Rhino: EU Merger Control Analysis

Rhino: EU Merger Control Analysis

Like the rhino in the animal kingdom, the EU merger control regime is an obvious and straightforward force in the global merger control landscape. Although it may, at times, appear slow-paced or brutish, it can be surprisingly swift to react when threatened and its instinct is to charge directly at whatever has spooked it.

Rhino is our digital platform for EU merger control analysis with statistics, updated monthly, and commentary.

Three statistics modules focus on Phase I and Phase II intervention rates, the length of prenotification and formal procedure durations and remedies from 2011. The statistics sustain that three themes impact deal review in the EU: intervention rates are increasing, deal reviews take longer and remedies are getting tougher. Click on the boxes below to explore.

Three themes impacting deal review in the EU

Phase I

The number of deals cleared by the European Commission in Phase I (in non-simplified cases) subject to remedies has increased from 9% of cases to 16% in the past ten years. It is now statistically less likely to achieve unconditional clearance in Phase I.

Pie charts and stats

Phase II

In Phase II, on average, prohibition decisions have increased from 10% to 14%. The number of cases which are withdrawn or abandoned in Phase II has increased from 10% to 17%. We have gone from 20% of deals not getting through, to almost one third of deals not getting through.

Pie charts and stats

On average, in 2012, a Phase II investigation lasted an average of 9 months, including prenotification and formal review. In 2020 that number was 15 months, an increase of more than 65%. 2020 is an outlier year with many Phase II cases being delayed due to pandemic related market changes. But if you take the average of 2016, 2017 and 2018 you still arrive at an increase of more than 40% in the length of time you can expect for a Phase II case compared to 2012.

The increase in the duration of the formal review is, in part, due to the increased use of the stop the clock mechanism.

Phase II case duration – prenotification and formal review duration in months*

bar charts and stats

Phase II cases with at least one stop-the-clock

bar charts and stats

If you look at prenotification duration in Phase I remedies cases, you also see an upward trend. In 2011, on average, the prenotification period was 4 months. In 2020 that number was 6.5 months. In the pre-pandemic years 2017, 2018, 2019, prenotification lasted 5.2 months on average, which is still an increase of more than 30% compared to 2011.

Phase I remedies cases – prenotification duration in months*

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In 2021, we see, so far, a continued increase of the prenotification duration compared to 2020, suggesting that the long term trend is still upwards.

*Data points for prenotification duration that fall outside a two standard deviation boundary are not included in the graphs on this page. If you would like to receive the graphs including all prenotification data points, please email Rhino@linklaters.com.

The EC is increasingly requiring up-front buyer remedies, where the parties cannot close the transaction before having entered into a binding agreement with an approved purchaser. This occurs where it is unclear if there will be suitable purchasers.

We also see an increase in fix-it-first remedies in 2016-2020 compared to 2011-2015. The parties must identify a purchaser, have it approved by the EC and enter into a binding agreement before clearance.

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Remedies cases in manufacturing sectors (2015-2020)

Despite the increase in remedies in 2016-2020, compared to 2011-2015, divestitures in the manufacturing sectors aren’t soft in terms of the substantive overlap that needs to be divested. Only in 20% of cases less than the full overlap has been divested. And chances of the EC accepting such divestiture are not necessarily higher in Phase II compared to Phase I. This shows two things: it is difficult to get away with less than the divestment of the full overlap, but it’s not entirely excluded. And parties do not necessarily get a better deal in Phase II compared to Phase I.

bar charts and stats

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