COMPETITION LAW OF THE EUROPEAN UNION

Competition Law of the European Union

Competition Law of the European Union

Introduction

On 18 June 2009, the Commission adopted a report on the application of the EC Merger Regulation after five years of operation since its entry into force in May 2004. The report is a stock-taking exercise, the main aim of which is to examine the operation of the notification thresholds provided for by Article 1 of the Regulation. The thresholds are a mechanism for allocating merger cases between Community level and national level. The report also evaluated the operation of the referral instruments provided for by Articles 4, 9 and 22.3 In a number of areas, the report highlights aspects that merit further discussion, but leaves open the question of whether any amendment to the existing rules or practice is appropriate. The report will serve as a basis for the Commission to assess, at some further stage, whether or not it is appropriate to take further policy initiatives. The report was preceded by consultations with the Member States' competition authorities ('NCAs') and stakeholders. One important feature of the EC Merger Regulation is the exclusive jurisdiction of the Commission to review concentrations that have a Community dimension. The concept that the Commission should have sole competence to deal with such mergers follows from the principle of subsidiarity. From the viewpoint of the European business community, the Commission's exclusive jurisdiction also provides the advantage of a 'one-stop-shop', which is regarded as essential in keeping the regulatory costs associated with cross-border transactions at a reasonable level. In addition, the Commission's exclusive jurisdiction to vet such mergers is an important factor in providing a 'level playing field' for mergers that result naturally from the completion of the internal market. This is widely accepted as the most efficient way of ensuring that all mergers with a significant cross-border impact are subject to a uniform set of rules. 

The division of competence between the Commission and the NCAs is based on the application of the turnover thresholds as set out in Article 1.4 It is also supplemented by three corrective mechanisms. The first corrective mechanism is the so-called 'two-thirds rule'. The objective of this rule is to exclude cases which contain a clear national nexus to one Member State5 from the Commission's jurisdiction. The second corrective mechanism is the pre-notification referral system introduced in 2004. This mechanism allows for the re-allocation of jurisdiction to the Member States under Article 4(4) or to the Commission under Article 4(5) when certain conditions are fulfilled.6 The initiative is in the hands of the parties prior to notification. Such referrals are subject to approval by both the Member States and the Commission under Article 4(4) and solely by the Member States under Article 4(5). The third corrective mechanism is the post-notification referral system whereby one or more Member States can request that the Commission assess mergers even though they fall below the thresholds of the EC Merger Regulation (Article 22). Conversely, a Member State may, in cases that have been notified under the EC Merger Regulation, request the transfer of competence to the NCA under certain conditions (Article 9) 

The European Community (EC) has come a long way since its initial attempts at ...