On 20 April 2023, the European Commission adopted a package to simplify its procedures for reviewing concentrations under the EU Merger Regulation. The package aims to reduce the burden on merging businesses and the Commission through simplification and expansion of the Commission’s review of unproblematic mergers and reducing information requirements.
The new rules set out to (i) expand the number of cases that can benefit from the simplified procedure, (ii) streamline the review of simplified and non-simplified cases and (iii) establish electronic submissions as the default.
Expanding the cases that can benefit from the simplified procedure
Under the simplified procedure, merging businesses have to provide less information and are able to obtain clearance faster than under the normal procedure. This is the case already today. However, with the new rules, the Commission identifies two new categories of cases concerning vertical concentrations (i.e. transactions between a supplier and customer) that can benefit from the simplified treatment:
- if the relevant downstream market share exceeds 30% but (i) the relevant upstream market share at the supplier level and (ii) the relevant purchasing share at the customer level both remain below 30%;
- if (i) the relevant downstream market share exceeds 30% but remains below 50%, (ii) the market concentration index (HHI delta) remains below 150 and (iii) the same undertaking is the smallest at both the upstream and downstream level.
In addition, the Commission introduces three “flexibility clauses” which grant the Commission discretion to treat cases under the simplified procedure even if they do not fall under any of the default categories for such a treatment. For instance, transactions between competitors (so-called horizontal concentrations) where the combined market share of the merging parties is 20-25%.
Streamlining the review of simplified and non-simplified cases
The new rules introduce a new notification form for simplified cases that primarily includes multiple-choice questions on the jurisdictional and substantive assessment of cases.
In addition, the Commission identifies a sub-category of “super-simplified” treatment for (i) cases involving a joint venture with no current or expected turnover within the EEA and no plans to move assets into the EEA and (ii) cases with no horizontal overlaps or non-horizontal relationships between the merging parties’ activities. Parties may also notify directly without pre-notification discussions.
Furthermore, the Commission has also streamlined the notification form for non-simplified cases (Form CO), by clarifying waiver possibilities, providing tables for information on affected markets and eliminating certain information requirements, for instance, on cooperative agreements and trade associations.
Establishing electronic transmissions as the new default
Since May 2020, the Commission has encouraged electronic notifications due to COVID-19. With the new rules, electronic notifications will become the default. Parties are now formally no longer required to submit a hardcopy version.
Despite the Commission’s aim to reduce red tape, the package might also increase the burden for merging businesses. For instance, investors with large portfolios may be required to provide (additional) information on non-controlling shareholdings and notifying parties will be required (in non-simplified cases) to provide data they collect and store in the ordinary course of their business operations that “could be useful for a quantitative analysis”.
The package, which includes (i) a revised Merger Implementation Regulation, (ii) a Notice on Simplified Procedure and (iii) a Communication on the transmission of documents, will come into effect on 1 September 2023.