The European Commission announced on 5 December 2013 a package of measures to simplify and streamline the procedure for merger reviews under the EU Merger Regulation. The adoption of this package signals the Commission’s intention to spend less time on unproblematic cases and to improve the effectiveness of merger reviews by ensuring that sufficient information is obtained from merging parties. The Commission has also revised its guidelines on remedies. These new measures will apply as of 1 January 2014.

1.
David Broomhall
Partner
Brussels
Martin Klusmann
Partner
Düsseldorf
Chantal Lavoie
Brussels
More cases to fall under the
simplified review procedure
Content of Form CO revised to
improve efficiency of merger review
process
Revised best practice guidelines on
remedies
Conclusion
Briefing
European Commission amends merger filing
procedure
The European Commission announced on 5 December 2013 a package of measures to
simplify and streamline the procedure for merger reviews under the EU Merger
Regulation. The adoption of this package signals the Commission’s intention to spend
less time on unproblematic cases and to improve the effectiveness of merger reviews by
ensuring that sufficient information is obtained from merging parties. The Commission
has also revised its guidelines on remedies. These new measures will apply as of 1
January 2014.
More cases to fall under the simplified review procedure
Merger filings under the EU Merger Regulation can benefit from a simplified procedure if certain criteria are met. In such cases,
filings are made using an abbreviated notification form (a ‘short Form CO’). The main advantage of the simplified procedure is
the reduced amount of information to be provided as well as the possibility for the Commission to clear such cases by means
of a short form decision without a market investigation. The use of the short form is therefore intended to reduce the
administrative burden for both merging parties and the Commission.
Under the amendments, the Commission has increased the market share threshold below which it considers that a deal can
be notified using the simplified procedure. As of 1 January 2014, merging parties will be able to use the short Form CO for
mergers resulting in a combined market share of 20% for parties in the same market (instead of 15%) and 30% for parties
active in upstream or downstream markets (instead of 25%).
The Commission has also added the possibility for mergers resulting in a small increase in market share to use the
simplified procedure. This possibility will only apply on a case­by­case basis to mergers between parties in the same market
with combined market shares between 20% and 50%. In order to determine whether the increase is small, the Commission
will rely on a threshold increment in market concentration level. The Commission may refuse however to accept a short form in
special circumstances where the market is already concentrated, for instance where one of the merging parties has promising
pipeline products.
The Commission has also expanded the scope for use of the simplified procedure in the case of joint ventures. Under the
current regime, the creation of a joint venture could, in certain circumstances, benefit from the simplified procedure but not if
there were overlaps between the parent companies. As of 1 January 2014, overlaps in activities between parents alone will no
longer prevent parties from using the simplified procedure.
The Commission estimates that 60­70% of merger cases could benefit from the revised simplified review procedure; an
estimated 10% increase. Time will tell whether the practical application of these new rules will indeed result in more cases
falling under the simplified procedure and reduce the administrative burden for notifying parties.
Whether these amendments will be branded a success will largely depend on how they are applied in practice.
There are two potential pitfalls that could jeopardise the success of the amendments. First, the increase in market share
threshold will require merging parties to take into account all ‘plausible alternative markets’ in assessing whether the
combined market share of the parties in any market falls below the threshold for using the short form. Applying this concept will
be a challenge for merging parties, as they will have to take into account a potentially wider range of markets. In turn, it may
require more pre­notification contacts with the Commission to agree on the likely, subjective, interpretation of the ‘plausible
alternative markets’. It is hoped that the Commission will apply this concept in a reasonable and consistent manner in order to
provide clarity and increase the proportion of cases treated under the simplified procedure.
Secondly, one of the new category of cases which could fall under the simplified procedure – small increments in market share
resulting from a merger – will only be decided upon on a case­by­case basis at the discretion of the Commission. As a result,
businesses will have to consult with the Commission in pre­notification contacts and provide evidence in relation to the nature
of the market share increase for all markets, including the ‘plausible alternative markets’. The scope for this category of cases
to fall under the simplified procedure will therefore depend on how the Commission applies its discretion in practice.
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Content of Form CO revised to improve efficiency of merger review process
The Commission has also reviewed the information to be provided under the short and long form notifications. The adopted
package will lead to a slight reduction in information to be provided by notifying parties, particularly in the context of the
simplified procedure. The Commission has also formalised the procedure for parties to request a waiver from the obligation to
provide information which is not considered necessary for the Commission’s examination of the case. Reasoned waiver
requests will need to be submitted at the same time as the draft notification and the Commission will normally respond within
5 working days. This formalises existing practice but potentially adds more red tape to the process of obtaining waivers.
The more substantive changes to the forms consist in additional information being requested from notifying parties in order to
make the Commission’s review more effective. These changes for the most part reflect existing practice.
Quantitative economic data collected by parties should be described in the notification in cases where quantitative
economic analysis is likely to be useful, such as in relation to mergers involving businesses with structured procurement
processes or mergers in the retail sector involving ‘scanning data’ about consumers.
1.
A wider range of company documents must be provided, including minutes of board meetings at which the transaction
was discussed; any documents prepared for the purpose of assessing the merger including documents discussing
possible alternative acquisitions; and documents from the last two years assessing any affected markets. This brings the
requirement to submit internal documents closer to that which is requested in US merger proceedings.
2.
More detailed information is required in relation to affected markets, notably whether there has been any exit from any
market, identifying pipeline products and disclosing the parties’ R&D plans and priorities for the next three years.
3.
The new forms also encourage parties to submit waivers of confidentiality to allow the Commission to share information with
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its counterparts outside the EEA reviewing the same merger. In theory, no obligation is imposed on parties to do so. This is
welcome, provided that it translates into practice, as the provision of waivers in non­complex cases is unduly burdensome and
in certain cases, waivers are not necessarily helpful to the process. Waivers also give rise to confidentiality concerns given the
expanded scope of sensitive business information to be provided under the new rules.
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Revised best practice guidelines on remedies
In parallel to the simplification package, the Commission has also revised its guidelines on remedies and accompanying
model texts for divestiture commitments and for the appointment of trustees. The review reflects the Commission’s recent
practice in relation to remedies.
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Conclusion
The Commission’s amendments have immediate implications for businesses currently envisaging a merger filing to the
European Commission. In practice, ongoing deals which have not been notified yet may need to be freshly reviewed to
consider whether the simplified procedure can be used and to consider changes to the nature of the information to be provided
under the Form CO. The absence of transitional provisions means that the revised forms will need to be used for filings made
after 1 January 2014. Likewise notifying parties envisaging offering commitments to the Commission after 1 January 2014 to
secure a merger clearance will need to take into account the Commission’s detailed revision of its guidelines on remedies.
The reform is a step in the right direction to reduce the complexity of EU merger proceedings and address criticism that the
process has become overly burdensome. The success of this reform will ultimately depend on how it is implemented in
practice. This will require on the part of the Commission a reasonable and consistent approach when exercising its discretion
to allow parties to use the simplified procedure and when considering waiver requests. Conversely, it is hoped the increase in
pre­notification contacts with the Commission which is likely to result from this reform will not lead to protracted discussions
and an increase in the administrative burden for businesses during the pre­notification process.
This important development, together with other significant issues in global antitrust enforcement in the year ahead, are
discussed in our "Global antitrust in 2014: 10 Key Themes" briefing, which we will be sending to you in the new year.
For more information please contact:
David Broomhall
T +32 2 504 7015
Martin Klusmann
T +49 211 49 79 223
Chantal Lavoie
T +32 2 504 7625
or any of your usual contacts in our antitrust, competition and trade team.
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