EU Law and Practice Contributed by: Porter Elliott, Catherine Gordley and Niharika Parshurampuria, Van Bael & Bellis
To be acceptable, a divestment must consist of a via - ble business that is operated by a suitable purchaser and can compete effectively with the merged entity going forward. While the Commission prefers the divestment of an existing, standalone business, it may accept the carve-out of a particular business activity where the parties can demonstrate, to the Commis - sion’s satisfaction, that the divestiture has sufficient resources, assets, personnel, R&D capacity and any other capabilities needed to compete. The Notice on Remedies requires that purchasers of divestment businesses must: • be independent of, and unconnected to, the par - ties; • have the financial resources, relevant expertise, incentives and ability to maintain the business as a competitive force; and • not give rise to new competition concerns by acquiring the divestment business. Behavioural Remedies The Commission is generally more sceptical of behav - ioural remedies (ie, commitments by the parties to act in a certain way on the market) as these tend to be more complex to implement and monitor. As such, they will only be accepted “exceptionally in specific circumstances”. In particular, the Notice on Remedies states that commitments not to raise prices or reduce quality or output are generally not workable. The Com - mission has been more open to accepting behavioural remedies to resolve concerns relating to access to key infrastructure, networks and interoperability, or concerns relating to exclusive long-term contracts or product bundling. 5.3 Legal Standard The Remedies Notice notes that: • any remedies must entirely eliminate the SIEC – the remedies offered by the parties must be sufficient to restore the conditions of competition that would have existed in the absence of the transaction; and • it must be possible to implement the remedies effectively within a short period of time.
In particular, the remedies must offer the Commission a sufficient degree of certainty that the commercial structures or relationships resulting from the remedies can be maintained. In assessing the likely effectiveness of remedies, the Commission will consider the nature of the market, any risks inherent in implementing the remedies and the likelihood of the remedies being maintained over time. The Commission is sceptical of remedies that are too complex or require significant ongoing moni - toring to ensure compliance (see 5.2 Parties’ Ability to Negotiate Remedies ). 5.4 Negotiating Remedies With Authorities The parties are responsible for offering remedies – the Commission will neither impose nor propose remedies on its own initiative. In practice, the case team will work with the parties to further refine the parameters of remedies offered by the parties so that they suf - ficiently address the case team’s concerns. Process Remedies are offered by submitting commitments, which become the operative terms of the remedy, accompanied by “Form RM”. The Commission’s “Best Practice Guidelines for Divestiture Commitments” pro - vide a model text for divestment commitments. Form RM is an annex to the Implementing Regulation. Both the commitments and Form RM require considerable time and effort to complete. Remedies may be offered at the following stages: • during pre-notification (in draft form); • in Phase I – before working day 20 (as Phase I is very short, the Notice on Remedies specifies that, in order to be accepted, remedies offered in Phase I must provide “a clear-cut answer to a readily identifiable competition concern”, and most Phase I remedies therefore take the form of divestitures); and • in Phase II – before working day 65 (the Commis - sion will only accept remedies submitted later in exceptional circumstances).
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