Reform of European merger policy: an appraisal of recent jurisprudence and the new merger

Abstract

The entry into force of Council Regulation (EEC) No. 4064/89 on the control of concentrations between undertakings, on the 21st Sptember 1990, marked the introduction of a European merger control regime. The Regulation established a comprehensive framework for the ex-ante control of concentrations with a community dimension by the EU Commission.

Until 2000 the ECMR operated as an effective instrument of merger control. Of the 1228 concentrations notified from 1990 to 1999 only eleven resulted in prohibitive decisions. the majority of proposed concentrations were cleared, or were able to proceed subject to commitments. However, of the 680 notifications made in 2000 - 2001 seven were declared to be incompatible with the common market. A number of these decisions proved to be controversial. The Commission's 2001 prohibition of tyhe proposed merger betwen two American companies, Honeywell International Inc. and General Electric Company resulted in transatlantic controversey. The Antitrust Division of the Department of justice had approved the merger after reaching an agreement with the companies which resolved the Division's antitrust concerns in relation to the merger. In 2002 the Court of First Instance (CFI) annulled the Commission's prohibition decisions in the 'Airtours', 'Schneider Electric' and 'Tetra Laval' cases. The Court held that the decisons were vitiated by a series of errors of assessment and procedural irregularities and therefore, the Commission had failed to prove the requisite legal standard that these mergers would substantially impede competition. The criticism of the Commission's procedures were to influence the content of the new Merger Regulation.

The New Merger Regulation entered into force on the 1st May 2004. The most significant change was the introduction of a new substantive test for the appraisal of concentrations.