Merger Control Research Articles

The Evolution of Theories of Harm in EU Merger Control

The Evolution of Theories of Harm in EU Merger Control

The SIEC Test in German Merger Control

The SIEC Test in German Merger Control

UK merger control post Microsoft/Activision: Phase 3, behavioural remedies, and the beginning of the end of the panel?

This article critically examines the procedure adopted by the Competition and Markets Authority in its review of Microsoft’s anticipation acquisition of Activision, which concluded on 13 October 2023, and what it might tell us about the next decade of CMA merger enforcement. It explores how the notion of ‘material change of circumstances’ was successfully deployed by the parties to overturn the CMA’s initial prohibition decision and how this ‘second bite of the cherry’, or ‘Phase 3’ might be utilized in future cases. It explains how, unlike the cases that came before it, Microsoft/Activision forced the CMA to overturn its Final Report and accept a negotiated settlement in place of defending the prohibition decision in the CAT, sidelining the Panel. It considers whether the case has set a precedent (however exceptional) for the CMA to accept re-notification of substantially the same merger after an initial prohibition decision, and whether fix-it-first (or ‘fix it last’) behavioural remedies may now find even more favour, including once the CMA’s Digital Markets Unit joins the show. It concludes with an examination of how the CMA’s approach in this case, coupled with its proposed reforms to the Phase 2 process, may presage the beginning of the end of the CMA’s panel system in UK merger review.

Theories of harm for digital mergers

Merger control plays a crucial role in ensuring that digital markets work for consumers. The growing prominence of digital firms has brought about substantial benefits for society, but also novel challenges that require competition authorities to adapt their analytical approach and evidence gathering. In the UK, the Competition and Markets Authority has evolved its approach to assessing mergers in digital markets to take account of the particular features of competition in those markets, including by updating and revising its Merger Assessment Guidelines in 2021. This article discusses the CMA’s approach to reviewing digital mergers, including, by reference to a number of recent cases, how it assesses the horizontal, vertical and conglomerate effects of such mergers.

Structure and Enforcement of the SIEC Test – Analyzing the CK Telecoms Judgment of the Court of Justice

Abstract The Court of Justice in its judgment of 13 July 2023 in CK Telecoms has dealt with important questions about the construal and the enforcement of the SIEC test. The decision had been awaited eagerly, since it was the first case in which the Luxembourg courts decided on the direct application of the SIEC criterion outside the scope of the notion of market dominance since the entering into force of the new EU Merger Control Regulation (EUMR) in 2004. Core issues are the burden of proof and the standard of proof, the definition of certain theories of harm, as well as the dealings with efficiencies. The following article analyzes the judgment and draws general conclusions on doctrines behind the SIEC test.

Sword of damocles? Assessing the compulsory sharing of essential data under the Chinese competition law

ABSTRACT As data have become an increasingly important asset of modern companies in the digital era, certain types of data, known as ‘essential data’, have become particularly crucial in market competition. The refusal to share ‘essential data’ may raise competition-relevant concerns, and the intervention by competition law to ensure its sharing is thus in demand. Yet, three dimensions should be carefully assessed before the legal interventions are deployed and applied. First, clear criteria should be crafted for identifying ‘essential data’. Second, it is vital to assess the role of ‘essential data’ concerning potential abuses of market dominance and merger control by corporations. Finally, the reasonable conditions under which the sharing of ‘essential data’ is compelled should be specified.

Taking aim at innovation-crushing mergers: a killer instinct unleashed?

Abstract The European Union (EU) has assigned competition policy an important role as part of an extensive new agenda to stimulate innovation, including by fostering the growth of small and medium-sized enterprises (SMEs). The ability of EU merger control to be receptive and responsive to innovation harms has therefore come under scrutiny, with some observers doubting its capacity to address innovation-crushing ‘killer acquisitions’ of innovative SMEs. This article reflects on several recent developments that have shaped the EU’s response to these doubts. Substantively, the more central role afforded to innovation considerations in the European Commission’s recent enforcement practice may well demonstrate its willingness to engage with innovation theories of harm in mainstream merger control going forward, although questions remain about the standards and methodology it can adopt under the EU Merger Regulation (EUMR). Jurisdictionally, the recalibrated approach to the Article 22 EUMR referral mechanism—assisted, in certain circumstances, by the new pre-merger information obligation for digital gatekeepers under Article 14 DMA—is capable of bringing an almost boundless range of cases before the Commission. The Towercast judgment casts the net further still, by confirming the potential for below-threshold mergers to face ex post reviews at the national level under the Article 102 TFEU abuse of dominance prohibition. The effect of these developments is that the Commission and national competition authorities may now be better equipped to unleash a killer instinct when faced with innovation concerns arising from killer acquisitions. However, an unwelcome pendulum swing towards over-enforcement risks untold harm to legal certainty, merger activity, and innovation itself.

