Brussels, 11/12/2002 (Agence Europe) - As expected, on Wednesday the European Commission decided to adopt reform of its merger control proposals introduced by Mario Monti. The objective of the reform is two-fold, explained the Commissioner, that of consolidating elements that have made their control system work effectively and "improve the Commission's decision-making process… to increase the soundness of our economic analysis" and ability to defend itself. He also pointed to the advantages of the European system, the "one-shop stop "and the fast-track procedure. The recent rulings by the Court of Justice have convinced the Commission of the need to advance further in its reforms is going in the direction of the enterprises and economic actors and that the aim of merger control was not to block the companies but reassure them that consumers would continue to benefit from choice and competitive prices, which most mergers guaranteed.
Proposals focus on: 1) revision of Merger Regulation; 2) non-legislative measures for improving decision-making and 3) guidelines for "horizontal mergers".
1) Proposal for a revised Merger Regulation. The Merger Regulation, adopted in 1989 and in force since 21 December 1990, is built on the principle of "the one-stop shop", which means that large cross-border transactions are scrutinised exclusively by the Commission and do not have to be cleared in any national EU jurisdiction. It also guarantees that mergers are examined within tight deadlines and that reasoned decisions are issued in every case, thus ensuring transparency and legal certainty. In December 2001, the Commission adopted a Green Paper seeking views on possible directions for reform of the EU's merger control system. Over the past year, the Commission proposes the following changes which will be submitted to consultation at the EP and a vote at the Council in 2003 for their entry into force on 1 May 2004:
Clarification of the substantive standard for the analysis of mergers on competition grounds, by making it clear in particular that the Regulation can be applied to situations of oligopoly which may give rise to competition problems;
Rationalisation of the timing of the notification of proposed mergers to the Commission, by introducing the possibility for notification prior to the conclusion of a binding agreement, and by abolishing the requirement that transactions be notified within a week of the conclusion of such an agreement to make the system ore flexible and co-ordinate competition agencies in other jurisdictions;
Simplification of the system for the referral of merger cases from the Commission to Member State competition authorities for investigation, and vice versa. This reform will seek to ensure, consistent with the principle of subsidiarity and reduce the incidence of "multiple filing;
More flexibility into the timeframe for the conduct of merger investigations with an additional three weeks to be added to the timetable and up to four extra weeks for the purpose of ensuring a thorough investigation;
The Commission's fact-finding powers would also be strengthened thereby enabling it to more easily obtain information for the purposes of an investigation, including the possibility of imposing higher fines for obstruction.
2) Non-legislative measures: designed to improve the quality of the investigation. The following measures will be taken: Creation of a post of Chief Competition Economist supported by a team; for all in-depth merger investigations, the creation of a peer review panel composed of experienced officials to scrutinise the investigating team's conclusions with a "fresh pair of eyes"; appointment of a Consumer Liaison officer at the Commission so that the consumer voice would be better heard; companies whose proposed merger is being investigated will be given an early opportunity to review third party submissions and opportunity to discuss such concerns directly with those third parties and the Commission.
3) Draft Notice on horizontal mergers and efficiencies (mergers between competing firms). This draft notice is part of the objective for a more transparent system, which is better articulated and based on greater legal certainty. The Commission is also expected to adopt measures for vertical mergers and conglomerates. These measures will tackle the concept of oligolopolistic market dominance and reflect the experience acquired through the examination of the more than 2,000 cases notified to the Commission over the past 12 years and the European Courts' case law. The Commission also promises to grant particular attention to the positive effects of a merger that on first glance could appear a threat to competition. Concrete and sufficient proof will be requested from the companies and a positive effect on consumers will have to be indicated. The Commission explains that a green light for the creation of monopoly or quasi-monopoly is quite unlikely. These proposals will be submitted to public consultation and the different parties will be invited to submit their written observations before the end of March 2003.
The Commission will begin to push for a speedy review by the Court of Appeals in merger cases and welcomes the adoption of fast track procedures (see http: //europa.eu.int/comm/competition/indexen.html).