Erhvervs-, Vækst- og Eksportudvalget 2013-14
KOM (2014) 0449 Bilag 2
Offentligt
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Draft comments from the Danish gov-
ernment
European Commission
Directorate-General for Competition, Unit A-2
White Paper “Towards more effective EU merger control”
1049 Brussels
Belgium
2 September 2014
Comments on the European Commission’s White Paper “Towards
more effective EU merger control” (COM(2014) 449 final)
The Danish government welcomes this opportunity to comment on the Euro-
pean Commission’s abovementioned white paper and annexed staff working
documents.
The Danish government can over-all support the goal of a more effective
merger control in the EU. It will, however, await more detailed and specific
proposals – if the European Commission decides to prepare such – before it
more specifically considers the necessity and appropriateness of amending the
EU Merger Regulation.
1. Expansion to include non-controlling minority shareholdings
The white paper proposes an amendment of the EU Merger Regulation to in-
clude certain non-controlling minority shareholdings.
The Danish government would welcome a deeper analysis of the consequenc-
es of such a proposal.
The Danish government agrees with the European Commission that it is very
important that the design of any potential future system ensures that it does not
entail unnecessary administrative and financial burdens for the companies. In
this respect, it is particularly important that the criteria determining which
transactions are reportable are sufficiently clear so as to not give rise to uncer-
tainties for the companies whether or not their transactions are reportable, but
that the system is both simple and secure. Furthermore, the design of any such
system should ensure that it to the widest possible extent brings within its
scope only such transactions which
prima facie
give rise to significant substan-
tive concerns.
The Danish government believes that the targeted transparency system –
which the European Commission proposes and recommends – generally is the
system among the three proposals which best has the potential of satisfying the
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abovementioned objectives. However, it would depend on the precise design
of the system. There are aspects of the system as outlined which in the view of
the Danish government give rise to some reservations whether it in fact satis-
fies these objectives to the requisite extent or whether it would be necessary to
consider alternative systems. In particular:
First, there can be some uncertainty in determining the existence of a
competitively significant link. If the European Commission will pro-
vide a shareholding threshold, it should fix it precisely. The present
“around
20%”
would entail too much legal uncertainty. In the spread
between the proposed 5% and around 20% it is necessary to conduct a
case-specific assessment. Here it is equally important that the criteria
are very clearly set out. It may give rise to uncertainty as to e.g. when
an acquirer has a blocking minority or when an acquirer has access to
commercially sensitive information. The Danish government believes
there is reason to clarify the criteria of such a system.
Second, there can be some uncertainty as to how indirect a competi-
tively significant link may be. It transpires from the white paper that
there will be a duty to report if the acquirer already has a non-
controlling minority shareholding in an undertaking active within the
same sector as the target undertaking. If such a competitively signifi-
cant link can also exist in a non-controlling minority shareholding in a
company which itself has a non-controlling minority shareholding in a
third company, the Danish government can have some reservations as
to whether this is something the undertakings will and can have suffi-
cient information about.
Third, it transpires that a blocking minority can also exist on the basis
of low attendance rates at the annual shareholder meetings. Even
though the appraisal of such
de facto
control is well-known today un-
der the EU Merger Regulation, the analysis could be inherently more
difficult to undertake in case of non-controlling minority sharehold-
ings, in particular if the analysis is also to include indirect sharehold-
ings through undertakings in which the acquirer holds non-controlling
minority interests. The Danish government can have some reservations
whether this is something the undertakings will and can have sufficient
information about.
Fourth, it transpires that the assessment of whether the undertakings
are competitors will not depend on the definition of the relevant market
but instead whether the parties are active within the same sector. The
Danish government finds that it is not sufficiently clear when this is the
case and what the test will be. If the European Commission intends to
propose an amendment to the EU Merger Regulation, the Danish gov-
ernment encourages the European Commission to elaborate on this as-
pect.
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Fifth, it is unclear how the proposed system would apply to joint ven-
tures. It follows from the white paper that the system would apply to
FFJVs but that it could be necessary to make some adjustments to the
present principles for identifying the undertakings concerned and for
calculating turnover. The Danish government can support the latter as
it otherwise could fear the number of reportable transactions would in-
crease, e.g. if three or four larger companies form a joint venture over
which none of them will exercise control under the present notion of
control and if each of the companies will be undertakings concerned
for the purposes of a new system. It is unclear whether the explicit ref-
erence to FFJVs has as its effect that non-controlling minority share-
holdings in non-FFJVs will not result in a reportable transaction. In its
recent practice, the European Commission has accepted that certain
changes to the ownership structure of an existing non-FFJV can consti-
tute a notifiable change of control even though the original formation
did not.
