EU consults on improvements to merger rules


On 7 October 2016, the European Commission launched a public consultation to assess the performance of the EU Merger Regulation1 (“EUMR”). The Commission invites all interested stakeholders to provide their input before 13 January 2017.

The key new area covered by this consultation relates to the effectiveness of the existing EUMR turnover thresholds. The Commission questions whether the current turnover-based jurisdictional thresholds capture all transactions that could have a significant impact on the internal market.

The Commission also seeks feedback on three areas that had already been identified in the 2014 White Paper “Towards More Effective EU Merger Control” (the “White Paper”),2 i.e. (i) further simplification for cases that clearly do not raise competition concerns; (ii) simplification of the case referral system; and (iii) clarification of certain technical and procedural aspects of the EUMR.

EUMR jurisdictional thresholds

The Commission notes that there may be an enforcement gap arising from the current turnover-based jurisdictional thresholds. Such a gap would be particularly relevant in the pharmaceutical and technology sectors, where the acquisition target might have a very significant growth potential – and therefore potentially competitive significance - without this being reflected in current sales revenues.

Commissioner Vestager recently gave the examples of a biotech company that owns products under development, or a tech company with access to significant amounts of valuable data that the company has not yet managed to turn into sales. A concrete example of the latter situation is the 2014 Facebook/WhatsApp acquisition, where Facebook paid $19 billion for WhatsApp, even though WhatsApp had low sales revenues. As a result, the transaction fell below the EUMR turnover thresholds and only ended up at the Commission because it was referred by Member States to Brussels.

Against this background, the consultation seeks information from stakeholders on any recent experiences of any significant cross-border transactions in the digital economy, pharmaceutical or other sectors which have not been captured by the EUMR turnover thresholds.

More significantly, stakeholders are asked whether they would support an alternative test based on deal value, or any other objective set of parameters that they could propose. In connection with the deal value test, the Commission is seeking further feedback on whether it should be general or sector-specific, and whether its scope should be limited by further geographic or other criteria.

Within the EU, some Member States have also echoed the need for reform. For instance, in July 2016 Germany published a proposed draft amendment to the Competition Act, introducing a new threshold based on transaction value which would enable the German Federal Cartel Office to review transactions in the digital economy involving at least one party with insufficient turnover to require notification.

Simplified procedure

The expansion of the ‘simplified procedure’ under the EUMR, brought by the 2014 reform, has resulted in a 10% increase of cases dealt with under the simplified procedure.

The Commission seeks feedback on:

  • whether the scope of the simplified procedure should be extended;
  • whether extra-EEA joint ventures should be excluded from the EUMR; and
  • whether the simplified regime should be modified to a self assessment, exemption regime, or become more flexible, for example by an exemption from the standstill requirement for cases falling under the simplified procedure.

The Commission seeks stakeholders’ views on certain proposals mentioned in the White Paper with the objective of increasing the efficiency of case referrals including:

(i) abolishing the requirement for self-referring parties to file a Form RS first and get approval for a referral;
(ii) expanding the Commission’s jurisdiction to the territory of the entire EEA (as opposed to the territory of only those Member States joining the request); and
(iii) abolishing the requirement for self-referring parties to state that the transaction may ‘significantly affect competition in a market’.

Technical aspects

The Commission invites stakeholders to comment on whether the EU merger regime could be further improved by some technical proposals contained in the Commission Staff Working Document that accompanied the White Paper, including:

(i) more flexibility for notification of mergers executed without a public takeover bid;
(ii) clarifying the methodology for turnover calculation;
(iii) more flexibility for investigation time limits (and the Commission requests details of past experiences of time limits);
(iv) aligning the scope of the Commission’s power to require dissolution of partially implemented transactions incompatible with the internal market with that of the suspension obligation;
(v) refining Article 5(2)(2) to capture only cases of real circumvention of the EUMR rules;
(vi) clarifying that "parking transactions" should be assessed as part of the acquisition of control by the ultimate acquirer;
(vii) amending the EUMR to allow appropriate sanctions against parties for improper disclosure and to clarify that referral decisions based or false information can be revoked.

Consultees are also invited to suggest improvements not covered in the document.


The major development with this consultation is the potential modification of the EUMR jurisdictional thresholds, which have remained the same for more than 12 years. The introduction of deal value (or alternative objective thresholds), even though it is a solution adopted in other merger control regimes, should be considered carefully, as it could result in a significant increase in the number of filings and potentially lead to uncertainty about filings to be made. It will also lead to more cases where competition would be potential and will therefore necessitate a rigorous application of the standards of evidence required before intervention is contemplated, in Phase I and Phase II.

The other areas of consultation – simplification, case referrals and technical aspects – are not new, as they build on the conclusions already drawn by the White Paper. Simplification in the case referral system, the exclusion of extra-EEA joint ventures and other efforts towards further simplification are generally supported by stakeholders, as the Commission is already aware from reactions to the publication of the White Paper.

Finally, it is worth noting that minority shareholdings are not covered by the consultation at this stage. The Commission indicated that it is still working on a solution, but no immediate change is foreseen for now (see Commissioner Vestager’s speech in March 2016 here).

1 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings.
2 COM(2014)449 final.