In order to counter the risk of mergers and acquisitions (“M&As”) which would significantly reduce competition in the Single Market, on January 20th 2004 the EU legislator issued the Council Regulation (EC) No. 139/2004, the so called “EU Merger Regulation” (“EUMR”), which provided for merger control procedures as carried out by the European Commission. The purpose of this article is to point out the merger procedure and its function, with a special section on the role of structural and behavioural remedies in the most recent developments in EU competition law.
The main aim of the Regulation (EUMR) is to avoid the creation of dominant companies, which might cause negative effects to the competition in the EU, and reduce its benefits for the European Union’s economy and for consumers.
For this reason, the EUMR aims at introducing a specific control regime based on turnover thresholds: where the undertakings in the merger have a worldwide and EU turnover above those thresholds, then the merger falls within the scope of the EUMR. Smaller mergers that do not have an EU dimension may fall instead under the remit of Member States’ competition authorities, but Member States and the Commission are allowed to transfer the case between themselves, both at the request of the companies involved and of the Member States.
The Commission, in fact, carries out the procedures set out in this Regulation in close and constant liaison with the competent authorities of the Member States, from the very beginning of the procedure, as it shall transmit to the competent authorities of the Member States copies of notifications. Moreover, National Competition Authorities are invited to express their views throughout the procedure and may be requested by the Commission to undertake investigations.
The article 19 of the Regulation, finally, provides that the before taking any decision on concentrations, pursuant to Article 8(1) to (6), Articles 14 or 15 the Commission has to consult the Advisory Committee, consisting of representatives of the competent authorities of the Member States.
Outline of the merger control procedure
When a merger reaches the thresholds of a EU dimension, the Commission must be notified. About 300 mergers are typically notified to the Commission each year. The following phases depend on the characteristics of the companies involved: if they don’t reach the 15% combined market share, or the 25% market share on vertically related markets, the Commission follows a simplified procedure, with a routine check.
If these thresholds are reached, the Commission starts a formal investigation. This occurs in two stages:
Within 25 working days from the notification, the Commission analyses the competition concerns that the operation might arise and, eventually, its possible remedies. In this phase the merging companies, and sometimes third parties, are asked to provide information. Questionnaires may be proposed to competitors or customers in order to figure out their views on the merger. Other contacts between market participants and merging companies are examined as well.
In this phase the Commission keeps the parts of the merger informed about the investigation process. If there are competition concerns, companies can offer remedies, which extend the phase I deadline by 10 working days. At the end of the phase, the merger can be cleared unconditionally or subjected to the approved remedies, or, if the competition concerns are not settled down, the Commission opens the phase II.
In this phase the analysis of the merger’s effects on competition is really deep and requires more time. Mergers come to this phase when the Commission has serious doubts that the transaction is compatible with the internal market.
The investigation includes the request and examination of several information, including companies’ internal documents, extensive economic data, more detailed questionnaires to market participants, and could include site visits. In this phase the Commission also analyses claimed efficiencies which the companies could achieve when merged together, which, in order to be taken into account, must fulfil strict conditions. The claimed efficiencies must be verifiable, merger-specific and must be likely passed-on to consumers.
If after the market investigation the Commission still has concerns that the planned merger will likely impede competition, it sends a statement of objections (SO) to the notifying parties, informing them of the Commission’s preliminary conclusions. Parties then have the right to respond to the SO in writing. They have the right to consult the Commission’s case file and to request an oral hearing, which is conducted independently by the competition Hearing Officer. From the opening of phase II, the Commission has 90 working days to decide on the compatibility of the planned transaction with the EU Merger Regulation, extensible in additional 15 working days if the notifying parties offer commitments.
Following the phase II investigation, the Commission may unconditionally clear the merger; or approve the merger subject to remedies; or prohibit the merger if no adequate remedies to the competition concerns have been proposed by the merging parties. All decisions and procedural conduct of the Commission are subject to review by the General Court.
When the Commission is not able to clear a merger unconditionally nor to prohibit it, clearance might be granted subject to commitments of the parties to modify their proposed transactions in order to remedy the competition issues that the operation has arisen. As we have seen, this could happen both in phase I or phase II. The practice reveals that the negotiation of remedy is a crucial part of the proceedings, which occurs on a large number of cases.
In 2008, the Commission published the Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 (‘the Notice’), concerning the basic conditions for acceptable commitments and spells out some criteria for their appropriateness. The basic aim of commitments should be to ensure competitive market structures compensating the misbalance the merger may create in the market.
In the Notice, the Commission stressed that the question of whether a remedy is suitable to eliminate the competition concerns identified, must be examined on a case-by-case basis. This approach has to be used in relation to the choice of the type of remedy as well.
