Brussels, 18 th June 2009
Mergers: Merger Regulation contributes to more efficient merger control in EU
The EU Merger Regulation (Regulation 139/2004) has contributed to more efficient merger control within the EU since it came into force on 1st May 2004, according to a report adopted by the Commission today. Turnover thresholds have in most cases been effective in distinguishing cases of EU relevance from those with a primarily national focus. Also, the improved system of case re-allocation between the Commission and the National Competition Authorities introduced in 2004 has allowed business to benefit from the Commission's "one-stop-shop" assessment and to have their cases reviewed by the more appropriate authority. The report nevertheless identifies certain areas where further reflection may be useful.
The entry into force of the revised EU Merger Regulation on 1 st May 2004 was the result of a thorough review of a number of jurisdictional, procedural and substantive rules in the previous Regulation (4064/89). While the jurisdictional thresholds regarding company turnovers were left unchanged, a set of additional referral mechanisms was introduced allowing for a flexible reallocation of cases between the Commission and Member States' national competition authorities (NCAs).
The EU Merger Regulation requires the Commission to submit a report on the jurisdictional aspects of its operation by 1 July 2009, five years after its entry into force. The report is a stock-taking exercise, aimed at assessing how the instruments used to allocate jurisdiction have worked during this period. In preparation of the report, a public consultation was launched on 28 October 2008 to get stakeholders' views (see ). The Commission received submissions from businesses and business associations, law firms, lawyers' associations and academia. The Member States' competition authorities were also consulted during the preparation of the report and provided detailed input.
The division of competence to review mergers between the Commission and the NCAs is determined by the size of the merging parties' turnovers, both globally and within the EU. The turnover thresholds may be overridden in a number of ways to better reflect in which jurisdiction any particular merger has its main effects and therefore its strongest nexus. First, the so-called "two-thirds rule" assigns jurisdiction to a Member State if more than two thirds of each of the parties' EU-wide turnover is generated in that Member State. Also, under certain conditions the review of mergers can be re-allocated between the Commission and the NCAs. Since the 2004 reform, such referrals may be made before mergers have been notified to a Member State or to the Commission at the initiative of the parties (pre-notification referrals). Alternatively, they can be made later at the request of a Member State (post-notification referrals), a mechanism that also existed under the previous legislation.
The report concludes that overall, the jurisdictional and referral mechanisms have provided the appropriate legal framework for a flexible allocation and reallocation of cases by effectively distinguishing in most cases mergers that have an EU relevance from those which are primarily national.
The pre-notification referral mechanisms introduced in 2004 have also significantly contributed to the efficient allocation of merger cases to the more appropriately placed authority and have avoided parallel proceedings. It is estimated that during the period from 2004 to 2008, these mechanisms have reduced the number of potential parallel proceedings from around 1,000 to about 150. During the same period, 40 cases were referred from the Commission to NCAs. The report also finds that the post-notification mechanisms continued to be useful after the introduction of the pre-notification referral mechanisms.
A small number of cases with potential cross-border effects have nevertheless been assessed by NCAs as a result of the application of the " two-thirds rule". In other cases, companies continue to notify mergers in parallel to three or more NCAs rather than make a single notification to the Commission. A "one-stop-shop" review of such cases could be availed of through the increased use of referral mechanisms. Conversely, there may also be scope for more referrals towards Member States. A number of stakeholders raised some concerns regarding cumbersome and lengthy referral procedures. Some participants in the public consultation also suggested that efforts towards further convergence of national rules governing merger control and their relation to EU rules could reduce difficulties with regard to multiple filings.
The report will serve as a basis for the Commission to assess, at a future stage, whether it is appropriate to take any further initiatives.
The report can be found at: