EU Law and Practice Contributed by: Porter Elliott, Catherine Gordley and Niharika Parshurampuria, Van Bael & Bellis
impediment to effective competition” or “SIEC” test. The Commission must: • clear any transaction that does not give rise to an SIEC; • open a Phase II investigation if it has “serious doubts” that the concentration is compatible with the internal market at the end of Phase I; or • prohibit any transaction that gives rise to an SIEC (after a Phase II investigation). The Commission provides guidance on how this test is applied in its Horizontal and Non-Horizontal Merger Guidelines (see 4.4 Competition Concerns ). 4.2 Markets Affected by a Transaction Markets can be: • horizontally affected – if the parties are both active in the same market and hold a combined market share of 20% or more; or • vertically affected – if one party is active in a mar - ket that is upstream or downstream from a market in which the other is active and in which the par - ties’ individual or combined market share on either market is 30% or more. In determining whether a concentration gives rise to any affected markets, the Commission considers the market definitions proposed by the notifying parties, as well as any plausible alternative market definitions based on the Commission’s or the EU courts’ prior decisional practice, market reports, feedback from competitors and customers, or the parties’ own inter - nal documents. The Commission enjoys considerable discretion in determining the scope of the relevant markets and will often define markets more narrowly than the parties may do internally. The current Horizontal Merger Guidelines, which are due to be replaced by new merger guidelines (see 1.1 Merger Control Legislation ), indicate that com - petitive concerns are unlikely where the parties hold a combined market share of 25% or less, or have a post-merger Herfindahl-Hirschman Index (HHI) below 1,000 (or, in certain other situations, have a higher HHI but a low delta).
In addition to affected markets, the Commission also assesses markets where one of the parties has a market share of 25% or more and another party is a potential competitor in that market, as well as closely related neighbouring markets where the par - ties’ individual or combined market share on either market is 30% or more. Product markets are closely related neighbouring markets when the products are complementary to each other or when they belong to a range of products that is generally purchased by the same set of customers for the same end use. 4.3 Reliance on Case Law The Commission consistently relies on a substantial body of case law built up from its own decisional prac - tice and the judgments of the EU courts. The notifying parties are expected to refer to this record as a point of departure when defining the relevant markets or submitting other arguments. The Commission or the notifying parties may occa - sionally rely on case law from other jurisdictions, par - ticularly if a transaction relates to markets that the Commission has not previously examined in detail; analysis provided by member state NCAs may be particularly persuasive. However, with nearly 10,000 cases decided over the past 35 years, the Commis - sion’s body of decisions is so extensive that reliance on the decisions of other jurisdictions is very rare. 4.4 Competition Concerns The Commission will investigate whether the con - centration gives rise to an SIEC (see 4.1 Substantive Test ). In making this determination, the Commission will assess the impact of the transaction on various parameters of competition, including prices, output, quality and innovation. The Commission’s Horizontal Merger Guidelines and Non-Horizontal Merger Guide - lines outline specific theories of harm that the Com - mission is likely to consider. Horizontal Concerns Where the parties to a concentration are active in the same markets, the Commission will typically consider whether an SIEC may arise from:
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