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BIICL London, 16 November 2007
Practitioners’ Points: The Consolidated Jurisdictional Notice
Dr Johannes LuebkingDeputy Head of Unit, Directorate C-5, DG Competition
The views expressed are personal and do not necessarily reflect the views of the European Commission nor those of DG COMP
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Scope and Sources
Consolidation of current jurisdictional Notices Concept of Concentration Joint Ventures Undertakings concerned Calculation of Turnover
Covers all issues relevant for Commission’s original jurisdiction under Merger Regulation
Sources for review New Merger Regulation Recent jurisprudence, i.e. Cementbouw and Endesa Decisional practice of Commission
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Concentration
Acquisition of control by investment funds Normally
Investment company acquires indirect control under Article 3 (1), (3)
Investment company indirectly holds rights in portfolio companies under Article 5(4)
Consequence: turnover of all portfolio companies is taken together, even if held by different funds organised by same investment company
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Concentration
Object of control Assets constituting a business with market
presence Outsourcing cases: Concentration only if
Transfer of assets and/or personnel That allow acquirer to develop market presence
beyond outsourcing client Time-frame similar to start-up period for full-
functionality of JVs
Page 5
Concentration
(Joint) acquisition and immediate split-up of target
Separate concentrations if Legally binding agreement on break-up No uncertainties that second transaction
takes place within short time-frame Maximum normally 1 year
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Concentration
Parking/warehousing transactions Interim purchaser acquires target “on behalf“ of
ultimate purchaser on basis of agreement on future on-sale
Often major part of economic risk shifted to ultimate purchaser who may be granted specific rights
First transaction considered first step in single concentration comprising lasting acquisition of of (parked) target by ultimate purchaser
First transaction no concentration in its own right and not considered to fall under Article 3(5)
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Concentration
Interrelated transactions: when are several transactions considered one concentration?
Under Article 3: Cementbouw, recital 20: Transactions unitary in nature Transactions de jure or de facto interconditional Only if control is acquired by same undertaking(s), not
in cases of assets swaps or de-mergers of JVs Examples:
One business, one economic entity Parallel (EQT/H&R/Dragoco) or serial acquisition
(Kingfisher) Under Article 5(2)(2):
Successive transactions between same parties within two-year period considered one concentration for calculation of turnover
Assessment under Article 3 is precedent
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Types of control
Sole control comprises Positive sole control Negative control by minority shareholder
De facto sole control: on basis of past voting pattern and prospective analysis
Joint control: more on commonality of interests and de facto situations
Reduction in number of shareholders: concentration only if change from joint to sole control
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Joint Ventures
Distinction between Joint acquisition of control of existing
undertaking, falling under Article 3(1) Creation of a JV, falling under Article 3(4)
Clarification of full-functionality criteria
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Community Dimension
Relevant date for establishing jurisdiction: Earlier of
Date of notification to Commission or national competition authorities
Conclusion of agreement, announcement of public bid, etc.
Turnover calculation Normally based on audited accounts of
previous financial year Adjustments to be made in case of
permanent changes in economic reality of undertakings concerned (CFI in Endesa)