COMMUNITY MERGER CONTROL - GREEN PAPER ON THE REVIEW OF THE MERGER REGULATION
Date: 1996-01-31
Institutions: European Commission
Subjects: EU control, competition law, division of powers, economic concentration, merger control

Tir 

Tir 

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  31.1.1996 
COM(96)  19  final 

COMMUNITY  MERGER  CONTROL 

GREEN PAPER 

ON THE REVIEW OF THE MERGER REGULATION 

(presented  by  the  Commission) 

-  2 

-

Executive  summary 

The Merger Regulation  adopted by the Council in  1989 provided the Community  for the first  time 
with  an  adequate  instrument  for  the  control  of  cross-border  concentrations.  European  merger 
control  has been  heralded  as a  success.  Within  the  EEA,  mergers  falling  within  the  Regulation 
have  all been  subject  to the  same rules  and  assessed by  a single authority,  the Commission.  This 
was  done  rapidly  and  efficiently,  on  the  basis  of  transparent  procedures. 

Since the Regulation  entered  into force  in  1990, more than 350 final  decisions have been  adopted 
by the Commission.  In a large number of cases the notified  transactions  did not raise  competition 
problems and were therefore  cleared within one month. Where, however, the merger would  create 
or  reinforce  dominance,  measures,  were  taken  to  prevent  a  deterioration  in  the  competitive 
structure  of  the  market.  Four  operations  were  thus  prohibited  and  24  other  transactions  were 
substantially  altered  so  as to  take  account  of  the  Commission's  competition  concerns. 

After  nearly five years of European  merger control, the Commission  is bound,  in light of its  1993 
commitment to the Council, to examine the workings of the Merger Regulation.  This requirement 
covers  mainly  the  level  of the  turnover  thresholds,  above which  concentrations  are  notifiable  to 
the Commission,  but  also the means by  which  transactions  are referred  between  the  Commission 
and  the  Member  States.  The  Commission  is,  in  addition,  taking  this  opportunity  to  respond  to 
shortcomings  of  the  Regulation  and  to  criticisms  of  its  operation  to  date. 

The Green Paper which  follows  details the existing regulatory  framework  for  mergers  at both  the 
Community  and  Member  State  level.  It  then  presents  a  series  of  options  for  discussion.  These 
may  be  summarised  as  follows: 

-  Thresholds:  at  present  the  turnover  of the  companies  involved  in  a concentration  must 
exceed  ECU  5 billion  on  a worldwide  basis  and,  for  at  least  two  of  those  companies, 
ECU 250 million  in the Community.  A considerable  number of mergers likely  to  affect 
market  structure  in  more  than  one  Member  State  fall  below  these  high  levels.  The 
information  available  to the Commission  suggests that thresholds  of ECU  2 billion  and 
ECU  100  million  respectively  would  be  more  appropriate. 

-  Multiple  notifications:  companies  whose turnovers  do not  reach  the  present  high  levels 
of  turnover,  are  faced  with  13  different  national  merger  control  systems  in  the  EEA. 
Multiple  national  filings  increase uncertainty,  effort  and  cost for  business  and  may lead 
to  conflicting  decisions.  A  threshold  reduction  would  solve  this  problem  to  a  large 
extent.  As  a  "second  best  solution",  it  could  be  provided  that  cases  of  multiple 
notification  below  the current  thresholds would  only  be controlled  by  the  Commission. 

-  Joint  ventures:  two  main  approaches  for  improving  the  treatment  of  joint  ventures 
within  the  framework  of  Community  competition  law  are  presented.  These  two 
approaches  are  detailed  by  reference  to  various  options  for  implementation. 

-  A  number  of  other,  mainly  procedural  improvements  are  proposed  concerning  the 
acceptance  of  commitments  in  the  first  phase  of  investigation  and  other  aspects  of  the 
Regulation. 

-  Banking income: proposals to simplify  the method  of calculating turnover for credit and 

financial  institutions  and  the  geographic  allocation  of  this  turnover  are  made. 

-  3 

-

The  purpose  of  this Green  Paper  is to stimulate  a far-reaching  debate.  Its  preparation  has  drawn 
upon  the  opinions  expressed  by  other  Community  institutions,  the  Member  States,  and  the 
industry  and  legal  profession  during  the  Commission  survey  carried  out  last year.  However,  the 
options  presented  in  this  Green  Paper  should  not  be  considered  to  be  either  complete  or 
exhaustive. 

The  Commission  believes  that  the  Regulation's  scope  should  be  extended  to  cover  a  larger 
number of mergers with a Community  dimension. Furthermore, current practice can be improved 
in the ways mentioned  in the Paper.  The opinion  of all  interested  parties is sought to allow a  full 
discussion  of  these  issues. 

-  4 

-

GREEN  PAPER 

Table  of  Contents 

I. 

INTRODUCTION 

II. 

THE  EXISTING  REGULATORY  FRAMEWORK 

A.  MERGER  CONTROL  AT  THE  COMMUNITY  LEVEL 

B.  MERGER  CONTROL  AT MEMBER  STATE  LEVEL 

HI. 

CRITERIA  DETERMINING  THE  COMMISSION'S  JURISDICTION 

A. 

PRESENT  SITUATION 

B. 

PROPOSED  OPTIONS 

IV. 

OTHER  ASPECTS  OF  THE  REGULATION 

A. 

REFERRAL  OF  CONCENTRATIONS  TO  AND  FROM  MEMBER  STATES 
(ARTICLES  9 AND  22) 

B. 

THE  TREATMENT  OF  JOINT  VENTURES 

C. 

D. 

E. 

F. 

COMMITMENTS  IN MERGER  CASES 

DE  MINIMIS  OPERATIONS 

TURNOVER  CALCULATION FOR  CREDIT  AND FINANCIAL  INSTITUTIONS 

OTHER  AMENDMENTS  OR  CLARIFICATIONS 

Ancillary  restrictions  in  phase 1 
Revocation  of  Article  6  decisions 
Article  7 
Article  10  (4) 
Calculation  of  the  turnover  of joint  undertakings 
Third  party  rights 
"Undertakings  concerned" 

! 

V. 

CONCLUSIONS 

I. 

1. 

2. 

3. 

4. 

-  5 

INTRODUCTION 

Council  Regulation  4064/89  on the control  of  concentrations  between  undertakings  ("the 
Merger  Regulation")  was  adopted  on  21  December  1989  and  entered  into  force  on  21 
September  1990.  The  Merger  Regulation  applies  to  all  concentrations  having  a 
Community  dimension  defined  on  the  basis  of  the  annual  turnover  of  the  companies 
concerned. 

The  Commission  first  examined  the functioning  of the Merger  Regulation  in  1993. That 
exercise  was  prompted  by  the  legal  obligation  to  review  the  turnover  thresholds  under 
Article  1 and the case referral  rules under  Articles 9 and  22. In addition, the  Commission 
took  the  opportunity  to  examine  the  operation  of  the Regulation  as  a whole,  in  order  to 
identify  other  areas  in  which  improvements  could  be  made. 

The result  of the  1993 exercise was a Report from  the Commission  to the Council1 which 
concluded  that there were  strong arguments in favour  of a threshold  reduction.  However, 
the  Commission  considered  that  it  would  be  prudent  to  gain  further  experience  of  the 
operation  of the Merger Regulation  and  of the impact  of national  merger  control  policies 
before  making  any  formal  proposal  for  revision.  It  therefore  invited  the  Council  to 
postpone  the  review  of  the  thresholds  until  the  end  of  1996  at  the  latest.  The  Council 
endorsed  these  conclusions  in  September  1993. 

In  the  two  years  that  have  elapsed  since  the  1993  exercise,  there  have  been  significant 
changes  in  the legal,  political  and  economic  environment.  As a result  of  the  enlargement 
of  the  Union,  but  also  of  regulatory  developments  in  the  old  Member  States,  there  has 
been  an  increase in the number  of national  merger  control  systems in the Community.  At 
the  Community 
level,  merger  control  has  entered  into  a  phase  of  consolidation, 
exemplified  by  the  adoption  of  a  new  Implementing  Regulation2  and  a  new  set  of 
guidelines  at  the  end  of  19943.  In  addition,  the  practical  applications  of  the  subsidiarity 
principle  were  developed  in  more  detail  by  the  Community  institutions  and  the  Member 
States. Finally,  in the  context  of an  ever-increasing  market  integration  in the  Community 
and  the  recent  economic  upturn,  trans-national  merger  activity  has  intensified4.  Against 
this  background,  a  review  of  the  Regulation  is  necessary  in  order  to  establish  how  the 
benefits  of  the  internal  market  can  best  be  ensured  by  an  effective  European  merger 
control  policy. 

5. 

In the context  of the current  merger  review,  the Commission  services  conducted  a survey 
of  Member  States,  companies,  industry  associations  and  advisers  to  seek  their  views  as 

COM  (93)  385  final,  28  July  1993. 
Commission  Regulation  (EC)  No  3384/94  of  21 December  1994, OJ No  L  377,  31.12.94,  p.l. 
Commission  Notices  of  21 December  1994, OJ  No  C  385,  31.12.1994,  p.  1, 5,  12 and 21. 
After reaching its peak in  1990, cross-border M&  A activity  diminished in  1991 to stabilise in the  following 
years  at  about  1350  operations  per  year.  1994  was,  however,  characterized  by  an  increase  of  M  & A 
activity, both in terms of the number of operations and in terms of value, European Economy  (March  1995), 
Supplement  A. 

to a revision  of the Regulation  (see Annex  1). The European Parliament and the Economic 
and  Social  Committee  were  also  invited  to  express  their  opinion. 

-  6 

6. 

The  Green  Paper  is  published  as  a basis  for  further  discussion  of  specific  changes  that 
may  be  made  to  the Regulation.  It  has the following  objectives: 

-  to  provide  an  analysis  of  the  current  situation; 

-  to  examine,  pursuant  to  the  commitment  made  by  the  Commission  to  the  Council  in 

1993,  whether  the  current  thresholds  should  be  revised; 

-  to  identify  other  areas  where  improvements  could  be  made  and  to  present  possible 

solutions. 

7. 

The  Commission  will  consult  the  Council,  the  European  Parliament,  the  Economic  and 
Social  Committee,  and the Committee  of the Regions  on the content  of this  Green  Paper. 
It also invites  all  interested  parties to submit  comments.  In  order to  respect the  timetable 
of  the  review  exercise,  such  comments  should  be  communicated  to  the  Commission  by 
no later than  31 March  1996  . The Commission  then intends to examine the results  of the 
consultation  process  and  make  a proposal  to  the  Council  within  1996. 

n. 

THE  EXISTING  REGULATORY  FRAMEWORK 

A.  MERGER  CONTROL  AT  THE  COMMUNITY  LEVEL 

1. 

The  Merger  Regulation 

8. 

9. 

The Merger Regulation  gave the European Commission  specific  powers for the assessment 
of  all  concentrations  with  a  Community  dimension.  These  are  mergers,  acquisitions  or 
concentrative  joint  ventures  in  which:  (i)  the  world-wide  turnover  of  all  the  companies 
involved  exceeds  ECU  5  billion;  (ii)  the  Community  turnover  of  at  least  two  of  the 
companies  involved  exceeds  ECU  250  million  (this  means  a  minimum  of  ECU  500 
million  combined  Community  turnover);  and  (iii)  all  companies  involved  do  not  realize 
more  than  two-thirds  of  their  Community  turnover  in  one  and  the  same  Member  State 
(Article  1 of  the  Regulation). 

The  Regulation  is  based  on  the  "one-stop  shop"  principle.  This  means  that  the 
Commission  has  exclusive  competence  to  assess  concentrations  with  a  Community 
.dimension and that,  as a result, the companies concerned  need  only make  one  notification 
within  the  European  Union.  Below  the  thresholds,  concentrations  are  subject  to  national 
merger  control  if that exists. Following the entry intoTorce of the  1994 Agreement  on the 
European  Economic  Area  (EEA),  the European  Commission's  exclusive  competence  for 
concentrations meeting the thresholds has been extended to cover the whole EEA territory. 

Observations  can  be  sent  to  by  fax  (fax  no.  32-2-296  43  01)  or  by  post  to  the  following  address: 
Commission of the European Communities, Directorate- General for Competition (DG IV), Directorate B-
Merger Task  Force, Avenue de Cortenberg  150, B-1049, Brussels, Belgium. 

10. 

11. 

The  allocation  of  cases between  the Commission  and  the Member  States under  Article 1 
is complemented  by the provisions of Articles 9, 21, paragraph  3 and 22. Article 9 enables 
the  Commission  to  refer  to  a Member  State cases  raising  competition  issues  limited  to a 
distinct market  within  its territory.  Article 22, paragraphs  3-5,  allows  a Member  State to 
request the Commission to apply the Merger Regulation to operations below the thresholds 
creating  or  strengthening  dominance  within  that  Member  State's  territory.  Article  21, 
paragraph  3,  allows  Member  States  to  take  appropriate  measures  to  protect  legitimate 
interests  other  than  those  taken  into  consideration  by  the  Merger  Regulation,  including 
public security,  plurality  of the med:a and prudential  rules. Moreover,  in the course of its 
investigation  and assessment of notified  concentrations, the Commission  acts in close and 
constant  liaison  with  the  competent  authorities  of  the  Member  States  (Article  19  of  the 
Merger  Regulation)  as well  as the EFTA  Surveillance  authority  (Article  58  of  the  EEA 
Agreement). 

The  Merger  Regulation  set  up  a  system  of  mandatory  prior  notification  for  all 
concentrations  of  Community  dimension.  Notified  concentrations  are  assessed  from  the 
point  of  view  of their  effect  on the  structure  of  competition  in  the  common  market.  The 
basic concept  is that of  "creation  or strengthening  of a dominant  position".  There  are two 
phases  of  examination  whose  duration  is  determined  by  legal  deadlines.  After  an  initial 
one-month  phase,  the  Commission  must  decide  whether  or  not  the  case  raises  serious 
doubts  as to its compatibility  with the common  market  and,  in the  affirmative,  initiate an 
in-depth  investigation.  Four  months  after  the  initiation  of  phase  2  proceedings,  the 
Commission  must  take  the  final  decision  on  the  concentration. 

