An appraisal of the European Commission's Application of the New Merger Regulation

Abstract

The original Rome Treaties, which established the European Economic Community, made no direct reference to the regulation of mergers. The establishment and evolvement of a Community framework of merger regulation, therefore, was piecemeal, incremental and sporadic in nature, the building blocks of the framework premised upon specific cases such as the 1973 Continental Can judgment which established the foundations of the quasi merger regulation framework.'
The European Community Merger Regulation which was formulated in 1989 and entered into force on September 21' 1990, aimed to establish a pro-active, preemptive, unitary system of merger control. This Regulation represented a critical
juncture in the evolvement of the merger regulation policy framework establishing a system that regulated mergers which possessed a Community dimension. This system appeared to be working effectively until early 2001-2002, when the Court of
the First Instance reversed several of the Commission's decisions and severely rebuked it for its errors and incorrect interpretation of evidence when investigating the transaction.
The revised Merger Regulation entered into force on May l 2004, enhancing the role of the Commission, introducing a higher degree of flexibility into the notification procedure and implementing the Significant Impediment Test. The Merger Task Force was dismantled and sectoral teams introduced. A Chief Competition Economist and team were also established to oversee the application of economic models during more complex investigations. The Courts have also been drawn into the governance regime as the whole investigative process has become much more adversarial in nature as parties become more willing to challenge Commission decisions, if they are not in agreement.
The thesis, therefore, will examine if and how the application of the revised Merger Regulation has changed the direction of merger regulation policy. The thesis will illustrate that the application of the Regulation by the Commission represents a step
rather than a radical change in the evolving framework of merger regulation. Paradigmatically and procedurally, the entry into force of the New Merger Regulation represents a shift in the focus and application of the provisions of the merger regulation framework by the Commission. The revised referral system, more flexible notification system, introduction of triangular meetings and the revision of the substantive test, all require the Commission to modilS' and reinterpret the foundations of the merger regulation framework. Economics now plays a much larger role in merger investigations, and the spectre of Court intervention looms on the horizon of any investigation where any party or interested person does not agree with the Commission's decision.