2017 Merger Control Survey: EU
IFLR is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

2017 Merger Control Survey: EU

Sponsored by


Craig Pouncey and Kyriakos Fountoukakos, Herbert Smith Freehills

Regulatory framework

1.1 What is the applicable legislation and who enforces it?

EU merger control is governed by Regulation 139/2004 on the control of concentrations between undertakings – the EU Merger Regulation (EUMR) – which applies to the 28 EU member states and the other European Economic Area (EEA) countries.

The EU Commission has also published a number of notices and guidelines aimed at governing certain procedural aspects of merger control, providing further clarification and practical guidance in respect of some of the key concepts set out in the EUMR. The most important ones are: Commission Regulation 802/2004 implementing Regulation 139/2004; Commission Consolidated Jurisdictional Notice (April 16 2008); Commission Notice on a simplified procedure for treatment of certain concentrations (December 5 2013); Commission Notice on case referrals (March 5 2005); Guidelines on the assessment of non-horizontal mergers (October 18 2008); Guidelines on the assessment of horizontal mergers (February 5 2004); Commission Notice on remedies (October 22 2008); Commission Notice on restrictions directly related and necessary to concentrations (March 5 2005); and a number of best practice guidelines. These are all available on the EU Commission website.

EU merger control is enforced by the Directorate General for Competition of the EU Commission (DG Comp).

Jurisdictional test

2.1 What types of mergers and joint ventures (JVs) are caught?


The EUMR applies to concentrations which have an EU dimension. A concentration is defined as a merger of two or more previously independent undertakings, or the acquisition of direct or indirect control of the whole or parts of another undertaking (Article 3(1) EUMR). The trigger for jurisdiction is a change of control. Control for these purposes is defined as the ability to exercise "decisive influence" over an undertaking (Article 3(2) EUMR) on the basis of rights, contracts or other means and is most commonly obtained through the acquisition of a direct or indirect shareholding in the target which grants positive control or negative control (for instance through the ability to veto) over the commercial decisions of the target.

Control can be sole control, where the acquirer alone can exercise decisive influence over the target or joint control, where two or more parties both exercise decisive influence over an undertaking through the ability to veto strategic commercial decisions, whether as a result of shareholdings or voting rights or contractual veto rights.

Concentrations can therefore include mergers, takeovers (hostile or agreed), rescues, acquisitions of controlling minority shareholdings, acquisitions of part of a business, acquisitions of assets (where those assets constitute an undertaking), contractual links which convert a minority shareholding into a controlling stake and certain joint venture transactions. The creation of a joint venture will constitute a concentration where: joint control is acquired over the joint venture; the joint venture is formed on a lasting basis and the joint venture is full-function; meaning that it is an autonomous and independent (from its parents) player on the market, performing all the functions normally carried out by independent undertakings on the same market, having the finances, staff, management and resources to do so (Article 3(4) EUMR).

2.2 What are the thresholds for notification, how clear are they, and are there circumstances in which the authorities may investigate a merger falling outside such thresholds?


There are two alternative tests to establish whether a concentration has an EU dimension (Article 1(2) and 1(3) EUMR). If either of the tests is met in relation to a concentration, a notification obligation under the EUMR will be triggered.

The first turnover test

Under this test a concentration will have an EU dimension if it satisfies two conditions:

  • the combined worldwide group turnover of all the undertakings concerned is more than €5,000 million; and

  • the EU-wide group turnover of each of at least two of the undertakings concerned is more than €250 million.

However, any concentration where each of the undertakings concerned achieves more than two-thirds of its EU-wide turnover in one and the same member state does not have an EU dimension, and the relevant member state(s) whose merger control law thresholds are triggered by the proposed transaction will have jurisdiction, rather than the Commission.

