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European Commission Announces New Approach to Merger Review Referrals Falling Below Thresholds

Under current EU merger control rules, whether a concentration has to be notified to the European Commission (“Commission”) depends, among other things, on the level of revenue generated by the parties worldwide and in the European Union.  A key question that has sparked considerable debate in recent years is whether the current merger control thresholds cover all transactions that have the potential to harm competition, or whether there is a so-called “enforcement gap”.

On September 11, during the International Bar Association’s 24th Annual Competition Conference, Competition Commissioner Margrethe Vestager announced that the Commission intends to change its approach towards referrals to the EU from national competition authorities. Commissioner Vestager noted that although the current, revenue-based thresholds set out in the EU Merger Regulation generally work well, revenue does not always reflect a company’s significance – particularly in innovative sectors, such as the pharmaceutical and digital sectors. In other words, innovative firms with low revenues may have a significantly out-sized market presence.

This issue is not entirely new, and has been debated in recent years – for example, in connection with possibly amending the thresholds set out in the EU Merger Regulation.  On this point, however, Commissioner Vestager pointed out that “changing the merger regulation, to add a new threshold like this, doesn’t seem like the most proportionate solution”.

Instead, as a solution to this shortfall, Commissioner Vestager stated that the Commission intends to broaden its approach to cases referred to it from one or more EU Member States, stating that the Commission will “[…] start accepting referrals from national competition authorities of mergers that are worth reviewing at the EU level – whether or not those authorities had the power to review the case themselves”.

The current referral system set out in the EU Merger Regulation enables the Commission to review concentrations that fall below the EU thresholds. Indeed, in recent years, certain significant transactions have been reviewed by the Commission only after an upward referral, as they did not fulfil the jurisdictional thresholds of the EU Merger Regulation, including for example Apple/Shazam (2018), Microsoft/GitHub (2018) and Facebook/WhatsApp (2014). Under the current rules, the Commission can review transactions which fall below the EU merger control thresholds on the basis of referrals from national competition authorities where:

  • the concentration is notifiable in at least three Member States; or
  • where the concentration affects trade between Member States and threatens to significantly affect competition within the Member State(s) making the request for a referral.

The Commission has discouraged national competition authorities from referring cases to the Commission  in instances when they themselves did not have the power to review because national merger control thresholds were not met.

The proposal announced by Commissioner Vestager would change this approach, and would allow a broader universe of cases – including those which fall below national thresholds – to be referred to the Commission.  Ms. Vestager explained that “those referrals could be an excellent way to see the mergers that matter at a European scale, but [...]

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Italian Competition Authority Updates Merger Control Turnover Thresholds

by Martino Sforza

The Italian Competition Authority has updated its merger control turnover thresholds.  Effective as of today, November 21, 2011, Section 16(1) of Law no. 287 of October 10, 1990, requires prior notification of all mergers and acquisitions where either of the following conditions is fulfilled:

  • Aggregate turnover in Italy of all undertakings involved is above EUR 468 million
  • Aggregate turnover in Italy of the target company is above EUR 47 million

No notification is required if the target is a foreign company which did not generate any turnover in Italy in the last three years and is not expected to do so as a result of the transaction.

Italy’s merger control thresholds are adjusted annually to take into account increases in the GDP deflator index.  The updated thresholds are published in the Competition Authority’s Bulletin once this increase in index is announced officially.




International News Issue 2 2010

McDermott Will & Emery’s International News, Issue 2, 2010, covers a range of legal developments of interest to those operating internationally.  This issue focuses on Antitrust and Competition.

In this issue…

The full issue can be found at: http://www.mwe.com/info/news/int0210.htm.
 




Italian Merger Control Thresholds – New Revisions

by Veronica Pinotti and Martino Sforza

The Italian Competition Authority has updated its merger control turnover thresholds.  Effective as of 31 May 2010, Section 16(1) of Law no. 287 of 10 October 1990 requires prior notification of all mergers and acquisitions where either of the following conditions is fulfilled:

  • Aggregate turnover in Italy of all undertakings involved is above EUR 472 million (revised under the terms of the same Section 16(1))
  • Aggregate turnover in Italy of the target company is above EUR 47 million (as revised)
     

No notification is required if the target is a foreign company which did not generate any turnover in Italy in the last three years and is not expected to do so as a result of the transaction.

Italy’s merger control thresholds are adjusted annually to take into account increases in the GDP deflator index.  The updated thresholds are published in the Competition Authority’s Bulletin once this increase in index is announced officially.
 




Italian Merger Control Thresholds – New Revisions

by Veronica Pinotti and Martino Sforza

The Italian Competition Authority today updated its merger control turnover thresholds.

As of 27 July 2009, Section 16(1) of Law no. 287 of 10 October 1990, requires prior notification of all mergers and acquisitions involving the following:

  • aggregate turnover in Italy of all undertakings involved above EUR 461 million (revised under the terms of the same Section 16(1)); or
  • aggregate turnover in Italy of the target company above EUR 46 million (as revised)
     

No notification is required if the target is a foreign company, which did not generate any turnover in Italy in the last 3 years, and it is not expected to do so as a result of the transaction.

Thresholds are adjusted each year to take account of increases in the GDP deflator index.  The resolution is published in the Authority’s Bulletin after the increase in the index has been officially announced (as to the thresholds in force, see the Authority’s resolution No.20074, published in Italian language in the Bulletin No. 27 of 27 July 2009).
 




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