Indeed, there are two types of remedies that the merging companies can negotiate in the commitments proposed to the Commission: structural remedies and behavioural remedies.
Structural remedies are commitments adequate to remove competitive overlaps between the parties and usually consist in divesting important parts of the business or assets, granting access to key infrastructure or technologies, or selling a consistent part of shares. They are considered as the most effective remedies to ensure the maintenance of an acceptable level of competition in the market.
However, structural remedies may not always be possible due to the particular characteristics of the undertakings involved: for example, in some cases divesting might be impossible, or it may undermine the core of the merger operation.
The debate on behavioural remedies
On the other hand, behavioural remedies consist in commitments regarding the behaviour of the future entity resulting from the merger. In particular, companies may commit not to raise prices, to reduce product ranges or to remove brands. It is not infrequent that behavioral remedies are included in addition to structural remedies.
Historically, behavioural remedies have been accepted in very rare circumstances, because they have been considered as not adequate to eliminate competition concerns, especially the ones resulting from horizontal overlaps, especially because they need permanent monitoring. Sometimes they also require ongoing revision and adaptation in order to avoid becoming ineffective and/or detrimental to the competitive process.
Despite this, the General Court, in the case Gencor Ltd V. Commission of European Communities, whilst expressing its preference for structural remedies, referred to behavioural remedies as adequate to remove competition concerns, in relation to the specific features of the undertakings involved.
The Commission therefore may accept behavioural remedies, but only in circumstances where the remedy proposed is at least equivalent in its effects to a divestiture or another structural remedy.
Moreover, in the Tetra Laval case, the General Court stressed that the Commission should have necessarily taken into account the proposal of the behavioural remedies by Tetra, in the merger control procedure regarding the purchase of the totality of Sidei SA.
That should have been done in order to evaluate if the new entity would have behaved in such a way to consolidate/create a dominant position.
Nonetheless, some positive signals have come from the Commission in recent times, in terms of opening to behavioural remedies. The Commission is starting to accept behavioural remedies more often.
This happened, for example, in 2019, with the Qualcomm/NXP  case, in the digital sector. The Commission cleared the merger under commitments of ensuring the interoperability of the merged entity’s products with those of rivals as well as commitments of not buying NXP essential patents and ensure, under some conditions, access to patents under fair and reasonable terms to other entities.
This opening to behavioural remedies may have also affected a recent merger control procedure in the Alstom/Bombardier case, on which the Commission delivered a decision on July 16th . This procedure had a particular importance, due to the strong concerns that were prospected with regard to the automotive and transportation market.
In this case, Alstom SA intended to acquire the full control of Bombardier Transportation Ltd, buying its units and shares. The Commission held in its Decision that this operation might fall within the scope of the Merger Regulation. In the end, the Commission decided to clear the case, accepting the remedies proposed by the two companies, which were a mix of behavioural and structural remedies.
In conclusion, it is self-evident that the Commission operates a strict control on mergers and acquisition that reach a “EU dimension”.
That is because this control has a crucial role in one of the core aims of the Commission, which is avoid the creation of dominant companies, which might potentially undermine the level of competitiveness in the Single Market.
Having said that, it is comprehensible that the Commission used to distrust behavioural remedies, but analysing the most recent decisions of the Commission, some kind of turnaround has started. It will be interesting to find out the next evolutions in the evaluation of remedies in merger control procedure in the future.
 Specific thresholds can be investigated at the following website: https://ec.europa.eu/competition/mergers/procedures_en.html
 The burden of proof stands on the merging companies.
 Further extensions of up to 20 working days can be granted on request by, or with the agreement of, the notifying parties
 OJ 2008 C 267/1
 Paragraph 16 of Notice on remedies
 An example is the Cisco/Tandberg case (Case No. COMP/M.5669); in which, in 2010, the Commission cleared the merger accepting a combination of structural and behavioural remedies.
Case T-102/96, Gencor Ltd V. Commission of European Communities, 25 March 1999
 Case T-5/02, Tetra Laval BV V. Commission of European Communities, 25 October 2002; see also Case C-12/03 Commission of European Communities V. Tetra Laval
 Case No. COMP/M.8306 — Qualcomm/NXP Semiconductors, (2018/C 113/10).
 Case No. COMP/M.9779 — Alstom/Bombardier Transportation.
Nata nel 1995, laureata in Giurisprudenza presso l’Università degli Studi di Napoli Federico II. Accanto alla pratica forense in diritto civile e del lavoro, da sempre mi dedico allo studio del diritto internazionale ed eurounitario. Attualmente frequento il Corso di Perfezionamento in Diritto dell’Unione Europea a cura del professor Roberto Mastroianni.