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ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
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German Regulator Steps Up Enforcement of Merger Standstill Obligation

by | May 17, 2011 | , ,

by Martina Maier and Philipp Werner

The majority of merger control regimes around the world impose standstill or waiting period requirements for notifiable transactions, e.g. the US, the EU and most EU Member States. If a transaction meets the filing thresholds, it must be notified to the competent antitrust regulator and must not be closed without prior approval by the antitrust regulator or the expiration of the applicable waiting period.

Under German merger control rules, a notifiable merger must not be implemented without prior clearance decision. An infringement of the standstill obligation can (theoretically) lead to fines of up to 10 percent of the group’s worldwide turnover. In addition, the infringement of the standstill obligation renders the contracts ineffective under German merger control rules.

The German Federal Cartel Office (FCO) has recently taken a stricter approach to the enforcement of the merger standstill obligation. In the past, the risk of fines was minor if the merger did not lead to any serious competition concerns, if it was the group’s first infringement of the standstill obligation and if the company itself notified the FCO ex post of the implemented merger.

We see now a growing number of decisions imposing fines for the infringement of the standstill obligation (sometimes referred to as "gun jumping" in the United States). In May 2011, in the latest of a string of such decisions, the FCO imposed a substantial fine for infringement of the standstill obligation although the merger did not lead to any serious competition concerns and although the company had itself notified the implemented merger. These facts were only taken into account as mitigating factors for the calculation of the fine.

The European Commission has also recently imposed fines for the infringement of the standstill obligation.

In this changing environment, the filing requirement and the standstill obligation cannot be seen as a pure formality. It is therefore essential to always verify whether and in which jurisdictions a transaction is notifiable – and not to close the deal before the relevant competition authorities have cleared the deal.



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Be Aware of the EU Watch Dog:  Commission Blocks Merger Between Aegean Airlines and Olympic Air

by | Apr 29, 2011 | ,

by Martina Maier and Philipp Werner

In January 2011, the European Commission decided that the proposed merger between Aegean Airlines and Olympic Air should be prohibited because it would have resulted in a quasi-monopoly on the domestic Greek air transport market.  This decision shows that traditional airline merger remedies, such as slot releases, are sometimes insufficient to allay concerns of monopolization.  It also illustrates that the Commission will take a tough stance on competition policy, even when facing strong political pressure to clear the merger for the sake of the economy.

To read the full article here, click here. 



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Cooperation Between Competition Authorities in Merger Review in the EU

by | Apr 29, 2011 | ,

by Philipp Werner and Christoph Voelk

The European Commission started a public consultation on a draft document which seeks to establish best practices on cooperation between national competition authorities (NCAs) in the EU when reviewing mergers.  Although cooperation between NCAs exists already, especially through the European Competition Network (ECN), the best practices seek to formalize the cooperation between NCAs and thus providing more security and predictability for the parties and their legal advisers.

The best practices should enhance cooperation between NCAs in cases where the same merger is assessed by several NCAs because it does not meet the thresholds for review under the EU Merger Regulation.  The Commission considers cooperation between NCAs as beneficial not only for the authorities but also for the merging parties:  it will speed up the investigation process, reduce burdens on the merging parties and may help NCAs in designing remedies.  Particularly in cases where serious concerns about the post merger situation exist, close cooperation between competition authorities will secure a non-conflicting and coherent outcome. 

The object of the Commission’s draft is twofold: 

First, NCAs should keep each other informed of important developments related to their investigation into the merger.  Also, NCAs should liaise in cases where closer cooperation is necessary and keep each other informed about their progress.  Most importantly, the Commission proposes that NCAs should in future discuss market definition, theories of harm, empirical evidence and the possible impact of a proposed merger. 

Second, the draft also assigns a role to the merging parties.  Merging parties should, as far as possible, provide NCAs with information as to where the merger will be filed, the dates of the proposed filing, geographic areas, sectors involved etc.  Also, merging parties should assist in ensuring that remedies do not lead to inconsistencies and that such remedies are effective.  Of importance is further the proposal that the merging parties, but also third parties, shall – as far as possible – grant waivers of confidentiality so that NCAs actually are permitted to discuss particular issues of a proposed transaction.

Comments on the Commission’s draft can be submitted until 27 May 2011 to comp-a2-mergers@ec.europa.eu.

The consultation page can be accessed via https://ec.europa.eu/competition/consultations/2011_merger_best_practices/index_en.html



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