potential customers. As a result, GE’s statement in the notification form that it had no higher power output wind turbines for offshore in development, was incorrect. According to the Commission, the fine imposed on GE does not affect the approval of the GE/LM Wind transaction (as the approval was based on corrected information from the second notification).

The fine imposed on GE follows a fine of €110 million imposed on Facebook in May 2017 for the provision of misleading information in the context of its acquisition of WhatsApp. 32 The decision serves as a reminder to companies to provide complete and correct information during the Commission’s review process as it highlights that – in Commissioner Vestager’s words – the Commission will take ‘very seriously’ procedural breaches of the EUMR, regardless of whether the information was withheld intentionally or negligently.

Ensuring that the information provided to the Commission in the context of its review is correct and complete might prove to be particularly difficult for merging parties, in particular in cases where they have to deal with extensive information requests under tight deadlines.

Ongoing investigation into Merck and Sigma-Aldrich

As noted in last year’s edition, the Commission has also sent a statement of objections to Merck KGaA and Sigma-Aldrich alleging that the parties failed to provide important information about an innovation project with relevance for certain laboratory chemicals, which was at the core of the Commission’s analysis during its review of the proposed acquisition of Sigma-Aldrich by Merck. 33 The Commission’s preliminary view is that if the parties had correctly disclosed this project, it would have been included in the remedy package and that by not including it, the viability and competitiveness of the divested business was impaired. At the time of writing, this investigation remains ongoing.

Commission issues first ever charge for breaching merger commitment 34

On 22 February 2019, the Commission sent a statement of objections to Telefónica Deutschland alleging that it breached a behavioural commitment it had offered to secure the Commission’s approval of its 2014 acquisition of E-Plus (the German mobile telecommunications business of Dutch Telecom operator KPN). 35 This is the first time that the Commission has sent a statement of objections alleging that a company has breached commitments it offered to secure the Commission’s approval of a transaction under the EUMR.

Of the commitments made by Telefónica, the Commission’s statement of objections related to its obligation to offer wholesale 4G services to all interested players at ‘best prices under benchmark conditions’. The Commission’s preliminary view is that by failing to include certain existing wholesale agreements in the benchmark, Telefónica did not properly implement its obligations. According to the Commission, had Telefónica done so, ‘third parties would have benefited from more advantageous 4G wholesale access conditions’ and as a consequence, ‘the ability of third parties to compete in the German market for mobile communication services was reduced’.

While the final outcome of the case is still pending, in the event the Commission finally concludes that Telefónica did not respect its commitments, Telefónica could receive a fine of up to 10 per cent of its annual worldwide turnover and have the approval of its acquisition of E-Plus revoked.

Following the announcement of the statement of objections, commissioner Vestager stated that ‘[c]ommitments from the parties in merger decisions are crucial to ensure that effective competition is maintained after a merger or takeover’, emphasising that the Commission will ‘need full compliance and take very seriously any case where companies may have failed to comply with their commitments’.

It remains to be seen whether the Commission will take an even more cautious approach to accepting behavioural commitments in future cases (given also that in general it has a clear preference for structural remedies).

Withdrawal and re-filing of merger notifications to the Commission

Last year saw a record number of examples of parties withdrawing their merger notifications to the Commission and then refiling at a later date (a practice also known as ‘pull and refile’). This happened on seven occasions in 2018, compared to three in 2017 and six in 2016.

For example, in Quaker/Global Houghton, 36 the parties filed their notification in February 2018 and offered commitments; the parties then withdrew their notification and refiled in October 2018, offering new commitments. The transaction ultimately received a Phase I clearance subject to commitments in December 2018. A similar chain of events preceded the Commission’s eventual approval of Knauf/Armstrong 37 during the same month.

Parties often undertake this strategy of withdrawing and refiling their notifications to avoid the merger process moving into a more burdensome and time-intensive Phase II review where, inter alia, an issue comes to light that was not apparent during the pre-notification phase that will take the parties considerable time to address or the Commission considers that the notification is incomplete.