The second test

If the concentration does not have an EU dimension under the first test, it will still fall within the scope of the EUMR if:

  • the combined world-wide group turnover of all the undertakings concerned is more than €2,500 million;

  • in each of at least three member states, the combined group turnover of all the undertakings concerned is more than €100 million;

  • in each of at least three member states included for the purpose of the above requirement, the group turnover of each of at least two of the undertakings concerned is more than €25 million; and

  • the EU-wide group turnover of at least two of the undertakings concerned is more than €100 million.

As under the first test, if each of the undertakings concerned achieves more than two-thirds of its aggregate EU-wide turnover in one and the same member state, the concentration does not have an EU dimension.

The calculation of turnover for EUMR purposes (including how to allocate turnover geographically) can be complicated but essentially involves looking at the turnover in the last financial year for which audited accounts are available of the undertakings concerned and the entire corporate groups to which they belong (except if the concentration involves the acquisition of only part of an undertaking, in which case only the turnover of that part is taken into account).

Special rules apply to the calculation and geographic attribution of turnover achieved by companies active in certain sectors and industries.

The central principle underlying the EUMR is that concentrations with an EU dimension should be subject to only one regulatory hurdle: assessment by the Commission on the basis of the test set out in the EUMR. Concentrations below the EU thresholds remain subject to the relevant national merger control rules. This one-stop shop principle is subject to two exceptions:

Concentrations with an EU dimension may be referred in whole or in part to EU national competition authorities at the request of one or more member states (Article 9 EUMR) or of the notifying parties (Article 4(4) EUMR), where the concentration affects competition in a market within that member state which has all the characteristics of a distinct market.

One or more member states may request that the Commission examines a concentration that does not have an EU dimension but affects trade between member states and threatens to significantly affect competition within the territory of the member state(s) making the request (Article 22 EUMR). Such a request can also be made by the notifying parties where the concentration is notifiable in at least three member states (Article 4(5) EUMR).

2.3 Are there circumstances in which a foreign-to-foreign merger may require notification, and is a local effect required to give the authority jurisdiction?


The EUMR applies to all concentrations with an EU dimension, regardless of the location of the undertakings concerned. The jurisdictional thresholds are based on geographic turnover, not on the location of the undertakings concerned.

Pre-notification and filing

3.1 Is filing mandatory or voluntary and must closing be suspended pending clearance? Are there any sanctions for non-compliance, and are these applied in practice?


The EUMR regime is mandatory and suspensory. Concentrations with an EU dimension must be notified to the Commission. Clearance must be received from the Commission before the transaction can be completed and before any other form of implementation falling short of actual completion takes place (Article 7 EUMR). Fines of up to 10% of the worldwide group turnover of the undertakings concerned can be imposed for failure to file a notifiable transaction or for completion or implementation (including partial implementation) of a transaction prior to receiving clearance (so-called gun-jumping) (Article 14 EUMR).

3.2 Who is responsible for filing and what, if any, filing fee applies?


In relation to acquisitions of sole control, the obligation to notify falls upon the acquirer of control. In the case of mergers or the acquisitions of joint control, there is a joint notification obligation on all parties to the merger or on all the jointly controlling parties as applicable. In the case of an existing joint venture this includes existing jointly controlling parents even if they are not party to the transaction.

There are no filing fees under the EUMR regime.

3.3 What are the filing requirements and how onerous are these?


The EUMR notification must be made on a specified notification form: Form CO. The scale of information required is extensive (although in some cases it may be possible to obtain waivers of some of the information requirements). It requires a detailed description of the concentration, the parties (and their turnover), detailed information on the conditions of competition in affected markets, as well as a summary of any efficiencies likely to be achieved. There is also an obligation to submit with the Form CO specified internal documents (so-called Section 5(4) documents) relevant to the transaction, such as copies of analysis, reports or surveys which have been prepared by or for or received by the board of directors or shareholders' meetings discussing the transaction or the market in general.

A Short Form CO, which requires significantly less information, may be used if certain conditions are met. In such cases the Commission will follow a simplified procedure in its review process (Commission Notice on a simplified procedure for certain concentrations – December 5 2013).

