For the first time in over a decade, the General Court of the European Union has annulled a European Commission (EC or Commission) decision to block a deal. This is a rare setback for the EC’s merger control program.
The ruling overturns a January 2013 move by the EC to stop global package delivery company, United Parcel Service (UPS), from acquiring a rival, TNT Holdings. The EC’s decision turned on its finding that the transaction would have restricted competition in 15 Member States regarding express delivery of small packages to other European countries. The Commission argued that the transaction would remove one of the four top players in Europe, leaving DHL as the only remaining significant competitor and FedEx as a distant third, with a European network lacking the density and scale to exert a meaningful competitive constraint on a combined UPS/TNT.
In an unprecedented move, the parties to a planned merger transaction have brought an action for annulment against the European Commission’s decision to initiate proceedings even before the proceedings are closed.
Under the EU Merger Regulation (“EUMR”), the Commission’s review procedure is divided into two phases: “Phase I”, which is normally limited to 25 working days, serves to separate unproblematic cases from cases that require a deeper analysis. At the end of phase I, the Commission must either clear a transaction (if it does not find significant competition concerns or if it concludes that it has no jurisdiction) or it must initiate “phase II” (if it has serious doubts as to the transaction’s compatibility with the EU law). While a decision to open phase II does not prejudice the final outcome – the Commission may still clear the transaction – it significantly increases the burden in terms of cost and inconvenience for the merging parties. The opening of phase II normally entails a significant delay of several months, and during that time and until the Commission issues a clearance decision, the parties may not close the transaction.
The European Commission has launched a public consultation to evaluate several aspects of EU merger control for possible revision. Stakeholders are invited to provide feedback until 13 January 2017. A link to the questionnaire can be found here.
The current consultation partly builds on previous efforts to improve and simplify the EU merger control regime, including the so-called “Simplification Package”, which has been in force since January 2014.
The German government has recently published a bill that would significantly amend the criteria for determining whether an M&A transaction is subject to German merger control.
Currently, the applicability of the German merger control rules depends primarily on the revenues of the firms participating in a transaction. A concentration needs to be notified to the German competition authority – the Bundeskartellamt – where all the following three turnover thresholds are met: (i) EUR 500 million worldwide, (ii) EUR 25 million in Germany, and (iii) EUR 5 million in Germany. The 500 million threshold (i) refers to the sales achieved by all of the parties combined in their last completed financial year. The other two thresholds (ii) and (iii) refer to the individual sales of two parties to the transaction (e.g., the acquirer, on the one hand, and the business being acquired, on the other). Where the notification thresholds are met, the parties are subject to a standstill obligation. They must not consummate the transaction until it has been cleared (or is deemed to have been cleared) by the Bundeskartellamt.
Are patients receiving the best care in hospitals? The German competition authority – Bundeskartellamt – has now decided to apply a health check to the German hospitals market.
On May 31, 2016, the German competition authority announced that it was launching a so-called “sector inquiry” into the hospital services market to examine the degree of competition in that sector of the economy.
Many manufacturers of branded goods, who have expressed concerns about the image of their products and worry that these are sold on the cheap, have sought to restrict the use of the Internet by their distributors. In particular, distribution agreements oftentimes include provisions that ban sales via online marketplaces such as eBay and Amazon Marketplace. The legality of such sales bans has repeatedly been questioned by the German competition authority (Bundeskartellamt) and before the German courts. The manufacturer adidas AG, for instance, recently changed its distribution agreements following pressure from the German competition authority to allow the members of its distribution system the sale of adidas sports gear via online platforms. READ MORE