12. 

As  of  30  October  1995,  376  concentrations  had  been  notified  to  the  Commission  under 
the Merger  Regulation.  The  Commission  has  adopted  357  final  decisions: 

-  31  decisions  under  Article  6(l)a  of  the  Regulation  (declaring  that  the  operation  falls 

outside  the  scope  of  the  Regulation); 

-  303  decisions  under  Article  6(l)b  of  the  Regulation  (declaring  the  concentration 
compatible  with  the  common  market  at the  end  of  the  first  phase  of  investigation); 
-  19  decisions  under  Article  8(2)  of  the  Regulation  (declaring  the  concentration 
compatible  with  the  common  market  at  the  end  of  a phase  2  in-depth  investigation); 

-  and  4  decisions  under  Article  8 3)  of  the  Regulation  (prohibiting  a  concentration). 

Twelve cases under Article 6(1 )b and twelve cases under Article 8(2) were cleared  subject 
to  conditions  and/or  obligations  to  ensure  compliance  with  commitments  given  by  the 
parties.  Three  cases  were  referred  to Member  States  following  a request  under  Article 9 
and two requests were made by Member  States under Article 22 (3). In three cases Article 
21  (3)  was  applied. 

2. 

Article  66  of  the European  Coal  and  Steel  Treaty  (ECSC) 

13. 

The  ECSC  Treaty  provides  that  all  concentrations  involving  at  least  one  undertaking 
engaged  in  the  production  or  distribution  of  coal  or  steel  and  established  in  the 
Community  are  subject  to  prior  authorization  by  the  Commission.  With  the  assent  of  the 
Council,  the  Commission  has  set  minimum  levels,  based  on  the  companies'  volumes  of 
production,  below  which  concentrations  are  exempted  from  the  requirement  of  prior 

14. 

15. 

16. 

17. 

notification.  For  crude  steel  or finished  products;  for  example,  there  is  a minimum  level 
of  6  million  tons  per  year,  which  corresponds  to  approximately  ECU  2.5  billion. 

B.  MERGER  CONTROL  AT  MEMBER  STATE  LEVEL 

There  are currently  eleven  national  merger  control  systems  in the  Community6,  of  which 
eight  are mandatory.  Out  of the remaining  four  Member  States, the Netherlands  is in the 
process of  adopting  a system  of mandatory  pre-merger  control  and  it is not  excluded  that 
the  other  three  may  also  introduce  national  legislation  in  the  future.  A  table  setting  out 
the  main  features  of  the  existing  national  systems  and  the  proposed  Dutch  system  is 
included  in  Annex  2. 

A comparative analysis of the different  national  systems shows that there is a great variety 
in  the  notification  requirements,  procedures  used  and  legal  standards  applied.  Formal 
cooperation  between  the  national  authorities  that  may  be  involved  in  the  same  case  is 
mainly  limited  to  some bilateral  contacts,  generally  for  information  purposes. 

As  regards  the  authority  competent  to  deal  with  mergers  within  each  Member  State,  in 
most  countries  more  than  one  separate  authority  plays  a  role  in  the  decision-making 
process.  Out  of  the  eleven  countries,  in  five  the  final  decision  is  taken  by  an 
administrative/ministerial  body,  in  four  by  an  independent  competition  authority,  in  one 
by  a judicial  authority,  and  in  one  either  by  a judicial  authority  (prohibition  decision)  or 
by  a  competition  authority  (clearance).  Finally,  in  two  countries  the  decision  of  the 
independent competition  authority  may be overruled by an administrative/ministerial  body 
on  grounds  of  public  interest. 

The thresholds triggering an obligatory  or voluntary  notification  also vary to a large extent 
in terms  of the  criteria used  (i.e. turnover,  either in the country  concerned  or world-wide, 
world-wide  assets  or  market  share  in  the  country  concerned)  and  the  level  at  which 
intervention  is  set  (the  required  world-wide  turnover  of  each  of  at  least  two  companies 
concerned  is, for  example, ECU  0,36  million  in Austria, ECU 25,2 million  in Ireland  and 
ECU  520  million  in  Germany,  the  total  world-wide  turnover  is,  for  example,  ECU  430 
million  in  Sweden  and  ECU  1,04  billion  in  Germany,  and  the  required  total  turnover  in 
the  country  concerned  is,  for  example,  ECU  125  million  in  Spain,  ECU  180  million  in 
Portugal  and  ECU  300  million  in  Italy  or  more  than  ECU  1 billion  in  France)7.  To  the 
extent that the different  levels of intervention  do not fully  correspond  to differences  in the 
respective  sizes  of  the  national  economies,  they  may  lead  to  varying  degrees  of  control 
for  companies  of  comparable  size. 

18. 

As  regards  the  duration  of  proceedings  in  the  different  Member  States,  the  preliminary 
phase  of  investigation  is generally  short  and  does  not  in  any  case  exceed  two  and  a half 
months. The duration  of in-depth investigations is more varied, especially because in some 
cases there are no statutory  deadlines, while in others the legal  deadlines can be extended, 
for  instance  for  the  receipt  of  additional  information.  Moreover,  a  number  of  systems 

There are two additional  systems of voluntary  notification  in the EEA, namely  in Iceland and in Norway. 
These thresholds were converted  into Ecu on the basis of the average  rates for  1994. 

7 

9 

-

19. 

20. 

21. 

provide  for  control  after  the  implementation  of  a  concentration  within  a  period  ranging 
from  one  month  to  an  unlimited  period. 

In  terms  of  assessment,  all  Member  States  use  competition  criteria  in  their  analysis  of 
notified  mergers.  The  possibility  to  take  account  of  public  or  general  interest  criteria  is 
also  provided  in  most  cases.  The  precise  impact  of  these  other  criteria  in  the  final 
assessment  of the  case  is  difficult  to  establish  and  may  differ  from  one Member  State to 
the  other. 

The  number  of  cases  examined  under  each  of  the  eleven  Member  State  systems  varies 
considerably.  In  the  countries  that  have  a  system  of  mandatory  notification,  the  average 
number  of  cases ranged  from  25  per year  in the  case of Portugal  to  about  1540  a year  in 
the  case  of  Germany8.  Of  the  three  countries  with  a  system  of  voluntary  notification, 
France  and  Spain received  on average about 24 cases per year, while the United  Kingdom 
received  150-200  cases  per  year. 

There  are  differences  among  Member  States with  regard  to the  manner  of  publication  of 
their  decisions  and  the amount  of information  contained  therein.  In  some cases the whole 
text  of  the  decision,  including  the  competitive  assessment  of  the  case,  is  published.  In 
other  cases  only  certain  decisions  (e.g.  prohibitions  or  most  important  decisions)  are 
published,  while  for  the  rest  an  announcement  is made. 

i n. 

CRITERIA  DETERMINING  THE  COMMISSION'S  JURISDICTION 

22. 

23. 

A.  THE  PRESENT  SITUATION 

This section examines what would be the optimum  allocation  of merger cases between the 
Commission  and  Member  States  in  the  light  of  two  fundamental  community  objectives: 
the  principle  of  subsidiarity  and  the  objective  of  sustaining  market  integration  through  a 
rapid  and  uniform  assessment  of  mergers  with  significant  cross-border  effects.  It  then 
assesses  whether,  on  the  basis  of  the  information  available,  the  Regulation  thresholds 
should  be  maintained  at  their  current  level. 

L. 

Basic  principles 

Subsidiarity  and  merger  control, 

The Merger Regulation  was intended  to apply to significant  structural  changes "the impact 
of  which  on  the  market  goes  beyond  the  national  borders  of  any  one  Member  State" 
(Recital  9).  Concentrations  with  significant  cross-border  effects  were  considered  to  have 
a  Community  dimension.  It  was  therefore  decided  that  the  Commission  should  have 
exclusive  competence  to  deal  with  them,  while  Member  State merger  laws  should  apply 
to  concentrations  with  mainly  national  impact. 

In the remaining  countries the  average  number of notifications  per year was: 35 in Belgium,  55 in Ireland, 
132  in  Sweden,  238 in Italy  and  310 in Austria  (informal  and  formal).  These  figures  represent  an  average 
of the  notifications  made  in  1993 and  1994. In Greece about  25 notifications  were received  per year under 
the  previous  regime  of  voluntary  notification. 

24. 

25. 

26. 

27. 

28. 

29. 

10  -

The  allocation  of  cases  between  the  Community  and  the  Member  States  in  the  area  of 
merger  control  was  thus  inspired  by  the  same  principles  that  underpin  the  notion  of 
subsidiarity.  According to this notion, action should be taken  at the most appropriate level 
of jurisdiction,  in  view  of  the  objectives  to  be  attained  and  the  means  available  to  the 
Community  and  the Member  States9. 

A  concentration  has  significant  cross-border  effects  if  its  impact  on  the  structure  of 
competition  extends  over  a  geographic  area  exceeding  the  borders  of  a  single  Member 
State.  This  is,  for  instance,  the  case when  the  merging  parties  have  significant  activities 
in several Member  States or their activities in a single Member  State may have  significant 
competitive  repercussions  in  other  parts  of  the  Community,  for  example  when  the 
concentration  may  impede  entry  by competitors  from  other Member  States, thus  creating 
obstacles to further  European  integration,  or when the entrenchment  of a national  position 
may  have  spillover  effects  in  the  rest  of  the  Community. 

For  concentrations  with  significant  cross-border  effects,  action  at  Community  level  is 
justified  given  the  objectives  of  merger  control  and  the  means  available  to  the 
Commission  and  to Member  States.  Within  the  Community,  the  powers  of  investigation 
as well  as of remedial  and  enforcement  action  of the Commission  extend  beyond  national 
boundaries  and  are therefore  wider than  those of a single Member  State. Moreover,  in the 
context  of  increasingly  global  or  at  least  inter-dependent  economies,  control  at  the 
Community  level  facilitates  the  assessment  of  the  effects  of  these  mergers  in  a  uniform 
manner  and  in  their  totality. 

Market  integration  and  the  "one-stop  shop"principle 

Cross-border  mergers  and  acquisitions  are  one  of  the  most  important  ways  in  which 
industry  can  successfully  adapt  to the  new  challenges  of  a European  single  market.  They 
are therefore  a positive  consequence  of  market  integration,  to the  extent  that  they  do  not 
result  in  lasting  damage  to  competition  (Recitals  3-5  of  the  Merger  Regulation). 

It  is  important  that  the  extent  and  the  manner  in  which  concentrations  with  significant 
cross-border  effects  are controlled  should be uniform  throughout the Community.  It is also 
desirable  that  their  assessment  under  the  competition  rules  does  not  unduly  delay  their 
implementation  or  create  legal  uncertainty. 

Accordingly,  the  Merger  Regulation  has  two  goals:  first,  to  prevent  anti-competitive 
transactions  and,  second,  to provide a single framework  within  which  concentrations  with 
a  Community  dimension  are  assessed  within  a  definite  and  foreseeable  timetable.  The 
"one-stop  shop" principle, whereby  concentrations  with  a Community  dimension  are only 
controlled  at  Community  level,  facilitates  the  accomplishment  of  the  second  goal. 

30. 

The  application  of  the  "one-stop  shop"  principle  to  concentrations  with  a  Community 
dimension  is  related  to  the  notion  of  subsidiarity:  exclusive  control  at  Community  level 

See  Commission  Report  to  the  European  Council  on  the  Adaptation  of  Community  Legislation  to  the 
Subsidiarity  Principle,  COM  (93)  545  final,  24.11.1993. 

11 

is  justified  in  view  of  the  scale  and  effects  of  such  transactions.  It  is  also  based  on 
efficiency  considerations.  As an alternative to multiple national  controls, the single "stop" 
of the Regulation  simplifies  administrative procedures and enables businesses to minimize 
the  costs  of  restructuring  in  a  single  market.  It  creates  a  level  playing  field  by  ensuring 
that  the  same  notification  requirements,  procedure  and  legal  standard  apply  to  all 
concentrations  with  significant  cross-border  effects. 

T 

The  current  thresholds 

31. 

In accordance with the above, the Community  dimension of a concentration  should ideally 
be defined  on the basis of its effects  on the market. For reasons of practicability  and legal 
certainty,  however,  the  Merger  Regulation  uses  quantitive  criteria  to  identify  operations 
with cross-border  effects.  These are the aggregate turnover of the undertakings  concerned 
world-wide  and  in  the  Community. 

32.  When  the  Regulation  was  adopted,  it  was  generally  understood  that  the  level  of  the 
turnover  thresholds  had  been  set  by  way  of  political  compromise.  For  this  reason  the 
Council  considered  that  after  an  initial  phase they  should  be  reviewed  in  the  light  of the 
experience  gained  (Recital  10). The Commission  and  the  Council  also  declared  that  they 
would be ready to consider  taking other factors  into account in  addition  to turnover  when 
the  thresholds  were  revised. 

33. 

34. 

In its above-mentioned  1993 Report,  the Commission  stated that, with progressive  market 
integration  in  the  Community,  cross-border  merger  activity  had  substantially  increased, 
but  only  a  small  number  of  those  cases  fell  within  the  scope  of  the  Regulation.  The 
Report gave specific  examples of concentrations that fell  outside the Regulation,  although 
they  were  likely  to  affect  competitive  conditions  throughout  the  Community.  On  this 
basis,  the  Commission  concluded  that  the Regulation  thresholds  should  be  reduced. 

The  results  of  the  present  review  tend  to  suggest  that  the  reasons  for  which  a  threshold 
reduction  appeared  to be  appropriate  in  1993 are still  valid  today.  While, with  continuing 
increased  in  size  and 
market  integration,  cross-border  merger  activity  has  further 
importance10,  there  are  indications  that  a  considerable  number  of  concentrations  with 
significant  cross-border  effects  fall  below  the  current  thresholds.  This  is  due  to  the  size 
and/or characteristics of sectors where cross-border  merger activity  takes place, and to the 
size of the  companies  involved.  Moreover,  it appears that  concentrations  with  significant 
cross-border  effects  falling  below  the  thresholds  are  likely  to  be  subject  to  multiple 
national  filings  that  increase  uncertainty  and  cost  and  may  lead  to  conflicting  decisions. 