Is green becoming a grey area? A discussion on sustainability and merger control

The European Commission recently published revised horizontal guidelines that specify the conditions under which cooperation agreements that deliver significant sustainability benefits may be exempted. This is in sharp contrast with merger control where no change to the current framework has been considered. This article therefore assesses the extent to which current EU merger control is well suited to deal with the impact that mergers may have on sustainability. A review of all EU merger cases from the past 10 years shows that the current framework focuses on direct consumers’ preferences. As such, it ignores both positive and negative externalities mergers may have on sustainability. This article sets out a potential analytical framework to consider these externalities in merger assessment but concludes that properly considering them is likely to raise practical challenges. Driving change in companies’ behaviours and consumer preferences through regulation may be a better instrument to support sustainability objectives.

The race towards a more sustainable future: is current State aid policy fit for purpose?

Sustainability continues to gain traction as an important principle to be factored into competition law analysis, across antitrust, merger control and State aid. This article provides an overview of the mechanisms that are currently being introduced (and those already in place), to pursue sustainability objectives in the EU State aid framework. While the article focuses on the different aspects of the EU State aid rulebook, the analysis takes place against a broader international backdrop, with the US Inflation Reduction Act’s subsidies being a prime example of non-EU funding in the race to the ‘green transition’. As times have changed, so has the EU’s approach to State aid policy, and what comes out of the analysis of the constantly developing framework for sustainable State aid, is a gradual but clear convergence towards the incorporation of sustainability considerations into subsidies regulation, at the level of both legislative initiatives and judicial interpretation by the Court of Justice of the EU. While this is a development broadly in the right direction, the article points out the geopolitical risks associated with an inadvertent green subsidies war, as well as the risk – within the EU itself – of amplifying existing economic inequalities, due to the playing field being tilted in favour of Member States with deeper pockets.

Digital dominance: assessing market definition and market power for online platforms under Article 102 TFEU

ABSTRACT The traditional, price-focused antitrust tools for assessing dominance under Article 102 TFEU and merger control are challenged by the business models and features of multisided digital platforms. This article demonstrates the importance of data in digital markets and how data enable the utilization of network effects and economies of scale in a manner that challenges the traditional dominance evaluation. Based on this, the article systematizes the solutions to the challenges caused by decreased accuracy of price-based tools through an analysis of various approaches to the issue. It is argued that potential competition should be emphasized more strongly throughout the dominance assessment and that different approaches can be chosen based on the case at hand. Thus the article contributes to the development of the dominance analysis for digital markets with a thorough overview of possible solutions and ties it to the proposed renewal of the Market Definition Notice.

When should EU merger assessment address privacy? The conditions for addressing privacy issues under the EU merger control regulation

ABSTRACT The advent of digital companies has brought benefits to society. Nevertheless, the digital era poses significant risks to consumers’ privacy. The combination, through mergers, of enormous datasets could raise further privacy concerns. It has been much discussed whether and how consumer privacy concerns should be introduced within merger assessment. This paper approaches this issue from another perspective and reflects upon the circumstances under which the EU Merger Control Regulation (EUMR) has a role to address privacy issues. Accordingly, this paper clarifies the conditions that must be satisfied in order for privacy issues to fall within the EUMR’s ambit. First, privacy should be a parameter of competition on the market and second, there must be a causal link between the merger and privacy deterioration. Following this, the paper turns to critically analyse the Commission’s treatment of privacy issues in objectively selected mergers involving some of the most powerful digital companies.

Merging for a sustainable future: integrating sustainability-driven efficiency claims into the merger control assessment

In the assessment of efficiencies, the European Commission narrowly interprets the conditions set out in the Horizontal Merger Guidelines which must be satisfied for each efficiency claim. Considering certain features of sustainability-driven efficiency claims, if the Commission maintains its current approach in analysing these claims, it may disproportionately limit the success of such claims. To avoid any impediment to the pursuit of sustainable goals through mergers, the Commission’s approach to the relevant conditions should change. There are some alternative models and means of assessment of efficiency claims that can be used to strike the right balance between promoting competition and sustainability.

