Similar to Dutch merger control, the EUMR jurisdiction is currently based on the ability to exercise “control”. As a result, minority acquisitions falling short of control do not trigger the merger notification requirement. Under the EUMR, the Commission can only take account of non-controlling minority shareholdings if a separate acquisition of control is notified and the pre-existing minority shareholding is part of the competitive picture. The Commission has a limited ability to assess potential anti-competitive effects of other minority shareholdings. The EU’s cartel prohibition and the prohibition on abuse of a dominant position do not cover all categories of structural links (see the Commission’s staff working paper). The cartel prohibition only comes into play if the structural link qualifies as an agreement or results in concerted practices, which could be difficult to prove. Additionally, the prohibition of abuse of dominance only covers a small number of cases, since it requires that the acquisition of the structural link by the already dominant company constitute abuse.
In 2013, the European Commission launched a public consultation which explored the option of extending the scope of the EU’s Merger Regulation (EUMR) to the acquisition of non-controlling minority shareholdings. According to the Commission, the acquisition of those shareholdings may, in some cases, have anti-competitive effects, particularly where they create structural links between competitors or in a vertical relationship. However, in October 2016, a final report examining the acquisitions of non-controlling minority shareholdings in various EU member states concluded that there had been very few such cases that had actually raised competition concerns.
The topic has, however, not died. Competition Commissioner Vestager recently raised the issue of common ownership in a February 2018 speech. The fact that the Commissioner intends to begin collecting data on the frequency of common ownership in Europe and its effects on competition shows that she is taking the cautious approach, and first wants to see the bigger picture before taking action. In her words: “Just because investors might benefit from less competition, doesn’t necessarily mean companies will oblige. There’s a difference between holding shares in a company, and controlling its decisions. Even without control, there are certainly ways for these funds to make their voices heard. But we can’t just assume they have the power to change minds. We need to look closely at what actually happens – whether they can really get companies to compete less hard.”
Depending on the outcome of the data collection, further regulation of common ownership could be on the horizon. Investors holding shares in multiple companies in the same industry should therefore watch this space.