Sectoral  coverage  of  the  Regulation 

35. 

The  Commission  competence  depends  on  the  level  of  the  aggregate  turnover  that  the 
companies  concerned  realize  world-wide  and  in  the Community.  The Merger  Regulation 
is therefore  more likely  to apply  to concentrations  involving  companies  active in  markets 
with very large total turnover and/or conglomerate enterprises. By contrast,  concentrations 

10  See  ftn.  4. 

36. 

37. 

38. 

39. 

12 

in  which  the  acquirer  and/or  the  target  are  specialized  companies,  active  in  smaller  but 
still  economically  important  markets,  are  less  likely  to  meet  the  thresholds. 

The  Commission  has  carried  out  two  separate  assessments  in  order  to  ascertain  the 
sectoral  coverage of the Regulation.  These are set out below together with  an  appreciation 
of  their  results. 

The first analysis involves the comparison of the number of notifications  under the Merger 
Regulation  by  economic  sector  with  the  number  of  concentrations  listed  by  AMDATA11 
in  the  corresponding  sector.  This  has identified  a number  of  sectors  whose  coverage  by 
the Regulation is below or just above  10%12. Examples of such sectors include mechanical 
engineering,  electrical  and  electronic  engineering,  computer  manufacturing,  rubber  and 
plastic  products,  textiles,  manufacture  of  food  products  and  beverages,  metal  products, 
manufacture  of  wood,  manufacture  of  medical  instruments,  construction,  energy  supply, 
printing  and  publishing,  hotels  and  catering,  computer  and  related  services,  banking  and 
finance.  The  coverage  of  some  other  sectors  is  also  limited.  For  instance,  chemicals,  the 
sector  where  the  largest  number  of  notifications  are  made  under  the  Regulation,  has  a 
coverage  of  only  some  16%. 

The  second  analysis  aims  at the identification  of  specific  concentrations  with  significant 
cross-border  effects  falling  below  the  current  thresholds13.  These  concentrations  cover  a 
wide  variety  of  sectors,  some  of  which  were  also  identified  under  the  above  exercise. 
Examples  of  these  sectors  are:  chemical  products  including  base  chemicals,  specialty 
chemicals  and  downstream  applications; pharmaceuticals;  components for  the  automotive 
industry;  mechanical  and  electrical  engineering;  biotechnology;  construction  materials; 
computer  software;  paper  products;  publishing;  aircraft  leasing;  tourist  services  and 
catering. 

These  concentrations  were  excluded  from  the  Merger  Regulation  either  because  all 
companies  involved  taken  together  did  not  meet  the world-wide  threshold  or because  the 
Community-wide  threshold  was not met by  each  of at least two of those companies. With 
regard to the Community-wide threshold  in particular,  it must be noted that  even if a very 
large  company  acquires  a  smaller  company  having  a high  Community  market  share,  the 
fact  that the latter company  has a Community  turnover below 250 million ECU will  mean 
that  the  operation  falls  outside  the  scope  of  the  Merger  Regulation.  Similarly,  even 
operations  involving  two  large  companies  may  fail  to  meet  the  Community  threshold,  if 
they  concern  a  swap  or  acquisition  of  specific  parts  or  businesses.  In  such  cases,  as  far 
as  the  seller  is  concerned,  only  the  turnover  of  the  acquired  part  can  be  taken  into 

13 

A  database  providing  information  on  mergers  and  acquisitions  compiled  by  Acquisitions  Monthly. 
By  way  of comparison, the coverage of certain other sectors such as air transport  and télécoms is more than 
50%. The  reasons for these differences  are due to the characteristics of each sector explained  in the present 
section. 
The  Commission  has compiled two  lists of specific  examples of such cases, the first covering the period  up 
to  1993 and  the  second  covering  the period  1993-95. These  lists have been  communicated  to the  Member 
States, but  are  not  annexed  to  this  paper  for  reasons  of  confidentiality.  Most  of  these  cases  would  have 
come  within  the  scope  of  the Regulation  under  lower  thresholds  of ECU  2 billion  (world-wide)  and ECU 
100  million  (Community-wide). 

40. 

41. 

42. 

43. 

44. 

45. 

13  -

account,  and  even  if this corresponds to a high  Community  market  share, it  may  still  fall 
short  of  the  Regulation  threshold. 

Restructuring  operations  in  most  of  the  above-mentioned  sectors  often  have  a  trans 
national  dimension,  since  company  activity  extends  over  several  Member  States.  Their 
weak  coverage  therefore  indicates that  a considerable  number  of  cross-border  operations 
are excluded  from  the scope of the Regulation. In some other sectors, such as banking and 
finance  or  energy  supply, 
the  market  players  tend  to  have  a  strong  national  presence. 
However,  even in these sectors it appears that operations are increasingly  being  structured 
on cross-border lines. With the existing thresholds, such concentrations remain outside the 
scope  of  Community  jurisdiction. 

There  are  various  reasons  why  concentrations  with  a  Community  dimension  within  the 
above-mentioned  sectors  are  excluded  from  the Regulation.  These  reasons  are  linked  to 
the  specific  characteristics  of  each  sector. 

First,  in  some  sectors  such  as textiles,  printing  and  publishing  or  hotels  and  catering,  the 
total  turnover  achieved  by  even  the  largest  companies  is  below  the  current  world-wide 
threshold14.  This  does  not  mean  that  the  sector  as  such  is  of  minor  importance.  To  give 
one  example,  in  1993, European  production  in  the  textiles  sector  amounted  to ECU  106 
billion  and  consumption  to ECU  110 billion.  The three  largest  EU  textile  companies  are 
among  the  ten  largest  in  the  world15. 

Second,  in  a number  of  diversified  sectors,  there  is  company  specialization  in  segments 
of  relatively  small  total  turnover.  In  these  sectors,  acquisitions  of  specialized  companies 
with  significant  market  presence  or transfers  of businesses/divisions  of  larger groups  can 
be  excluded  from  the  Merger  Regulation.  For  instance,  in  the  vehicle  spare  parts  and 
components  sector,  despite  the  presence  of  some  large  international  companies,  there  is 
a  considerable  degree  of  fragmentation  due  to  a large  number  of  small  to  medium-sized 
specialized  producers. 

The sector of mechanical  engineering is another interesting example. This important sector 
-  in  1992  it  occupied  the  fifth  place  in  the EC  industrial  production  ranking  -  includes a 
wide  range  of  diversified  products.  The  industry  has  a  polarized  structure,  with  a  high 
degree  of  concentration  at  the  top  end  of  the  industry,  a  limited  number  of  very  large 
players  and  a  large  number  of  small  and  medium-sized  enterprises. 

In the  chemicals  and  pharmaceuticals  sector,  about  16% of all  concentrations  are  notified 
to the Commission.  For  such  an industry  of transnational  dimension,  this coverage  can be 
regarded  as relatively weak.The main explanation  for this appears to be the great  diversity 
of  chemical  products  and  the trend  towards  specialization  via  restructuring.  This  strategy 
results in  a number  of  swaps or acquisitions falling  outside the Regulation  because of the 
small  turnover  of  the  acquired/divested  business. 

The  data  used  are  included  in  the  1995 DABLE  Synopsis  of European  Enterprises. 
Panorama  of EC  Industry,  Ch.  14, Office  for  Official  Publications  of  the  European  Communities  (1994). 

Company  coverage  of  the  Regulation 

14 

46. 

47. 

48. 

49. 

50. 

The  current  thresholds  catch  only  a small  percentage  of European  companies.  Out  of the 
largest  2200  European  companies  included  in  the  1995  DABLE  Synopsis  of  European 
Enterprises16,  only  152  companies  in  the  EU  and  EFTA  States  (7%  of  all  DABLE 
companies) had in  1993 a world-wide turnover  in excess of ECU  5 billion.  A total  of 293 
companies  (13% of all DABLE  companies)  had  a world-wide  turnover  in  excess  of ECU 
2.5  billion  and  would  thus  come  under  Community  control  in  a  concentration  involving 
companies  of  equal  size. 

Although  these  figures  do  not  include  all  companies  covered  by  the Regulation,  notably 
non-European  companies,  they  indicate  that  the  company  coverage  of  the  Regulation  is 
relatively  limited.  This  is  all  the  more  significant,  because  market  globalisation  and 
increasing  integration  within  the  Community  are  expected  to  lead  to  the  involvement  of 
a larger number of companies, including medium-sized enterprises, in cross-border  merger 
activity  in  the  future.  Medium-sized  enterprises  that  do  not  benefit  from  the  "one-stop 
shop principle" would probably  come within the jurisdiction  of several Member  States and 
thus  be  subject  to  multiple  national  filings. 

The two-thirds  rule 

Data concerning the extent of the application  of the two-thirds rule to European  companies 
are not  generally  available.  The Commission  is, however,  aware  of  some large  European 
groups,  such  as  Siemens,  that  meet the  two-thirds  rule  and  yet  have  substantial  activities 
in  the  Community  outside  their  home  market.  Concentrations  between  two  or  more  such 
groups of the same nationality  would fall  outside the Regulation,  although they  could  have 
substantial  repercussions  across  the  Community. 

Geographic  markets  affected  by concentrations  below  the  thresholds 

The Commission  has requested  the Member  States to specify  in  how many  cases  notified 
to them  in  the  last two years  the  relevant  geographic  market  was  defined  as being  larger 
than  national  or  more  than  one  national  geographic  market  was  affected. 

Based  on  these  replies,  the  Commission  has  tried  to  make  an  estimate  of  the  number  of 
cases with  significant  cross-border  effects  below the thresholds. However, the  information 
required  was  in  many  cases to  a greater  or  lesser  extent  unavailable.  Even  in  those  cases 
where  data  were  available,  only  some  concentrations  likely  to  have  significant  cross-
border  effects  could  be  identified,  namely  those  in  which  the  geographic  market  was 
defined  as being larger than  national17.  According  to these data,  at least  about  10% of the 
cases notified  in Italy, about 20% in France,  Spain, Belgium  and Portugal, more than 30% 

16 

17 

The European  Commission's Database  on Large Enterprises. 
Concentrations affecting one or several national geographic markets can also have significant effects going 
beyond the borders of a single Member  State, but thi? information  is not readily  available. 

in Austria and more than  50% in Germany18 would appear likely to have significant  cross-
border  effects. 

-  15 

-

Multiple  national  filings 

51. 

Concentrations  with  significant  cross-border  effects  falling  below  the  thresholds  are 
subject to national  merger laws. Because of their trans-national  character, these operations 
are  likely  to  meet  the  notification  requirements  of  more  than  one  national  system. 

52.  Multiple  national  filings  are  a  direct  consequence  of  the  high  level  of  the  current 
Community  thresholds  and of the multiplication  of national  merger control  systems in the 
European  Union.  As a general  rule, the existence of multiple national  filings  is indicative 
of the  cross-border  effects  of an  operation.  Such  concentrations  should  therefore  be dealt 
with  at  Community  level. 

53. 

54. 

According  to the  survey,  the  overwhelming  majority  of  companies,  industry  associations 
and advisers believe that the "single stop" of the Regulation  is a benefit  to business. When 
a  concentration  is notified  in  several  Member  States,  deadlines  for  decision-making  may 
differ  and  completion  of  the  deal  will  be  dependent  on the  decision  of the  last  authority. 
Differences  in  approach  between  the national  systems  involved,  for  instance  with  regard 
to  the  application  of  public  interest  criteria,  may  affect  the  predictability  of  the  final 
outcome.  In this respect,  the greatest advantages  of the  "one-stop  shop" appear to be legal 
certainty  and  speed  of  decision-making. 

In practical terms, dealing with a plurality  of different  authorities requires the coordination 
of  information  to  be  provided  with  regard  to  timing  and  argumentation.  The  facts 
contained  in the notification  and the manner they  are presented  needs to be adapted  to the 
particularities  of each national  market  and procedure. Moreover,  familiarity  with  different 
legal  systems  and  the  ability  to  work  in  different  languages  is  required.  For  most 
companies  this  necessitates  recourse  to  external  local  experts. 

55.  Multiple  notifications  imply  additional  effort  and  costs,  both  external  and  internal.  The 
cost  savings  resulting  from  the  application  of  the  "one-stop  shop"  are  very  difficult  to 
quantify,  because they  depend  on the size of the company,  the complexity  of the case and 
the number of national  authorities that would be involved  should the Commission  not have 
jurisdiction.  According  to  the  survey,  it  seems,  however,  that  as  a  general  rule  and  in 
comparable cases, the application  of the Regulation  represents a significant  cost advantage 
for  business. 

56. 

The  "single  stop"  of  the  Regulation  creates  a  level  playing  field  for  all  companies 
restructuring their operations in Europe. According to the survey,  the Commission's trans 
national  character  facilitates  the  global  assessment  of  cross-border  cases  and  limits  the 
technical  difficulties  associated  with  the  examination  of  larger  than  national  markets. 

18  The  German data  relate  to operations  in which at  least one  non-German  company  was involved.  Although 
not  all  cases  in  which  companies  of  different  nationalities  are  involved  have  effects  going  beyond  the 
boundaries  of a single  Member  State, these data  can be  used  as. an indication  of  the  number  of  operations 
with  cross-border  effects. 

57. 

58. 

59. 

60. 

16 

Single  control  eliminates  the  risk  of  conflicting  decisions.  In  addition,  it  is  easier  and 
more effective  to negotiate remedial  action and third parties can intervene more  effectively 
when  only  one  authority  is  involved. 

The extent of multiple national filings is only  partly  related to the mandatory  or voluntary 
character of notification  under national law. For reasons of legal certainty, companies may 
feel  that  they  should  notify  even  if  notification  is  voluntary,  at  least  when  their  market 
shares are significant.  In  any  case, the risk involved  in non-notification  must be  assessed, 
especially  since  the  national  authorities  may  take  action  after  the  deal  is  implemented. 