Sixth, the European Commission proposes that it should have jurisdic-
tion to open an investigation until e.g. four or six months after the par-
ties have reported their transaction. The Danish government appreci-
ates that it can be a time-consuming task to determine whether a con-
centration gives rise to such substantive concerns that it should be sub-
ject to further review. However, in this interim period the parties find
themselves in legal uncertainty. Considering the fact that the European
Commission estimates the number of reportable transactions will be
relatively low, the Danish government finds the European Commission
should consider whether there is cause to operate with a shorter dead-
line – or indeed whether the parties should have certainty that their
concentration will not be subject to review (neither by the European
Commission nor by a national Member State under a referral request)
outside the proposed initial waiting period.
Seventh, the European Commission proposes that a standstill obliga-
tion could apply. Given the nature of non-controlling shareholding ac-
quisitions, the Danish government believes there could be cause to fur-
ther elaborate on whether a standstill obligation should always apply
during the initial waiting period.
Eighth, the Danish government notes that the European Commission
estimates that the number of reportable minority acquisitions would
roughly be 20-30 per year. The Danish government attaches great sig-
nificance to this low number of reportable transactions as it directly
ties to e.g. the administrative burdens for the companies. However, the
European Commission bases the estimate on information from the
German and UK competition authorities and from extracts from the
Zephyr-database. Considering 1) that the German rules – as the Euro-
pean Commission also mentions – encompasses acquisitions of 25%
whereas the proposed system would encompass acquisitions down to
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5% and 2) that the Zephyr-database only contains information for cer-
tain acquisitions, the Danish government encourages the European
Commission – should it decide to propose an amendment of the EU
Merger Regulation – to further analyse and compute the number of ex-
pected reportable transactions, also taking into account how the Euro-
pean Commission would identify the undertakings concerned and the
calculation of turnover. The Danish government believes it to be very
important to have a more precise understanding of the scope of any
proposed system.
Ninth, the Danish government encourages the European Commission
to expand more on the relationship between any proposed amendment
of the EU Merger Regulation and Articles 101 and 102 TFEU, in par-
ticular the extent to which Articles 101 and 102 will continue to apply
to, e.g., the exchange of information between the acquirer and the tar-
get company and expansion of the rights awarded to the acquirer.
The Danish government also believes there is cause to carefully consider how
the present notice on ancillary restraints could or should apply to non-
controlling minority acquisitions.
2. Changes to the referral system
The Danish government can over-all support a clarification and streamlining
of the present rules on referral of cases to and from the European Commission.
The present rules entail a number of administrative burdens on the undertak-
ings. This, in particular, appears to be the case with Article 4(5). To the extent
it is possible to minimise these burdens, this is something the Danish govern-
ment can support.
Furthermore, the present rules entail a number of uncertainties for the under-
takings whether their concentrations require approval from the European
Commission and/or one or more national competition authorities/no notifica-
tion at all. This, in particular, appears to be the case with regard to Article 22
of the EU Merger Regulation. To the extent it is possible to reduce the uncer-
tainties, this is something the Danish government can support.
Finally, the Danish government believes an expansion of the EU Merger Reg-
ulation to include non-controlling minority shareholdings could give rise to
some complex questions concerning the referral rules. The Danish government
encourages the European Commission to consider the referral system in more
detail should it propose such an expansion of the EU Merger Regulation.
3. Miscellaneous amendments
The European Commission proposes 11 additional changes to the EU Merger
Regulation, in particular to simplify the procedure.
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In general, the Danish government can support these proposed changes. How-
ever, considering the European Commission has only briefly and broadly de-
scribed the changes, the government – if the European Commission will pro-
pose an amendment of the EU Merger Regulation – will await more worked-
through and specific proposals before it considers the necessity and appropri-
ateness of making such changes.
The Danish government will however note that the European Commission
contemplates amending Article 5(2)(2) of the EU Merger Regulation so as to
include certain concentrations between the same parties within a two year pe-
riod, namely those that stem from real circumvention. In case of circumven-
tion, however, the European Commission would likely be able to consider the
concentrations as one single transaction on the time of the first concentration
without having recourse to Article 5(2)(2).
Furthermore, the Danish government notes that the European Commission
contemplates amending the EU Merger Regulation so that it can revoke a de-
cision to refer a concentration to a Member State if it has based the decision on
incorrect or misleading information for which one of the parties is responsible.
While the Danish government appreciates the European Commission wishes
to regulate such a situation, it must also take into account that a Member State
in the meantime might have approved the concentration under its national
merger control rules. The European Commission should consider how to best
solve any issues arising from such situations.
4. Potential for further harmonisation
The Danish government notes the statement by the European Commission that
there could be cause to consider a harmonisation of parts of the merger control
rules. A position, even a preliminary one, would require a more specific pro-
posal. Even though a harmonisation – as emphasised by the European Com-
mission can be to the advantage of the undertakings (at least in some cases) –
it would be necessary to further consider the legal basis in the Treaty for such
a harmonisation and its compliance with the principle of subsidiarity.