The EU Merger Control: Jurisdictional Matters

 

Combination of forces resulting from a concentration may reduce competition, and that is why the European Union Merger Regulation provides a mechanism for the control of concentrations between undertakings. EU merger control is governed by Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger Regulation). This regulation complements Articles 101 and 102 of the Treaty on Functioning of the European Union and has subject to limited exceptions, exclusive jurisdiction within the EU over “concentrations” that have a so-called “Community dimension”.

In Europe there are two levels of merger control: (1) EU merger control for transactions with a “Community dimension” and (2) national merger control for those transactions which do not meet the EC Merger Regulation criteria, but qualify for investigation under the national law of individual Member States.

For the application of the EC Merger Regulation, as noted above, it applies to “concentrations” with a “Community dimension”:

Definition of concentration. In Accordance to Article 3 of the EU Merger Regulation concentration is deemed to arise where a change of control on a lasting basis results from:

  • The merger of two or more previously independent undertakings or parts of undertakings;
  • The acquisition, by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of control of the whole parts of one or more other undertakings; or
  • The creation or extension of a joint venture performing on a lasting basis all the functions of an autonomous economic entity.

In this context, the decisive factor is the criterion of gaining control of one or more undertakings. Article 3 (2) defines control as the ability to exercise “decisive influence” over an undertaking, in particular, trough the ownership or right to use all or part of its assets or the existence of contracts conferring decisive influence on the composition, voting or other commercial decisions of the undertaking.

Community Dimension. A concentration has a Community dimension if the following criteria are met (Article 1):

  1. the combined aggregate worldwide turnover of all the undertakings concerned is more then EUR 5000 million; and
  2. the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more then EUR 250 million.

Where these thresholds are not met, the secondary thresholds apply and are satisfied if:

  1. the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 2500 million;
  2. in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100 million;
  3. in each of at least three Member States included for the purpose of point (b), the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25 million; and
  4. the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 100 million.

The Community dimension test does not require the parties to the concentration to have any links with the EU other than the requisite turnover. Therefore, it is not necessary that the agreement shall be signed or performed in the territory of the EU, but only that the concentration has a substantial effect in the Community.

 

References:

 

The EC Merger Regulation

http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32004R0139

 

 

 

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