Overall  assessment 

The information  available at the present tends to suggest that the curent thresholds  should 
be  reduced,  in  order  that  the  bulk  of  operations  with  significant  cross-border  effects  can 
be  dealt  with  at  Community  level.  This  would  not  only  enable  the  Commission  to  treat 
more  cross-border  cases  where  dominance  could  be  created  or  strengthened,  but  would 
also  speed  up  and  increase  consistency  in  the way  such  cases  are  examined,  on the  basis 
of  a  "one-stop  shop"  principle. 

B. 

PROPOSED  OPTIONS 

This  section  states  that  in  order  to  achieve  a  better  coverage  of  concentrations  with 
significant  cross-border  effects,  it would  be more appropriate  to have a combined  world 
wide threshold  of ECU 2 billion  and a Community  threshold  of ECU  100 million  for  each 
of  at  least  two  companies  involved.  In  order  to  address  the  problem  of multiple  national 
filings  in  particular,  another  more  limited  solution  could  consist  in  extending  the 
Commission  competence  only  to  those  concentrations  below  the  thresholds  that  come 
within  the jurisdiction  of  more  than  one  national  system  of  merger  control. 

1. 

Threshold  reduction 

Position  of  Community  Institutions 

There  is  support  for  a threshold  reduction  both  from  the  European  Parliament  and  from 
the Economic  and  Social  Committee.  More  specifically,  in its Resolution  on the  Twenty-
third Report  on Competition  Policy,  adopted  on  16 March  1995, the European  Parliament 
renewed its support for a Commission  proposal  which would  substantially  reduce the level 
of  turnover  at  which  the  Commission  was  required  to  act19.  Similarly,  in  its  Opinion  on 
the  Review  of  the  Community  Merger  Regulation,  adopted  on  25  October  1995,  the 
Economic and Social Committee urged the Commission to propose a world-wide threshold 
of ECU  2 billion  and  a Community  threshold  of ECU  100 million.  It  also  recommended 
that  the  2/3  rule  should  be  dropped20. 

19 

20 

See Point  32 of  the Resolution  of  the European  Parliament  on XXIIIrd  Report  on Competition  Policy,  OJ 
C89/146,  10.4.95. 
Opinionon  the  Review  of  the  Merger  Regulation,  ECOSOC  1157/95. 

The position  of Member  States 

17 

61. 

62. 

63. 

64. 

65. 

According  to the  preliminary  opinions  expressed  to  date, the views  of Member  States  as 
to  threshold  reduction  diverge.  A  number  of  Member  States  are  strongly  in  favour  of 
lowering  the  thresholds,  while  others  wish  to  maintain  the  current  level.  On  the  other 
hand,  there  seems  to  be  more  or  less  general  agreement  that  the  Commission  should 
examine  the  issue  of  multiple  notifications  and  seek  a practical  solution  to  it. 

Observations  of  companies,  industry associations  and  advisers 

According  to  the  Commission  survey,  out  of  all  answers  received,  the  majority  of 
companies  and  advisers  would  be in  favour  of  lowering  the world-wide  and  Community 
thresholds.  Views  were  more  divided  with  regard  to the  desirability  of  changing  the  2/3 
rule. 

Eleven  out  of the twenty-four  associations  that  replied  to the  survey  were  in  favour  of a 
threshold  reduction.  Some  other associations,  including  UNICE  (Union  of  Industrial  and 
Employers'  Confederations  of  Europe)  and  ICC  (International  Chamber  of  Commerce), 
had mixed views reflecting  the divergent  positions of their members. For this reason, they 
suggested  that  companies  should  have  the  option  to  notify  concentrations  below  the 
thresholds either to the Commission  or to the national  authorities  concerned.  As to the 2/3 
rule,  most  associations  suggested  that  it should be maintained,  with  the notable  exception 
of the BDI  (Bundesverband  der Deutschen  Industrie),  which  recommended  its  deletion. 

The position  of  the Commission 

At the time of the  adoption  of the Regulation,  the Commission  stated that the world-wide 
threshold  should  be reduced  to ECU 2 billion  at the end  of an initial  period  of four  years. 
It  also  considered  that  the  Community-wide  turnover  should  be  revised  in  the  light  of 
experience and the trend  of the world-wide threshold, which would imply  a corresponding 
reduction  to ECU  100  million. 

It  was  explained  above  the  current  levels  of  both  the  world-wide  and  the  Community 
threshold  appear  to  exclude  a  considerable  number  of  operations  with  significant  cross-
border  effects  from  the  Regulation.  The  results  of  the  present  survey  tend  therefore  to 
suggest  that  the  need  for  a  threshold  reduction  is  at  least  as  compelling  today  as  it  was 
in  1993.  The  precise  level  of  such  lower  thresholds  is difficult  to  establish.  On the  basis 
of  the  information  available  at  present,  it  seems,  however,  that  ECU  2  billion  and  ECU 
100  million  would  allow  most  cross-border  cases  to  come  within  the  Regulation,  in 
accordance  with  subsidiarity.  They  would  also  largely  solve  the  problem  of  multiple 
national  filings  to which  a number  of  operations  with  significant  cross-border  effects  are 
currently  subject.  Accordingly,  the  Commission  believes  at  this  stage  that  these  levels 
would  be  appropriate.  At  the  same  time,  it  will  naturally  consider  whether  these  levels 
should  be  re-assessed  in  the  light  of  further  information  that  may  be  brought  to  its 
attention  during  the  consultation  period. 

66. 

The Commission  accepts that the 2/3  rule can  in  some  cases  exclude concentrations  with 
significant  cross-border  effects  from  the  scope of the Regulation.  If  a 3/4  rule were to be 

introduced,  a larger number of such cases would come within  the Regulation.  On the other 
hand,  a  substantial  number  of  cases  of  mainly  national  impact  would  likely  be  caught. 
Consequently,  the Commission  considers  at this  stage that  on balance  the maintenance of 
the  2/3  rule  would  probably  be  more  consistent  with  the  subsidiarity  principle. 

67. 

It was suggested  to the Commission  that a threshold  reduction  could  increase the  number 
of  notifications  with  mainly  national  impact  and  therefore  the  number  of  requests  for 
referral  under  Article  9.  The  implications  of  a threshold  reduction  for  the  application  of 
Article  9  are  discussed  under  IV.A.  below. 

Inflation  and  enlargement  of  the  Union 

68. 

The  Commission  has  examined  the impact  of  inflation  and the  enlargement  of the Union 
on  the  existing  thresholds.  It  seems  that  this  has been  rather  limited.  In  particular: 

(i) 

(ii) 

On  average  within  the  EU,  inflation  and  currency  fluctuation  (i.e.  devaluation  or 
appreciation)  in  the  period  1989-94  have  led  to  an  erosion  of  the  first  threshold 
from  ECU  5 billion to ECU 4.3 billion  and  of the second threshold  from  ECU 250 
million  to ECU  216  million.  This  decrease  cannot  be  ignored,  but  in  the  light  of 
the figures  mentioned  in paragraph  61 above, it is not  significant  enough  to negate 
the  need  for  reducing  the  current  thresholds. 

It  was  suggested  to  the  Commission  that  as  a  result  of  the  enlargement  of  the 
Union, more companies would fall  within the Regulation, because their  Community 
turnover  would  increase  and/or  the  2/3  rule  would  no  longer  apply.  However, 
among  the  cases  notified  to  the  Commission  since  1 January  1995  only  a  limited 
number  met  the thresholds  because  of  the  additional  turnover  realized  in  the  new 
Member  States. 

Estimate  of  extra  cases 

69. 

70. 

The  precise  number  of  extra  cases  resulting  from  a  threshold  reduction  is  difficult  to 
predict.  An estimate has been  made based  on information  provided  by the Member  States. 
The data given  relate to the number of national  merger notifications  in  1993 and  1994 that 
would  fall  within  the  Merger  Regulation,  if  the  world-wide  and  Community  thresholds 
were  reduced  to  ECU  2 billion  and  ECU  100 million  respectively  and  the  2/3  rule  were 
maintained. 

On  this  basis,  it  is  estimated  that  the  Commission  workload  would  increase  by  an  extra 
65-80  cases  per  year.  This is  comparable  to  a DG  II  forecast21,  which  was  65  extra  cases 
per  year,  or  90  if  an  estimate  for  concentrative  joint  ventures  is  also  included  in  the 
calculation. 

Impact  on  Commission  resources 

21  "Competition and Integration:  Community  Merger Control Policy". 57 European  Economy  (1994), 2.2.3.4., 

p.  38. 

71. 

72. 

73. 

19 

Concern  was  expressed  as to whether  the increase  in the Commission  workload  resulting 
from  a  threshold  reduction  would  endanger  the  effectiveness  of  the  existing  procedures 
and  the  quality  of  the  competition  analysis.  A  threshold  reduction  proposal  should  be 
justified  by  general  policy  considerations,  but  would  naturally  have  to  take  into  account 
the  need  for  any  additional  resources  so as not  to  reduce  quality  and  efficiency. 

2. 

Cases  of  multiple  notification 

Concentrations  subject  to  multiple  notification  can  generally  be  considered  to  have 
significant  cross-border  effects.  In  accordance with  subsidiarity,  they  should  therefore  be 
dealt  with  at  Community  level.  Moreover,  multiple  national  filings  increase  uncertainty, 
effort  and  cost  for  business  and  may  lead  to  conflicting  decisions  contrary  to the  idea  of 
a  "level  playing  field". 

the  notification 

There  is  wide-spread  concern  among  industry  about  concentrations  below  the  thresholds 
meeting 
requirements  of  several  national  systems.  Consequently, 
companies  and  associations,  including  those  that  would  not  be  in  favour  of  a  general 
threshold  reduction,  urged  the  Commission  to  make  a proposal  ensuring  that  such  cases 
are  dealt  with  at  Community  level. 

Policy  options 

74.  Merger  control  systems  in  the  European  Union  are  highly  diverse.  Their  harmonization 
e.g.  by  means  of  a  Community  directive  could  alleviate  the  administrative  burden  of 
towards 
multiple  national  filings.  The  Commission  would  encourage  any  efforts 
harmonization,  especially  with  regard  to  the  form  of  notification  and  other  procedural 
rules.  At  the  same time  harmonization  would  not  be the  most  appropriate  solution  to the 
problem  of  multiple  notifications  for  the  following  reasons.  Even  putting  aside  the 
difficulties  and  time necessary  for  changing the national  laws, companies would  still  have 
to  notify  to  several  national  authorities  and  provide  information  relating  to  the  specific 
features  of  each  national  market.  More  importantly,  operations  with  significant  cross-
border  effects  would  still  have  to  be  examined  at  Member  State  level,, contrary  to  the 
subsidiarity  principle. 

75. 

A  number  of  industry  associations,  including  UNICE,  ICC,  CNPF  (Conseil  National  du 
Patronat  Français)  and  AGREF  (Associations  des  Grandes  Entreprises  Françaises),  have 
proposed  that  in  cases  of  multiple  notification  falling  between  the  current  thresholds  and 
some  lower  thresholds  to be  defined  - for  instance ECU  2 billion  and ECU  100 million  -
the  companies  concerned  could  have the option  of notifying  either  to the Commission  or 
to the relevant national  authorities. The Commission  or the national  authorities  concerned, 
as the  case  may  be,  would  have  exclusive  competence  when  notified.  It  is  clear  that  this 
solution  is desirable  from  a business  perspective,  because it  allows  the greatest  degree of 
flexibility.  On  the  other  hand,  it  would  leave  the  choice  of jurisdiction  to  the  discretion 
of  the  companies  concerned.  For  this  reason,  it  appears  at  this  stage  that,  in  devising  a 
solution  to  the problem,  it would  be  more  appropriate  to  find  clear  and  objective  criteria 
for  the  division  of  competences  between  the  Commission  and  the Member  States. 

Proposed  options 

76. 

77. 

78. 

79. 

80. 

20 

As  explained  above, it  appears that  a threshold  reduction  to ECU  2 billion  and  ECU  100 
million22  would  bring  the  bulk  of  cases  with  significant  cross-border  effects  within  the 
Regulation.  At  the  same  time  this  would  largely  solve  the  problem  of  multiple 
notifications,  to  the  extent  that  otherwise  a  number  of  these  cases  would  have  been 
notifiable  to  several  national  authorities. 

In  order  to  address  the  problem  of  multiple  national  filings  in  particular,  another  more 
limited  solution  could  consist  in  extending  the  Commission's  competence  only  to  those 
concentrations  below  the  thresholds  that  come  within  the jurisdiction  of  more  than  one 
national  system. Compared with a threshold reduction, this solution w7ould bring some, but 
not the bulk  of concentrations with  significant  cross-border  effects  within  the  Regulation. 
Because  of  differences  in  the  notification  thresholds  used  by  national  laws  or  the  lack  of 
merger  control  legislation  in  some  Member  States,  the  existence  or  not  of  multiple 
national  filings  depends  on  the  national  markets  in  which  the  undertakings  concerned 
mainly  operate.  The  Commission  therefore  considers  this  more limited  solution  to be the 
minimum  required  to  achieve  a division  of  competences  consistent  with  subsidiarity. 

In  accordance  with  the  above,  the  Commission  competence  could  be  extended  to  cover 
concentrations  of  multiple  notification  falling  between  the  current  thresholds  and  lower 
thresholds,  for  instance ECU  2 billion  (world-wide)  and  100 million  (Community-wide). 
Article  1 of the Merger Regulation  could thus be amended  to provide that a  concentration 
within  the  meaning  of  the  Regulation  that  does  not  meet  the  thresholds  laid  down  in 
paragraph  2  has,  nevertheless,  a  Community  dimension  when  it  comes  within  the 
jurisdiction  of  a number  of Member  States. 

