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 Commission can, on completion of its analysis, issue a decision declaring that the concentration is incompatible with the internal market. Under Article 8(3) of Council Regulation No 139/2004 of 20 January 2004, “where the Commission finds that a concentration fulfils the criterion defined in Article 2(3) or, in the cases referred to in Article 2(4), does not fulfill the criteria laid down in  …

Incompatibility or de-merger

The Commission can, on completion of its analysis, issue a decision declaring that the concentration is incompatible with the internal market. Under Article 8(3) of Council Regulation No 139/2004 of 20 January 2004, “where the Commission finds that a concentration fulfils the criterion defined in Article 2(3) or, in the cases referred to in Article 2(4), does not fulfill the criteria laid down in Article 101(3) of the Treaty, it shall issue a decision declaring that the concentration is incompatible with the [internal market]”. Such is the case where the operation leads to the elimination of an operator on an oligopolistic market , an increase in the customer base of the new entity on markets where the clients' power of action is limited  or where it strengthens its purchasing power . Likewise, a transaction must be prohibited if it brought together two major vertically integrated competitors, which were the only ones with all the technical capabilities needed to meet customer demand, thus causing the disappearance of a major driver of competition, while at the same time significantly impeding effective competition, in particular due to the non-coordinated horizontal effects resulting from the elimination of a strong competitive constraint that would confront customers with a reduction in the number of suppliers, as well as with higher prices  or even a merger which gives rise to the creation of a dominant position on more than a dozen markets by eliminating the very close competitive relationship between two operators and by reducing customers' choices of travelling options, it being unlikely that other operators could sufficiently constrain the merged entity, especially in terms of fare levels . However, according to the General Court, the creation or strengthening of a dominant position is only one of the scenarios in which such a hindrance can be found, so that a merger creating or strengthening a dominant position does not automatically give rise to a significant impediment to effective competition (SIEC), and there is no automaticity between the dominant position test and the SIEC test . Furthermore, a significant impediment to effective competition arising from the merged entity's future decisions can only be considered a direct and immediate consequence of the merger, rendering it incompatible with the internal market, if such future behavior is made possible and economically rational by the change in the characteristics and structure of the market caused by the merger .

A finding of incompatibility will also ensue where the proposed commitments do not eliminate the competition concerns raised . This is particularly the case when, despite the commitments to divest activities taken by the notifying party, the purchaser is not a suitable purchaser in whose hands the divestment business would become an active competitive force and that it is not established that it would be possible to implement those commitments in a timely manner, nor that they would be sufficiently workable and lasting to ensure that the impairment of effective competition which they are intended to remove would not be likely to materialize in the relatively near future . Decisions finding a concentration incompatible with the internal market are however quite rare.

Paragraph 4 of the Merger Regulation states that where Commission finds that a concentration has already been implemented and that concentration has been declared incompatible with the internal market, or has been implemented in contravention of a condition attached to a decision taken under paragraph 2, which has found that, in the absence of the condition, the concentration would fulfill the criterion laid down in Article 2(3) or, in the cases referred to in Article 2(4), would not fulfill the criteria laid down in Article 101(3) TFEU, it may:

- require the undertakings concerned to dissolve the concentration .

- order any other appropriate measure to ensure that the undertakings concerned dissolve the concentration  or take other restorative measures as required in its decision. When a concentration that has alread been implemented is found to be incompatible with the internal market, the Commission may therefore require the assignment of all the assets of the target company to a viable independent competitor with the requisite expertise and financial resources , that has no links to the group at the origin of the operation.

Commission Decision M.1524 of 22 September 1999, Airtours/First Choice, LawLex200400002633JBJ; The concentration, which leads to the elimination of a major operator in a context already favorable to the emergence of a dominant oligopoly, is incompatible with the common market; M.619 of 24 April 1996, Gencor/Lonrho, LawLex200500004381JBJ: A concentration which leads to the elimination of an operator on an oligopolistic market and leads to the creation of a duopoly is incompatible with the common market, in the absence of any favorable countervailing effects. 

Commission Decision M.053 of 2 October 1991, Aerospatiale- Alenia/de Havilland, LawLex200400002474JBJ: the concentration that leads to a broadening of the customer base of the new entity on markets where customers' power of action is limited, current competition is weak and potential competition is insignificant, is not compatible with the common market. See, in the same vein, M.774 of 4 December 1996, Saint-Gobain/Wacker-Chemie/NOM, LawLex200500004386JBJ: the concentration that confers around 70% of the market share on the parties in a sector requiring extensive know-how and large investments, in the face of much smaller competitors and where there are no potential competitors, is not compatible with the common market; M.1672 of 14 March 2000, Volvo/Scania, LawLex200500005292JBJ: a concentration operation which confers on the new entity 90.8% market share cannot be authorized insofar as it creates a dominant position and the elimination of a potential effective source of competition, where the customers of the new entity would not be able to implement multi-sourcing strategies and any new operator would need several years and require considerable investment to establish a competing service; M.2097 of 31 January 2001, SCA/Metsä Tissue, LawLex200400002651JBJ: a merger operation is incompatible with the common market where it confers on the new entity a market share of between 80% and 90%, that is such as to create a durable dominant position, particularly due to the difficulties of entering a mature market where the creation of new production capacities and the development of the reputation of a new brand are costly. 