It should be noted in this regard that in Phase II, parties are only permitted to withdraw their notification if they can demonstrate that they have abandoned the deal in its entirety; 38 therefore, withdrawing and refiling is not possible in Phase II investigations.

Withdrawing and refiling remains comparatively rare in the European Union as the lengthy pre-notification period under the EU regime often enables the parties to understand the issues foreseen by the Commission at an early stage and ensure these are addressed prior to formal notification. Nevertheless, in the instances that parties have pursued the strategy of withdrawing and re-filing their notifications, this appears to have worked in their favour, as no refiled cases have gone to a Phase II review.

Substantive developments

EUMR and the creation of European champions

While the introduction of the FDI Regulation (as discussed above) seeks to protect EU interests at home, over the past year we have also seen heightened debate regarding the extent EU merger control enforcement should facilitate and promote the interests of European companies abroad.

In particular, the Commission’s decision in February 2019 to prohibit the proposed acquisition of France’s Alstom by Germany’s Siemens 39 (‘both champions in the railway industry’) 40 has sparked debate as to the extent by which geopolitical considerations should be taken into account in the context of EU merger control enforcement.

The Siemens/Alstom case is the standout deal in a trend that has also seen:

  • the Commission’s prohibition of Wieland’s acquisition of Aurubis Rolled Products 41 (adopted on the same day as the prohibition of the Siemens/Alstom transaction) – a deal which would have created a ‘European champion’ in the production of rolled copper products; and
  • the decision of Aperam in December 2018 to abandon, during a Phase II review, its proposed acquisition of VDM Metals (which according to Aperam would have created a ‘European alloys champion’). 42

These cases are against the backdrop of a joint statement by 18 EU governments published on 18 December 2018 that urged the Commission to act quickly to ‘promote the competitiveness of European industry at international level’ and to foster the development of European champions. 43


The Commission’s decision of 6 February 2019 to prohibit the Siemens/Alstom deal was based on findings that the transaction would have created a dominant player in very high-speed trains and the ‘undisputed market leader’ in several mainline signalling markets. As a result, the transaction would have significantly reduced competition in both these areas, depriving customers, including train operators and rail infrastructure managers, of a choice of suppliers and products. commissioner Vestager stated in a speech that while she agrees that ‘we need our businesses to be European champions’, European champions cannot be built by undermining competition in the European Economic Area (EEA) 44 – a stance that was also supported by the Commission president Jean-Claude Juncker.

While the parties to the transaction offered remedies to address the Commission’s concerns (including divestitures and licensing of certain assets), the Commission considered that those remedies would not have been sufficient to prevent higher prices and reduced choice for railway operators and infrastructure managers. 45

Reaction to the Commission’s decision

Despite receiving support from a number of national authorities (notably the Belgian, Dutch, Spanish and UK competition authorities), the Commission’s prohibition decision was met with criticism from other political spheres. The French and German Ministers of Economy published a joint manifesto proposing an update to the current merger guidelines to take greater account of competition at the global level. The joint manifesto pointed to the fact that ‘amongst the 40 biggest companies in the world, only five are European.’ 46 The manifesto has met opposition from other countries and regulators, notably the Dutch competition authority and senior Commission officials. 47

The ‘National Industrial Strategy 2030’ of the German Federal Ministry for Economic Affairs and Energy also highlights the lack, in recent years, of the emergence of German companies of the requisite stature to compete on the world stage – particularly in contrast to the emergence of such companies in the United States and China (especially in the fields of telecommunications, internet and digitisation). In this context, the publication called for a review of, and where necessary a change to, the competition rules to facilitate the ability of German and European companies to compete internationally. 48

Despite the Commission’s decision to prohibit the Siemens/Alstom transaction, commissioner Vestager has since acknowledged that the case has triggered a ‘long due’ discussion about global unfair competition. 49 That being said, given the Commission’s stance that global competitiveness cannot come at the expense of a healthy competitive environment in the EEA, the likelihood of a substantive change to the EUMR to facilitate the formation of European champions (which would require a unanimous decision of all the member states) appears to remain low.

