EU Simplifies Merger Review Procedures. Then Again, Maybe Not…

“On balance, we expect the new rules to increase the burden imposed on companies when a close review of the transaction is required in order to assess potential competitive effects. This increased burden may outweigh the benefits of the revision package.” (Jens Hackl and Svajune Sakalyte of Morrison & Foerster)

Earlier this month, the European Commission adopted significant revisions to EU merger control regulations in an effort to streamline the review process. Attorneys Andreas Kafetzopoulos and Isabelle Rahman of Dechert explain:

 “Under the simplified procedure, companies need to provide much less detailed information in their merger filing than under the ordinary procedure while the Commission can clear the transaction without conducting a market investigation on the competitive effects of the notified transaction. The European Commission expects that 60-70% of notified transactions will be treated under the new simplified procedure, i.e., 10% more than under the current system.”

But will that actually happen, wonder attorneys at Skadden Arps:

“[M]any of the simplifying measures remain discretionary — the Commission can decide to request additional information and can revert to the normal, more burdensome process. For example, while the Commission acknowledges that certain information required in the filing is unnecessary for its review of a significant number of cases, it does not eliminate the requirement. […] In addition, in cases involving affected markets, the new rules are likely to substantially increase the information burdens imposed on notifying parties.”

The changes are scheduled to go into effect on January 1, 2014. For your reference, here’s a look at what attorneys on JD Supra are writing about the new procedures:

Simplifying EU merger control procedures for simple cases (Andreas Kafetzopoulos and Isabelle Rahman of Dechert LLP):

“The European Commission expects that 60-70% of all notified transactions will qualify for the new simplified procedure. This is approximately 10% more than under the current system. Moreover, the European Commission estimates that approximately 25% of the transactions that qualify for a simplified procedure do not give rise to horizontal overlaps and vertical links and may thus be notified without pre-notification contacts. This could save companies the one or two weeks of pre-notification contacts that such cases usually require.” Read on>>

European Commission Simplifies Aspects of EU Merger Control (Andrea Hamilton and David Henry of McDermott Will & Emery):

“The Commission has, however, also introduced new categories of information that will need to be provided. […] Where the parties’ activities overlap in the European Economic Area, or where there is a vertical relationship between them, the parties will have to submit presentations that analyse the transaction that were prepared by or for, or received by, members of the board of management, board of directors, supervisory board, any person exercising similar functions or the shareholders’ meeting.” Read on>>

European Commission Adopts Changes to EU Merger Rules: One Step Forward, Two Steps Back (Jens Hackl and Svajune Sakalyte of Morrison & Foerster LLP):

“On balance, we expect the new rules to increase the burden imposed on companies when a close review of the transaction is required in order to assess potential competitive effects. This increased burden may outweigh the benefits of the revision package.” Read on>>

European Commission reduces notification burden for more mergers (DLA Piper):

“Businesses should welcome the Commission’s revised simplified procedure. It will save time and reduce costs with more streamlined administrative procedure. Ultimately, this should enable businesses to proceed quicker with transactions which do not pose major anti-trust problems. This new approach will also allow the Commission to devote additional resources to those merger reviews which require a more detailed assessment.” Read on>>

European Commission Simplifies Procedures Under the EU Merger Regulation (Douglas Lahnborg and Till Steinvorth of Orrick, Herrington & Sutcliffe LLP):

“The Merger Simplification Package is certainly a step in the right direction to streamline the EU merger control process. However, it remains to be seen whether the changes will translate into faster and less bureaucratic procedures. One of the main reasons for the administrative burden caused by EU merger filings, in particular during the pre-notification phase, has been the Commission’s insistence that the parties provide information for ‘all plausible’ relevant product and geographic markets. […] This is unlikely to change, in particular since the Commission has emphasised that it will continue to use the ‘plausible markets’ concept.” Read on>>

Changes to EU Merger Review Procedures (Skadden, Arps, Slate, Meagher & Flom LLP):

“On the whole, the revisions modestly expand the safe harbour for transactions that raise no substantive issues, and parties to such mergers will benefit from streamlined procedures and reduced information requirements. For other transactions, however, the changes significantly increase the informational burdens imposed on notifying parties while also formalizing certain practices that the Commission has been using for a number of years. For these latter cases, in which the new procedures will increase informational burdens, the parties will need to prepare early and carefully and to pay particular attention to documents they generate during the normal course of business.” Read on>>

The Commission simplifies its procedures for most mergers, but demands extra information for the rest (White & Case LLP):

“As part of the reforms, the Commission has introduced measures to reduce the length of pre-notification discussions. In particular, the Commission states up front in the new Form CO and Short Form CO that pre-notification discussions are useful to determine whether the submission of certain information can be waived in a given case and that, as stated in DG Competition’s Best Practices for handling merger cases, such decisions will be made within five working days.” Read on>>

Procedural Reform of EU Merger Control Rules (Alexandros Papanikolaou and Michael Rosenthal of Wilson Sonsini Goodrich & Rosati):

“In parallel to its Merger Simplification Package, the commission has updated its standard model text for divestiture commitments. The standard model text is now aligned to the revised notice on remedies adopted in 2008. Merging parties can offer commitments to remove the competition concerns raised by the commission during a merger review. Although the use of the standard text is voluntary, it provides for a useful model to design commitments to divest assets and for the appointment of a monitoring trustee.” Read on>>

Read more on European Merger Control Regulations at JD Supra Business Advisories>>