3.4 Are pre-notification contacts available, encouraged or required? How long does this process take and what steps does it involve?


The Commission advises parties to engage in confidential pre-notification discussions before submitting a formal notification. The object of the pre-notification contacts is to smooth the process of review and to minimise any danger of the formal filing being declared incomplete. During this period the parties submit draft notifications to the Commission case team for its review. Depending on the complexity of the case, the parties may submit briefing papers containing submissions on the competitive assessment of the transaction or particular factual or legal issues.

The pre-notification period can last from a period of a few weeks in simple cases to several months or more in complicated cases.


4.1 What is the standard timetable for clearance and is there a fast-track process? Can the authority extend or delay this process?


The Commission has 25 working days from receipt of a complete notification to conclude its first stage phase I investigation. This period is extended to 35 working days if remedies are offered or if a case referral request is made by a member state. At any stage after filing, the Commission may request further information, data or documents. The Commission may stop the clock if it considers that it has not received a full response to an information request made by decision, within the time limit set for the response.

At the end of phase I, the Commission must decide either that it does not have jurisdiction over the transaction, to clear the transaction unconditionally, to clear the transaction conditionally subject to remedies; or to open an in-depth phase II investigation. If the Commission does not take a decision, the transaction is deemed to have been cleared.

The Commission has 90 working days (extendable by 15 working days if remedies are offered by the parties and by a further 20 working days with the agreement of the parties and the Commission) to complete its phase II investigation. The Commission may stop the clock if it considers that it has not received a full response to an information request made by decision, within the time limit set for the response.

At the end of phase II, the Commission can clear the transaction (with or without remedies/commitments) (Article 8(2) EUMR) or prohibit the transaction (Article 8(3) EUMR).

4.2 What is the substantive test for clearance, and to what extent does the authority consider efficiencies arguments or non-competition factors such as industrial policy or the public interest in reaching its decisions?


Concentrations are assessed against the significant impediment of effective competition (SIEC) test: does the concentration significantly impede effective competition in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position? (Article 2 EUMR)

The test is intended to cover all competition issues raised by mergers and focuses on effects on competition rather than the structure of the market.

The Commission has published guidelines on the assessment of horizontal mergers (dealing with non-coordinated and coordinated effects) and guidelines on the assessment of non-horizontal mergers (dealing with vertical and conglomerate effects) setting out in more detail the factors it generally considers when it carries out its substantive assessment.

Efficiency claims are taken into account in the overall assessment of the merger. In order to be taken into account the efficiencies have to benefit consumers, be merger-specific and be verifiable. The efficiency defence has been accepted in very few cases.

4.3 Are remedies available to alleviate competition concerns? Please comment on the authority's approach to acceptance and implementation of remedies.


The parties can offer remedies at phase I in order to address the Commission's concerns and avoid a detailed phase II investigation. Proposed remedies must be formally submitted on a standard Form RM. The Commission will only consider remedies if they provide a clear-cut solution to remove the competition problems identified. At phase I this will generally involve structural remedies. In relation to phase II remedies the Commission also has a preference for structural divestment remedies, but may be prepared to accept behavioural remedies in specific cases. Compliance with remedies is strictly enforced by the Commission. The parties will usually be required to appoint a monitoring trustee to monitor compliance. Failure to comply with remedies may result in a fine of up to 10% of the aggregate turnover of the undertaking concerned. The Commission can also impose periodic penalty payments of up to 5% of the average daily aggregate turnover of the undertaking concerned for each working day of delay in complying.

Rights of appeal

5.1 Please describe the parties' ability to appeal merger control decisions – how successful have such challenges been?


Commission decisions to clear or prohibit a transaction can be appealed to the EU General Court under Article 263 TFEU and from there, on points of law, to the Court of Justice. The parties, member states and any third parties who can show that the relevant decision is of direct and individual concern to them (such as complainants) all have rights of appeal. Any appeal must be brought within two months from the date of notification of the decision to the parties or publication of the decision.

