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Merger Control – A New Policy Enables Post-closing Reviews of Deals Even Where No National Filing Thresholds Are Met

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Executive Summary

  • The European Commission (Commission) has issued new guidance on when it will accept referrals of merger control reviews from EU national competition authorities. The new guidance was published on 26 March 2021 with immediate effect.
  • In a change of policy, the Commission will accept merger control referrals from a Member State even if the transaction falls below that Member State’s filing thresholds.
  • Member States can refer transactions to the Commission even if they have already closed.
  • For a transaction to be referred it must: (i) affect trade between Member States; and (ii) threaten to significantly affect competition within the Member State or States making the request.
  • The Commission says that this is more likely to be the case if the turnover of the target does not reflect its actual or future competitive potential.
  • The Commission anticipates that this change in policy will mostly affect transactions in the pharmaceutical, biotech and technology sectors where acquisitions of start-ups and small companies with low-to-no revenue regularly occur, but the new guidance applies to all sectors and all transactions.
  • Parties to transactions falling below the European and national merger control filing thresholds which are economically significant (e.g. on the basis of deal value) should now manage the risk of such referrals in their transaction documentation.

In brief

The European Commission (“Commission“) has issued new guidance on the application of Article 22 EUMR referrals (“Article 22 Guidance“).1 The Article 22 Guidance will complement the Commission’s existing Notice on Case Referral. The Article 22 Guidance is technically not a change in law, but it is a significant change of policy by the Commission as it will now actively encourage a Member State to refer transactions which may adversely affect competition even if they fall below the merger filing thresholds of that Member State.2 The new Article 22 Guidance anticipates referrals of closed deals. Prior to this change in policy, the Commission discouraged such Article 22 referrals.

The Commission anticipates that this change in policy will mostly affect transactions in the pharmaceutical, biotech and technology sectors, such as acquisitions of start-ups and small companies with low-to-no revenues, but that could adversely affect competition. These types of transactions typically fall below the EU and Member State merger control filing thresholds. However, the Commission’s revised policy is not limited to just these sectors.

In practice, Parties to transactions falling below the European and national merger control law thresholds which are economically significant (e.g. on the basis of deal value) should now manage the Article 22 risk in their transaction documentation.

The Commission has also announced a new impact assessment to assess policy options to further simplify the Merger Implementing Regulation and the Notice on Simplified Procedure. The aim of this consultation is to identify additional cases that are highly unlikely to raise competition concerns and could therefore be assessed under the simplified procedure. As a first step in this process, the Commission has launched a public consultation with a deadline for submitting a response of 18 June 2021.

1. See https://ec.europa.eu/competition/consultations/2021_merger_control/guidance_article_
22_referrals.pdf

2. Article 22 of the Merger Regulation states that, in order for a referral to be made by one or more Member States to the Commission, two legal requirements must be fulfilled. The concentration must: (i) affect trade between Member States; and (ii) threatens to significantly affect competition within the territory of the Member State or States making the request.

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Author

Paul Johnson is an of counsel in Baker McKenzie Brussels’ European & Competition Law Practice. He is an English qualified solicitor and has been practicing in Brussels and the UK for over 10 years. Before joining the Firm, Mr. Johnson worked as a technical specialist in the Competition Department of the UK Financial Conduct Authority. He also worked in private practice in Brussels and London, representing clients on numerous high-profile cases before the European Commission and national competition authorities and regulators around the world.

Author

Gavin Bushell is a partner in the European & Competition Law Practice Group in Brussels, where he advises clients on EU competition and merger control law.
He has 20 years of experience practicing law and is a frequent speaker at legal conferences, particularly on merger control matters. In 2020, Gavin was listed as one of a limited number of practitioners in the Who’s Who Legal: Thought Leaders – Competition 2020.
Gavin is individually ranked in Chambers & Partners Global - Belgium for Competition Law in Band 3. "Clients say that Gavin Bushell is "extremely business-oriented, which makes it very easy to talk to him and to explain the practical issues." He is a key figure in the firm's competition team, regularly advising on EU merger investigations and assisting with the co-ordination of supporting global filings. Clients appreciate his ability to handle international mandates, saying: "He has huge experience in cross-border or multi-jurisdictional filings"."
In March 2012, Gavin was named by Global Competition Review as one of the top 40 of the world's leading competition practitioners under the age of 40 in its 40 under 40 survey. He is author of a number of articles on EU competition and merger control law.

Author

Samantha Mobley is a senior partner in the Competition, Trade & Foreign Investment Practice of Baker & McKenzie's London office and a member of the London office Management Committee. She is a former chair of Baker McKenzie's Global Antitrust and Competition Group, a team of over 300 competition and antitrust specialists worldwide. Samantha is a member of Baker McKenzie's India Steering Committee.

Author

Léna Sersiron leads Baker McKenzie’s French Competition and Distribution practice. She joined Baker McKenzie in 2003 and was co-opted as a Partner in 2012. She is a worldwide Baker McKenzie Competition Steering Committee member.
With over 20 years' experience, Léna Sersiron has a strong track record of successfully handling difficult and sensitive competition cases (investigations and subsequent litigation) at both EU and national level. She has extensive knowledge related to inspections and the collection of digital evidence (forensic IT). She advises various clients on a wide array of competition subjects, including complex merger control operations (at a French and EU level). She also works on distribution law cases.
Léna Sersiron also advises blue-chip clients from multiple sectors such as Daunat, Demeco, Lubrizol, Servier, Wonderbox, EDF, TDF, Crédit Agricole, Avis Budget Group, CGI, etc.
She is also well-established in the agricultural and food sector, advising various clients and professional trade associations (FNPSM, CNIEL, Nutrixo, FNIL, etc.) on a wide array of competition subjects.
She frequently contributes to various law conferences and seminars.
Léna Sersiron has been praised by one rival practitioner as an "excellent litigator." Acritas 2021 recognizes Léna as a "stellar professional lawyer" based on interviews and testimonials of more than 2,500 companies decision-makers. Clients interviewed have called her "very talented. The work provided is irreproachable and of high quality." She is also reported to be "the most impressive on contentious matters currently" and "a remarkable lawyer," according to sources. She is highly sought after for her expertise in handling abuse of dominance and cartel investigations. Clients also say that they are "extremely happy about her way of practising," going on to add, "She knows the ins and outs of the law."

Author

Dr. Nicolas Kredel, LL.M is a partner in Baker Mckenzie's Dusseldorf office in Germany. His practice focus on clients in EU and German competition law matters, including domestic and international cartel investigations, merger control proceedings and abuse of dominance cases. He routinely leads global projects for antitrust risk prevention (compliance systems), international investigations and transactions. He also provides competition law advice on cooperation agreements with competitors, as well as supply agreements and distribution systems.

Author

Luca Montani is a senior associate in Baker McKenzie, Brussels' Antitrust & Competition Practice. He joined the Firm in January 2014 after working in a major US law firm based in Brussels, and at the European Commission Directorate General for Competition (Mergers). Prior to that, he practiced civil litigation in Italy.

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