a. Merger control
i.
Introduction
Based on a system of prior notification, Regulation
139/2004 is rather intended to prevent future concentrations from significantly
impeding effective competition in the EU. This has important procedural
consequences which in many respects distinguish control of concentrations from
infringement proceedings under Regulation 1/2003.
ii.
Notification of concentrations ‘having a Community
dimension’
The compulsory one-stop shop monitoring system which
Regulation 139/2004 sets up concerns exclusively concentrations having a
Community dimension, that is to say concentrations entailing significant
structural changes, the impact of which on the market goes beyond the national
borders of any one Member State. This is because EU powers can be exercised only within the limits of the
principle of subsidiarity.
Article 1 of Regulation 139/2004 sets the thresholds
for considering that a merger has a Community dimension and is therefore
subject to the requirement of a prior notification under Article 4(1). Pursuant
to the latter provision, concentrations (i.e. mergers or acquisitions) with a
Community dimension are to be notified to the Commission prior to their
implementation and following the conclusion of the agreement, the announcement
of the public bid, or the acquisition of a controlling interest. A
concentration which consists of a merger within the meaning of Article 3(1)(a)
or in the acquisition of joint control within the meaning of Article 3(1)(b) of
Regulation 139/2004 have to be notified jointly
by the parties to the merger or by those acquiring joint control. Failure to notify a concentration of a Community dimension, either
intentionally or negligently, potentially has serious consequences for the
undertaking(s) concerned. The Commission may impose on them fines not exceeding
10% of their aggregate turnover in the preceding year.
iii.
Standard merger control procedure
Anticipating the impact which a concentration is
liable to have on competition is a very complex task requiring in particular
full cooperation of the undertakings involved and the possibility for
third-parties to make know their views on the ensuing market restructuring. The
Commission is presumably better placed to verify that a planned concentration
will not significantly impede effective competition if it has been informed on
the state of the market and its likely evolution by market actors other than the
notifying party(-ies). The procedure of control set out in Regulation 139/2004
reflects those requirements.
Provided a notified concentration falls within the
scope of Regulation 139/2004, the Commission publishes the fact of the
notification and indicates at the same time the names of the undertakings
concerned, their country of origin, the nature of the concentration and the
economic sectors involved. That publication should however take into account
the legitimate interests of the undertakings concerned in protecting their
business secrets. The
Commission explicitly acknowledges that the notifying parties and the parties
to a proposed concentration discuss the intended concentration informally and
in strict confidence before notification. The information which is to be notified to the Commission is specified in
Annexes to Implementing Regulation 802/2004.
It is necessary to limit as much as possible the
period of legal uncertainty between notification and the date on which the
Commission adopts final position on it. Accordingly, the Commission has to examine the notification as soon as it is
received. Where it concludes that the concentration notified does not fall
within the scope of the regulation, it records that finding by means of a
decision. If it finds that the concentration does not raise serious doubts as
to its compatibility with the common market, it decides not to oppose it and
declares that it is compatible with the common market. If the Commission takes
the view, on the contrary, that the concentration notified falls within the
scope of the regulation and raises serious doubts as to its compatibility with
the common market, it decides to initiate
proceedings. Those
decisions have to be taken within 25 working days at most, that period starting
on the working day following that of the receipt of the notification.
The Commission may also, by decision notified without
delay to the undertakings concerned and the competent authorities of the other
Member States, refer a notified concentration to the competent authorities of
the Member State concerned if the concentration threatens to affect
significantly competition in a market within that member State, which presents
all characteristic of a distinct market, or if a concentration affects competition
in a market within that Member State, which presents all the characteristics of
a distinct market and which does not constitute a substantial part of the
common market.
The Commission is entitled to request from the
notifying parties and more generally other undertakings or associations of
undertakings all information which it deems necessary to conduct its
investigation. The
Commission fixes the time limit within which the information is to be provided.
It may also conduct all necessary inspections of undertakings and associations
of undertakings, which involves in particular the right to enter any premises,
land and means of transport of undertakings and associations of undertakings,
to examine the books and other records related to the business, irrespective of
the medium on which they are stored, or to seal any business premises and books
or records for the period and to the extent necessary for the inspection.
Fines of up to 1% of the aggregate turnover for the
preceding business year may be imposed by the Commission on undertakings or
associations of undertakings which, negligently or intentionally, supply
incorrect, incomplete or misleading information to the Commission or if seals
have been broken.
