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European Commission


Brussels, 5 December 2013

Mergers: Commission adopts package simplifying procedures under the EU Merger Regulation- Frequently asked questions

See also IP/13/1214

What is the key content of the Commission's Merger Simplification Package?

This package simplifies the Commission's merger review procedures in three ways.

First, the Commission widens the scope of its simplified merger review procedure. This procedure allows companies to use a shorter notification form for mergers that are unlikely to raise competition problems. The companies need to provide much less detailed information, and the Commission can clear the merger without investigating its effects amongst customers, competitors and other parties.

Second, for all merger cases, the Commission reduces the information that needs to be provided when notifying a merger.

Finally, the Commission has taken measures to streamline the so-called pre-notification process.

Which cases now qualify for a simplified review?

The Commission raises the market share thresholds, under which cases qualify for a simplified merger review:

(i) for markets in which two merging companies compete ("horizontal overlap markets"), the threshold is raised from 15% to 20%;

(ii) for markets where one of the merging companies sells an input to a market where the other company is active ("vertically related markets", for instance where a manufacturer of cars acquires a manufacturer of car parts), the threshold is raised from 25% to 30%;

(ii) mergers can also qualify for a simplified review when the companies' combined market shares are between 20% and 50%, but when the increase in market share after the combination of their activities is limited. These are cases where the merger's change to the level of concentration in the market (the so-called HHI delta) is less than 150.

These measures allow 60-70% of all notified mergers to qualify for a simplified merger review. This is around 10% more than today.

What other measures are taken to simplify the merger review process?

The Form CO and Short Form CO are the standard notification forms that contain the information that is required for launching a merger review. The Commission now eliminates from these forms information requirements that often proved unnecessary to analyse a notified merger.

Moreover, in individual cases, companies can request waivers from the Commission to give that information. The Form CO and Short Form CO now clearly identify categories of information that may be good candidates for such waiver requests. Merging companies are encouraged to request these waivers, without having to compile such information before seeking it.

What are the expected benefits of the Merger Simplification Package?

The measures allow the Commission to treat between 60-70% of merger cases under the simplified review procedure. There are indications that this will lead to a reduction of lawyers' fees by up to one third, and reduce the in-house work that companies undertake before they notify their merger.

The elimination of information requirements and the streamlining of the pre-notification process will significantly reduce business cost and resources for all merger cases, simple and normal ones.

Can the Commission give examples of information requirements that have been streamlined?

For simplified cases, information requirements are tailored to the different case categories. For instance, a "super-simplified notification" is introduced for joint ventures that are active entirely outside the European Economic Area (EEA). For those cases, companies only need to describe the transaction, their business activities and provide the turnover figures that the Commission needs to establish jurisdiction.

For normal, non-simplified cases, the threshold of what constitutes an 'affected market' for which more information needs to be provided has been raised to 20% (from 15%) for horizontally affected markets and to 30% (from 25%) for vertically affected markets. As a result, companies need to provide market information for fewer markets.

Finally, before they notify their merger, companies may wish to request Member States to refer the merger review to the Commission, or vice versa. The information to be submitted for this purpose in the so-called Form RS is kept to a strict minimum. It focusses on the crucial issues that the Commission and the Member States need to identify the best placed authority to undertake the review, such as the geographic scope of the relevant markets and the nature of the transaction.

The Commission still requires notification of joint ventures that are mainly active outside the EEA. Could the Commission not remove altogether the need to notify such joint ventures?

The turnover thresholds that determine the Commission's jurisdiction in merger cases are set in the Merger Regulation. These thresholds cannot be altered on the basis of the Implementing Regulation and the Commission Notice on a simplified procedure that are covered by this initiative.

The Commission nonetheless aims to make notifications of this type of JVs as business-friendly as possible. It now effectively introduces a "super-simplified procedure" for them. If a JV really does not affect Europe, companies can simply say so in their notification by explaining briefly the planned activity of the JV, without supplying further market data. The Commission believes that this is a business friendly solution for the notification of these JVs.