Continued focus on data and digital platforms in merger review

With innovation and data increasingly driving developments in big business, a growing discipline in the work both of the Commission and national regulators is the competitive analysis of transactions involving platform economies.

On 6 September 2018, following a Phase II review, the Commission granted Apple unconditional clearance to proceed with its acquisition of music recognition service, Shazam. 50 This is another example in a line of cases (following Microsoft/LinkedIn 51 and Facebook/WhatsApp), 52 in which the Commission has raised questions relating to how the accumulation of data sets can lead to competition law concerns.

The Commission opened a Phase II investigation into the Apple/Shazam deal in order to assess:

  • whether Apple, upon obtaining Shazam’s commercially sensitive data about customers of its competitors for the provision of music streaming services in the EEA, would be able to directly target its competitors’ customers to entice them to switch to Apple Music; and
  • whether, in view of Shazam’s strong position in the market for music recognition apps, Apple Music’s competitors would be harmed if they were precluded by Apple from receiving referrals from the Shazam app.

Having analysed various factors, the Commission cleared the transaction on the basis that:

  • the merged entity would not be able to shut competing providers of digital music streaming services out of the market by means of having access to Shazam’s commercially sensitive data;
  • the Shazam app is of limited significance as an entry point for competing music streaming services and thus the merged entity would not be able to shut out competing providers of digital music streaming services by restricting access to the Shazam app; and
  • Shazam’s data is not unique (eg, it is limited in user count and user time spent on the app) and, post-transaction, Apple’s competitors would still be able to access and use other sets of comparable data held by other music recognition apps.

Although the transaction was eventually cleared unconditionally, the manner that the Commission assessed this case demonstrates the level of attention it intends to pay to mergers involving the amalgamation of valuable data sets. In the wake of the Commission’s decision, commissioner Vestager stated:

data is key in the digital economy. We must therefore carefully review transactions which lead to the acquisition of important sets of data, including potentially commercially sensitive ones, to ensure they do not restrict competition.53

The Commission’s focus on the importance of data, as well as digital markets more generally, is likely to only intensify. Therefore, companies in the digital sector are advised to carefully consider the data implications of data-related mergers, in particular in view of internal documents and the rationale of the transaction.

Commission’s report on competition enforcement in the pharmaceutical sector

On 28 January 2019, the Commission published its report on competition enforcement in the pharmaceutical sector (the Pharma Report). 54 The Pharma Report follows the Commission’s 2009 inquiry into the pharmaceutical sector and provides an overview of how the Commission and member states’ national competition authorities have enforced EU antitrust and merger control rules in this industry between 2009 and 2017.

During the relevant period, the Commission reviewed more than 80 transactions in pharmaceutical markets identifying concerns in 19 cases – this amounts to an intervention rate of 22 per cent compared to 6 per cent across all other industry sectors. The Commission approved the transaction in all instances in which concerns were identified as a result of the parties’ commitments to provide remedies (often including divesture of parts of their businesses; eg, marketing authorisations, intellectual property, manufacturing and sales know-how, product facilities and personnel).

The dynamics of pharmaceutical markets

The Pharma Report highlights that the pharmaceutical sector is one of the most research and development-intensive industries in the world. This research and development is predominantly carried out by ‘originators’ who are active in the innovation of new medicines. Originators typically compete ‘for the market’ by seeking to discover new medicines for which they obtain patent protection and thus an exclusive right to sell such medicines for a specified period. ‘Innovation’ is therefore a fundamental avenue of competition between originator pharmaceutical companies.

‘Generics’ on the other hand supply non-innovative versions of an originator’s medicine (ie, comprising the same active ingredients and treating the same conditions) once the relevant intellectual property rights have expired. Generics’ entry to the market therefore often signifies the introduction of price competition ‘within the market’.

