The Commission’s public consultation in relation to the EU merger control framework includes the possibility of requiring that the acquisition of minority shareholding be notified to the Commission.
Despite the fact that acquisition of minority shareholding (also referred to as structural links) may be relevant for the competitive evaluation of certain transactions, and that there may be instances where they could have anti-competitive effects, the proposal has been viewed by many as imposing a disproportionate burden on undertakings – while possibly stretching the Commission’s resources further.
The Commission’s principal concern is that the acquisition of minority shareholding could reduce competitive pressure between competitors and/or facilitate coordination between them, and that the possibly resulting efficiencies are unlikely to be such as to outweigh the distortion of competition.
The Commission proposes a number of measures relating to the acquisition of minority shareholding which could distort competition, including increasing the scope of the merger regulation to cover the acquisition of minority shareholding, the possibility of the Commission investigating specific acquisitions without requiring suspension of the transaction pending approval, and an obligation on the parties to inform the Commission of certain acquisitions of minority shareholding.
In the context of the EU merger regulation being aimed at protecting competition and avoiding concentrations that may significantly impede effective competition in the common market, it is unclear whether the proposal can be considered to provide proportionate measures for controlling those acquisitions of minority shareholding that are capable of impeding effective competition significantly. This would be justified if the leakage in enforcement is sufficient to tip the balance in favour of the change, despite the additional burden and uncertainty of modifying (possibly significantly) the current system which can generally be said to be stable and performing well.
For more information on competition and EU law please contact Ron Galea Cavallazzi.