Media plurality assessment as a public interest concern in UK merger control

In the UK, following the enactment of the Communications Act 2003, amending the Enterprise Act 2002, the assessment of mergers involving broadcaster and/or newspaper enterprises is subject to – alongside the regular competition standard under the ‘substantial lessening of competition’ (SLC) test – a public interest standard. Under this standard, certain media mergers need to be assessed pursuant to the following considerations: media plurality, broadcasting standard objectives and free expression of opinion grounds. While the statute defines these terms ambiguously, it does provide guidance to the Secretary of State, the competition authority and the courts to decide how the statute is intended to be applied consistently. The paper will analyse how the media plurality test has been applied, some of the considerations of the CMA and OFCOM, and in doing so it will touch on the discretion of the decision making stakeholders.

Closing the tech acquisitions enforcement gap: from article 22 to article 102

ABSTRACT Platform power poses a number of challenges for competition authorities. One concern is that big tech companies may harm competition through the acquisition of emerging companies with a high competitive potential. Such acquisitions may escape ex ante merger control if they do not reach the turnover threshold for mandatory notification. The Commission sought to bridge this enforcement gap with its Article 22 guidance and the Digital Markets Act. This paper evaluates the steps taken by the Commission to increase scrutiny of such mergers. Building on this discussion, the paper examines the AG opinion in Towercast and analyses the residual gap-closing function of Article 102 TFEU. The aim of this paper is to bring the new developments surrounding digital merger control together and assess whether they represent an adequate response to the challenges posed by the digital economy.

Novel Merger Control Practices Expanded the Commission’s Jurisdiction to Review Concentrations beyond EUMR Thresholds

Novel Merger Control Practices Expanded the Commission’s Jurisdiction to Review Concentrations beyond EUMR Thresholds

The Foreign Subsidies Regulation of the European Union: A New Instrument Levelling the Playing Field?

The European Union (‘EU’) has adopted a Foreign Subsidies Regulation (‘FSR’) to address potential distortions of competition in EU markets caused by subsidies granted to companies by non-EU governments. The FSR aims to level the playing field for all companies active within the EU and to close a regulatory gap left by existing frameworks (such as the EU’s State aid and merger control regimes or trade defense instruments). This article provides a comprehensive overview of the FSR and the accompanying Implementing Regulation and reflects upon their practical implications for companies engaging in economic activity in EU markets. Has a simple idea (i.e., extending the controls already applicable to government support by EU Member States also to support by non-EU governments) morphed into a bureaucratic monster burdening companies with needless red tape? Will the FSR achieve its goals effectively or will it put too much strain on the European Commission’s resources? Is the FSR about fair competition or is it simply protectionist? European Union, subsidies, mergers, acquisitions, M&A, public procurement, government contracts, State aid, competition, trade defense, Foreign Subsidies Regulation, FSR

Correction: The evaluation of innovation in merger control: a comparison between China and other jurisdictions

Correction: The evaluation of innovation in merger control: a comparison between China and other jurisdictions

EU merger control at a crossroads – CK Telecoms as an Opportunity to Clarify the SIEC Test of Unilateral Effects

EU merger control at a crossroads – CK Telecoms as an Opportunity to Clarify the SIEC Test of Unilateral Effects

The evaluation of innovation in merger control: a comparison between china and other jurisdictions

The evaluation of innovation in merger control: a comparison between china and other jurisdictions

A review of 2021 and 2022 EU merger control

This article covers key developments in EU merger control in 2021 and 2022. These include the publication of the EC’s Guidance on the Article 22 EUMR referral mechanism and the developments in the Illumina/GRAIL case. There were also important CJEU judgments, including on competitive assessment of transactions by the EC as well as breaches of the standstill obligations by the merger parties. In 2021 and 2022, the EC adopted six Phase II conditional merger clearances, most of which were based on structural, rather than behavioural, remedies. The EC also prohibited two transactions, and a number of deals were abandoned in particular because of issues identified by the EC. Other main developments include the EC’s decision on Hungary’s violation of Article 21 EUMR as well the publication of the draft revised Market Definition Notice.