A  concentration  would  be  considered  to  come  within  the  jurisdiction  of  a  number  of 
Member  States  if  it  met  the  national  thresholds  triggering  an  obligation  to  notify  in 
systems  of  mandatory  control  or  subjecting  a  concentration  to  a  system  of  voluntary 
notification.  The Commission  considers that voluntary  systems are relevant in this respect. 
A  concentration  meeting  the  threshold  of  more  than  one  system  is  likely  to  have 
significant  cross-border  effects,  regardless of the mandatory  or voluntary  character  of the 
national  systems  concerned.  If  one were to  exclude voluntary  systems in  determining  the 
number  of  authorities  involved,  there  would  be  discrimination  among  companies 
participating  in  cross-border  transactions,  depending  on  the  national  markets  affected  in 
each  case.  Finally,  for  reasons  of  legal  certainty,  notification  also  takes  place  under 
voluntary  systems,  especially  when  the  market  share  of  the  parties  is  significant. 

As to the number  of national  laws that must  be  applicable,  the following  should  be  taken 
into account.  In the Commission's view,  a concentration  coming within  the jurisdiction  of 
two  national  systems  is  likely  to  have  significant  cross-border  effects  and  should  in 
principle  be  able  to  benefit  from 
the  "one-stop  shop"  of  the  Regulation.  Such 
concentrations  should  thus  be  dealt  with  at  Community  level.  It  was  suggested  to  the 
Commission  that  the  Community  dimension  of  a  concentration  may  be  more  manifest 
when  at  least  three  national jurisdictions  are  involved.  Member  States  also  stated  that  in 
cases  where  only  two  national  authorities  are  involved,  any  problems  could  be  more  or 

22  See paragraph 65 above. 

-  21 

-

less  adequately  solved  through  bilateral  coordination.  By  contrast,  coordination  would 
become too complicated  and thus ineffective  when  three or more  systems come into play. 
The  validity  of  these  arguments,  which  suggest  that,  at  a  maximum,  the  number  of 
national  systems  involved  should  be three,  needs  to  be  explored  during  the  consultation 
period. 

Procedure 

81. 

82. 

The  above-mentioned  cases  will  be  subject  to the  same  substantive  and  procedural  rules 
that  apply  to  any  other  concentration  within  the meaning  of  the Merger Regulation,  with 
the  following  exception:  in  addition  to  the  normal  requirements  establishing  the 
Commission's  competence,  it  will  be  necessary  to  determine  whether  the  concentration 
meets  the  notification  thresholds  of  a number  of  Member  States. 

Two basic  approaches  exist:  either the Member  States  concerned  confirm  the  application 
of  their  national  thresholds  and  the  Commission  is  bound  by  this  assessment;  or  the 
Commission  itself decides thereon. The second approach would mean that the Commission 
would  have  to  interpret  the  national  merger  laws.  This  would  be  impractical  and  could 
lead  to  divergent  interpretations  of  national  laws  by  the  Commission  and  the  Member 
States. For  these  reasons,  the  Commission  considers  that  the  first  approach  is  preferable. 

83. 

Two  possible  ways  in  which  the  application  of  the  national  laws  can  be  determined  are 
set  out  below. 

(i) 

As part of the formal  notification,  the parties include in the form  CO (in one of the 
official  Community  languages)  all  information  showing  that  the  operation  meets 
the notification  thresholds  of a number  of Member  States.  A copy  of the form  CO 
is  sent  to Member  States as usual.  The Member  States  concerned  must  inform  the 
Commission  within  a set  period  of time  (e.g.  within  one  to  two  weeks)  when  the 
concentration  does  not  meet  their  thresholds.  If  the Member  States  concerned  do 
not  oppose the  analysis  of the parties within  the  set  period,  the  competence  of  the 
Commission  will  be  established. 

(ii)  At  a  stage  prior  to  formal  notification, 

the  fact  of  the 
concentration  to  the  Commission.  No  form  CO  is  required  at this  stage,  only  the 
information  showing that the operation is a concentration  within the meaning of the 
Merger Regulation  and meets the Member  States' notification  thresholds. The same 
procedure  as  under  (i)  above  is  then  followed.  There  are  two  variations  on  this 
scenario: 

the  parties  notify 

the parties have an obligation  to notify  the fact  of the concentration  within  the time 
limits  provided  in  Article  4,  but  the  phase  1  deadline  starts  only  after  the 
jurisdictional  question  has been  solved  and  the  full  form  CO  has  been  submitted; 
or 
the  parties  notify  the  fact  of  the  concentration  before  the  final  agreement  is 
concluded  or  control  is  acquired. 

84. 

85. 

86. 

87. 

88. 

- 

2: 

In  the  course  of  preliminary  contacts  with  interested  parties,  it  was  pointed  out  to  the 
Commission  that these  procedures  could  raise some  practical  difficulties.  In  particular,  it 
was  argued  that  it  will  not  always  be  easy  to  determine  quickly  whether  a  concentration 
meets  the  national  notification 
thresholds,  especially  in  cases  where  market-share 
thresholds  are  used. 

To the  extent  that  the  application  of  some national  thresholds  is difficult  in  practice,  this 
situation  is  not  created  by  the  Commission  proposals.  Companies  are  already  subject  to 
the operation  of  national  laws and  must check whether the various  notification  thresholds 
apply  to  their  deal.  During  the  consultation  period  following  the  adoption  of  the  Green 
Book,  the  Commission  will  have  the  opportunity  to  examine  this  issue,  as  well  as  any 
further  practical  problems  that  may  be  identified. 

In  any  event,  it  is  clear  that  the  smaller  the  number  of Member  States'  laws  required  for 
establishing  the  Commission's  competence,  the simpler the procedures  and the greater the 
degree  of  legal  certainty  for  the  companies  concerned.  In  the  Commission's  view,  the 
simplest  procedure  is where two Member  States  are involved,  while  above three Member 
States  the  system  becomes  extremely  difficult  to  manage  both  from  the  point  of view  of 
the  companies  concerned  and  from  the  point  of  view  of  the  regulatory  authorities 
involved. 

Number  of multiple  notifications 

The  Commission  is  currently  aware  of  about  one  hundred  cases  of  multiple  notification 
in  the  last  two  and  half  years.  About  35% of these  cases were  notified  to  more  than  two 
and  up  to  ten  national  authorities. 

These figures  by no means represent the total  number  of multiple notifications  during that 
period.  The  Commission  does  not  at  this  stage  have  Member  State  records  for  1995, a 
year  with  intense  merger  activity.  Existing  records  for  1993-94  are  very  difficult  to 
analyse,  because  the  data  are  not  kept  on  the  same  basis  in  each  Member  State. 
Moreover,  multiple  national  filings  may  become more frequent  in the future  to the  extent 
that  companies'  awareness  of  newly  introduced  merger  control  systems  increases,  new 
systems  come  into  force  in  the  Community  and  notification  under  voluntary  systems 
becomes  more  common.  Market  integration  and  the  resulting  increase  in  cross-border 
merger activity  should  also lead to an increase of multiple notifications.  For these reasons, 
the additional  number  of  cases to be dealt with by the Commission  should  be higher  than 
the  above-mentioned  figures. 

IV. 

OTHER  ASPECTS  OF  THE  REGULATION 

89. 

90. 

In  addition  to thresholds,  the  Commission  survey  identified  a number  of  specific  areas in 
which  improvements  could  be  made  to  the  Regulation.  In  order  to  respond  to  these 
concerns, the Green Paper proposes  changes that amend  or clarify  the existing  provisions. 

In  addition  to  these  changes,  the  Commission  would  also  consider  examining  the  ECSC 
Treaty  provisions  relating to concentrations, including thresholds. These issues go beyond 
the  scope  of  the  present  review  and  will  not  be  further  discussed  in  this  Paper. 

-  23 

-

91. 

The  proposed  changes  are  mainly  procedural.  As  to  substantive  matters,  the  survey 
identified  areas  where  clarifications  would  be  useful,  such  as  the  notion  of  oligopolistic 
dominance,  the  "failing  firm"  defence  and  the  "efficiencies"  defence.  These  matters  are 
best  dealt  with  by  means  of  interpretative  guidelines. 

A. 

Referral  of  concentrations  to  and  from  Member  States  f Articles  9  and  T£\ 

Article  9 

92. 

93. 

94. 

95. 

Concentrations  with  mainly  national  impact  are  better  controlled  at the  national  level.  It 
is  possible  that  operations  of  this  kind  may  fall  within  the  current  thresholds.  In  these 
cases,  and  in  line with  subsidiarity,  Article  9 of  the Regulation  provides  for  a  corrective 
mechanism  of  referral  to  the  national  authorities.  Three  concentrations  have  so  far  been 
referred  to  national  authorities:  Steetley/Tarmac  was  referred  to  the  UK  authorities, 
to the German. 
Holdercim/Cedestto  the French and McCormickCPC/RabobankOstmann 

The industry  and the large majority  of Member  States have expressed  satisfaction  with the 
operation  of  this Article.  At the  same time,  a number  of  suggestions  aiming  at  clarifying 
or improving the referral  procedure were made to the Commission. It was also pointed  out 
that,  in  the  event  of  a threshold  reduction,  there  might  be  an  increase  in  the  number  of 
cases  with  mainly  national  impact  and,  as  a  result,  an  increase  in  requests  for  referral 
under  Article  9. 

The  Commission  considers  that,  especially  if  there  were  not  to  be  a threshold  reduction, 
any  amendments  to  Article  9  should  be  limited  so  as  not  to  undermine  the  delicate 
balance  struck  by  the  current  referral  provisions  or to  negate the  advantages  of the  "one-
stop  shop"  principle.  Too  frequent  use  of  Article  9  could  reduce  the  legal  certainty 
afforded  to  companies  and  should  probably  be  linked  to  a  harmonization  of  the  main 
features  of  national  merger  systems. 

The Commission  therefore  proposes that Article 9 be maintained  in its current  form,  with 
the following  exception  regarding concentrations  that affect  only  a non-substantial  part of 
the common  market. It could be provided  that in  such cases the Member  State making the 
request  for  referral  must  inform  the  Commission  that  the  concentration  affects  a  distinct 
market  within  its  territory  not  constituting  a  substantial  part  of  the  common  market.  By 
contrast,  it  will  not  need  to  demonstrate  that  the  concentration  threatens  to  create  or 
strengthen  a  dominant  position  on  that  market. 

96. 

The  Commission  also  proposes  to  examine  whether  its  practice  with  regard  to  the 
application  of  Article  9  should  be  further  clarified,  for  instance  by  means  of  an 
interpretative  notice. 

Article  22 

-  24 

-

97. 

Use  of  Article  22(3)  has  already  been  made  on  two  occasions23  and  it  is  generally 
regarded  as  a useful  tool,  especially  for  those Member  States  that  do not  currently  have 
a merger  control  system. The Commission  therefore  proposes to maintain  it. However,  in 
the  light  of  experience,  the  following  amendments  could  be  made: 

-  It could be expressly  provided  that an Article 22 request  could  also be made by  several 
Member  States,  acting  by  common  agreement.  Such  a request  would,  for  instance,  be 
appropriate  in  cases  where  a  concentration  would  create  or  strengthen  a  dominant 
position  in  an area wider than  the territory  of a single Member  State and would  enable 
the  Commission  to  examine  the  effects  of  the  concentration  to  a fuller  extent. 

-  It  could  be  stated  that  the  concentration  would  be  suspended  from  the  date  of  receipt 
of the Article 22 request,  provided  that it has not been  put into effect  prior to that date. 

-  In  order  to  harmonize  the  time  limits  under  Article  10  and  Article  22,  the  fourth 

paragraph  of  Article  22  should  be  amended  as  follows: 
"The period  within  which  proceedings  may  be  initiated  pursuant  to Article  10(1)  shall 
begin  on  the  day  following  that  of the receipt  of  the  request  by  the  Member  State". 

-  The  text  of  Article  23  should  also  be  amended  to  enable  the  Commission  to  adopt 

implementing  provisions  concerning  time  limits  pursuant  to  Article  22. 

B.  The  treatment  of joint  ventures 

Present  situation 

98. 

99. 

A  distinction  is  made  under  the  EC  competition  rules  between  concentrative  and 
cooperative joint ventures. Concentrative joint ventures fall  within the scope of the Merger 
Regulation,  while  cooperative joint  ventures  are  dealt  with  under  Regulation  17/62  and 
other  Regulations  implementing  Article  85  of  the EC  Treaty. 

According  to  Article  3  (2)  of  the  Merger  Regulation,  as  interpreted  by  the  1994 
Commission  notice24,  concentrative joint  ventures  are  full-function  entities25  that  do  not 
give  rise  to  coordination  of  the  competitive  behaviour  of  undertakings  which  remain 
independent.  In  order to  be relevant,  coordination  must  be  likely  to  result  in  a  restriction 
of competition  within the meaning of Article  85 (1) of the EC Treaty.  Joint ventures that 
do  not  fall  within  Article  3  (2)  are  considered  to  be  cooperative.  Cooperative  joint 
ventures  encompass  a  wide  variety  of  arrangements,  ranging  from  operations  of  a 
structural  nature  to  cartel-like  cooperation. 

100. 

In the Commission  survey,  a large part of industry  as well  as a number  of Member  States 
expressed  considerable  concern  about  the  differences  in  treatment  between  concentrative 

23 

24 

25 

In British  Ainvays/Dan  Air  and  RTLA^ronica/Endemol. 
Commission Notice of 21 December  1994 on the Distinction between  Cooperative and Concentrative  Joint 
Ventures,  OJ  N* C  385, 31.12.1994,  p.  1. 
This  means  that  they  perform  all  the  functions  normally  carried  out by  other  companies  operating  in  the 
same market and have sufficient  financial  and other resources to carry  out their activities on a lasting basis. 

-  25 

joint  ventures  and  cooperative  joint  ventures  of  a  structural  nature.  It  is  said  that  both 
kinds  of  operations  are  similar  in  terms  of  their  effects  on  market  structure.  They  are, 
however,  currently  subject  to  different  regimes.  This  situation  is  widely  regarded  as 
unsatisfactory,  especially  to  the  extent  that  there  are  differences  in  the  deadlines  for 
assessment  and  the  degree  of  legal  certainty  afforded  to  companies. 