In accordance with the principle of respect for the
rights of defence, the notifying parties must be given the opportunity to
submit their comments on all the objections which the Commission proposes to
take into account in its decisions. Before adopting (inter alia) a decision
authorising a concentration subject to certain modifications by the parties
concerned and/or subject to certain conditions (Article 8(2) of Regulation
139/2004), or a decision declaring that a concentration is incompatible with
the common market (Article 8(3) of Regulation 139/2004), the Commission is thus
under a duty to give the persons, undertakings and associations of undertakings
concerned the opportunity of making known their views on the objections against
them. In so far as the Commission or the competent authorities of the Member States
deem it necessary, they may also hear other natural or legal persons. Third
persons, including customers, suppliers, associations of consumers and
competitors, are also entitled to be heard upon application, provided they show
a sufficient interest.
In that context, the Commission informs the notifying
parties and other involved parties (that is, parties to the proposed
concentration other than the notifying parties, such as the seller and the
undertaking which is the target of the concentration) of its objections and
sets a time limit within which they may make known their views in writing. In their written submissions, the notifying parties may request a hearing in
order to develop their arguments. In that case, the Commission has to hold one.
If third parties apply in writing to be heard, the
Commission informs them in writing of the nature and subject-matter of the
procedure and sets a time limit within which they make known their views. The Commission may (upon request or not) invite those parties to participate in
a formal hearing or to express their views orally.
iv.
Simplified merger control procedure
The compulsory system of notification under
Regulation 139/2004 constitutes an efficient safety net preventing large mergers
and acquisitions from significantly impeding effective competition. Although it
is limited to concentrations with a Community dimension, that system represents
considerable workload for the Commission. Search for efficiency has led the
Commission to set up a simplified procedure enabling it to adopt a short-form
decision declaring a concentration compatible with the internal market.
Commission
Notice on a simplified procedure for treatment of certain concentrations under
Council Regulation 139/2004 applies inter alia to the following categories of concentrations:
· - two or more undertakings
acquire joint control of a joint venture, provided that the joint venture has
no, or negligible, actual or foreseen activities in the territory of the
European Economic Area (that is to say where the turnover of the joint venture
of the contributed activities is less than EUR 100 million in the EEA territory
at the time of notification, and the total value of assets transferred to the
joint venture is less than EUR 100 million in the EEA territory at the time of
notification ;
· - two or more undertakings merge, or one or more
undertakings acquire sole or joint control of another undertaking, provided
that none of the parties to the concentration are engaged in business
activities in the same product and geographic market, or in a product market
which is upstream or downstream from a product market in which any other to the
concentration is engaged;
· - a party is to acquire sole
control of an undertaking over which it already has joint control.
The Notice on a simplified concentration control
procedure recognizes how valuable pre-notification contacts with the Commission
can be with a view to identifying unproblematic cases and hence the information
which has to be submitted with the formal notification.
If, upon receipt of a notification, the Commission
takes provisionally the view that the concentration may qualify for a
simplified procedure, that information is published (together with standard
information) in the Official Journal of the European Union. Interested parties
thus have the opportunity to submit why they consider that the concentration in
issue requires a full investigation.
If the Commission takes the view that the notified
concentration fulfills all conditions for the simplified procedure (including
where the notifying parties did not request it), it issues a short-form
decision declaring the concentration compatible with the internal market. That
decision is adopted within 25 working days from the date of notification. The Commission may however at any time before adopting such a decision, where
appropriate, take the view that it is necessary to revert to a full assessment
under the normal merger procedure.
v.
Access to the file and confidentiality issues
a. Principles
Implementing Regulation 802/2004 distinguishes
between categories of interested parties regarding access to the file.
Concerning first the notifying parties, the
Commission has to grant them full access to the file after notifying the
statement of objections. The Commission, upon request, must also grant other involved parties who have
been informed of the objections access to the file, but only in so far as this
is necessary for the purposes of preparing their comments. In each case, access is granted only to the non-confidential version of the
file, which does not include business secrets or other confidential information
the disclosure of which is not considered necessary by the Commission for the
purpose of the procedure.
All persons which make known their views in the
course of the proceedings are invited to ‘clearly identify any material which
[they] consider[…] to be confidential, giving reasons, and provide a separate
non-confidential version by the date set by the Commission’. The Commission may
also, on its own initiative, require from the parties involved in the proceedings
that they identify the documents or parts of documents which they consider to
contain business secrets or other confidential information, or to identify any
part of a statement of objections, case summary or a decision which in their
view contains business secrets.
By contrast, third parties (even when they have been
authorized to submit their views) are not granted access to the Commission’s
file.