The package also includes measures for the "pre-notification process." What is this process?

Companies that wish to notify a merger usually engage in discussions with the Commission before making the formal notification. Such pre-notification contacts are useful to identify the information that the Commission needs to run an efficient investigation. This is beneficial for the Commission and the merging companies, and is a service that the Commission offers to business.

The length of pre-notification is often linked to the quality of the submissions that the Commission receives. Less emphasis on the pre-notification phase increases the risk that a notification lacks important information and has to be declared incomplete. Nonetheless, the Commission commits to keeping the process as short as possible and has taken concrete measures to streamline it.

What are the measures that the Commission takes to streamline the pre-notification process?

The overall reduction of information requirements that result from the Merger Simplification Package will shorten the time that is needed for pre-notification contacts.

In addition, the length of pre-notification is linked to the possibility for Commission case-teams to waive the submission of information that is not necessary for analysing the case in question. Different sets of information are now identified as candidates for waiver requests. These requests will be dealt with within the timeline set in DG Competition's Best Practices for the handling of merger cases, namely five working days.

Finally, the Commission identifies simplified merger cases that can be notified without pre-notification contacts altogether.

What are the new simplified cases that can be notified without pre-notification altogether?

This concerns mergers that do not give rise to horizontal overlaps and vertical links between the merging companies in the EEA. In other words: this concerns those cases where there are no markets for which further information needs to be reported. For those cases, parties may consider notifying without engaging in pre-notification contacts. Based on 2008-2010 figures, this concerns around 25% of cases that qualify for a simplified review.

This is an important measure to streamline our merger review process. It of course remains the sole responsibility of the merging companies to submit all the information that is necessary for the Commission to conclude that the merger does not give rise to any reportable market in the EEA.

During the public consultation, criticism was voiced as to the amount of internal documents that are requested to initiate the merger review process. How did the Commission address that criticism?

Internal business documents can be useful for the Commission, for instance to understand the strategic rationale of a merger. Following the public consultation, the Commission nonetheless reduced the amount of documents that need to be provided.

For simplified cases, such documents only need to be provided if the merger gives rise to horizontal and vertical relationships between the merging companies. If no such relationships exist, no documents need to be provided.

The criticism mainly concerned the request for documents on alternative mergers that were presented to company decision-makers. The Commission certainly does not want to look at a company's entire internal M&A track record and the texts make this clear. Documents that are completely unrelated to the notified transaction do not have to be provided. Documents that are relevant are those that analyse the transaction that is notified in relation to alternative acquisitions.

Why does the Commission require merging companies to give market information for all "plausible" product and geographic markets?

It is long-standing practice that companies need to explain the impact of their merger on "all plausible" relevant product and geographic markets. This is reflected in DG Competition's Best Practices for the handling of merger cases. It has also been requested for many years in the simplified procedure.

The texts make clear that the Commission does not change this practice. As a further service to business, the Commission gives more guidance on the application of the "plausible markets" concept. It clarifies that plausible alternative markets can be identified on the basis of previous Commission decisions and judgments of the Union Courts. Where no such precedents exist, they can be identified by reference to industry reports, market studies and the companies' internal business documents.

How do these measures result exactly in changes to the Commission's Notice on a simplified procedure and the Commission Regulation implementing the Merger Regulation?

The Commission's new Notice on a simplified procedure for the treatment of certain mergers was revised mainly to include the new thresholds for the application of the procedure, and to specify the Commission's general approach to pre-notification in these cases.

The Commission Implementing Regulation contains, in its Annexes, the standard notification forms (Form CO, Short Form CO and Form RS). These standard forms were revised mainly to eliminate and reduce the information requirements contained therein.

The Simplification Initiative does not concern the Merger Regulation itself. The Commission has also launched an initiative aiming at a broader review of the Merger Regulation. Further information on that initiative can be found on our website:

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