101.  The  Commission  has  recognised  the  desirability  of  harmonization  of  the  regimes 
applicable  to joint  ventures  by  introducing  a  special  accelerated  procedure  in  relation  to 
structural  cooperative joint  ventures26.  The  Commission  set  itself  a  two-month  internal 
deadline,  applicable  since  1 January  1993, within  which  it  should  take  an  initial  view 
concerning  operations  of this kind.  According  to the Commission  survey, this  procedure 
is  a positive  development,  but  still  does  not  guarantee  full  equality  of  treatment. 

Is  there  a  need for  change? 

102.  Cooperative full-function  joint ventures involve a significant  change in the structure of the 
companies  concerned.  They  may  have, in this respect,  similar  effects  on market  structure 
to  concentrative joint  ventures.  The main  difference  between  the two  types  of  operations 
is  that,  in  the  case  of  cooperative  full-function  joint  ventures,  the  independent  presence 
of  their  parent  companies  in  the  same  market  as  that  of  the  joint  venture  or  in 
neighbouring  markets  is  regarded  as  likely  to  give  rise  to  the  coordination  of  the 
competitive  behaviour  of  their  parent  companies.  For  this  reason,  a different  substantive 
test has been applied to cooperative full-function  joint ventures.  Different  procedural  rules 
have  also  been  applied,  with  different  treatment  in  terms  of  timing  and  legal  certainty. 
Since cooperative full-function  joint ventures may imply a transfer  of substantial  resources 
from  the parent companies, it should be considered to what extent differences  in treatment 
should  be  reduced. 

103.  Under  the  current  rules,  most  concentrative joint  ventures  are  assessed  within  one  month 
(phase  1), and the rest within five months (phase 2-in-depth  investigation). In all cases the 
procedure  is  concluded  by  a formal  clearance  or prohibition  decision  which  can  only  be 
revoked  in  exceptional  circumstances  (see  Article  8 (5)  of the Merger  Regulation).  If  no 
decision  is  taken  within  these  deadlines,  the  joint  ventures  is  deemed  to  have  been 
authorized. 

104.  There  are  no  such  legal  deadlines  for  cooperative  joint  ventures  of  a  structural  nature. 
The two-month  deadline that  applies to certain  operations  of this kind  is only  an  internal 
one. Moreover,  given  the  current  procedural  constraints  under Regulation  17/62, it is not 
possible to adopt a formal  decision  within two months, but only to issue an  administrative 
letter  which  does  not  bind  the  authorities  and  the  courts  of  the Member  States.  There  is 
no  legal  or  internal  deadline  for  the  conclusion  of  the  in-depth  investigation.  Finally, 
under  Regulation  17/62,  in  cases  where  an  exemption  is granted,  this  must  be  given  for 
a  certain  period  of  time  and  the  decision  can  be  revoked  or  modified  under  the 
circumstances  mentioned  in  Article  8 (3)  of  that  Regulation. 

26  These are cooperative full-function  joint ventures and certain partial-function joint ventures without access 

to the market, in particular  research and development  or production joint ventures. 

-  26  -

105.  The  above-mentioned  differences  have  been  caused  by  the  different 

implementing 
Regulations  applicable  to  cooperative  and  concentrative joint  ventures  and  on  the  view 
that  there  is  a basic  difference  between  restrictions  of  competition,  to be  assessed  under 
Article  85,  and  concentrations  which  are  not  subject  to  the  fundamental  prohibition  of 
agreements  and  restrictive  practices  which  distort  competition.  Reform  of  the  current 
arrangements  would  have  to  remain  within  the  bounds  of  the  Community  legal  system. 
To  change  the  substance  of  Article  85  (1)  would  exceed  the  limits  of  the  powers  of  the 
Community's  institutions. 

106. 

It  remains  to  be  seen  to  what  extent  the  system  has  given  rise  to  practical  problems. 
Nevertheless,  changes  may  also  be  justified  by  general  considerations  of  competition 
policy,  particularly  the  drive  to  make  the  system  simpler,  more  transparent  and  more 
effective. 

Options  to  be  considered 

107.  Apart from  the option  of making  pragmatic improvements  in internal  procedures  so as to 
speed  up  the  decision-making  process  (for  instance  by  reducing  existing  internal 
deadlines),  there  are  five  other  options  to be  considered  all  of which  would  require  new 
legislation.  These  five  options  can  be  divided  into  two  groups  reflecting.two  different 
approaches: the first group deals with procedural matters while maintaining the substantive 
tests,  while  the  second  group  would  subject  structural  cooperative joint  ventures  to both 
the  substantive  test  and  the  procedural  rules  of  the Merger  Regulation. 

108. 

I 

Procedural  options 

a. 

b. 

c. 

Create new procedures for the treatment of cooperative full-function  joint  ventures 
by means of a new Regulation,  in order to simplify  procedures and provide for  fast 
decisions  and  legal  certainty. 

Make  cooperative  full-function  joint  ventures  subject  to procedures  of the  Merger 
Regulation,  leaving  the  two  substantive  tests  separate. 

Extend  the  scope  of  Commission  block  exemption  Regulations  dealing  with 
horizontal  cooperation  (and  adopt a new one for  areas not covered  by  the  existing 
Regulations)  to  cover  cooperative  full-function  joint  ventures,  with  opposition 
procedures  and  market  share  thresholds. 

109. 

IL 

Substantive  and  procedural  options 

a. 

b. 

Extend  Article 3 (2) of the Merger Regulation  to all  cooperative full-function  joint 
ventures. 

Extend  Article  3  (2)  of  the  Merger  Regulation  to  aU joint  ventures,  whether  full 
function  or  not,  except  shams  (cartels  dressed  up  as joint  ventures). 

110.  All  of these  options would  have  a significant  impact  on priorities  and  resource  allocation 

within  the  Commission's  services. 

Comments  on  the  options 

-  27 

-

111.  The option of making pragmatic changes to internal  procedures would improve the current 
situation  without  any  changes  in  the  law.  Since  only  internal  procedures  have  to  be 
adapted,  this  could  be  achieved  quickly.  However,  the  changes  would  remain  of  an 
internal  nature  and  legal  certainty  would  not  be  provided  within  a  short  period  of  time. 

Procedural  options 

112.  Legal  certainty  could  be  obtained  more  quickly  under  option  a  with  a  new  Council 
procedural  regulation  which  would  introduce  a  procedure  for  cooperative  full-function 
joint  ventures  along  the  lines  of  the  Merger  Regulation.  The  emphasis  would  be  on 
streamlining  procedures,  while  the  current  substantive  test  would  be  maintained. 

113.  Under  option  b. cooperative  full-function  joint  ventures  would  continue  to  be  subject  to 
the  substantive  test  of  Article  85,  paragraphs  1 and  3.  At  the  same  time,  it  would  be 
provided  that the procedural  rules of the Merger Regulation  would  apply to them,  instead 
of  those  of  Regulation  17/62  and  the  other  implementing  Regulations  that  are  currently 
applicable. 

114.  Cooperative  full-function 

joint  ventures  would  benefit  from  the  timing  and  other 
procedural  advantages  of the Merger Regulation.  They  would  also be subject  to the  same 
notification  and  other  procedural  requirements.  However,  the  distinction  between 
cooperative  and  concentrative joint  ventures would  still  govern  the  substantive  test  to be 
applied:  concentrative  joint  ventures  would  be  subject  to  the  test  of  Article  2,  while 
cooperative full-function  ones would be subject to the test of Article  85, paragraphs  1  and 
3. Exemptions under  Article  85 (3) would be limited  in time and revocable in  accordance 
with  current  law  and  practice,  which  pays  particular  attention  to  the  competitive 
relationships  between  the joint  venture's  parent  companies. 

115.  Under  option  c.  Article  3  (2)  of  the  Merger  Regulation  would  remain  unchanged.  The 
Commission  would  instead use its legislative powers under  Council  Regulation  (EEC) N° 
2821/71  to  cover  most  of the cooperative joint  ventures  by  a group  exemption.  For  this 
purpose,  Regulations  (EEC)  N° 417/85  and  N°  418/85,  which  both  expire  at  the  end  of 
1997, could  be broadened  and  merged:  The advantages  of the group  exemption  would  be 
available  up  to  a  certain  market  share.  The  threshold  should  be  fixed  clearly  above  the 
current  figures  (which  are:  10% for  full-function  joint  ventures,  20% for  partial  function 
joint ventures). Those not  covered by the automatic  exemption  could  be subject  to a non-
opposition  procedure  with  two  deadlines:  a  first  one  of  two  months  within  which  the 
Commission  would  take  an  initial  view  (corresponding  to  the  existing  internal  deadline, 
but legally  binding),  and  a second  one of five months within  which  the  final  outcome, be 
it  positive  or  negative,  would  have to  be  reached. 

116.  Under this  option  the differences  between  the relevant  substantive  test would  continue to 
exist.  The  rules  on  individual  procedures,  although  not  being  harmonized,  would  be 
brought closer to each other, thereby accelerating procedures. It is true that the  application 
of a market  share criterion  may  give rise to practical  difficulties.  However,  the  opposition 
procedure  would  make  the  Commission  responsible  in  the  final  analysis  for  correctly 

-  28 

-

defining  the relevant  market  and  the market  shares of the interested  parties.  Cases  which 
meet  the  requirements  for  automatic  exemption  would  not  have  to  be  notified.  The 
exemption  granted  under  the  regulation  would  last  as long  as  the  group  exemption. 

Substantive  and  procedural  options 

117.  Under  option  a.  Article  3  (2)  of the Merger  Regulation  would  be  amended  to  state  that 
"the  creation  of  a joint  venture  performing  all  the functions  of  an  autonomous  economic 
entity  shall  constitute  a concentration  with the meaning  of paragraph  1 (b)".  This would 
mean  that,  in  substantive  terms, the  dominance test  of  Article  2 of  the Regulation  would 
also  apply  to  the  creation  of  cooperative  full-function  joint  ventures.  In  respect  of  the 
cooperative aspects of the case that are not ancillary, it would be provided  that Article 85, 
paragraphs  1 and  3, would  apply to them, either within  the same procedure  or  separately. 

118.  This  option  would  ensure  legal  certainty  and  rapid  procedures.  Moreover,  it  would 
simplify  the distinction between  cooperative and concentrative joint ventures, because the 
same procedures and substantive test would apply to all full-function  joint ventures, except 
for  clauses which  are not  ancillary.  This option  would  imply  a reassessment  of the  scope 
of Article 85 (1) with regard to the Commission's existing and long-standing  practice and, 
in  any  event,  would  have to remain  within  the bounds of  Article  85 as interpreted  by  the 
Court  of  Justice. 

119.  As  to  the  division  of jurisdiction  between  the  Commission  and  the  Member  States,  this 
option  would  extend  to  all  full-function  joint  ventures  the  jurisdictional  allocation 
provided  for  in Article  1 of the Merger Regulation.  As a result,  national  law would  apply 
to  full-function  joint  ventures  below  the  thresholds. 

120.  Finally  option  b  would  submit  all  joint  ventures,  except  hidden  cartels,  to  the  Merger 
Regulation  through  extending  Article  3 (2).  As  a consequence,  both  the  substantive  test 
and  procedure  would  be  changed  for  all  cooperative joint  ventures.  Legal  certainty  and 
rapid  procedures would  be  provided  in the  same way  as currently  for  concentrative joint 
ventures.  This option  would  also imply  a reassessment  of the scope of Article  85 (1) with 
regard  to  current  and  well-established  practice  and,  in  any  event,  would  have  to  remain 
within  the bounds of  Article  85 as interpreted  by the Court  of Justice.  It would  create the 
problem  of  identifying  those joint  ventures to which  Article  85 would  remain  applicable 
(hidden  cartels). 

Concluding  remarks 

121.  As  will  already  be  clear,  the  Commission  is  interested  to  know  how  seriously  the 
differences  in  the treatment  of  co-operative  and  concentrative joint  ventures,  in  terms  of 
deadlines, procedures, substantive test and legal certainty, are considered. This will  clearly 
influence the choice between the various options. The above-mentioned  procedural  options 
improve procedures, including deadlines, and increase legal certainty.  The substantive and 
procedural  options  appear  to  offer  the most  comprehensive  and  harmonised  treatment  of 
concentrative  and  cooperative joint  ventures from  the point  of view of the  above  criteria. 
The Commission  is at this stage open as to the option best suited to address the  disparities 

in  the  treatment  of  joint  ventures  and  the  desire  for  simplicity,  transparency  and  an 
effective  competition  policy. 

C. 

Commitments  in  merger  cases 

122.  Pursuant to Article  8 (2) of the Merger Regulation,  a Phase 2 authorisation  decision  may 
be  subject  to  conditions  and  obligations  ensuring  that  the  parties  comply  with  the 
commitments  they  have  entered  into  vis-à-vis  the  Commission.  Commitments  must  be 
submitted  within  three months from  the beginning  of Phase 2 (Article  18 of  Commission 
Regulation  3384/94). It is not proposed  that changes be made in the Commission  practice 
in  this  area. 

123. 

It is the Commission's practice to accept commitments  also in Phase  1 in cases where the 
competition  concern  is clear-cut  and  limited  compared  with  the whole deal, can  easily  be 
remedied  and  where  compliance 
is  easily  monitored.  The  authorization  of  the 
concentration  is based on the fulfilment  of these commitments. The Commission  considers 
that  such  an  approach  provides  a  regulatory  response  proportionate  to  the  size  of  the 
competition  problem  and  the remedy  already  at hand.  There  is  also  overall  support  from 
industry  and  advisers to  accept  commitments  in Phase  1, because they  avoid  the cost and 
loss  of  time  involved  in  entering  Phase  2  proceedings.  It  is  the  Commission's  policy  to 
give Member  States  and  interested  third  parties the opportunity  to  comment  on  proposed 
commitments  before  an  Article  6(l)b  decision  is  adopted. 