Just like access to the Commission’s files in cartel
and antitrust proceedings, rules on access to Commission’s files in merger
proceedings are set out in the Notice on access to the file. The notifying
parties are to be granted access to the file upon request at every stage of the
procedure following the notification of the Commission’s objections (and up to
the consultation of the Advisory Committee). The qualification of a piece of information as confidential is not a bar to its
disclosure if such information is considered necessary by the Commission for
the purpose of the procedure.
b. Interaction
with the Regulation on access to documents
Case C-404/10 P, Commission
v. Éditions Odile Jacob [2012] clarifies how the provisions on access to the
file in Implementing Regulation 802/2004 interact with the Regulation on access
to documents. That dispute had it roots in a challenge by Éditions Odile Jacob of a
Commission decision declaring the concentration between Lagardère, Natexis and
VUP compatible with the internal market. As a third party to the concentration,
Éditions Odile Jacob had no right of access to the Commission’s file during
the administrative proceedings. In order to substantiate its judicial challenge
of the Commission’s decision before the General Court, however, that
undertaking lodged a request to the Commission on the basis of the Regulation
on access to documents, seeking access to, in particular the Commission’s
decision to initiate an in-depth merger investigation, the full text of the
sale and purchase agreement signed by the parties to the merger in issue, and
correspondence between the Commission and those parties. The Commission refused
to grant that access. Overruling a judgment of the General Court, the Court
took the view that, although the Regulation on access to documents is designed
to confer on the public as wide a right of access as possible to documents of
the institutions, there is a good reason for not granting such access pursuant
to Article 4 of that Regulation where granting access would undermine the
specific system of access to the Commission’s file put in place by Regulation
139/2004. As the Court stated:
‘…generalized access, on the basis of [the Regulation
on access to documents], to the documents exchanged in [a merger control
procedure] between the Commission and the notifying parties or third parties
would…jeopardise the balance which the European Union legislature sought to
ensure in [Regulation 139/2004] between the obligation of the undertakings
concerned to send the Commission possibly sensitive commercial information to
enable it to assess the compatibility of the proposed transaction with the
common market, on the one hand, and the guarantee of increased protection, by
virtue of the requirement of professional secrecy and business secrecy, for the
information so provided to the Commission, on the other.’
Consequently, when interpreting the exceptions to the
right of access under Article 4(2) of the Regulation on access to documents
(that is, protecting commercial interests of a natural or legal person and
protecting the purpose of inspections, investigations and audits), a general
presumption should be acknowledged that disclosure of documents exchanged
between the Commission and undertakings during merger control proceedings
undermines, in principle, both protection of the objectives of investigation
activities and that of the commercial interests of the undertakings involved in
such a procedure’. In the context of merger control, those principles apply irrespective of
whether the procedure is still pending or is already closed.
That however does not exclude the possibility of
demonstrating that a given document disclosure of which has been requested is
not covered by that presumption, or that there is a higher public interest
justifying the disclosure of the document concerned. Until the Commission’s decision on the merger is definitive, there is also a
presumption that disclosing internal memoranda or legal advice would seriously
undermine that institution’s decision-making process.
Following that judgment, the question arose whether
the Court’s reasoning concerning the existence of presumptions was also
applicable in the context of proceedings under Regulation 1/2003. As stated
above, on the one hand, the context here is very different not only because the
proceedings do not result from a voluntary notification and they have as their
subject-matter a possible violation of Article 101 or 102 TFEU. On the other
hand, Regulation 1/2003 and Implementing Regulation 773/2004 provide for
specific rules protecting business secrets and other confidential information
in the Commission’s file. One month before the judgment in Commission v. Éditions Odile Jacob was delivered, the General
Court delivered its judgment in Case T-344/08, Energie Baden-Württemberg (EnBW) v. Commission [2012]. In these
proceedings, a German energy-distribution company which considered itself to be
the victim of a cartel censured by a Commission’s decision sought access to
various documents in the file which had led to the adoption of that decision.
EnBW submitted that that information would be useful to substantiate a future
claim for damages before national courts. The request for access covered in
particular leniency documents, requests for information and the parties’
replies to those questions, documents obtained during inspections, the
statement of objections and the parties’ replies thereto, as well as internal
Commission documents. In the Commission’s view, all these documents fell within
the exception provided for in the third indent of Article 4(2) of the
Regulation on access to documents (protecting the purpose of inspections,
investigations and audits). Several of them were covered by the exception in
the first indent (protecting commercial interests). In annulment proceedings
initiated against that decision, the General Court took the view that the
Commission was not entitled to presume, without undertaking a specific analysis
of each document, that all the documents requested were clearly covered by the
exception concerning protection of the purpose of inspections, investigations
and audits. The presumption was available only for documents obtained during
inspections. In its appeal against that decision, the Commission argued in
essence that the General Court’s approach, granting broad access to files in
cartel or abuse of dominance files, entailed the risk of undermining the
special rules governing access to it set out in Regulation 1/2003 and
Implementing Regulation 773/2004. Moreover, interpreting the exception under
the third indent of Article 4(2) of the Regulation on access to documents is
liable not only to jeopardise the purpose of investigations in each particular
case but also the effective application of EU competition law in general.
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