European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

The establishment of direct supervision of merger transactions within competition law is only the latest stage in a general trend. Before they were made subject to specific rules, mergers were generally controlled through traditional competition law rules on restrictive agreements and abuses of dominant position. These rules could apply either to the merger process, i.e. the transaction, or to the …

Position of merger control within competition law

The establishment of direct supervision of merger transactions within competition law is only the latest stage in a general trend. Before they were made subject to specific rules, mergers were generally controlled through traditional competition law rules on restrictive agreements and abuses of dominant position. These rules could apply either to the merger process, i.e. the transaction, or to the result, i.e. the degree of market concentration.

The reluctance to regulate mergers is basically explained by the widespread prejudice in their favor. Economists traditionally think large companies are better able than small ones to put technological advances to good use and cut their costs. They generally admit, however, that a high rate of concentration encourages conscious parallel conduct in pricing and production objectives, and that therefore significant levels of concentration may lead to less competition. All this explains why it was not until 1989 in the European Union that a regulation specific to merger was adopted.

Started at the end of the 1970s, the first European regulation on the control of concentrations was not adopted until 21 December 1989 and came into force on 21 September 1990 . Unlike the ECSC Treaty, the EC Treaty did not provide for merger control. This deficiency is generally explained by the fact that, in the 1950s and 1960s, the Common market economy was not particularly concentrated in sectors other than coal and steel, especially when compared to its biggest competitors, in particular the United States. Before it had any specific means of action in respect of merger control, the EU authorities had to make use of the means at its disposal. In the famous Continental Can decision , they considered that even a non-hostile merger, might constitute an abuse of a dominant position where its effect was to substantially strengthen the position of the initiating undertaking. Then, in the BAT and Reynolds decision , the Court admitted that Article 101 TFEU could also be used under certain conditions to regulate the acquisition of a minority shareholding in a competing company.

The intention behind such indirect methods of merger control was in fact more the encouraging of the Member States to accept the establishment of specific rules on merger control than the realization of an alternative control. In effect, the adoption of an EU regulation conflicted with the wishes of the Member States to retain their own prerogatives in an area regarded as essential from the economic or competition policy point of view. When the merger control regulation was in preparation power struggles prevailed over technical concerns to such an extent that what may have been the more efficient result was often sacrificed for what appeared to be more acceptable to those concerned. The willingness to make compromises, which was manifest regarding the determination of the scope of control, was also apparent when it came to defining the conditions of the exercise of that control.

Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings as modified by Regulation No 1310/97 of 30 June 1997.

Case 6/72 Europemballage Corporation and Continental Can Company v Commission [1973] ECR 215, LawLex200400002771JBJ.

Case 142/84 BAT and Reynolds v Commission [1986] ECR 1899, LawLex200500004282JBJ.

Regulation No 4064/89

The merger control reform took place in 2004 with Regulation No 139/2004 , which came into force on 1 May 2004 at the same time as Regulation No 1/2003. The main objective of the reform was to give Europe legislative provisions appropriate to the future enlargement of the Union while avoiding cumulative controls. According to the recitals , the new regulation was to permit “effective control of all concentrations in terms of their effect on the structure of competition in the Community and to be the only instrument applicable to such concentrations”.

The “one-stop shop” principle, in place as from 1989, already made it possible for undertakings party to a concentration with EU dimension to avoid notifying their merger in the various Member States which could be concerned: for such mergers, the EU's jurisdiction was in effect exclusive. In 1997, new thresholds were added to the initial thresholds in order to include concentrations less substantial as to their absolute value but having a significant impact in at least three Member States. The drafters of the 2004 regulation went even further; now, undertakings which are parties to a merger that does not have an EU dimension (for which the Commission has therefore no jurisdiction), but which is capable of being reviewed by the national authorities of at least three Member States, may also ask to benefit from the Commission's one-stop shop mechanism. For the referral to apply however, the approval of the Member States concerned is required .

As well as extending the scope of application of the control, Regulation No 139/2004 has modified the substantial assessment of concentrations: the creation or strengthening of a dominant position becomes only one scenario amongst several of the restriction of competition; efficiencies brought about by the concentration, which were not mentioned in the previous version, can now counteract the effects on competition . 

As a result of the public consultations in 2009 and 2013 which led to the conclusion that a recast of Regulation No 139/2004 was not necessary, on 9 July 2014 the European Commission adopted the White Paper “Towards more effective EU merger control” on possible improvements to the EU merger control rules and has launched a public consultation on its proposals for the simplifying of procedure and greater flexibility. It proposes notably to reform the review of  minority stakes which do not confer control but influence competition, to make case referrals between Member States and the Commission more business-friendly and effective, to streamline procedures i.e. by excluding certain non-problematic transactions from the scope of the Commission's merger review and finally, to enhance cooperation between Member States in order to avoid divergent decisions in parallel merger reviews conducted by the competition authorities of several Member States. These proposals were not, however, taken up and there has since been no modification of the Merger Regulation. On 7 October 2016, the Commission launched a public consultation on the effectiveness of purely turnover-based notification thresholds, further simplification of the treatment of cases that typically do not raise competition concerns and the functioning of the case referral system .

Regulation No 139/2004 of 20 January 2004, OJ L 24, 29.01.2004, 1-22.

Regulation No 139/2004 of 20 January 2004, at pt 6. 

Regulation No 139/2004 of 20 June 2004, Article 4.

Point 29 of the recitals indicates that efficiencies resulting from a concentration may counteract its anticompetitive effects, in particular the potential harm to consumers and, as a consequence, that concentration may not significantly impede competition.

 http://europa.eu/rapid/press-release_IP-16-3337_en.htm 

European Competition Law

286. Position of merger control within competition law

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Les notions juridiques connexes

286. Position of merger control within competition law

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Les notions juridiques connexes

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