A factor to be taken into account when deciding whether or not to appeal is the long delays (appeals to the General Court may take up to two years or longer, even if a fast track expedited process is utilised) which can reduce the benefit for the parties to a transaction in challenging the Commission's decision before the European courts.

Your jurisdiction

6.1 Outline any merger control regulatory trends in your jurisdiction (i.e., cases, court filings, etc.).

During 2015/2016 the Commission has dealt with a high number of transactions of increased complexity in concentrated industries, requiring in-depth reviews and remedial action. A total of 17 phase II investigations were launched, which is the highest number since 2007, and the first prohibition decision adopted under Commissioner Margrethe Vestager was published in May 2016, in Hutchinson 3G/Telefonica UK. The transaction would have created the largest mobile network operator (MNO) in the UK with a combined market share of more than 40%. The Commission was concerned that the transaction would result in higher prices and reduced choice for consumers, hampered development of the UK mobile network infrastructure and impaired negotiation position of UK mobile virtual network operators (MVNO).

In October 2016 the Commission launched a public consultation on a number of procedural and jurisdictional aspects of the EUMR, exploring possible changes to the EUMR. A previous proposal on expanding the EUMR in order to capture non-controlling minority stakes appears to be shelved for the moment. In this latest consultation the Commission is looking at possible amendments to the EUMR thresholds in order to catch transactions that currently fall below the turnover thresholds (for example because the target is a start-up with valuable technology but has no or minimal turnover) but may nevertheless raise concerns. According to the Commission this is more likely to be the case in certain sectors, such as the digital and pharma industries, where the undertakings concerned could have a significant market impact despite having little or potentially no turnover.

About the author



Craig Pouncey

Managing partner Brussels, Herbert Smith Freehills

Brussels, Belgium

T: +32 2 518 1829

E: craig.pouncey@hsf.com

W: www.herbertsmithfreehills.com

Craig Pouncey has been managing partner of Herbert Smith Freehills' Brussels office since 2005, where he specialises in EU and UK competition law. His practice focuses on merger control, cartel investigations, antitrust litigation and counselling. Pouncey's practice encompasses a broad range of sectors from telecoms and media (he is acknowledged as the leading expert on UK newspaper mergers), to manufacturing industries, e-commerce and financial services.

Pouncey is particularly active in the Asia-Pacific area, advising clients from the region on a variety of issues including recent high profile EU Commission cartel investigations, as well as on the merger control issues raised by inward investment plans. He liaises closely with partners across the Herbert Smith Freehills network in providing the co-ordinated multi-jurisdictional advice, which is increasingly critical for companies operating internationally.

Pouncey writes on a variety of competition topics, including most recently on the specific merger control issues raised by Chinese SOE acquisitions, minority share-holdings and private equity transactions.

About the author



Kyriakos Fountoukakos

Partner, Herbert Smith Freehills

Brussels, Belgium

T: +32 2 518 1840

E: kyriakos.fountoukakos@hsf.com

W: www.herbertsmithfreehills.com

Kyriakos Fountoukakos is a competition lawyer in Herbert Smith Freehills' Brussels office, where he specialises in all aspects of EU and UK competition law including merger control, cartels and antitrust investigations and competition litigation before the EU courts. He works closely with the Herbert Smith Freehills network to provide advice on multi-jurisdictional transactions and investigations.

Fountoukakos brings particular expertise through his former positions as an EU Commission official at DG Competition's Merger Task Force and as a Référendaire (legal assistant) in the cabinet of the President of the General Court of the EU. While at the Commission, Fountoukakos dealt with a number of high profile merger transactions and was part of the team that drafted the current EU Merger Regulation and accompanying notices.

Fountoukakos is acknowledged as a leading competition law expert in major legal directories and was selected as one of the top 40 competition lawyers under the age of 40 in a Global Competition Review survey.

Gift this article