124.  The Commission considers that, under the current regime, it may accept and enforce Phase 
1  commitments.  However,  legal  certainty  would  increase  if  an  express  provision  to  that 
effect  were  included  in  the  Regulation.  At  the  same  time  such  commitments  must  be 
accepted in a manner ensuring transparency  and timely consultation  of Member  States and 
interested  third  parties. 

Proposed  changes 

125. 

126. 

In accordance with the above, Article 6 (1) b of the Merger Regulation  could  be amended 
in  line  with  Article  8,  paragraphs  2  and  5  (b),  so  as  to  give  the  Commission  express 
powers  for  accepting  and  enforcing  Phase  1 commitments. 

In  order  to  ensure  transparency  and  to  give  Member  States  and  interested  third  parties 
adequate  time  for  comment,  it  is  estimated  that  a period  of  at  least  two  weeks  from  the 
date of the submission  of the commitments will be necessary.  Consequently, three possible 
procedural  solutions  could  be  envisaged: 

-  A two-week  consultation  period  from  the  time  of  the  submission  of  the  commitments 
will  be  required.  This  may  lead  to  an  extension  of  Phase  1 by  a  maximum  of  two 
weeks. 

-  There would  be  no  extension  of the  current Phase  1. Companies  would  have to  submit 
their  commitments  in  time  for  a two-week  consultation  to  take  place  within  the  one-
month  period.  In  view  of  the  time  constraints  of  Phase  1,  this  solution  would  be 
possible  in  practice  only  if the  competition  problem  and  the  remedy  were  identified  at 

-  30 

-

a very  early  stage in  the procedure.  Otherwise,  the  parties  could  withdraw  their  initial 
notification  and make a new notification  containing the proposed commitments. In cases 
of  withdrawal  and  re-notification,  the  Commission  could,  where  appropriate,  take  a 
decision  immediately  after  the  three-week  period  for  an  Article  9  request. 

-  A mechanism  comparable to Article  9 would  be  introduced:  commitments  would  have 
to  be  submitted  within  three  weeks  from  notification  and  Phase  1 would  be  extended 
to  six  weeks. 

D. 

De  minimis  operations 

127.  For  the  purposes  of  this  Green  Paper,  an  operation  is  defined  as de  minimis  if  it  has  no 

or  insignificant  effects  on the  structure  of  competition  in  the  Community. 

128. 

It  is  possible  that  some  de  minimis  operations  may  fall  within  the  scope  of  the  Merger 
Regulation. For instance, concentrations that do not lead to an overlap between the merged 
activities in the Community  may be notifiable  because of the parties' Community  turnover 
in  markets  other  than  those  affected  by  the  operation  (see  the  Seagram/MCA  and 
JCSAT/SAJAC  cases).  In  the  last  two  years  ten  concentrations  with  no  or  minimum 
overlap  were  notified  to  the  Commission. 

129.  Another  example  of de minimis  operations  may  be joint  ventures  of  very  small  turnover 
which  may  be  notifiable  because  of  their  parents'  turnover.  In  the  last  two  years  there 
were  at  least  20 joint  ventures  with  a turnover  of  less  than  ECU  100 million.  However, 
not  all  of  these joint  ventures  were  de  minimis  operations,  since  in  a  number  of  cases 
market  shares  exceeded 25%. 

130.  A number  of the  companies  and  associations  surveyed  suggested  to  the  Commission  that 
the  notification  of  de  minimis  operations  constitutes  an  unnecessary  burden  on  business. 
Such  operations  should  therefore  be  excluded  from  the  scope  of  the  Regulation  or 
examined  under  simplified  procedures. 

131.  The  Commission  does not  consider  at this  stage that de minimis  concentrations  should  be 
excluded  from 
the  Merger  Regulation  for  the  following  reasons.  If  de  minimis 
concentrations were defined  on the basis of turnover thresholds, there would be a risk that 
operations  raising  competition  concerns would  also be  excluded.  Market  share  thresholds 
would  be  more  appropriate  but  would  reduce  legal  certainty.  Moreover,  if  de  minimis 
concentrations  were  excluded  from  the  scope  of  the  Merger  Regulation,  they  would  no 
longer benefit  from  the "one-stop  shop" principle and could be subject to multiple national 
filings. 

132.  Because of the above-mentioned  definitional  problems, the Commission also considers that 
it  would  be  difficult  to  lift  the  suspension  under  Article  7  of  the  Merger  Regulation  for 
all  such  concentrations.  Consequently,  to  the  extent  that  the  notification  of  de  minimis 
operations  constitutes  an  undue  burden,  the  existing  procedure  should  be  simplified  as 
much  as  possible. 

-  31  -

133.  Under the current rules, the information  required  for de minimis  operations notified  to the 
Commission  is limited.  The  new form  CO27 provides  for  short-form  notification  in  cases 
where  the  turnover  of  a joint  venture  and/or  the  turnover  of  the  contributed  activities  is 
less than ECU  100 million  in the EEA,  and the total  value of the transferred  assets is less 
than ECU  100 million  in the EEA.  As to operations  other than joint  ventures,  no  market 
information  is  required where  the  combined  market  share  of the  parties  does  not  exceed 
15%  in  the  same product  market  and  any  individual  or  combined  market  share  does  not 
exceed  25% in  a  market  upstream  or  downstream  of  a  product  market  in  which  any  or 
more  of  the  parties  is  active.  These  provisions  already  reduce  the  burden  of  notification 
to  a  considerable  extent.  In  practice,  the  information  required  could  be  further  limited  if 
necessary,  on  the  basis  of  waivers  to  the  form  CO. 

134. 

In addition, the Commission  could take a short-form  decision  in de minimis  cases without 
having  to  await  the  expiry  of  the  legal  deadline.  These  procedural  improvements  would 
not  require  an  amendment to  the Merger  Regulation. 

E.  Turnover  calculation  for  credit  and  financial  institutions 

135. 

In  relation  to  credit  and  financial  institutions,  the  Merger  Regulation,  in  line  with  a 
number  of  Member  States'  national  merger  control  laws,  uses  assets  instead  of  turnover 
for  the  purposes  of  application  of  Article  1 (2).  In  order  to  determine  Community-wide 
turnover  and  the  application  of  the  two-thirds  rule,  assets  are  allocated  between  the 
Community  and Member  States in accordance with the ratio between  loans  and  advances 
to  Community  and  Member  States'  residents  and  their  total  loans  and  advances. 

136.  Two  problems  have  been  identified  with  the  Commission's  current  approach  : 

(i) 

(ii) 

a  notional  turnover  figure  calculated  on  the  basis  of  assets  excludes  certain 
transactions (eg. foreign  exchange and security dealing revenues) from  the notional 
turnover  figure; 

the  identification  of  the  residence  of  a borrower  is,  in  practice,  difficult  and  may 
vary  over the life  of the loan.  Consequently,  the geographic  allocation  of  turnover 
is  onerous  for  banks. 

137. 

In  order  to  alleviate  these  problems,  the  Commission  is  considering  changes  in  its 
approach: 

(i) 

Turnover 

138.  The  Commission  has  studied  whether  the  use  of  assets  or  gross  banking  income  would 
significantly  change  the  number  or  type  of  banks  that  would  be  subject  to  the  Merger 
Regulation.  On  the  footing  of this  evaluation,  it  has been  concluded  that  both  bases  give 
broadly  similar  results.  It  is,  however,  admitted  that  the  use  of  banking  income  would 
more  properly  reflect  the  economic  reality  of  banks'  operations. 

27  Annex to Commission Regulation  (EC) No 3384/94, of 21 December  1994, OJ L No 377, 31.12.1995, 1. 

-  32 

-

139.  Gross  banking  income  comprises,  at  least,  the  items  set  out  in  Article  28 B  (1),  (2),  (3) 
and  (4)  of  Directive  86/63 5/EEC  on  the  annual  accounts  and  consolidated  accounts  of 
institutions.  Therefore,  interest  receivable,  income  from 
banks  and  other  financial 
securities,  commissions  receivable  and  the  net  profit  on  financial  operations  would  be 
included  in  such  a  definition. 

140. 

It could be more appropriate to employ  gross as opposed to net banking income as a basis 
for  calculating  turnover.  This is because  net banking  income  effectively  equates to  gross 
profit  in,  for  example,  the  manufacturing  or  service  industries,  and  not  to  sales. 
Consequently,  using  such  a basis for  banks would  be inconsistent  with  the  Commission's 
general  approach  for  calculating  turnover.  However,  it  remains to be examined  which  of 
the  two  types  of  banking  income  would  more  accurately  reflect  the  economic  reality  of 
the  whole  banking  sector. 

(ii)  Geographic  allocation  of  turnover 

141.  The  Commission  appreciates  that  allocating  income  by  reference  to  the  location  of  the 
borrower  may  be  burdensome  on  banks.  Whilst  the  Commission's  notice  concerning  the 
calculation  of turnover provides that turnover arising from  services is, in general,  allocated 
to  where  the  customer  is  located,  the  notice  also  makes  an  exception  to  this  rule,  in 
respect  of  inter-bank  lending28.  Accordingly,  in  order  to  simplify  the  Commission's 
approach  it  can  be  considered  that  the  allocation  of  banking  income  should  be  based  on 
the  location  of  the  branch  of  the  bank  making  the  loan  or  providing  the  service. 

F.  Other  amendments  or  clarifications 

Ancillary  restrictions  in phase  1 

142. 

In  order to have an express legal basis for  the acceptance  of ancillary  restrictions in phase 
1  decisions,  the  following  provision  should  be  added  to  Article  6  (1) b: 
"The decision  declaring the concentration  compatible with the common  market  shall  also 
the 
cover  restrictions  directly 
concentration." 

related  and  necessary 

implementation  of 

the 

to 

Revocation  of Article  6  decisions 

143. 

In line with  Article  8 decisions, it should be expressly  provided  in the Regulation  that the 
Commission  may  revoke  a decision  taken  under  Article  6 (1)  a  or  6 (1)  b  where: 
"the  declaration  of  compatibility  is based  on  incorrect  information  for  which  one  of  the 
undertakings  is  responsible  or  where  it  has been  obtained  by  deceit." 

Article  7 

28  Cf  paragraphs  45  and  66  of  the  above-mentioned  Commission  notice  on  the  Calculation  of  Turnover. 

33 

-

144. 

145. 

In  order  to  harmonize  the  duration  of  suspension  of  concentrations  with  the  duration  of 
Phase  1, the  duration  of  suspension  under  Article  7  (1)  should  be  extended  from  three 
weeks  to  the  adoption  of  a  final  decision. 

It  was  stated  to  the  Commission  that  the  conditions  for  granting  a  derogation  from  the 
suspension  are too  strict.  In  particular,  it was  suggested  that  if  a  concentration  does  not 
raise  competition  concerns  -  in  the  case  of  de  minimis  operations,  for  instance  -  the 
Commission  should  be able to grant a derogation  where  appropriate,  even  if there  would 
be no serious damage to the undertakings concerned. In  order to allow for this possibility, 
Article  7 could  be  amended  accordingly. 

Article  10(4) 

146.  Article  10(4) provides for  the exceptional  suspension  of the four-month  period  for  taking 
an  Article  8  decision  in  cases  where,  owing  to  circumstances  for  which  one  of  the 
undertakings  involved  in  the  concentration  is  responsible,  the  Commission  has  had  to 
request  information  by  decision  pursuant  to  Article  11  or  to  order  an  investigation  by 
decision  pursuant  to  Article» 13.  This  provision  should  be  expressly  extended  to Phase  1 
proceedings. 

Calculation  of  the  turnover  of joint  undertakings 

147.  At  the  time  of  the  adoption  of  the Merger  Regulation,  the  Commission  and  the  Council 
considered  that the  review  of the thresholds  should  be combined  with  the  re-examination 
of the method  of  calculation  of turnover  of joint  undertakings  as referred  in  Article  5(5). 
This  has  in  the  meantime  been  clarified  in  the  above-mentioned  Commission  Notice  on 
the  Calculation  of  Turnover.  It  is not  considered  to be  necessary  to make  any  changes in 
this  respect. 

Third party  rights 

148.  Concern  was  expressed  with  regard  to the  short period  of time within  which  third  parties 

can  comment  on  phase  1 commitments.  This  matter  was  discussed  under  IV.C.  above. 

149. 

It  was  also  suggested  that  the  rights  of  third  parties  that  apply  in  writing  to  be  heard 
pursuant to Article  18 (4) of the Merger Regulation  should be extended  to all third  parties 
that are directly concerned by the Commission's objections.  The Commission will  examine 
whether  the  current  situation  should  be  changed  in  this  respect. 

"Undertakings  concerned" 

150.  The  Commission  will  review  the  text  of  the  Regulation,  in  order  to  remove  any 

ambiguities  or  inconsistencies  regarding  the  use  of.the  term  "undertakings  concerned". 

Y, 

CONCLUSIONS 

-  34 

-

151. 

In  light  of  the  above,  the  Green  Paper  concludes  the  following: 

-  In line with  subsidiarity,  it appears that the current thresholds for  the application  of the 
Merger  Regulation  should  be  reduced  in  order  to  cover  a larger  number  of  operations 
with  significant  cross-border  effects.  In  this respect,  a combined  world-wide  threshold 
of ECU  2 billion  and  a Community-wide  threshold  of ECU  100 million  for  each  of  at 
least  two  companies  involved  would  be  more  appropriate. 

-  In  order to  address the  problem  of multiple national  filings  in  particular,  another  more 
limited  solution  could  consist  in  bringing  within  the  exclusive  competence  of  the 
Commission  only  cases  of  multiple  notification  below  the  current  thresholds. 

-  A  number  of  other,  mainly  procedural,  improvements  to  the  Regulation  should  be 
considered,  including  inter  alia  the  treatment  of joint  ventures  and  the  acceptance  of 
commitments  in  the first, phase  of  investigation. 

152.  The Commission  welcomes a general  debate on the Green Paper  and  invites all  interested 

parties  to  submit  their  comments  by  31 March  1996. 