Case T-411-07 Aer Lingus Group plc c. Commission européenne, Ryanair Holdings plc, Judgment of 6 July 2010, LawLex201000001306JBJ: the Commission cannot order the divestiture of a minority shareholding, which does not constitute a concentration, without exceeding its powers, since under Article 8(4) of Regulation No 139-2004, it only has the power to order the divestiture of all the shares acquired by one undertaking in another “in order to re-establish the situation prior to the implementation of the concentration”.

Commission Decision M.784 of 19 February 1997, Kesko/Tuko, LawLex200400002561JBJ.

Commission Decision M.784 of 20 November 1996, Kesko/Tuko, LawLex200500004387JBJ: a presumption of a dominant position of the new entity, corroborated by the strengthening of its purchasing power, makes the concentration incompatible with the common market.

Case C-581/22 P Thyssenkrupp AG, Judgment of 4 October 2024, LawLex202400007566JBJ

Commission Decision M6663 of 27 February 2013, Ryanair/Aer lingus III, LawLex201300001251JBJ; Case T-584-19 ThyssenKrupp, Judgment of 22 June 2022, LawLex202200004094JBJ.

Case T-58/20 NetCologne Gesellschaft für Telekommunikation mbH, Judgment of 13 November 2024, not available in English.

Case T-58/20 Tele Columbus AG, Judgment of 13 November 2024, not available in English.

Commission Decision M.469 of 9 November 1994, MSG Media Service, LawLex200500005341JBJ; M.2220 of 3 July 2003, General Electric/Honeywell, LawLex200400002655JBJ; Commission Decision M.5830 of 26 January 2011, Olympic/Aegean Airlines, LawLex201200002392JBJ: finding the merger incompatible “despite the parties” commitments to release a number of slots at various Greek airports and enable new entrants to enter into an interline agreement with the merged entity on the routes in dispute, as they are not such as to remedy the identified competition concerns where the  main barriers to entry in the market do not relate to the availability  of slots. See also  Commission Decision M.6166 of 1 February 2012, Deutsche Börse/NYSE Euronext, LawLex201700000652JBJ: for a concentration, which would have given rise to the creation of the  biggest stock exchange in the world in terms of revenue and the creation of a monopoly in a  number of markets and would have eliminated the closest actual and  potential competitor, is likely to significantly impede effective  competition despite the commitments offered i.e. a divestment commitment in the area of single equity derivatives, access to new types of products and a software licensing commitment; Case T-175/12 Deutsche Börse AG v Commission and Icap Securities, Judgment of 9 March 2015, LawLex201700000663JBJ: in this case, the General Court confirmed the incompatibility of the merger with the internal market and held that the rejection of the proposed divestiture commitment was based on a set of separate grounds relating to whether the commitment was likely to remove the competition concerns and whether it would lead to timely and sufficient entry.  Also Commission Decision M. 6570 of 30 January 2013, UPS/TNT Express, LawLex202000001880JBJ: despite the proposed structural (divestiture of assets) and behavioral  (provision of access) commitments, the concentration is declared  incompatible with the internal market, since the only interested  purchaser which had no intention to purchase, lease or charter aircraft  would probably not have developed a network capable of handling  intra-EEA international express deliveries in the EEA as efficiently as an integrator. However, this ruling has recently been overturned by the General Court for violation of the rights of the defense  (Case T-194/13  United Parcel Service, Inc. v Commission and FedEx Corp., Judgment of  7 March 2017, LawLex201700000464JBJ); Case T-584/19 Thyssenkrupp AG, Judgment of 22 June 2022, LawLex202200004094JBJ, the Commission cannot be criticized for applying a stricter legal test than that provided for in Regulation No 139-2004 and the Remedies Notice in order to declare the proposed commitments insufficient, by requiring the elimination of the entire overlap between the parties' activities, since it carried out an overall analysis of the competition concerns which the commitments were intended to remedy and did not confine itself solely and strictly to examining the ability of those commitments to precisely reinstate the competition which would have been eliminated as a result of the transaction.

Commission Decision M6663 of 27 February 2013, Ryanair/Aer lingus III, cited above.

When a concentration that has already been implemented - by way of an of 98.1% acquisition of the shares of the main competitor on highly concentrated markets - is declared incompatible with the internal market, the restoration of effective competition cannot be obtained other than by a separation of the parties: Commission Decision M.2283 of 30 January 2002, Schneider/Legrand, LawLex200800000088JBJ. The de-merger can be ordered where the operation, declared incompatible with the internal market despite commitments proposed by the parties, has already been implemented: Commission Decision M.2416 of 30 January 2002, Tetra Laval/Sidel, LawLex200800000087JBJ.

European Competition Law

352. Incompatibility or de-merger

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352. Incompatibility or de-merger

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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