EU Law and Practice Contributed by: Porter Elliott, Catherine Gordley and Niharika Parshurampuria, Van Bael & Bellis
trol Legislation ), the Commission also emphasises the fundamental role of innovation in strengthening Europe’s competitiveness. It considers that innovation should be given adequate weight in the merger control assessment, by assessing both the positive and the negative impact of a concentration on innovation. This may potentially lead to clearance of more deals that improve European innovation, although it remains to be seen how this will ultimately play out in practice. 4.5 Economic Efficiencies The Commission will take efficiencies generated by a concentration into account under certain circum - stances. Form CO contains a dedicated section in which notifying parties may present any evidence of efficiencies. Any efficiencies claimed must: • be merger-specific, in that they are directly created by the transaction and are not achievable through any other, less anti-competitive means; • be quantifiable and verifiable to a reasonable degree of certainty; and • benefit consumers. In practice, this is a difficult standard to meet. The Commission rarely accepts efficiencies put forward by parties to a concentration as being sufficiently persua - sive, and has not yet cleared an otherwise problematic transaction based purely on efficiencies. It remains to be seen if the Commission will adopt/implement a more lenient approach when it issues its new merger guidelines (see 1.1 Merger Control Legislation ). It is under significant political pressure to do so. 4.6 Non-Competition Issues The Commission is generally lauded for adhering to competition law principles in its assessments of trans - actions and eschewing non-competition considera - tions. It has repeatedly emphasised the independence of its review process from political considerations, and has resisted calls from certain member states to adopt a more protectionist view. This has resulted in complaints that the Commission’s strict application of EU merger control has unduly impeded the creation of “European champions”. In
• non-co-ordinated (unilateral) effects, notably (but not only) if the transaction creates or strengthens a dominant position; or • co-ordinated effects, if the remaining market players are better able to tacitly co-ordinate their market activities as a result of the transaction, including due to the creation or strengthening of a position of collective dominance. In practice, the vast majority of the Commission’s concerns relate to unilateral effects arising from the parties having high market shares in markets where they compete. Non-Horizontal Concerns If parties are active on vertically or closely related mar - kets, the Commission will normally consider whether an SIEC may be created through: • incentives for the merged entity to foreclose com - petitors’ access to inputs or customers; or • anti-competitive conglomerate effects due to the merged entity being able to engage in the bundling of products or services. While it is rare for the Commission to object to a trans - action based on vertical or conglomerate effects alone (in the absence of any horizontal effects), it did so recently in Illumina / GRAIL (though this decision has since been annulled by the Court of Justice on juris - dictional grounds – see 2.1 Notification ). Innovation Concerns The Commission also scrutinises transactions’ poten - tial impact on innovation and future competition. In particular, the Commission has considered that a merger may problematically hinder competition at the general level of the “innovation space” by decreasing incentives for the merged entity to compete actively in the development of new products and services. In addition, the Commission-mandated report from former president of the European Central Bank Mario Draghi (see 4.6 Non-Competition Issues ) stresses the importance of improving innovation in European industries, including in the context of EU merger con - trol. In its ongoing review of its Horizontal and Non- Horizontal Merger Guidelines (see 1.1 Merger Con-
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