Buckle up: Commission speeds up its merger notification procedure

The European Commission’s merger simplification package entered into force on 1 January 2014 and streamlines the merger review procedure by including more transactions under the simplified procedure and reducing the information burden on companies having to notify their transactions. The scope of the simplified procedure is widened by:

• raising the market share thresholds for mergers between competing companies from 15% to 20%
• raising the market share thresholds for mergers with vertical links from 25% to 30%
• introducing a new criterion according to which mergers will also qualify for simplified review when they result in only a small increment in market share.

As a result, more companies will be able to notify their transactions through a short filing form with less detailed information requirements. At the same time, the Commission will be able to clear more mergers without an in-depth investigation of their effects amongst customers, competitors and other parties.

The Commission also wants to alleviate the information overload in its merger notification forms by:

• facilitating notifying parties, when requesting waivers, by clearly identifying what information qualifies for a waiver request in the standard notification forms
• introducing a “super-simplified notification” for joint ventures entirely active outside the EEA limited to providing a description of the transaction, the business activities and the turnover figures
• increasing the market share thresholds for what constitutes an “affected market”, which require more extensive information, from 15% to 20% for horizontally affected markets and from 25% to 30% for vertically affected markets.

So far so good as to decreasing the information burden for notifying parties and speeding up the process. However, the more elaborate request for supporting documentation may increase the notifying parties’ workload since it now includes:

• minutes of board meetings at which the transactions were discussed
• analyses, reports, studies, presentations etc. that assess a transaction’s rationale (including documents where the transaction is discussed in relation to potential alternative acquisitions)
• analyses, reports, studies, presentations etc. from the last two years for the purpose of assessing any of the affected markets.

But forewarned is forearmed. It is advisable to draw up documentation creation guidelines already to reduce the risk of having to provide assailable internal documents as a result of future transactions. Similarly, maintaining a register to keep track of internal documents relating to the potential transaction is recommended as it will facilitate producing this documentation once you need to file.