Last week, we spoke about the consumer welfare standard, and in particular, whether it is flexible enough to include non-price considerations, such as privacy, and whether a common standard is likely between the US and the EU after the nomination of Professor Lina Khan as an FTC Commissioner.
This week, let’s discuss article 22 of the EU Merger Regulation (EUMR), which allows the Commission to review transactions that fall outside the scope of the notification thresholds following requests by the Commission, Member States, and third-parties. On March 26, 2021, the Commission released its findings of the evaluation of procedural and jurisdictional aspects of EU Merger control and guidance on the application of article 22. The Commission will have the full discretion to investigate mergers, in particular those with high transaction value, concerning the acquisitions of a target that:
1. is a start-up or recent entrant with significant competitive potential that has yet to develop or implement a business model generating significant revenues (or is still in the initial phase of implementing such business model);
2. is an important innovator or is conducting potentially important research;
3. is an actual or potential important competitive force;
4. has access to competitively significant assets (such as for instance raw materials, infrastructure, data or intellectual property rights); and/or
5. provides products or services that are key inputs/components for other industries.
In the digital economy, the Commission only analyzed Apple/Shazam under article 22. While the article enables the Commission to address the “regulatory gap” to catch up “pre-emptive mergers” and “killer acquisitions”, and “reverse killer acquisitions”, it might pose issues regarding legal certainty as the Commission will have the discretion to accept the referral, and delay to close the transaction as the merging parties will have to stop the merger before approval to avoid “gun jumping”.
Competition lawyers and economists prepare your clients for article 22.
Join us every Tuesday from 7 pm to 8 pm CET time to freely exchange about digital competition.
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