On 1 January 2014 a package of measures introduced by the European Commission to simplify the merger clearance process entered into force. The Commission expects that 60 to 70% of all notified mergers will be eligible for review under the simplified procedure. The Commission also made significant changes to the information requirements for both the simplified and the standard procedure.
Mergers eligible for the simplified procedure
When a transaction qualifies for simplified review, the amount of information to be provided by the parties is reduced significantly. Mergers will now qualify for the simplified procedure when the combined market share of the parties is below 20% (instead of 15%) on markets where there is horizontal overlap and below 30% (instead of 25%) on vertically related markets. The Commission also introduced a new category of transactions that are eligible for simplified review. Where the combined market share of the parties is between 20% and 50% and the increase in market share due to the merger is small, the Commission may allow the merger to be reviewed under the simplified procedure.
The Commission also introduced a "super-simplified" procedure for joint ventures which are active entirely outside the European Economic Area and which have to be notified because their parents' turnover exceeds the European turnover thresholds. Such transactions are not exempted from notification, but their notification only needs to contain information on the transaction, the activities and the turnover.
Reducing the amount of information to be submitted
Notifying parties are required to submit detailed market information on all relevant markets where their market share reaches the threshold. On the one hand, the Commission increased these thresholds, so they correspond to the thresholds that apply for simplified review. Detailed information will need to be submitted when the market share of the parties is 20% or more (instead of 15%) in the case of a horizontally affected market and 30% or more (instead of 25%) in the case of a vertically affected market.
On the other hand, the Commission now also requires information on all plausible alternative relevant markets. This new requirement could significantly increase the number of markets concerning which information has to be included in the notification, thereby potentially undoing the positive effect of the increased thresholds.
Another change which will increase the burden on notifying parties is the requirement to submit a significant number of internal business documents. In standard notifications, these documents include minutes of meetings at which the transaction has been discussed, analyses assessing the concentration – including documents assessing potential alternative acquisitions – and reports or studies on any of the affected markets from the last two years. Even in simplified procedures, some of these documents will have to be included, such as presentations prepared by or for the board analysing the notified concentration.
A welcome change is the identification of the categories of information for which a waiver can be requested.
As a result of the envisaged reduction in the information requirements, the Commission expects pre-notification contacts to take up less time. Mergers which do not give rise to horizontal overlaps or vertical links can even be notified without pre-notification. However, the Commission points out that it is still the parties' responsibility to make sure that the notification form is complete. Therefore, pre-notification contacts may be preferable in most instances.
A step forward?
Although the simplification of the notification process is to be welcomed, not all of these changes will contribute to a smoother and more efficient process. A lot will depend on how the Commission applies the new rules in practice.