WIREDGOV

The European Commission recently (26 March 2021) published a Staff Working Document that summarises the findings of the evaluation of procedural and jurisdictional aspects of EU merger control. Following the results of the evaluation, the Commission decided to adopt a communication providing guidance on the application of the referral mechanism between Member States and the Commission set out in Article 22 of the Merger Regulation, and launch an impact assessment on exploring policy options for further targeting and simplification of merger procedures.

Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:

“The EU merger procedures have served us well so far. Our evaluation however has identified some areas for improvement. A number of transactions involving companies with low turnover, but high competitive potential in the internal market are not reviewed by either the Commission or the Member States. A more frequent use of the existing tool of referrals under Article 22 of the Merger Regulation can help us capture concentrations which may have a significant impact on competition in the internal market. In parallel, we are also looking at the possible revision of certain procedural aspects of EU merger control. To this end, we invite input from stakeholders on different policy options to achieve further targeting and simplification of the EU merger control procedures.”

Findings of the evaluation of procedural and jurisdictional aspects of EU merger control

The objective of the evaluation was to assess the functioning of selected aspects of EU merger control to understand how the rules have worked in changing market realities. The evaluation focused on two topics in particular:

• the effectiveness of the turnover-based jurisdictional thresholds in capturing concentrations which may have a significant impact on competition in the internal market, and
• the effectiveness of simplification measures introduced in 2013.

To inform the evaluation process, the Commission carried out a public consultation, held numerous meetings with stakeholders, carried out extensive research into deal activity and analysed its own enforcement practice. The Commission also relied on evidence from a separate work stream on the effects of digitisation on competition policy, and closely monitored the introduction and application of additional jurisdictional thresholds based on transaction value in some of the Member States.

As regards the jurisdictional thresholds, the evaluation results showed that at this stage, the turnover-based jurisdictional thresholds, complemented with the referral mechanisms, have generally proved effective in capturing significant transactions in the EU internal market. Recent market developments, however, have resulted in a gradual increase of concentrations involving firms that play or may develop into playing a significant competitive role in the markets despite generating little or no turnover at the moment of the concentration. Accordingly, a number of transactions which could potentially have an impact on competition in the internal market have not been reviewed by the Commission or, in some cases, by any Member State. This includes in particular concentrations involving nascent competitors and innovative companies, including in (but not limited to) the digital, pharmaceutical, biotechnology and certain industrial sectors. While informative, the value of the transaction may not always be sufficiently correlated with the transaction's potential competitive significance. Therefore, encouraging and accepting more referrals under Article 22 of the Merger Regulation – notably where the transaction does not meet the national merger control thresholds – could give Member States and the Commission the flexibility to target concentrations which merit review at EU level, without imposing notification obligations on transactions that do not.

As regards the simplification measures, the evaluation has shown that the 2013 simplification package has been effective in increasing the application of simplified procedures to unproblematic mergers and in reducing administrative burden both for businesses and the Commission in terms of resources and time spent on the merger review, while ensuring effective enforcement of the merger rules. However, there is still room for further simplification and targeting of the rules.

The findings of the evaluation of procedural and jurisdictional aspects of EU merger control are summarised in a Staff Working Document.

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