Competition concerns in pharmaceutical merger cases and focus on innovation

According to the Pharma Report, the Commission’s main concerns in the context of pharmaceutical mergers are that the acquisition or strengthening of market power may allow the combined entity to increase the prices of its medicines or lead to a reduction in innovation.

The report emphasises the Commission’s intention to ensure that mergers are not used as a means of easing the pressure on originators to constantly innovate. For example, the report notes that where one merging company’s pipeline product would be in competition with the other’s marketed product, the merged entity may be inclined to ease its efforts on the competing pipeline product. Similarly, where two companies have competing research and development programmes, a merger between the two may reduce this incentive to continue their parallel research and development efforts.

The report mentions the Novartis/GSK (Oncology) deal 55 as an example where the Commission approved the transaction subject to structural remedies ensuring that, inter alia, Novartis’ research and development efforts would be continued by an independent third party. More recently, in November 2018 the Commission approved Takeda’s acquisition of Shire 56 on condition that Takeda would divest a biologic treatment product being developed by Shire to treat inflammatory bowel disease. This divestment was requested by the Commission as it was anticipated that Shire’s pipeline product would compete with Takeda’s Entyvio product, upon the former’s entrance to the market.

The Commission has also demonstrated that divestment may be required in circumstances where the proposed merger would reduce innovation incentives for pipeline products at an earlier stage of development, such as in the earlier phases of clinical trials. That was the case, for example, in Johnson & Johnson/Actelion, 57 where the Commission was concerned that the merger could result in the abandonment of one of the two parallel projects to develop new insomnia medicines.


1 This article aims to provide an overview of the main EU merger control developments in 2018–2019 (and in particular in the period from June 2018 to May 2019). The contents of this article are for reference purposes only: they do not constitute legal advice and should not be relied upon as such. The authors would like to thank Riina Luha (trainee solicitor, Herbert Smith Freehills LLP, Brussels) for her helpful research and input.

2 See DG Competition, Merger statistics (up to 31 March 2019),

3 See IMAA, Number & Value of M&A Worldwide,

4 These cases and others mentioned in the introduction are referenced in the sections below where we discuss them in more detail.

6 See Commission press release IP/19/2088 of 10 April 2019,

8 This term is used for acquisitions by larger companies of early-stage, innovative companies in order to eradicate future competition.

10 Article 4(5) EUMR.

11 Article 22(1) EUMR.

12 The transaction did not meet the turnover thresholds but caught the Commission’s attention following a referral request from Austria, which was subsequently joined by Iceland, Italy, France, Norway, Spain and Sweden; director-general of DG Competition, Johannes Laitenberger, has pointed to the Apple/Shazam referral, as well as the referral to the Commission of the Facebook/WhatsApp deal in 2014, as examples of how mergers in the digital economy involving low-turnover companies will still be reviewed at EU level, in appropriate circumstances (see Johannes Laitenberger’s speech ‘Enforcing EU competition law in a time of change’, 1 March 2018,

13 The report considers, however, that there is a need to revisit the substantive theories of harm to properly assess acquisitions in the digital sector. It stresses that competition law should be particularly concerned about protecting the ability of competitors to enter markets. The report proposes in this regard a ‘heightened degree of control’ of acquisitions of small start-ups by dominant platforms or ecosystems to analyse whether they are used as a possible strategy against partial user desertion from the ecosystem. Where an acquisition is plausibly part of such a strategy, the notifying parties should ‘bear the burden’ of showing that the adverse effects on competition ‘are offset by merger-specific efficiencies’. The report further specifies that this theory of harm does not create a presumption against the legality of such mergers, but that it takes due account of new business strategies and the competitive risks they raise.

14 See Commission press release IP/19/1532 of 5 March 2019,

15 Article 21(4) EUMR does, however, allow member states to take appropriate measures to protect legitimate interests.

17 Such as Horizon 2020, Trans-European Networks for Energy, the European Defence Industrial Development Programme and Galileo.

