EU Law and Practice Contributed by: Porter Elliott, Catherine Gordley and Niharika Parshurampuria, Van Bael & Bellis
5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions If the Commission determines that a notified concentration will lead to an SIEC, it must pro - hibit the transaction (see 4.1 Substantive Test ), unless remedies are offered that eliminate the Commission’s concerns. The Commission can prohibit transactions without prior approval from the EU courts or any other EU or member state body. Prohibition decisions may be appealed to the General Court (see 8.1 Access to Appeal and Judicial Review ). In practice, prohibition decisions are rare. To date, the Commission has prohibited only 33 transactions since 1990, out of more than 9,500 notified (although over 250 notifications have been withdrawn, often as a result of the Com- mission’s objections). Most problematic transac - tions are cleared, subject to remedies designed to eliminate the competition concerns. 5.2 Parties’ Ability to Negotiate Remedies The parties may propose remedies to address competition concerns raised by the Commission (see 5.4 Negotiating Remedies With Authori- ties ). The Commission’s 2008 Remedies Notice contains extensive guidance on the legal require - ments that remedies must meet (See 5.3 Legal Standard ). Structural Remedies The Commission has expressed a clear prefer - ence for structural remedies, especially divest - ments, as these bring about a lasting change on the market and do not require ongoing oversight.
To be acceptable, a divestment must consist of a viable business that is operated by a suitable purchaser and can compete effectively with the merged entity going forward. While the Commis - sion prefers the divestment of an existing, stan - dalone business, it may accept the carve-out of a particular business activity where the parties can demonstrate, to the Commission’s satisfac - tion, that the divestiture has sufficient resources, assets, personnel, R&D capacity and any other capabilities needed to compete. The Notice on Remedies requires that purchas - ers of divestment businesses must: • be independent of, and unconnected to, the parties; • have the financial resources, relevant exper - tise, 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 behavioural 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 accept - ed “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 Commission has been more open to accepting behavioural remedies to resolve concerns relat - ing 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:
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