ANNEX  1 

Summary  of  the  survey  of  the  Member  States,  industry  and  advisers 

The  Member  States 

All  Member  States  were  requested  to  provide  infomation  relating  to  their  national  merger 
control  legislation, the number and identity  of cases treated in  1993 and  1994 and their means 
of  cooperating  with  other  national  authorities.  In addition,  their views  about the definition  of 
subsidiarity  in  merger  control,  and  about  amendments  to  the  Regulation,  apart  from 
thresholds,  were  sought.  All  Member  States  responded. 

Industry 

A  total  of  289  companies  from  the  EEA,  Switzerland,  Japan,  the  USA  and  Norway  were 
contacted whose businesses cover both manufacturing  and services. The questionnaires related 
to  the  companies'  experience  of  national  and  EC  merger  control  legislation,  the  benefits  of 
the  "one-stop  shop"  principle  and  whether  they  wished  for  any  changes  in  the  current 
thresholds.  A request for  examples of multiple national  filings  was also made. In addition the 
companies  were  asked  whether  any  other  changes  should  be  made  to  the  Regulation.  Total 
responses  amounted  to  118. 

Industry  associations. 

European  representative  bodies  as  well  as  national  industry  associations  were  contacted:  in 
total  40  questionnaires  were  despatched.  The questions  asked  were the  same  as  those  in  the 
questionnaire  for  companies.  Replies  were  received  from  25  associations. 

Advisers 

Questionnaires  were  sent  to  a total  of  54 advisers,  being  either  law  or  consulting  firms  with 
experience  of EC and national  merger control  law. These contained  questions relating to their 
attitudes to notification  practices, the system  of EC merger control,  changes in the thresholds 
and other amendments to the Regulation. A request for examples of multiple notifications  was 
also  made.  A  total  of  24  firms  responded. 

Questionnaires  sent 

Replies  received 

Response  rate 

Member  States 

Industry 

Associations 

Advisers 

15 

289 

40 

54 

15 

118 

25 

24 

100% 

41% 

63% 

44% 

^>" 

ANNEX 2 
National  merger  control  systems 

in  the  EEA 

Procedures : 
a)  Compulsory  notif. 
b)  Pre-merger  control 
c)  Post  merger  control 

Thrcsholds 
a)  Criteria 
b)  Level 

Statutory  time  limits 
a)  Phase 1 
b)  Phase 2 

Assessment  criteria 
a)  Dominance or 
restriction of 
competition 
b)  Other 

Sectoral  regulation 
a)  Sectors  excluded 
from  merger  control 
b)  Special  regulation 

a)Gross  assets or 
turnover of each  of at 
least  2 companies'. 

a)30  days  from  notif. 
or  receipt of 
information 

b)3  months  from  notif. 
or  rec. of  information 

a)yes 

a )-

b)employment  + other 
common  interest 
criteria 

b)newspapers and 
magazines: 
no  thresholds 

b)IR£  10m/IR£ 20m 
(Ecu  12,6m/Ecu 
25,2m)2 

a)Total  world-wide 
turnover 

b)SKr 4 b. 
(Ecu  430m) 

a)l  month 

a)yes 

b)4  months  from  notif. 
for  referral  to JA 
No  deadline  for JA 

b)public  interest 

Competent  body 
A  : 
administrative/ministerial 
body 
CA  : independent or 
autonomous  competition 
authority 
JA  : judicial  body 

IRL 

A  -> final decision 
CA -> opinion 

SWEDEN 

CA  -> clearance 
JA  -> prohibit. 

a)yes 
b)ycs 
c )-

a)yes 
b)yes 
c )-

The assets and turnover thresholds are not specifically  limited to Ireland and may be interpreted as referring to worldwide turnover or assets, provided that 
at least one of the enterprises involved is carrying on business in Ireland. In practice, the Department of Enterprise and Employment operates a "short-form" 
notification  procedure  leading to a "not notifiable"  letter to deal with the uncertainties associated with the Act's apparently  wide scope. 

These thresholds were converted  into ECU on the basis of the average rates for  1994. 

1 

\A3 

Competent  body 
A  : 
administrative/ministerial 
body 
CA  : independent  or 
autonomous  competition 
authority 
JA  : judicial  body 

Procedures  : 
a)  Compulsory  notif. 
b)  Pre-merger  control 
c)  Post  merger  control 

Thresholds 
a)  Criteria 
b)  Level 

Statutory  time  limits 
a)  Phase 1 
b)  Phase 2 

Assessment  criteria 
a) Dominance  or 
restriction of 
competition 
b)  Other 

Sectoral  régulation 
a)  Sectors  excluded 
from  merger  control 
b)  Special  regulation 

SPAIN 

A  ->final  decision 
CA  ->  opinion 
(+investigation  in 
phase  2) 

a)no 
b)yes 
c)within  5 years  from 
implement,  of 
concentration 

PORT 

A ->  final  decision 
.  CA -> opinion  (for 

phase 2) 

a)yes 
b)ycs. 
c )-

UK 

A  ->  final  decision 
CA  ->  opinion 

a)no 
b)yes 
c)  referral  to the 
MMC  (Monopolies 
and  Mergers 
Commission)  within 6 
months  after  implcm. 
or  receipt  of  inform. 

a)Market  share  in SP 

Total  turnover  in SP 

b)25%/20  b. pesetas 
(Ecu  125m) 

a)Market  share  in P 

Total  turnover  in P 

b)30%/Esc  30b 
(Ecu  180m) 

(pre-merger) 
a)Gross  assets  world 
wide  taken  over 
QI 
Market  share  in UK 

b)£70  in. 
(Ecu  90,9m)/25% 

a)l  month  from 
notification 

b)6  months  from 
notification 

a)yes 

a)-

b)international  com 
petitiveness,  econ. + 
tech.  progress,  improv. 
in distrib. 

b)  credit  and  financial 
institutions, 
insurance:  special 
thresholds 

a)50  work.days  from 
notif. 

a)yes 

a)Credit  and  financial 
institutions,  insurance 

b)95  work.days 
from  notif. 

b)Bilan  écon.  or 
international  compe 
titiveness. 

(for  pre-notification) 
a)35  work.days  from 
notif.  (for MMC rcf) 

b)6  (+3 months)  from 
date  of  reference 
No  deadline  for  Sccr. 
of  State 

a)yes 

a)-

b)public  interest 

b)  newspaper 
transfers,  mergers 
between  water 
companies,  media 

Competent  body 
A  : 
administrative/ministerial 
body 
CA  : independent  or 
autonomous  competition 
authority 
JA  : judicial  body 

Procedures  : 
a)  Compulsory  notif 
b)  Pre-merger  control 
c)  Post  merger  control 

Thresholds 
a)  Criteria 
b)  Level 

Statutory  time  limits 
a)  Phase  1 
b)  Phase 2 

Assessment  criteria 
a)  Dominance  or 
restriction of 
competition 
b)  Other 

Sectoral  regulation 
a)  Sectors  excluded 
from  merger  control 
b)  Special  regulation 

GR 

CA 
(A  may overrule  on 
grounds  of  public 
interest) 

a)yes 
b)yes 
c)notif  within one 
month  from  implem. 
of  concentration 

(pre-merger) 
a)Market  share  in GR 

QI 
Total  turnover  world-
wide+  Turnover of 
each  of at  least 2 
companies  in GR. 

(pre-merger) 
a)  1 month  from 
complete  notif. 
b)  3 months  from 
complete  notif.  (+ 
possibility  for 
extension) 

a)yes 

b)general  econ.  gains 
or public  interest 

a)-

bl)media 

BELG. 

A  ->  investigation 
CA  ->  decision 

a)yes 
b)yes 

b)25%/Ecu  50m/Ecu  5 
m. 

a)Market  share  in 
Belgium and 
Total  turnover 

b)25%/BEF  3 b. 
(Ecu 70m) 

a)l  month  from  notif. 

b)l  month  + 75 days 
from  notif. 
(suspension  possible, 
for  receipt of 
additional  infor.  etc.) 

a)yes 
b)technical  and econ. 
progress,  general  econ. 
importance, 
international  compe 
titiveness  provided 
that  restrictions are 
indispensable+ 
not  elimination of 
competition 

v/0 

b2)credit  institutions, 
insurance:  special 
thresholds 

a)-

b) banks, credit and 
financial  institutions, 
insurance:  special 
thresholds 

FR. 

GER. 

Compétent  body 
A  : 
administrative/ministerial 
body 
CA  : independent  or 
autonomous  competition 
authority 
JA  : judicial  body 

Procedures  : 
a)  Compulsory  notif. 
b)  Pre-merger  control 
c)  Post  merger  control 

Thresholds 
a)  Criteria 
b)  Level 

Statutory  time  limits 
a)  Phase  1 
b)  Phase  2 

Assessment  criteria 
a)  Dominance  or 
restriction of 
competition 
b)  Other 

Sectoral  regulation 
a)  Sectors  excluded 
from  merger  control 
b)  Special  regulation 

A  ->  final  decision  + 
investigation 
CA  ->  opinion  + 
investigation  (for 
phase  2) 

a)no 
b)yes 
c)any  time  after 
implementation. 

a)Total  turnover  in FR 
+ turnover  of  at  least 
2  comp.  or 
market  share  in 
France 

a)2  months  after 
notification 

b)6  months  after 
notification 

a)yes 

b)bilan économique  et 
social 

a-b)press and  audio 
visual  sector 

b)7bFF+2bFF 
(Ecul060m+ 
300m)/25% 

CA 
(A:  application  for 
exceptional  ministerial 
authorisation) 

a)  yes 
b)  yes 
c)  1 year  after 
complete  notification 
(post-merger  control) 

Pre-merger  control 
a)  World-wide 
turnover  of  one 
company  or  World 
wide  turnover  of  each 
of  at  least  2 comp. 

a)  1 month  after 
complete  notification 

b)  +  3 months  (can  be 
extended  by  common 
agreement) 

b)  DM  2 b./l  b.  (Ecu 
1,04  b. /520  m.) 

Post-merger  control 
Combined  world-wide 
turnover  of  all  parties: 
DM  5Û0 m.  (ECU  260 
m) 

a) yes  (CA) 

a )-

b)  public  interest 
(exceptional  cases:  A) 

b)credit  institutions, 
insurance:  special 
thresholds 

b2)  special  rules  for 
turnover  calculation 
-  in  the  retail  sector 
-  in  newspapers  and 
magazines 

Competent body 
A  : 
administrative/ministerial 
body 
CA  : independent  or 
autonomous  competition 
authority 
JA  : judicial  body 

Procedures : 
a) Compulsory  notif. 
b) Pre-merger control 
c) Post merger control 

Thresholds 
a) Criteria 
b) Level 

Statutory  time limits 
a) Phase 1 
b) Phase 2 

Assessment criteria 
a) Dominance or 
restriction of 
competition 
b) Other 

Sectoral regulation 
a) Sectors excluded 
from  merger control 
b) Special regulation 

IT. 

CA 
(general interest 
criteria can be set by 
A for application by 
CA;  no such criteria 
are set at the moment) 

a) yes 
b) yes 
c)  -

a)Total turnover in IT 
or turnover of target 
in IT. 

a) 30 days from 
receipt of complete 
notification 

b)L 606 b/60,6 b 
(ECU 300m /30 m) 

b) + 45 days (+30 
days except., for addit. 
inform.) 

a) yes 

a)-

b) general interests of 
the national economy 
(see first column) 

b)Film production 
and distribution: 
special thresholds 

AUS. 

JA 

A 

NED. 
(not yet 
in force) 

a) yes 
b) yes 
c) yes (for smaller 
concentrations, 
obligation to  inform 
JA) 

a) yes 

b) yes 

c)-

(for pre-merger) 
a) Total turnover and 
Turnover of each of at 
least 2 comp. 
worldwide 

b) Sch 3,5b/5m (Ecu 
250m/0,36m) 

a) Total turnover and 
turnover of each of at 
least 2 comp. in NED. 

b) GUIL 250m/30m 
(ECU 116m/14m) 

a) 4 weeks from 
complete  notification 

a) yes 

b) 5 months  from 
complete  notification 

b) Bilan concurr. 
intern, compet. 

a) 4 weeks from 
receipt of  notification 

a) yes 

b)  13 weeks from 
receipt of  notification 

b) general economic 
interest 

a )-

bl)  media 

b2) banks, insurance: 
special thresholds 

a) banks, insurance 

^ 
Ù 

Competent  body 
A  : 
administrative/ministerial 
body 
CA  : independent  or 
autonomous  competition 
authority 
JA  : judicial  body 

Procedures  : 
a)  Compulsory  notif. 
b)  Pre-merger  control 
c)  Post  merger  control 

Thresholds 
a)  Criteria 
b)  Level 

Statutory  time  limits 
a)  Phase  1 
b)  Phase  2 

Assessment  criteria 
a)  Dominance  or 
restriction  of 
competition 
b)  Other 

Sectoral  reeulation 
a)  Sectors  excluded 
from  merger  control 
b)  Special  regulation 

Iceland 

CA->  final  decision 

a)  no 

b)  yes 

c)  yes 

Norway 

CA->  final  decision 

a)  no 

A->  appeal  of  CA's 
decision 

b)  yes 

c)  yes 

a )-

b)  2 months  after 
becoming  aware  of  the 
merger  or  takeover 

a )-

b)  6  months  after  the 
agreement  to  acquire 

a)  yes 

b)  no 

a)  yes 

b)  no 

a)-

b)-

a)  none 

b)  none 

a) assumption  of  a 
dominant  position  or 
reduction  of 
competition  in  Iceland 

b)  none 

a)  creation  or 
strengthening  of  a 
significant  restriction 
of  competition 
contrary  to  the 
achievement  of  an 
efficient  utilization  of 
society's  resources  in 
Norway 

b)  none 

>r 

ISSN 0254-1475 

COM(96) 19 final 

DOCUMENTS 

EN 

08 

Catalogue number  : CB-CO-96-050-EN-C 

ISBN 92-78-00181-3 

Office  for Official Publications of the European Communities 

1^2985 Luxembourg