18 Member states should nevertheless endeavour to indicate whether proposed foreign direct investment is likely to require notification under the EUMR, when notifying the other member states of foreign direct investment undergoing screening in their territories.

19 See Commission press release IP/19/2088 of 10 April 2019,

21 The relevant event can be the conclusion of the binding legal agreement, the announcement of a public bid, the acquisition of a controlling interest or the date of the first merger notification, whichever date is earlier (see paragraph 156 of the Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings (2008/C 95/01) (Jurisdictional Notice)).

24 Case COMP/M.7993 Altice/PT Portugal (article 14.2 proc.).

25 Case T-425/18 Altice Europe v Commission.

26 Case C-633/16 Ernst & Young P/S v Konkurrencerådet, Judgment of the General Court of 14 December 2005, EU:C:2018:371.

27 See Commission Daily News MEX/18/6636, 30 November 2018,

30 Case COMP/M.4994 Electrabel/Compagnie Nationale du Rhône, Commission decision of 10 June 2009.

31 Case COMP/M.7184 Marine Harvest/Morpol (article 14.2 proc.), Commission decision of 23 July 2014. The Commission’s decision in that case was upheld on appeal by the General Court. Marine Harvest brought a further appeal, which at the time of writing is pending before the CJEU (see Case C-10/18 P Marine Harvest v Commission).

32 Case COMP/M.8228 Facebook/WhatsApp (article 14.1 proc.), Commission decision of 17 May 2017.

33 See Commission press release IP/17/1924 of 6 July 2017 and Case COMP/M.8181 Merck/Sigma-Aldrich (article 14.1),

34 See Commission press release IP/19/1371 of 22 February 2019 and Case COMP/M.9003 Telefonica Deutschland/E-Plus (article 14(2)(d) proc.),

35 The Commission cleared that transaction following a Phase II investigation (see Case COMP/M.7018 Telefónica Deutschland/E-Plus, Commission decision of 2 July 2014). Pursuant to article 8(2) of the EUMR, as part of a Phase II review the Commission may attach to its decision conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered into vis-à-vis the Commission with a view to rendering the concentration compatible with the common market.

36 Case COMP/M.8492 Quaker/Global Houghton, Commission decision of 11 December 2018.

37 Case COMP/M.8832 Knauf/Armstrong, Commission decision of 7 December 2018.

38 Article 6(1)(c) EUMR; also see paragraph 118 of the Jurisdictional Notice.

39 Case COMP/M.8677 Siemens/Alstom, Commission decision of 6 February 2019.

40 See Commission’s press release IP/19/881 of 6 February 2019,

41 Case COMP/M.8900 Wieland/Aurubis Rolled Products/Schwermetall, Commission decision of 6 February 2019.

43 See Joint Statement of 18 December 2018 by France, Austria, Croatia, Czech Republic, Estonia, Finland, Germany, Greece, Hungary, Italy, Latvia, Luxembourg, Malta, Netherlands, Poland, Romania, Slovakia and Spain, Sixth Ministerial Meeting, 18 December 2018,

45 See quote of commissioner Vestager in Commission press release IP/19/881 of 6 February 2019,

50 Case COMP/M.8788 Apple/Shazam, Commission decision of 6 September 2018.

51 Case COMP/M.8124 Microsoft/LinkedIn, Commission decision of 6 December 2016.

52 Case COMP/M.7217 Facebook/WhatsApp, Commission decision of 3 October 2014.

53 See Commission press release IP/18/5662 of 6 September 2018,

55 Case COMP/M.7275 Novartis/GlaxoSmithKline Oncology Business, Commission decision of 28 January 2015.

56 Case COMP/M.8955 Takeda/Shire, Commission decision of 20 November 2018.

57 Case COMP/M.8401 J&J/Actelion, Commission decision of 9 June 2017.

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